More on Google vs MadAve

Smackdown ... simple piece from BWeek covers it.

Google's Search for the Advertising Edge:

"But while Google has gone from search engine to media octopus in less than a year since expanding its reach, it hasn't lost all the feel of an Internet startup. Says a slightly self-effacing Armstrong: 'One of our challenges is just figuring out the right way to sell and even who and how many should be in the room when we go see a client.'

For the Vanguard meeting, there are just six people -- two from Google, two from Vanguard, and two from Vanguard's ad agency, Avenue A/Razorfish. It turns out that with AdWords, Vanguard in November spent less than 50¢ per click, one-tenth that of some rivals, and 14% of Net surfers exposed to the ad clicked through to its Web site.

That performance beats the response rate from a typical direct-mail effort, for example, of about 2%. And it's why Vanguard upped its Net ad spending by 33% since 2003, to $12 million last year, while it cut every other media category, according to TNS Media Intelligence. Vanguard spent $40 million total on ads last year, says TNS."

MuSoft vs Google

Jan 9 issue of New York Magazine on the decline of MuSoft (below)

Then we have MuSoft bowing to the Feds on requests for search data (what, where and when) while Google resists.
Having lost the fight, MuSoft seems to say ... but you better go after those guys over there.

Data : November Nielsen//NetRatings :
"At the top would be Google, which snared 46.3 percent of search
queries in November 2005. Almost 2.4 billion searches wound their
way through the Google server farms. Yahoo held its place at second
on this list, with a 23.4 percent share and 1.194 billion queries
received, parsed, and tossed back to the user.

That takes care of the billionaires of search share. MSN Search at
number three picked up 11.4 percent of the November '05 search
market, 583 million queries. AOL Search was tops in single digit
share, 6.9 percent and 350 million searches handled."

46.3% vs 11.4%
No wonder Billy G is willing to give up to the Justice Dept ... if it can hurt Google.


Microsoft's Bill Gates Wants to Save the World - New York Magazine:

"The Softening of a Software Man'

In 2000, Gates stepped down as CEO and assumed his current title: chairman and chief software architect. The official line at Microsoft was that he was reenergized, reinvigorated, up to his elbows in the company’s future, shepherding new products and formulating new strategies. But by the time I saw him a couple of years later at a conference in California, it was clear to all in the auditorium that software no longer got Gates’s juices pumping the way his work at the foundation did. Technology questions were answered quickly, without passion, whereas questions about global health elicited lengthy disquisitions full of detail and emotion. The way he talked about wiping out malaria was how he used to talk about wiping out Netscape.

Ever since then, Microsoft has noticeably been drifting. Not that the company isn’t still enormously profitable and doesn’t exercise terrific clout in the markets where its products are entrenched. But there’s no escaping the impression of an outfit beset by strategic blurriness and lumbering middle age—or disguising the fact that, despite countless fervent if flailing efforts, Microsoft is getting its ass kicked handily in the race to rule the Internet. Here you have Yahoo, trouncing MSN as an all-purpose Web portal. And there you have Apple, crushing it in online music. Here you have poor, doom-struck AOL, beating it in e-mail and instant messaging. And there, most glaringly, you have Google, whipping Gates’s company in Web search and advertising—and the crucial competition for top-drawer talent."

Nowhere is Microsoft’s decline more keenly felt (or warmly welcomed) than in Silicon Valley. “Ten years ago,” observes Joe Kraus, one of the founders of Excite, “if you were starting up a company, you assumed that Microsoft already had ten engineers working full-time on the same thing, and they were probably going to eat your lunch. But you don’t say that anymore about Microsoft. You say it about Google. They’re the 10,000-pound gorilla now.”

For Gates, then, losing out on the AOL deal to Google—a deal he’d personally been involved in negotiating, courting Time Warner CEO Dick Parsons at last year’s Allen & Co. summer retreat in Sun Valley—would have been all the more painful for what it represents. For 25 years after Microsoft’s founding in 1975, Gates labored furiously to see that his company would escape the fate that befell his archrival IBM, along with every other technology outfit that rose to dominance in one era, then slid into senescence in the next. Yet now he sees his precious baby veering dangerously in the direction of becoming the new Big Blue: large, profitable, and stuffed with happy employees, but feared or followed by no one. Unimportant, in a word.

