Hershberg.org

What Twitter Can Learn From Google (and Groupon)

Thu, 07 Oct 2010 11:54:13 -0400

Over the past few weeks, there’s been much discussion about Groupon and whether its incredible success is coming at the expense of the small businesses that have been running deals through its service. A number of past customers have stated that their promotions were so “successful,” they nearly went out of business. There were three main reasons for this:

Most were unprepared for the overwhelming number of new customers they’d be dealing with and didn’t have the necessary infrastructure in place to effectively react to them.
Others had a difficult time turning new customers into repeat customers. Businesses that use Groupon basically discount deals so significantly that unless they can get customers to purchase multiple times, they end up losing money on each one they acquire.
Finally, some Groupon customers simply didn’t have a handle on the economics of their own businesses, let alone Groupon’s. A significantly discounted product or service — combined with the fact that Groupon takes 50% of the deal price — created such huge losses for some companies that their promotions were pretty much doomed from the start.

The last two points are really the most critical. And yesterday, Nick Saint, in what could be the first SAI article I actually agreed with, explained why these issues don’t mean there’s a problem with Groupon’s model, just that some of its customers aren’t using it properly.

Having founded a search marketing firm in 2003, this all sounded very familiar to me. At that time, search was still very much in its infancy. As we went out to speak with perspective clients, we generally heard one of two things: 1) “Hang on, you mean to tell me there are paid ads on Google?” (which, of course, there were) and 2) “I’ve tried paid search before and it doesn’t work for my business.”

While there was undoubtedly some percentage of companies for which that was truly the case, the overwhelming majority of them weren’t seeing poor results because search couldn’t be effective for them, but because it was a new channel that they didn’t take the time (or have adequate resources) to figure out how to use.

For instance, many advertisers were unaware that search engines provided daily budget caps. As a result, budgets that were intended to be spent evenly over a one-month period, were sometimes spent in a day (or less) instead, with nothing to show for it. Other advertisers were completely oblivious to the art and science of keyword research, spending money on keywords that had tremendous volume, but would never be used by perspective customers. And still other advertisers knew nothing about match types and were therefore taking no measures to control who was actually seeing their ads. The list of reasons why a lack of understanding for the way the channel worked led to poor performance obviously goes on and on from there.

The other issue that led some early search advertisers to the false conclusion that search couldn’t work for them was a lack of understanding around metrics and how success would ultimately be measured. Advertisers who had experience with display were focused on impressions, sometimes setting a goal of always being in the #1 position for all the keywords they were buying. Others asked that we optimize campaigns around click-through rate. The bottomline is that these advertisers took few, if any, measures to improve campaigns while they were running. They just took a look at the results once the campaign was finished, saw that they had acquired few new customers, and declared the channel ineffective.

As a result, we (and many other SEM’s) spent much of the first two years we were in business evangelizing the merits of search marketing to some of the world’s biggest brands and reversing false perceptions of how it worked (or didn’t). At the same time, Google began providing a variety of comprehensive resources for smaller advertisers so they could better understand the benefits of search and the mechanics of how it worked. It was really at this point in time that search began to take off.

I was once again reminded of this experience after Twitter’s recent announcement regarding Promoted Accounts. While I’m pretty bullish on Twitter’s suite of “Promoted” products long-term, I wonder if it may be going down a similar path to the one I’ve described above. To the company’s credit, Twitter has taken a slow, controlled approach to all product launches and has shown no reservations about killing products (e.g. Early Bird) that aren’t performing. Twitter’s also done a seemingly good job of limiting the number of advertisers testing new products and offering the necessary amount of hand-holding to ensure things go smoothly. But the type of scale Twitter’s been talking about creating — and that its investors and the market expect — will require going way above and beyond Fortune 500 advertisers. One need look no further than Ad Age’s recent article about Google’s top advertisers to see why that’s the case — the Top 10 advertiser’s in June accounted for less than 5% of Google’s U.S. revenue during the month. The number of companies advertising on Google is in the millions. It is impossible to hold that many hands, regardless of how large your company may be.

Offering advertisers the ability to purchase qualified clicks — or in Twitter’s case, qualified Followers — can be powerful, but only in the event that potential advertisers first understand how to properly leverage a large following. I’m not sure that the overwhelming majority of them know how to do that at this stage.

It seems clear that the success of Twitter’s Promoted Accounts offering is going to be dependent on scalable resources that help advertisers understand the benefits of Twitter so they can effectively engage newly acquired Followers. That needs to be combined with tools that allow them to properly quantify success. Otherwise, what was previously “I paid for 100,000 clicks to my site and no one bought anything” will be “I paid for 100,000 followers and it had no impact on my business.” And that would be a shame.

Follow me on Twitter: @hershberg

Is the Social Media Opportunity Slipping Away From Digital Agencies?

Sat, 17 Apr 2010 09:55:00 -0400

Last month, I tweeted that:

Twitter’s coming ad platform is going to create quite a bit of tension between digital agencies and their search-specific counterparts.

A few people asked me to elaborate on that point and given that Twitter unveiled its Promoted Tweets product this week, it seems like a good time to explain what I meant.

Ad agency execs will be among the first to admit that their companies have a miserable track record when it comes to identifying new trends. And even when they have sensed shifts in the market, they’re generally so slow to react to them that they end up addressing the problem with the same response anyway – through the acquisition of companies they probably never should have let exist in the first place.

That happened in the late 90’s when traditional agencies, thinking online was a fad that didn’t warrant significant investment, were forced to acquire interactive agencies. Amazingly enough, those same interactive agencies then went on to largely ignore the emergence of search, only to watch it rise to account for nearly half of all online ad spend. Once again, ad holding companies were in a position where they had no choice but to acquire search marketing firm’s (SEM’s), not only because they were interested in capturing the upside associated with all the dollars going to search, but as importantly, because their lack of search expertise created potential downside by putting existing client relationships at risk too.

So, when social media marketing (SMM) started to appear as though it was going to be the next big thing a couple of years ago, digital agencies seemed determined not to let history repeat itself — they moved aggressively to build out a set of services that would make them competitive in SMM. They weren’t alone, of course. Companies from all corners of the Marketing Communications world, including PR firms, creative agencies, and yes, search marketing firms, did exactly the same thing. The fact that social media platforms hadn’t yet created paid ad programs that provided real benefit to marketers meant that most agencies focused on using “earned” media tactics instead, and every type of agency could make a compelling case as to why SMM was most directly aligned with its legacy business.

This ultimately created a scenario where most holding companies were hesitant to position any one of their agencies as its SMM specialist. Instead, they’ve allowed agencies to compete with one another with the expectation that the market would ultimately sort itself out and help them decide the best way to move forward over the long-term.

A series of recent developments would indicate that order is finally being created in in the world of social media. First, Promoted Tweets (understandably) look an awful lot like Google’s paid search programs — both AdWords and AdSense. This means that marketers who use the platform will need to be experienced in the art and science of services ranging from keyword research, to writing ad copy featuring strong calls to action, to real-time bidding in auction-based environments that reward relevancy. Using Promoted Tweets at scale is also going to require systems (i.e. real technology) that can aggregate, process, and report on massive amounts of data.

Facebook’s “Ads” program, which also bears more than a few similarities to paid search, is starting to gain some traction too. And Facebook knows much of its future growth is going to depend on its ability to meet the needs of direct response advertisers. For that reason, it’s started looking to the search marketing community for guidance on how to best develop and then evolve its platform.  All Facebook reported that Facebook execs at last month’s SMX West (a search marketing conference) “expressed a deep appreciation for the sophisticated analytics SEM professional use to hone campaign performance at scale.”

All this reminded me of a 2005 blog post I wrote in response to criticism that search was too narrow a category for an agency to focus on exclusively and that it would ultimately be absorbed by larger brand strategies.

Back to the original question we were faced with [when starting Reprise Media] - of whether search is a big enough business for search engine marketing firms - it’s actually become irrelevant. SEMs haven’t had to migrate towards offering other ad programs because the market has actually migrated towards them instead. We’ve seen this manifest in bids on ads in RSS, bids on behavioral advertising, bids on the “automotive” category in Quigo’s AdSonar network…It’s like one broad pool of content networked together by advertising.