BWeek Cover story on Math ... and Google's use for Ads

Big Boys start to understand

Math Will Rock Your World:
"The clearest example of math's disruptive power is in advertising. There Google and other search companies built on math are turning an industry that grew on ideas, hunches, and personal relationships into a series of calculations. They can pull it off because, quite simply, they know where their prospective customers are browsing, what they click on, and often, what they buy. Internet companies use this data not only to profile customers but also to pitch for more contracts. Some 18 months ago, 30 blue-chip companies, from Procter & Gamble Co. (PG ) to Walt Disney Co. (DIS ), underwent a series of tests promoted by the Interactive Advertising Bureau, an industry group. These studies crunched consumer data to measure the effectiveness of advertising in a host of media. The results came back in hard numbers. They indicated, for example, that Ford Motor Co. (F ) could have sold an additional $625 million worth of trucks if it had lifted its online ad budget from 2.5% to 6% of the total. Ford responded vigorously: Last August it announced plans to move up to 30% of its $1 billion ad budget into media targeted to individual customers, half of it through online advertising. Such moves are sure to generate even more data, giving greater clout to the numbers people.
"

Google to Justice Dept ... Nope

Good for Google, others cave, Google says "not so fast".

While data mining of open communications is something I'm not terribly concerned with (the NSA Flap), this seems creepy to me. Camel's nose under the tent to mix metaphores.

Google Resists U.S. Subpoena of Search Data - New York Times:
"Google has been refusing the request since a subpoena was first issued last August, even as three of its competitors agreed to provide information, according to court documents made public this week. Google asserts that the request is unnecessary, overly broad, would be onerous to comply with, would jeopardize its trade secrets and could expose identifying information about its users.

The dispute with Google comes as the government is moving aggressively on several fronts to obtain data on Internet activity to achieve its law enforcement goals, from domestic security to the prosecution of online crime. Under the antiterrorism law known as the USA Patriot Act, for example, the Justice Department has demanded records on library patrons' Internet use.

Those efforts have encountered resistance on privacy grounds.

"

Google Growing Up Fast

Good comment from David on Bell's challange to charge for connections ...
isen.blog

See also the comments:
"This reminds me of the Associated Press/Western Union situation of the late 1860s, which many argue is the origin of the separation of content and carriage in the US."

Google on MadAve

More on Google Taking on the whole world (of Advertising)
Big Note : Google ain't MuSoft ... they adapt much more quickly.

Google Casts Its Eye Past the Web - Jan. 11, 2006:

"The Google the world knows best occupies a spacious corporate campus in Mountain View, Calif., complete with a volleyball court and plenty of lava lamps. What's less well known is that the search giant also maintains an East Coast stronghold. In a gleaming high-rise in Midtown Manhattan, steps from Madison Avenue, Google has quietly built a 550-person outpost that is already outgrowing its own lava-lamp-decorated space. To get to the massage room or the refrigerator with 20 types of free soft drinks--Mocha Frappuccino, anyone?--you have to weave your way through hundreds of cubicles where eager young reps work the phones. What are they up to?"

Then we have this guy who likely fails to see the tsunami coming.

Not everyone in the ad world is concerned about Google's thrust into agency work. Rishad Tobaccowala, a top strategist at Starcom Mediavest, a media planning and buying firm that purchases $35 billion worth of advertising each year for clients, finds the Google Print program for magazines amateurish and says his clients consider the concept "ridiculous." He pooh-poohs the Google threat. In fact, he thinks the search giant is overreaching. "It wasn't until ten years after Microsoft went public that it was seen as a threat by a lot of its partners," says Tobaccowala. "It's taken Google less than a year." But bet against it at your own peril. As that ad industry CEO cautions, "I would not be complacent. It's dangerous to say Google will never take us all over."