At this stage, you can add Promoted Tweets and Facebook Ads to that list. And given the parallels between the histories of search and social media, it seems obvious that SMM’s real growth is going to be tied to these paid programs. While digital agencies can continue to position themselves as experts in the services that have historically been associated with earned SMM (conversation monitoring, sentiment analysis, creation and management of social media profiles, etc.), it’s difficult to see how they can make the case that they’re best equipped to handle paid media as well.

And this is exactly what’s going to create the tension I previously alluded to. Digital agencies finally anticipated the emergence of a new category and took proactive steps to make sure the opportunity didn’t slip away. But given the way platforms are evolving, it’s clear that their search-specific counterparts are actually better positioned to manage SMM. It will be fascinating to see whether digital agencies continue trying to compete with partners for something that can no longer be considered a core competency, knowing the alternative is watching what could be massive amounts of revenue go somewhere else yet again.

Follow me on Twitter: @hershberg

Killing Two Birds: Why Profiles Aren't Just Key to Google's Success in Social, but Real-Time too

Fri, 29 Jan 2010 17:10:00 -0500

They certainly picked a questionable day to make the announcement, but as of Wednesday, Google Social Search is available to all Google users and it’s definitely a big deal. Marshall Kirkpatrick probably summed up the reason why best by saying:

This is a very big step. What’s your portal to the Internet: Google’s algorithmic search of the Web at large, or your social circle of people on Facebook? That’s the battle for the future that Google and Facebook are waging now, and Google Social Search is a big move.

Of course, the prerequisite for using Social Search is the creation of a Google Profile. These pages can include various pieces of information about a person, including companies worked for, schools attended and most importantly, links to social profiles created on other sites across the web. Google users who have added at least some of this information to their profile pages can now use Social Search to see a customized set of search results consisting of content created or shared by people in their social networks, including Twitter, Flickr, and Google-owned services like Gmail and Google Chat. I spent some time with it earlier this week and while Google’s record of my “social circle” (defined as friends and contacts) seemed pretty outdated (it included people I had stopped following on Twitter months ago), it’s a major step towards meeting recent calls for a service that allows our questions to be answered by our friends.

Needless to say, the ultimate success or failure of Social Search hinges on Google’s ability to get a significant number of users to create their own profiles — something it has struggled with in the past. Absent that information, it doesn’t have the ability to make sense of someone’s social circle. But what I think is perhaps less obvious, yet equally as important, is that Google’s chances of owning real-time search also depend on its ability to have users create a critical mass of Google Profiles. I think Google knows this and that we’ll see them make Profiles a priority in the future.

The Relationship Between Google Profiles and Real-Time Search

I’ve been very critical of Google since it launched its real-time search feature in December. For a company that obsesses over always offering a simple and clear user experience, the “Latest Results” section of a reply page seems surprisingly out of synch with the rest of the page’s content – almost as though it were implemented as an afterthought. Additionally, I’m often confused as to when Google is going to show real-time results for a given topic and even more importantly, why and how its decided whose content to feature. Generally speaking, I’ve found Google’s real-time results, particularly tweets, to be irrelevant and pretty mindless.

So, I was very interested in Technology Review’s interview with Google Fellow, Amit Singhal, the person responsible for Google’s ranking systems and who led development for real-time search. When asked about methods for determining tweet relevance, Singhal likened it to PageRank, the process Google uses for ranking web pages, saying:

“You earn reputation, and then you give reputation. If lots of people follow you, and then you follow someone–then even though this [new person] does not have lots of followers,” his tweet is deemed valuable because his followers are themselves followed widely.”

I’ve spent quite a bit of time thinking about this statement over the past couple of weeks and it makes so little sense that one of two things must be going on here. Google is either absolutely clueless as to how the process it developed for ranking web pages can be properly applied to tweets (possible) or Google is being as opaque about what it plans to do here as it is about pretty much every other aspect of its business (likely).

To begin with, when determining the relevance of a tweet, the absolute number of followers that user has is essentially a worthless metric. It’s basically the equivalent of saying that web pages with lots of links are inherently authoritative, regardless of the subject.

Singhal’s stated approach to ranking tweets also assumes that everyone is a generalist and that they can speak about any topic with the same amount of expertise when that’s obviously not the case. For instance, while I would put a lot of stock into what Paul Krugman, who has ~350K followers on Twitter, has to say about economics and politics, I wouldn’t turn to him for an opinion on music.

Google must find a way to account for the fact that tweets from the same user about different topics don’t necessarily have equal amounts of value. Looking at number of followers alone does not come close to accomplishing that.

Separately, I can’t understand why people (and companies) continue to make a distinction between reputation and authority on Twitter and reputation and authority in the real world — they are one and the same. If someone is a proven expert in her field or has firsthand experience with a given topic, shouldn’t we value what she has to say about it regardless of how many people follow her on Twitter?

Prior to signing agreements to have tweets included in Google and Bing search results, Twitter was basically an island, which made it very difficult, if not sometimes impossible, to match someone’s Twitter account with the rest of their social profiles. The combination of Twitter’s data feed and Google Profiles changes all that. Think about all the information about each individual user that Google now has the potential to thread together:

LinkedIn profile: Includes work history, schools attended, current location, links to other personal websites and recommendations from friends and co-workers.
Feed reader: Provides insight into the types of content I’m interested in consuming.
Geo-location information: Provides verification that I checked-in at a specific place or event and could therefore place higher priority on my firsthand experience. A huge improvement over the current hashtag “solution.”
Disqus profile: Blogs I moderate and those I comment on.
Last.fm, Pandora, Lala, etc profiles: History of types of music and specific artists I listen to.
Photo albums: Provides insight into the places I’ve been.
Etc, etc…

Google is the only company I can think of that is likely to give enough incentive for users to provide this information (access to Social Search) AND that has the ability to fully leverage it. As a result, Google will be able to index and then properly filter and rank tweets based on an aggregated and (nearly) complete picture of each user’s profile — not just the number of followers someone happens to have. That is how real authority and experience should be determined. And if that’s the case, there’s no way that even Twitter can rank tweets as well as Google can — it simply doesn’t know enough about each of its users.

Google’s history with social media absolutely sucks and past attempts to get users to create Google Profiles have resulted in very little success. But I am not ready to count Google out just yet. If it can properly communicate the benefits of creating a profile – which will require significantly more promotion than serving an ad to people googling “me” (literally) – I think Social Search will get some traction. And Google knows the profile information users share won’t just improve their personal search results, they’ll help Google improve a major component of its real-time index as well.

A couple of related notes:

The point has been made that Google’s Social Search is dependent on many of the services mentioned above making all of their data available to Google. I agree. Still, Google does not need agreements with any of these companies to index public profile pages on each of these sites. That is apparently what it’s currently doing with Facebook. When aggregated together, the information contained on those public pages will generally provide enough insight to give Google a more complete picture of the person behind each Twitter account.

Also, I don’t believe that Twitter search and real-time search are synonymous with each other, though this post probably reads that way. That is because Amit Singhal was discussing how Google ranks tweets exclusively in the context of the real-time web. As Google improves its ability to determine the relevance of tweets, it’s likely that they will be featured in broader search results as well.

Follow me on Twitter: @hershberg

Lesson From Google: Corp Accounts May Not Be Twitter's Golden Egg

Tue, 12 May 2009 00:00:00 -0400

Often when an online start-up’s revenue model is unclear to some or most people, the immediate assumption is that the answer must be corporate licenses or professional accounts. This has been the discussion around Twitter for some time and now I’ve been reading the speculation about Bit.ly as well.

This came into focus for me recently when I re-read a Business Week article from 2000 about Google. I was at Ask.com at the time and, like Google, we had two sides of the business, corporate licenses and a consumer site. The belief (and reality) was that Wall Street valued B-to-B revenue potential more highly than consumer revenue potential, so that side of the company received the bulk of the resources. Ask went so far as to position the consumer site as a showcase for the corporate technology. Some execs simply didn’t think there would ever be a business there because the rev opportunity wasn’t obvious. (Eventually Ask sold the B-to-B component for 3 or 4 million bucks, while its consumer business went for billions.)

When reading the Business Week article, it’s obvious that everyone — including Sergey Brin — thought that Google’s opportunity was in corporate search. But management luckily proceeded with developing AdWords and the rest is history.

This isn’t to say that corporate deals can’t be lucrative, but companies ought not to limit themselves to bigger opportunities, if recent history holds true. It’s like 2000 all over again and we’re going to look back in 10 years and laugh at how people viewed Twitter and others — and laugh at how they were blind to the bigger picture.

Google Piggybacks Twitter Search, Gets Closer to Real Time (UPDATE)

Mon, 23 Mar 2009 00:00:00 -0400

There is lots of talk today about Ad Age’s article “Media Giants Want to Top Google Results” which focuses on big media companies being annoyed that they aren’t getting higher rankings in Google. While I agree that Google generally does a pretty poor job of ranking news stories, I think the issue isn’t Google’s so much as it the result of poor SEO. But that’s a topic for another day. What is far and away the most significant aspect of the story is embedded in this passage:

“Search results for “Gaza” on March 20 began with two Wikipedia links, a March 19 BBC report, two video clips of unclear origin, the CIA World Factbook, a Guardian report and, most strikingly, a link to Gaza-related messages on Twitter.”

The “link” is to Twitter Search and you can still see it in the results today: http://bit.ly/4pssNi

I decided to search for some other keywords specific to time-sensitive events and information and found that Twitter Search is being indexed in a number of instances:

March Madness: http://bit.ly/12z9wB

SXSW: http://bit.ly/CH9Q

If Google doesn’t think Twitter provides any real differentiated or valuable benefit in search and is in fact, “poor man’s e-mail” as their CEO Eric Schmidt put it, they have a funny way of showing it. It’s weird to see them featuring links to another engine’s search results on their own search results page. The twist here is that Twitter has generally not done much to make their content followable or easily indexed by Google’s spiders. This explains Google’s use of Twitter Search to generate results.

As we’ve pointed out before, Google clearly hasn’t addressed “real-time” search on its own, so this is a way of laying the groundwork to deal with it near term. Whether that means simply using Twitter as their real time search or studying them to initiate their own rival (perhaps based on FriendFeed, which is stocked with ex-Googlers) Google is showing that they are keenly interested in how to incorporate real time results into their search service.

Keep in mind that it still takes Google over an hour (compared to first mention on Twitter) to get a breaking story like Lance Armstrong’s crash on the front page of Google News (Sports section, even) or on the main SERP’s page in connection with searches for “Lance Armstrong.”

UPDATE:

TechCrunch alliteratively reports today that Twitter has tweaked it’s title tags (try saying that 5 times fast) for user profiles, allowing them to better rank on Google search results. It’s a step closer to opening up a users influence beyond the number of followers they have, as I predicted:

“To this point, the “Twitterverse” has pretty much been living in a bubble – one where all updates are made and consumed within Twitter and its associated applications alone and where some believe that having 10,000 followers means that you are an authoritative or influential figure. While I believe that is, in fact, the case for some (and I won’t diminish the value in having a large following), the volume of traffic some individual Twitter updates will receive from organic search will dwarf what they are typically able to generate from Twitter alone. It also means that Twitter accounts with fewer followers – but with something important and to say on a given topic – will start to see some increased attention as well. Much like many of the early bloggers did. And when that happens, the whole question of influence and authority will once again be turned on its head.”

Facebook May Be Traffic Driver, but Won't Reap Search Dollars

Tue, 17 Mar 2009 00:00:00 -0400

Why Social Media is Complementary to SEM

I’m a big believer in the notion that search marketing and social-media marketing go hand in hand with one another. I’ve seen firsthand how they interact on search results pages and how insights from one channel can have an impact on the marketing efforts for both. What does seem odd to me is that some marketers and observers seem to view search and social media as oppositional either-or propositions.

Now, knowing the growing impact of social media, it was only a matter of time until we started seeing headlines like the recent Ad Age article titled “Facebook Sending More Traffic Than Google to Some Sites.” It’s an interesting article and well worth reading, but what really got my attention right off the bat was this sub-headline, “Will Search-Marketing Dollars Also Shift to Social Media?”

The answer to that question is no, they will not — at least in the short term. However, SEO may become a bigger factor in maximizing social media’s impact in a search environment as the channel begins to mature and find a way to successful monetization through marketing.

Granted, the massive number of consumers using social media platforms presents a huge opportunity for marketers. The problem right now, however, is that most social networks currently offer advertising programs that do little, if anything, to align the interests of consumers, advertisers and the platforms themselves.

Social networks do drive huge amounts of traffic, but the campaigns we — and many other marketers — run typically don’t involve paying a site money, largely because the paid ad programs they have offer no real incremental benefit to our clients (through data, targeting, etc.) above and beyond what we’d get for reaching out to people in a more direct fashion.

It’s a phenomenon that can be seen in the latest Forrester Research report on social media. Forrester found that social media marketing budgets are currently incremental at best (though they are expected to increase substantially.) The real spend on social media occurs in places that can’t be measured by looking at money coming into social platforms. Rather, it’s in budget that’s used to optimize brand profiles, initiate and monitor conversations, and to spread access to other assets like television ads on sites like YouTube.

To see just what I mean, I think it’s illustrative to add context that tells us why some sites are benefiting from visibility on Facebook in comparison to Google. The specific sites the article highlights are PerezHilton.com, Dlisted, CafeMom, Evite and video site Tagged.com. As the article notes, there are a variety of reasons why Facebook has turned into a big traffic-driver for each of them compared to Google.

CafeMom has a Facebook fan page, which undoubtedly drives traffic back to its site. As for Evite, it seems fairly obvious that people don’t typically visit a search engine like Google or Yahoo to see what events they’ve been invited to. More likely, Facebook is being used to bring a group of people together around a single event (there are currently 413 of them that show up when doing a search for “Evite” on Facebook events) and then clicking-through from Facebook to an Evite page to RSVP after they’ve learned about the event. Lastly, Tagged.com benefits from the popularity of video clip posting and sharing within Facebook – many of those users ultimately end up visiting the site where the original video was posted.

I suspect Perez Hilton and Dlisted appear on this list for similar reasons. People who are fanatical about celebrity gossip know what sites they’re going to visit every day (or many times a day) for the latest news. And when they see something of interest, they’re undoubtedly sharing links across Facebook, which ultimately drives some of the people they’re connected to back the original site to read the full story.

In comparison, when it comes to generating organic search traffic, gossip sites suffer from the same problem as other news tabloids do — specifically, witty headlines that resonate with users (e.g. “Life’s a Beach” headline for a post about Paris Hilton and some guy named Doug Reinhardt on the beach), but mean nothing to search engines trying to determine relevant content. As a result, these stories typically struggle to rank well organically on sites like Google which in turn does not send significant volumes of visitors to these sites.

With all that in mind, if you agree that the Facebook traffic the article is referencing was primarily driven by shared links, then Facebook isn’t benefiting from it in any way. There is no paid media component to talk about and therefore, no dollars currently being spent in search that could possibly go towards this effort in social media. Outside of fees that could have been paid to an agency, it’s basically free traffic. I don’t believe that Perez Hilton, for instance, is making media buys on Facebook, but people share links to his stories like crazy and significant traffic is being driven to his site as a result.

I would also bet that there is some percentage of traffic that was ultimately driven by Facebook, but actually originated from a search engine. In other words, someone went to Google, found a link to a Facebook profile, and then clicked on a posted link and ultimately through to a company’s website. In this instance, search and social media are complimentary, not competitive.

Ultimately social media properties like Facebook and Twitter will be indexed by the major search engines on a more regular basis, filling the need for “real-time” search and offering more relevant content. As this happens, the traffic these sites drive across the web will be much, much greater than what we’ve seen to date. In the short term, I don’t believe that will ultimately equate to media dollars being reallocated from search to social-media properties, but you could make a case that it leads to a greater investment in initiatives like SEO to tie these together in an more meaningful way.

In the long term, all of this might change as social media platforms discover ways to monetize that brings marketers and users together to the benefit of all of the parties involved.

Follow me on Twitter: @hershberg

Losing Control Can Be Good For Your Brand and For Social Media

Fri, 13 Mar 2009 00:00:00 -0400

Social media is proving very complicated for marketers to navigate. Thus far, in the relatively short history of the medium, there is a lack of agreement on such basics as what “Social Media Marketing” actually is, how success should be measured – even whether or not marketers are welcome in social networks at all. But, with the incredible growth of social media properties marketers are eager to join in and reach consumers.