Much Googlie stuff here

Too numerious to mentition
Likely will add to link list

John Battelle's Searchblog
Author of "The Search" ... history of search/Google

ClickFraud Continued

Why is clickfraud a minor issue for big advertisers?
Because other media is so much worse at it's best

From BusinessWeek on broadcast metrics:

Television: Counting The Eyeballs:

"In the TiVo Age, Mad Ave is turning to services that explain which ads work

By some estimates two-thirds of TV viewers cut the sound during commercials, channel-surf, or skip them altogether because they are annoying or irrelevant. In fact, if TV commercials were subjected to ratings the way TV programs are, most would be canceled faster than Martha Stewart's The Apprentice."

excerpts:
" MediaCheck is one of a handful of services emerging to make TV ads prove their worth, in part to answer the challenge posed by Internet ads, whose viewers can so easily be counted by clicks. Advertisers and networks are coming to view ad ratings as a necessary part of competing with the online ad boom. More important, the new tools will help them put the screws like never before to often free-spending Madison Avenue idea factories. They also stand to wreak havoc on the process of buying and selling ad time.
"
""We're pursuing any move to get the accountability -- the real numbers -- on TV audiences that we are getting with our Internet ad buys," says Julie Roehm, Chrysler's marketing communications director.
"

"...ad ratings could upset the decades-old system of pricing ad time based on how many viewers are watching a show and instead force networks to price time based on how many watch the commercials."

and :
" For now advertisers and agencies are left with the hard truth that 8 out of 10 DVR buyers took the plunge to avoid ads, according to media agency MindShare. MediaCheck's Weinblatt has a possible solution for that, too. Besides delivering ad ratings, his digital boxes also let an advertiser offer consumers coupons, product samples, or discounts."

Comments on Ad shifts ...

From Jim Louderback of PCMag.com

"...interesting set of forecasts laid out the other night by Mark Anderson, publisher of the Strategic News Service newsletter. Mark's audience includes a wide range of the most influential venture capitalists, investors, and CEOs in the tech space, and I find his insights to be mostly on target."


Column from PC Magazine: Industry Expert's Predictions for 2006:

" 2. 'Online ad flows jump 40 to 50 percent as advertisers flee TV and print, for the Web.' Anderson sees new networks of bloggers aggregating together, similar to what Jason Calacanis did with Weblogs Inc. He also predicts a shakeout in advertising, with a 'new generation of young shops taking the lead.'

My take: We're seeing this already. Many magazines have already evolved, newspapers are in trouble, and TV is next. I believe that in 2006 this flow will hit broadcast and cable TV most heavily: This will be the first year that the 'upfront,' where ads are presold into the fall TV season, will generate less money than in the year before."

Guess who is right in the middle ... Google

Big Threat to MuSoft

Good read even if speculation not facts.
Spread the software, spread the Adsense ...

Pass the peanutbutter ... MuSoft is toast ?

CES analysis: Why I know Google will do an office suite and a desktop OS in 2006. - The Jason Calacanis Weblog: "The story everyone wanted to talk about--and Eric and Larry didn't--was Google going into the operating system, deskop computer, and office suite business (let's call those three things 'Google Desktop' for simplicity).

Eric kept saying the Google vision is to index the worlds information, but we all know that is a smoke screen. Google's business is to make money from targeted advertising (i.e. AdSense). "

Google Acquisitions � SEO by the SEA

David isen.blog pointed this one out ... compilation of Google acquisitions:

Google Acquisitions � SEO by the SEA:

"On the web, to make reference without making a link is possible but ineffective - like speaking but with a paper bag over your head. - Tim Berners Lee, in Links and Law: Myths"

2006 CES keynote with news ...

Live coverage of Google Keynote with Robin Williams - Engadget

Sky's the Limit

No wonder Larry is funding (able to fund ?) studies about the "space elevator" ...

Note that in interview on CNBC, Stahlman said that this price could be over a 5 year time frame. About a 33% annual compounded gain.

Figure This: Google 2K:
"Google (GOOG:Nasdaq - commentary - research - Cramer's Take) shares at $2,000? That's what Caris & Co. analyst Mark Stahlman says is theoretically possible.

In note issued to clients Thursday, Stahlman stresses that he isn't setting an official price target for the stock of the Mountain View, Calif.-based company. New York-based Caris doesn't set price targets for stocks. Earlier this week, Safa Rashtchy of Piper Jaffray, which evidently does set price targets, predicted that Google's shares would hit $600. So far that's the highest projection of any analyst.

"We believe that Google's addressable market has a chance to become much larger, more quickly than initially anticipated, perhaps a $100 billion annual sales company over time," Stahlman writes. "Google is not limited to the size of today's advertising market and is likely to expand into next generation financial services, and health care, among other digital service opportunities considerably larger than typically recognized."