Marketers have generally entered these networks in one of two ways:

Some buy display or text ads that sit around the outside fringes of social interactions, essentially treating social media sites like any other online publishing property. Other marketers choose to participate directly in the activities these sites are designed to foster.

We believe the latter is the more powerful choice because it harnesses what’s interesting about social media – the direct connection. However, by entering into conversation, you give up a measure of control.

“Control” is a key concept here – more than one entity has found itself washed up on the rocks due to the siren lure of control. We can look at the music industry which has seen its main source of income eroded in part due to its insistence on controlling whether, when, where and how much to charge for digital music delivery.

Then there are brands who similarly feel that engaging on a social media platform like Twitter or Facebook is to cede control of their messaging and identity. In fact the opposite is true – allowing the conversation to happen without a way to respond and engage as well as to listen is to leave your brand bound and gagged.

This was the Skittles experience when they pointed the front page of their website to a Twitter search feed that aggregated every mention of their brand. The jokers quickly showed up to graffiti all over what had become Skittles’ homepage with disparaging tweets, leaving the brand with no way to address this other than by moving the front page onto a new site.

Finally there are the social media properties themselves who have to wrestle with the choice between letting brands interact organically with their audience and finding a way to turn those activities and relationships into revenue.

For instance, my company initiated a social media engagement on behalf of one of our clients in a free-to-join online community of blogs, journals and diaries that also included some social sharing aspects. We determined that this site was a good fit for our campaign because of the audience’s existing interest in our client’s brand. We set up some profiles and, (with full disclosure of who we were, and what brand we were representing), entered into conversations and shared media with users. We were careful to make sure that nothing we were doing fell outside of the site’s terms of service agreement.

The response from the platform owners, once they figured out what was happening, was to have one of their salespeople contact us to talk about advertising opportunities on their site. When we demurred, their next move was to contact our client and threaten legal action unless they received a piece of the action. Ironically a week later our client’s sites were a “featured community” on the platform homepage due to the success of the outreach and socialization. Our engagement with the platform ended shortly afterwards.

The underlying issue was that in exchange for paying them they were offering nothing else – not better targeting or metrics or functionality. They did offer ad space but that wasn’t what we wanted, or what would offer the most benefit to their community and our client. I’ll grant that they can do what they want with their own platform but some folks would call that a shakedown. In their ham-handed quest to control this interaction, they ended up closing the door to a potential revenue source.

The problem here is that as social media marketing becomes more focused on engagement, it becomes harder for sites to figure out how to make money from the brands and marketers on their platform. Similarly, it can be tricky for marketers to point to a direct dollar-to-response relationship here as they can with a search ad or even a banner advertisement. In fact, for that reason, I believe that social media spending is significantly underestimated. The most effective campaigns do not involve paying a site money and are thus rarely counted.

Another example of this is what’s happening on platforms like Twitter, YouTube and Facebook every day. Brands can engage on each of these in a meaningful way at low — or no – cost. YouTube offers paid alternatives that allow brands to have some added control over their content presentation such as branded YouTube channels so for the marketing dollar there is a clear functionality being added. Neither Facebook nor Twitter have gone to anything like this (though Facebook does allow for paid advertising with some level of interactivity like polling) but I don’t think it’s far in the future for either site.

It’s easy to forget now that these were once considerations that search engines had to navigate through in the days before paid search advertising emerged. At the beginning of the search engine era, marketing was accomplished organically and engines struggled to find ways to monetize the traffic they were sending sites – sometimes going so far as to consider removing advertisers who declined to buy display advertising from their indexes so that they no longer ranked well for certain search terms.

Part of what search engines offered to attract advertisers to their paid search platforms was access to data, and the ability to target in a variety of ways that would have been more difficult to do organically outside their walls. Most importantly, search engines developed a way of making sure that the advertising opportunities they offered marketers aligned with the way consumers were already using their sites, rather than trying to change behavior instead.

In a similar way, if social media sites want to find a way to monetize engagement, there needs to be some added value for the marketer. What that might mean for platforms is giving up some control over data (something that Facebook has been wrestling with) or the type of interactions that marketers are able to take part in.

Eventually search engines found the right balance between commerce, control and user-friendliness, a balance that I believe social media sites will eventually strike. There will be some false starts to be sure but there is much to be gained for all parties –marketers, social media platforms, and users – in getting the balance right. And yes, that means that advertisers and platforms both will have to let go of the need to control every element of every interaction.

Does Twitter Represent the Future of Search? Or is it The Other Way Around?

Tue, 20 Jan 2009 00:00:00 -0500

An interesting online debate caught my attention this past weekend.

It started with Danny Sullivan’s Why Don’t Google & Yahoo Offer Twitter Search? Danny’s point is that people are increasingly turning to Twitter — rather than Google and Yahoo — when looking for information on breaking news. This is a trend we highlighted in our 2009 predictions post at the end of last year. For proof of Twitter’s real-time search capabilities all you need to do is look back at last week’s plane crash in the Hudson to see where the news initially broke. People were talking about the event for several minutes on Twitter before the first mentions of it on Google News or any major media site, for that matter.

With that in mind, I agree with Danny when he suggests it’s important that Google and Yahoo develop ways to search Twitter. Where we (may) disagree is over exactly what that would look like. Danny seems to be suggesting that the engines develop search services that are dedicated to searching Twitter. My own take is that while it’s important for Google and Yahoo to consider how Twitter could compliment their broader search services, it would be a mistake to create something solely Twitter-centric.

Why Don’t Major Search Engines Offer Twitter Search?

For starters, that has already been addressed by Summize (acquired by Twitter last year and re-branded Twitter Search). Its search functionality hasn’t been integrated directly into Twitter yet, but anyone can use the site to search all Twitter updates. There are also third-party tools like Power Twitter for Firefox that integrate Twitter Search into the main Twitter page.

Beyond that, most people generally do not want to use several different search engines when looking for products, services, and information – they want different types of results (images videos, and yes, breaking news headlines) brought directly to them on a single results page. That’s the whole idea behind Universal Search. When there is breaking news Twitter updates could be treated just like news results which sometimes show up above organic listings.

Regardless of what the “right” implementation would look like, however, Danny’s larger question is why hasn’t this been addressed yet?

John Battelle’s take is that it’s all about competition:

“The reason there is not a “Twitter search” from Yahoo or Google is because both companies want to own Twitter, or at least, they want to own the phenomenon of real time search Twitter represents. If they were to create a Twitter search, it would validate Twitter and give the company way too much power.“

Also:

“And Google is likely viewing Twitter as a competitor, and is probably noodling the addition of Twitter-like functionality to Blogger (if it hasn’t already, I’m not following the service too closely). The reason? TweetSense. I am certain Google wants AdSense to be TweetSense, and I am equally certain that the Twitter team will want to build its own version of a scaled ad platform that matches consumer intent, as declared through Tweets and search, to marketers’ paid listings.”

While I don’t disagree with John’s POV, particularly as it relates to the potential advertising opportunity Twitter inventory could represent, I think it would be a mistake for both companies to try to develop Twitter competitors. Yahoo is moving in the direction of fewer projects and it’s unlikely they would put the adequate amount of resources behind the project. Google, on the other hand, is well-equipped to issue a challenge in theory, but they have a very questionable record on projects outside of search and it’s reasonable to wonder whether they could be successful. This is essentially what they’ve tried to do with Knol in response to Wikipedia’s popularity and the results have been mixed at best. Similarly, they haven’t put too many resources behind Blogspot which still attracts most of its users because it’s no charge to use it.

On the other hand, an aggregator of Twitter results similar to Google’s Blog Search or Google News functionality would have potential to be successful, as a way of filtering Twitter posts from universal results. Just as they checkmated Technorati with blog search, they could use the power of their huge number of users to overwhelm Twitter Search. So why haven’t they done something like this yet?

On a Collision Course

My personal view is that Google and Yahoo haven’t come up with Twitter solutions simply because they did not initially understand what Twitter represents from a search perspective. Twitter themselves may have failed to grasp this initially, before Summize came into the mix. It’s unlikely that either Google or Yahoo saw Twitter’s potential as a search engine. So, it’s only now that they’re probably starting to put adequate resources behind developing a strategy in this area, though I have to believe that it’s become a very high priority, particularly for Google. That’s where this issue gets really interesting – particularly for someone like me who views social media through the lens of search.

There may in fact be a sort of online game of chicken happening between Google and Twitter. As Battelle points out, Google wants to be the one to serve ads on Twitter’s platform if indeed that is the monetization direction Twitter decides to follow. Twitter understands this, but they would like to develop and reap the potential profits from what Battelle calls “TweetSense” themselves. The bet from Twitter is that they will continue to pull the audience for breaking news away from Google quickly enough so that Google will have to capitulate to stay competitive. Google would like to keep this audience but their bet is that Twitter wants the big boost in users that Google search results would bring and would be willing to share some of the ad profit to do so.

This may be what keeps Google from enacting a version of Twitter Search soon. Why build up Twitter’s platform only to see them monetize it without Google’s involvement? Keep in mind the above is all pure speculation.

Open the Fire Hose

Twitter’s growth has already been pretty phenomenal – its recent use on CNN and mentions on ESPN.com and in the New Yorker would seem to indicate that it’s beginning to go mainstream. Still, relative to the 200 million plus people currently online in the U.S. , Twitter’s user-base is relatively small – recent estimates suggests there are around 6 million people currently signed up for the service, with most of them only ever sending out a handful of updates. Most of the “tweets” even active Twitter users send are only viewed by their “followers” (the occasional retweet notwithstanding), so at best, a user’s most popular updates are viewed by tens of thousands of people. More likely, their updates are viewed by dozens or possibly hundreds of people.

Showing Twitter updates in search results by the major search engines means that users will no longer have to exclusively rely on a large group of followers for distribution of updates – Google, Yahoo, and Microsoft will effectively become distribution valves for Twitter conversations (much the same way as Twitter has represented a distribution source for content created in other areas on the web through link dissemination). It’s at that point that Twitter usage will really begin to tip as people without Twitter accounts discover useful and interesting information in these results.

From a marketer’s perspective, this means that companies who have been successful using Twitter as a standalone social media strategy will need to recognize that those efforts will need to evolve so that they’re part of a more integrated effort – one that likely includes Facebook fan pages, corporate blogs, branded YouTube channels, etc – that ties back to one overarching corporate goal. Social media properties continue to dominate search results pages – for better or for worse, the amount of presence a marketer has in those results oftentimes represents the aggregation of the company’s social media efforts. SEO will become a core component of a successful Twitter strategy.

It’s worth noting that this is a development that has significant relevance to recent debates about Twitter and authority. To this point, the “Twitterverse” has pretty much been living in a bubble – one where all updates are made and consumed within Twitter and its associated applications alone and where some believe that having 10,000 followers means that you are an authoritative or influential figure. While I believe that is, in fact, the case for some (and I won’t diminish the value in having a large following), the volume of traffic some individual Twitter updates will receive from organic search will dwarf what they are typically able to generate from Twitter alone. It also means that Twitter accounts with fewer followers – but with something important and to say on a given topic – will start to see some increased attention as well. Much like many of the early bloggers did. And when that happens, the whole question of influence and authority will once again be turned on its head.

Send In The 'Clouds'

Mon, 28 Apr 2008 00:00:00 -0400

In less than a decade, search engine marketing has grown from a little understood and even derided concept (“who would ever want to pay to be in search results?”) into the single biggest sector in online advertising. With all that change and upheaval, it’s only natural for advertisers to start asking: What’s next for search?

In many ways, when you ask that question, you can’t help but focus on the industry’s largest player. With Google commanding 70 percent of the market, all eyes are on the biggest kid in class in order to figure out where we’re heading next. So what is Google doing?

The company continues to expand the list of services it offers to users at a torrid rate. In doing so, it’s started to resemble the portals that it displaced in the late ’90s. One of the reasons for Google’s early success had been its exclusive focus on search. And now it sells TV ads and offers word processing software? What’s the connection?

It turns out that change costs are not high in search—if I don’t get what I want on Google, then Microsoft or Yahoo are just a click away.

Thus far, Google has maintained its lead by providing a superior search experience. But the difference between its results and the competition’s is shrinking. At some point, either one of their current companies or someone around them is going to catch up. In order to keep up the growth rate and defend its turf, the company needs to find ways to grow its relationship with users beyond search, and lock them in.

Enter a broad range of tools that not only give users valuable and useful services—for free—but also provide Google with insight into user needs:

Personalized Search, Google Reader and iGoogle personalized homepages offer the company a view into a user’s individual content preferences.

Google Product Search and Checkout provide one-click checkout on thousands of retail sites, while giving Google access to detailed transactional information and crucial data about how search activity links to pur- chase behaviors.

Google’s Web-based applications, including Documents, Spreadsheets and Presentations, give the company a foothold into information that, until recently, was stored primarily on users’ desktops and potentially loosens Microsoft’s hold on consumers.

YouTube and Picasa allow users to store and share multimedia clips.

Google Maps and Earth allow users to navigate their world, in exchange for rich data about locations.

Google is also planning to launch a service called Google Health that will allow users to store and access their personal health records from any computer.

As users adopt more of these services, Google is building a large collection of the world’s data that some affectionately refer to as the Google Cloud. Once your data is in the “cloud,” that’s when things get interesting.

Despite its mammoth market share and broad range of services, less than 5 percent of Google’s users visit the search site today for anything other than search. It seems that users simply equate Google with search, and only search. So instead of bringing users to the cloud, Google is focused on bringing the cloud to users.

This philosophy is apparent in strategic moves such as Google’s recently announced alliance with Salesforce. Through this partnership, elements of the Google App suite—word processing, chat and e-mail—will be integrated directly into the Salesforce interface. This gives Google access to an audience of millions and puts its useful applications into action.

Additionally, Google has placed a lot of resources behind Google Gadgets—small, self-contained applications that can easily be syndicated to any blog or social network. These tools allow users to place doorways to any Google service or application in the places where they find them most useful.

Despite the impact of both of these tools, Google’s Android operating system for mobile phones may be the product that finally brings together the giant’s broad suite of services. All Android-enabled phones will undoubtedly have out-of-the-box integration with virtually every Google application. The value of having access to your entire “Google Cloud” in your pocket at any time may finally cause users to adopt these applications at a higher rate. After all, it’s not all that hard to imagine:

Accessing Google Health while sitting in a doctor’s office during your first visit and being able to pull up and easily share your medical records.

Taking and uploading mobile pictures directly to a Picasa account, posting mobile videos to YouTube or blogging directly to Blogger from your phone.

Once Android-enabled phones have conditioned users to view Google as the central point for storage and access to all their data, they are more likely to begin using more of the search giant’s services. That doesn’t mean that another engine couldn’t catch them—just that the stakes will have been raised once again.

The BusinessWeek Debate

Mon, 17 Sep 2007 00:00:00 -0400

Douglas McIntyre of 24/7 Wall St. and Silicon Alley Insider’s Peter Kafka have been debating the reasons why BusinessWeek has not been able to replicate its offline success in the online world (according to comScore, BusinessWeek.com trails other finance sites, including Forbes, TheStreet, Morningstar, Bloomberg, CNBC, and Reuters, in monthly page views). For those who haven’t been keeping score at home, McIntyre started things off by suggesting that BusinessWeek’s problems stem from a lack of regularly updated content, BW’s failure to use video on its homepage effectively, and overall site usability problems. Kafka, a former Forbes.com employee, thinks that BW’s page views have been decreasing simply because the site doesn’t have significant distribution.

So, who’s right? Well, actually, they both are. Here’s why:

McIntyre points out that BusinessWeek undoubtedly has the staff to develop unique, fresh content on a daily basis, yet many of its top stories are outdated and its most recent headlines have simply been syndicated from the AP. Needless to say, users are not going to return to a site that doesn’t feature original content with any degree of frequency – particularly in a category like finance, in which news is constantly breaking. A lack of unique content also gives bloggers and webmasters little incentive to link to BW’s pages. This leads to a loss of direct traffic, but more important, it impacts the site’s search engine rankings. Without a significant number of third-party links from authoritative sources, a site cannot count on receiving a meaningful volume of traffic from major search engines. It should be noted that this is where site usability becomes a factor as well: AP articles can be found on so many different websites that webmasters often decide which site they’re going to link to based on the user experience it provides. If BusinessWeek’s usability is poor, it cannot count on being linked.