In an interview, the 57-year-old Stahlman, who as an investment banker wrote the prospectus that brought America Online public, stresses that he believes that the excitement over Google is different than the hype he saw during the Internet bubble of the late 1990s.

"We now have the technology to actually build out digital services," he says. "We didn't have broadband available in the 1990s. We didn't know how to build grids of computers."

Google, whose shares more than doubled last year, has considerable potential to grow. Stahlman estimates that Google's share of the $2 trillion digital services market, which he says has the potential to expand to $10 trillion annually, is about 0.3%. He arrived at his theoretical price -- not a price target, by any means -- by multiplying the 6.2 multiple that Microsoft (MSFT:Nasdaq - commentary - research - Cramer's Take) now fetches on an enterprise-value-to-trailing-12-months-sales basis by what he sees as Google's potential $100 billion in revenue.

Stahlman's analysis is the latest attempt by Wall Street to figure out the potential growth of the largest search engine company, a difficult task even for the most ardent Google admirers given that the company doesn't give earnings guidance and is on the cusp of what is widely considered to be a nascent market.

But analysts are still giving it their best shot. Goldman Sachs' Anthony Noto Thursday raised his price target for Google to $500 from $400 and raised his fourth quarter earnings per share estimate to $1.69 from $1.62. Analysts are predicting that the company will earn between $1.51 and $1.95, according to Thomson Financial. Noto also raised estimates for Yahoo! (YHOO:Nasdaq - commentary - research - Cramer's Take). He rates both shares as outperform.

Google is expected to announce plans Friday to allow customers to buy content from providers. It also will provide a downloadable bundle of software to allow people to set up new computers without using Microsoft programs.

More Cringely speculation

More speculation but the quote below is the crux of the issue: GRANULARITY.

PBS | I, Cringely . January 5, 2006 - A Commercial Runs Through It:

"Google is an advertising company. Their edge is granularity. No one uses Google AdWords to push toilet paper because everybody uses TP. But if you want to sell custom Warlock capes or hand-machined shifters for discontinued Studebakers, Google can charge advertisers a huge premium (per prospect) because these customers are too expensive to find any other way."

Google Ecosystem

Good stuff.
Contrast G's model of living within the web, with MuSoft's "we must dominate".
One is soft, co-operative, the other is Imperial.

Bear Stearns Upgrades Google:

"Bear Stearns lauded a self-reinforcing 'Google ecosystem' that should allow the Internet behemoth to grow while continually seeding new industries and attendant 'sub-economies.' While the ecosystem bodes well for the future, Bear said the higher price target reflects a one-percentage-point reduction in its estimate of Google's long-term cost of capital and higher revenue estimates."

And the reason behind the AOL deal (very obvious) ... stall MuSoft:
"We think that there is less risk in Google's business model for the following reasons: 1) Our thinking that an ecosystem is developing around Google which could provide a lift in revenues, 2) Google's stronger balance sheet which it will use to ward off competition, 3) multiple product rollouts which should expand Google's revenue potential, 4) Google's continual market share gains, and 5) the fact that AOL is not in the hands of a major competitor," Bear said.

Cringely on why Click Fraud is a minor issue

Although he doesn't come right out and say it, I will.
Assuming his thesis is right that Ad Agencies engaged in a form of fraud anyway, some, maybe a large amount of clickfraud will be tolerated.

Piece on the end of print publishing
Reference to the 75% ration has to do with USPS rules on 2nd class postal rates.

PBS | I, Cringely . December 29, 2005 - Stop the Presses!:
"Ad agencies 12 to 13 years ago didn't want to know whether or not their ads had actually been read, they told us. This was simply because if an advertiser discovered that few, if any, people were actually reading their modem ad on page 113, they might just pull the ad and save their money. The entire ability to sell an ad-edit ratio of 75 percent was based on this deliberate ignorance. Ad agencies and publications alike knew that many -- even most -- advertising dollars were simply wasted, but it wasn't in their interest to admit that, so they didn't."

This guy has no love for "G"

Ran across this today ... Peter Ireland

The Great Startup Game: Are Adwords & Adsense Dying?

and

The Great Startup Game: My New Non-Google Startup Strategy

ClickFraud

Wired 14.01: How Click Fraud Could Swallow the Internet:

Pay-per-click advertising is big, big, big business. So are bogus hits on Internet ads. It's search giants against scam artists in an arms race that could crash the entire online economy."