At the same time, some of BusinessWeek’s strongest competitors are affiliated with other well-trafficked sites. In addition to offering tons of unique content, these competitors are often integrated really well into their parent or partner sites. CNNSI, for instance, drives a huge amount of traffic to CNN.com. And CNN.com drives tons of traffic to Fortune. All of the sites in Time Warner’s portfolio benefit from being part of the family. There’s no doubt that many other finance sites that belong to larger parent companies are benefiting in a similar way. BusinessWeek’s parent McGraw-Hill owns almost no online properties – and none of the ones it does own are very popular. This is where Kafka’s lack of distribution theory really makes sense. Yes, BusinessWeek can strike distribution deals with the major portals, but there is a real advantage to being integrated into a broader network of sites.

It’s worth noting that BusinessWeek.com’s Editor-in-Chief, John A. Byrne, responded in a comment to Kafka’s post by stating that the comScore numbers don’t reflect reality - BW’s internal numbers suggest that they had four times as many page views in August than comScore reported. That may be true, in which case, there’s even more upside for the site if it can address each of the shortcomings McIntyre and Kafka have highlighted.

Don’t Just Consider the ‘Last Click’

Tue, 12 Jun 2007 00:00:00 -0400

According to a new study released by the Atlas Institute, 90% of conversions are driven by overlapping ads across multiple sites rather than by the search ad that leads to the last click. All too frequently, said Atlas, credit for the sale is inappropriately given to search.

“Right now when you look at how advertisers are evaluating their campaigns, when a sale appears on their Web site, they credit the last ad or click with the entire credit for that sale. And more often than not that last click came from Google,” said Young-Bean Song, vice president of analytics for Atlas. “So wow-holy-cow, it looks like Google is responsible for the vast majority of sales on the site. The consequence of that is month after month, they buy more Google and cheap advertising space.”

The report, titled “Overlap’s Impact on Reach, Frequency and Conversions“, goes on to critique marketers that depend too heavily on paid search. Atlas claims that advertisers should re-evaluate the effect of overlapping advertising, from TV, Radio, Print, Banner, etc, on paid search performance.

As co-founder of a search marketing firm and long-time search industry advocate, I take issue with the Atlas study (surprise surprise). To be sure, I don’t disagree that overlapping forms of advertising can impact the success (or failure) of a paid search campaign - 80% of online users start at a search engine, but it would be foolish to suggest that they do so by random coincidence. In all likelihood, the searcher saw an ad elsewhere that inspired him to seek out more information - a TV commercial, an online sponsorship, a print ad, a billboard, or perhaps just a conversation with a friend. All forms of advertising drive people to search engines - on that fact, there is little debate.

What I do disagree with, however, is Rob Hof’s interpretation of the Atlas study. Based on Atlas’ finding, Hof beleives that advertisers may be spending “too much on search ads.” He suggests that marketers will soon act on Atlas’ results “by shifting some of their spending from search ads back to banner ads.” Hof points to Google’s recent Doubleclick acquisition as further verification that banner ads are being under-valued.

But Hof is missing a key point: the question provoked by Atlas is not whether advertisers are spending too much on search, it is whether they’re spending enough money everywhere else. If advertisers shift dollars away from search and into other ad formats, they won’t be able to effectively convert the incremental number of users being driven online. To increase “overlapping” ad spend at the expense of search would be like building a skyscraper without a doorway - it might make your brand more visible, but without a key point of entry, it’s effectively useless.

What’s most important is ensuring that a search marketing campaign compliments other offline and online advertising campaigns. If done properly, we’ll all get the credit we deserve.

Blame It (and Everything Else) on Quality Score

Wed, 06 Jun 2007 00:00:00 -0400

This week’s SMX Conference featured a panel called “Inside the Auction Black Box.” Not surprisingly, most of the panelist’s presentations – and nearly all of the questions from the audience – focused on the search marketing community’s collective inability to understand exactly how Google’s Quality Score (and all the associated mechanics of the ad ranking system) works. Questions ranged from “Why did my ad’s minimum CPC go from $.25 to $5.00 when it was getting a 10% click-through rate?” to “Are my landing pages being crawled?”

What was somewhat surprising, however, was the amount of time spent discussing how the black box impacts the type of support Google provides to its advertisers. And I couldn’t help but walk away from that session feeling that my suspicions had been confirmed - that the account teams at Google either have no better understanding of how their ad ranking system works than the rest of the search marketing world does OR they’ve been advised that, when in doubt, blame the unexplainable on Quality Score.

For example, for the past few weeks we’ve been managing an AdWords campaign for a local advertiser. His keyword list, consequently, is extensively populated with local “tail” terms. Not long after the campaign launched, a high percentage of keywords were deactivated due to low quality scores - which we pretty much expected to happen. To our surprise, however, dynamic keyword insertion wasn’t working for many of the city names that we wanted to feature in the ad creative. The instances when it was working seemed to be completely random.

We reached out to the folks at Google to see if they could help us address the issue. Nearly two weeks after opening a help ticket, we received their formal response:

“You’ll recall that we spoke specifically about keywords like ‘XXXX,’ ‘YYYY,’ and ‘ZZZZ.’ These keywords are not dynamically inserted into your ad text because their corresponding Quality Scores aren’t high enough to qualify for keyword insertion.

Maintaining high-quality ads for both users and advertisers is important to AdWords. Your keyword’s Quality Score reflects your clickthrough rate (CTR), plus your keyword, ad text, and landing page content.

This quality standard can affect your ads and keywords using dynamic keyword insertion. Therefore, if a keyword’s Quality Score is low, the keyword won’t appear in the ad (we’ll insert the default text instead). This ensures that users see relevant keywords in a dynamic keyword insertion ad, so that they continue to see relevant ads overall.

To learn how to improve the quality of your ad text, please visit https://adwords.google.com/support/bin/answer.py?answer=27648&hl=en_US.”

Needless to say, I wanted to see how Google suggested we could improve the quality of our ad text, so I visited the url they had provided us with.

Unbelievably enough, Google suggests the following:

“Review your keyword list to choose your ad title. Find keywords with the highest number of clicks or impressions. For example, if the keyword phrase ‘online advertising’ is clearly generating the most clicks and impressions in your account, use this term in the title of your ad. This is an effective way of increasing clickthrough rate because users can see immediately that your ad is relevant to their query. Also, any keywords you include in any part of your ad text are automatically highlighted in bold type on Google, when a user enters the keywords as part of their query. This helps draw the user’s attention to the ad.”

So, the best way for me to increase the quality of my ad is by featuring the keyword that the user searched for in my ad copy? That would be great were it not for the fact that I was just told that my ad’s Quality Score wasn’t high enough to justify using dynamic keyword insertion to feature the keyword in my ad copy. How else can I make sure that user keywords are always featured?

Well, according to Google:

“To help ensure that your ad appears for a specific keyword and includes this keyword in the ad text, please manually create the ad. Such ads that do not use keyword insertion are considered ’static text ads.’ The static ad you create can appear with your specific keyword when your dynamic ad is not eligible to appear with that keyword. “

Forgetting for a moment that creating tens of thousands of “static ads” is a complete pain in the ass, I’m having a hard time following the logic here. On the one hand, Google is suggesting that the use of dynamic keyword insertion on ads with low Quality Scores may cause users to see “irrelevant” ads. But if I manually create a static version of the *exact* same ad that was previously deemed irrelevant, users will suddenly find it relevant? Right.

History Lesson For Mahalo

Thu, 31 May 2007 00:00:00 -0400

Jason Calcanis officially launched his “people-powered search engine,” Mahalo, yesterday.

“Mahalo is the world’s first human-powered search engine powered by an enthusiastic and energetic group of Guides. Our Guides spend their days searching, filtering out spam, and hand-crafting the best search results possible. If they haven’t yet built a search result, you can request that search result. You can also suggest links for any of our search results.”

Mahalo’s press release features a Q&A section, wherein it outlines the differences between the company’s business model/processes and those of some other “comparable” companies, including About.com, DMOZ, Yahoo Directory, and Wikipedia. Interestingly enough, there’s no mention of the company that, in my mind, most closely resembles Mahalo – Ask Jeeves.

I worked at AJ from 1998-2002, during which time we employed over 100 human editors. Those editors – who, btw, were all well-versed in their assigned vertical categories – were responsible for hand-selecting the best answers to the site’s most frequently asked questions on an ongoing basis. The thought was that 80% of the people asked the same 20% questions all the time. By using humans to direct users to sites that most effectively answered each question, we’d be able to ensure the web’s most relevant search experience.

Needless to say, Jeeves’ original business model failed for a variety of reasons and I suspect that, based on Mahalo’s processes as they exist today, the new engine will likely suffer a similar fate. Here’s why:

Content is being created at way too fast a place to ensure that the “best” answers today will be the best answers tomorrow. Given the recent explosion in CGM, etc, this is a far bigger issue today than it was seven or eight years ago. It’s unrealistic to expect that Mahalo’s Guides will reassess the search results they’ve created on a regular basis.
The company is only as scaleable as the number of people it can hire (i.e. there’s little to no technology leverage). The more successful Mahalo becomes (as defined by the number of queries it receives), the more content it will need to create. The more content it needs to create, the more people they’ll need to hire. As Danny Sullivan notes in his post on Mahalo,

“Ask’s problem was scaling. Having so many editors cost money. In contrast, Google’s link-based automated approach provided good relevancy for both popular and unusual (or long-tail) queries. Over time, the machine has reigned supreme when it comes to the major search engines. Yahoo’s human-powered directory has been buried in various ways over the years, while Microsoft once heavy-reliance on human editing of top results was long-abandoned in the technological chase after Google.”

Granted, Calcanis admits that Mahalo is not intended to be a “google killer”. But even in competition for a single percent of search market share, I think they’ll run into problems competing with algorithmic-based search engines. It’s no coincidence that Ask’s new ad campaign claims, “The Algorithm Killed Jeeves”.
Yesterday, Calcanis asked, “Why not build a Reuters or AP organization to handle 24 percent of searches.” Why? Because winning – or even competing – in the search game isn’t about finding the best answers to the 20% of most frequently asked questions — the difference lies in each engine’s ability to find the most relevant answers for the remaining 80%. Google recognized that from day one, which is one of the many reasons why they’ve come out on top.

Calcanis understands Mahalo’s scalability issues and has decided to backfill long-tail searches with results from Google. This certainly provides a better overall user experience, but once again history would suggest that it won’t go far enough. Ask Jeeves tried backfilling results from engines including About.com, AltaVista, Excite, Infoseek, and Webcrawler, Direct Hit, and finally Teoma. The problem was, backfilled results were always treated secondary to any possible human-edited match, which meant that the most relevant answers were often buried in the back pages of search engine results.

Not long after acquiring Teoma, Ask dropped its “human” element and decided instead to feature only algorithmic search results. If Mahalo continues to lean heavily on the human-powered model, I predict it will eventually come to the same realization that Ask made in 2002. Especially with the emergence of image, video, audio, and user-generated content, Mahalo will have an extremely hard time maintaining relevancy. Though Mahalo might reach a balancing point between ad revenue and operational costs, I predict that it will never generate a loyal user base that extends far beyond Calcanis’ circle of friends.

Panama’s Indirect Impact: Will We Finally See a Two Horse Race?

Thu, 01 Mar 2007 00:00:00 -0500

On Monday, Comscore released data on the short-term impact of Panama on Yahoo’s performance. From the release, “ComScore data show that the recent introduction of Yahoo!’s new search marketing ranking model is already having a positive impact on the click-through rates for Yahoo’s search advertising.” They report that click-through rates on paid search ads have risen by 9% since Panama’s official launch on February 5th.

Though it’s still WAY too early to assess Panama’s long-term effects, the immediate CTR increase has many industry observers hopeful about Yahoo’s overall financial performance. I’m surprised however, that few have mentioned two additional factors that are critical to the effective monetization of those clicks. They are:

Geo-Targeting

Both Google and MSN have offered Geo-targeting for years, giving both engines a significant advantage over Yahoo. With Panama, however, Yahoo has arguably surpassed Google and MSN with more sophisticated targeting mechanisms and nifty UI features like interactive maps. It goes without saying that “local” advertisers will find Yahoo a more attractive advertising venue, while national advertisers will have the opportunity to expand campaigns that were previously limited. This should mean an increase in ad dollars spent on Yahoo.
Separate Campaigns and Tracking for Contextual Ads

Yahoo has technically been in the “contextual” advertising business for years, but its distribution and tracking capabilities were limited. As a result, significant traffic volume and contextual-specific performance results were difficult to capture. In November 2005, Google implemented separate search and contextual channel management in response to heavy demand from SEMs (Reprise Media included). Yahoo has finally made the same move with Panama by separating contextual and search tracking, thus giving marketers a way to measure the effectiveness of contextual advertising as a separate entity. Again, this should mean an increase in ad dollars being spent with Yahoo, as advertisers begin realizing the benefits of contextual on its own.

Only with the combined effects of better CTR, more sophisticated geo-targeting, and visible contextual results, will Yahoo have “currency” to begin competing for syndication deals that it has historically lost to Google. With better syndication deals, Yahoo can build a portfolio of high-quality inventory, and may finally address one shortcoming that Panama cannot directly fix - conversion rates. Once Yahoo improves its conversion rates to a level that rivals Google, we may actually see a legitimate two horse race.

Yahoo Fixes Minimum Bids in UK and Europe

Thu, 18 Jan 2007 00:00:00 -0500

A recent thread on WebmasterWorld highlights the fact that Yahoo has apparently lowered some of its minimum bids in the UK and Europe from £0.10 to £0.05. Readers of SearchViews will recall that I’ve encouraged Yahoo to drop its minimum CPC on a number of past occasions. This is a no-brainer decision for several reasons, not the least of which is because Yahoo will undoubtedly generate incremental revenue from its system by monetizing a larger percentage of overall queries. There’s also an opportunity to capture dollars from current Google advertisers being penalized by Quality Score, and therefore unable to profitably bid on some number of keywords

Now Yahoo needs to take things a few steps further by making the same change here in the U.S. And the lower minimum shouldn’t just apply to some keywords as it appears to in the U.K. For instance, some “finance” keywords allegedly still require £0.10 minimums. That doesn’t make any sense. Google realized that shortly after they launched AdWords and they’re clearly doing something right.

Hey Yahoo!, How Low Can You Go?

Wed, 03 Jan 2007 00:00:00 -0500

Well, I promised I wouldn’t tell Yahoo what to do when I posted several weeks ago, but as Panama moves closer to becoming a reality, I felt it would be an appropriate time to revisit some thoughts I previously shared about Yahoo’s minimum cost-per-click.

I, like many others, believe that the release of Panama (specifically the pending algorithm change) will help Yahoo more effectively monetize its searches. Though Panama’s impact may not overwhelmingly improve Yahoo’s market status relative to Google, there is one immediate change that Yahoo can make if it wants to capture some of Google’s ad dollars – one that requires no technology enhancements or new syndication partners.

Yahoo should simply drop its minimum bid to $.05/click. Here’s why:

When looking at the different ways a search engine can make money, the following variables need to be considered:

Average cost-per-click
Average click-through rate
Percentage of queries monetized

Panama will help Yahoo address the first two factors, but the last one is being completely overlooked. In November, SEO Roundtable reported that Panama would not honor “grandfathered” bids (less than $0.10) left over from Overture. The elimination of those “grandfathered” bids means that Yahoo will ultimately monetize a lower percentage of its overall searches, which in my opinion, is a huge mistake.

When most people talk about search marketing, they’re referring to its use by direct marketers or e-tailers. A growing percentage of website publishers, however, use search to drive traffic to pages that feature ad units sold on a CPM basis. They’d like to spend ‘X’ and make ‘Y’ from the advertising displayed every time a user clicks through to their site. By sticking with a minimum bid of $.10/click under Panama, many of them will be priced out of the market.

Let’s say, for example, that a popular online news publisher is selling ads at an average CPM of $40 (which is aggressive) and that users visit an average of one page per session. That publisher could afford to pay only $.04/click to breakeven on each user ($40/1000 x 1). I don’t think there are many marketers that would be willing to run a search campaign that would effectively guarantee a loss of $.06/click ($.10 minus $.04), so they would give no consideration to Yahoo.

But what if that same publisher found a way to increase the average number of PV’s it generated to two. All of a sudden, it would be in a position to spend up to $.08/click for search traffic ($40/1000 x 2). A minimum CPC of $.10/click would still guarantee a loss of $.02 on each visit, so as it stands, Yahoo still wouldn’t get any consideration from this publisher.

If Yahoo dropped its minimum CPC to $.05, however, the publisher could potentially make a profit of $.03/click ($.08 minus $.05). Given that scenario, I think the publisher would find a way to increase its search budget and spend as much money it possibly could knowing that it was making a profit with every click. Furthermore, because Google’s Quality Score forces advertisers to pay substantially more than the alleged $.01 minimum CPC when an ad initially launches (while it tries to establish its quality), a publisher trying to minimize the X/Y (CPC/CPM) ratio will be hard pressed to find a way to make this profitable. How many marketers want to pay up to $5/click while they establish the quality score necessary to reach that figure? And even if/when they do get there, how many clicks will they need to generate at $.01 to get back to breakeven?

As it stands, there are a number of publishers - with significant marketing budgets - sitting on the sidelines because they can’t find a way to make search profitable. If Yahoo continues to alienate publishers that depend on CPM ad revenue, Yahoo (like Google) will fail to fully take advantage of a growing opportunity.

One final point on this topic. I’ve made my case on Yahoo’s minimum bid to a bunch of people in recent weeks. Many of them have suggested that it would be a terrible idea because publishers bidding at low cost CPCs to meet high-cost CPMs are essentially “arbitraging” traffic. I agree that sending users to a site that simply provides another set of ads, like a page littered with AdSense, should not be allowed - but that is a completely different scenario than the one I’m describing. There are numerous instances where paid ads are actually more relevant than organic search results - Online news publishers, for instance, have a hard time getting their stories in the general search index while they’re still relevant. Given that paid search ads can be launched in less time than it takes a search engine to organically index pages, news publishers may rely on paid search to send traffic to their CPM-supported sites.

The ability to directly monetize queries aside, Yahoo could probably benefit from a little more relevance too.

What Yahoo Should Not Do

Mon, 11 Dec 2006 00:00:00 -0500

Now that their re-org has been announced and Panama is scheduled for a March release, there’s been much discussion about what Yahoo should do next. Rather than add to that list, I want to point out the one thing they absolutely should not do – attempt to compete with Google for syndication across content sites.

I’ve read that suggestion in any number of places over the past week or so, most recently on John K’s Got Ads? blog. John suggests that, among other sound recommendations, Yahoo “get serious about distribution deals. Win the next 5 from Google. Focus on entertainment content, news, mobile, games.” But I’m more inclined to agree with Dave McClure, who thinks that the key to Yahoo’s immediate success lies solely in its ability to improve monetization, not in its ability to sign new partners.

The most recent estimate from Merrill Lynch suggests that Google makes $.11 on every domestic search, while Yahoo only generates $.04. Panama is, of course, intended to help close that gap. But until that happens, there’s very little chance they’ll sign a syndication partner of any real value and an even slimmer likelihood that they’d even be able to make the deal work.

Here’s why:

Yahoo Publisher Network has yet to make any kind of an impact on the market. One of the main reasons why it hasn’t taken off is because Yahoo has not been able to figure out the supply/demand equation. Simply put, they’ve got substantially more supply than there is demand at this stage. Adding new inventory without a significant increase in a) the volume of advertisers in Yahoo’s system and b) the CPC’s they’re paying for inventory, would actually hurt new and existing YPN publishers. The limited number of advertisers in the system would be spread across an even greater number of impressions, thereby increasing the amount of remnant inventory being served. In the end, this would result in a decline in ad performance and a lower revenue share for YPN publishers. Many existing partners would likely switch to AdSense or a competing network over time.

That argument aside, I can’t see a scenario where Google allows any of its competitors (Yahoo, MSN, etc) to win a single “major” syndication deal. Google has the currency (in both AdSense rev shares and hard dollars) to win every time. They’re close to having a monopoly on contextual advertising and there’s no reason why they’d let a competitor enter the space. If nothing else, competing for these deals in the short-term is a waste of Yahoo’s time. Even worse, losing another one to Google would be yet another shot to employee morale.

Don’t get me wrong, I’m not suggesting that Yahoo abandon its ad network altogether for the time-being. But I do think it’s important that they take a “phased” approach to chipping away at Google’s dominance. If Yahoo’s going to be successful over the long-term, its gotta start with fixing the monetization engine first.

Quality Score KO’s KPI

Tue, 10 Jan 2006 00:00:00 -0500

Yesterday, Fathom Online released its Keyword Price Index (KPI) for December 2005. According to the report, cost-per-clicks dropped 1% during Q4 of ‘05 and 16% overall in the past year - a “downward spiral” in keyword prices, according to MediaPost.

With that in mind, Dan Grossman attempts to answer the question Fathom’s report has led many people to ask - specifically; why does Google’s stock continue to rise despite the fact that CPC’s appear to be falling? Dan provides two reasons:

Overall spend in online search continues to rise dramatically
Investors believe Google will eventually develop revenue streams unrelated to search

While I don’t disagree with either of those points, I have two other ideas of my own.

First, Fathom’s sample size of 500 keywords is not representative of the entire universe of advertising opportunities available on Google. There are literally millions of unique keywords being purchased in the search marketplace today. Furthermore, the KPI doesn’t include either proper or brand names — keywords that typically deliver significant volume at higher average CPC’s. (In fairness to Fathom, they acknowledge this shortcoming in each of their reports. Whether or not the press picks up on it is another story…)

Second, and more importantly, Google’s stock continues to rise because it’s CPC’s simply ARE NOT falling. And even if they were, there would be no way for Fathom, or anyone else, to know that was the case.

How can I be so sure? Because of Google’s “Quality Score,” a topic I’ve written about on several occasions in the past.

For anyone not familiar with this concept, Google defines Quality Score as “the basis for measuring the quality of your keyword and determining your minimum bid. Quality Score is determined by your keyword’s clickthrough rate (CTR), relevance of your ad text, historical keyword performance, the quality of your ad’s landing page, and other relevancy factors.”

This essentially means that two (or more) advertisers could be required to bid completely different CPC’s to occupy the same position against the same keyword. In other words, the advertiser with the “better” Quality Score might have to pay just $.10/click for the top position against the keyword “wireless accessories,” while an advertiser that’s been penalized for poor ad copy, a landing page that’s light on content, or some other “violation” would be required to pay $.50/click for the same position.

So, how can Fathom possibly say that CPC’s (across Google, at least) are up, down, or flat? Fact of the matter is, thanks to Quality Score, Google’s auction is no longer truly democratized. And regardless of whether the bid market becomes less competitive or Google successfully develops new revenue streams, Quality Score is the reason why it’s stock price will continue to rise.

Can Money Buy Microsoft Love?

Fri, 09 Dec 2005 00:00:00 -0500

Like many in this industry, I’ve been giving a lot of thought to the different ways MSN can pose a legitimate threat to the dominance of Google and Yahoo in the years ahead.

While there are undoubtedly numerous others, here are four different approaches they could take (or have already taken).

Evolve the Marketplace

There’s no disputing that paid search has been on a tear for the past few years. The few lines of text that have been served across billions of search results pages are largely responsible for the resurgence we’ve seen in interactive advertising. But while those ads are now being served across content pages and in RSS feeds, there’s been relatively little evolution in the way search marketing is bought and sold - we’ve been talking about clicks, CPCs, match types, etc. for years. This has stood in stark contrast to the many developments we’ve seen on the consumer end of the search process. That experience now includes desktop search, mobile search, book search, blog search, just to name a few.

While MSN should have had the foresight to enter this market years ago, they have undoubtedly benefited from observing the mistakes that Yahoo and Google have made in the past. Beyond that, the fact that MSN doesn’t have to rush into the market at this stage has allowed them to think about improvements that can be made to the search marketing process as it exists today. As a result, in addition to the standard features we’ve seen from existing paid search providers, MSN’s adCenter includes both behavioral (day-parting) and demographic targeting - something no other engine currently offers.

Because the system is still in beta, the jury is still out on its overall effectiveness. But there’s no doubt that if the targeting is accurate enough to justify the incremental bids it requires, advertisers will begin to shift some percentage of their search budgets to MSN. If nothing else, MSN’s entry into the market is going to drive innovation. Google and Yahoo! can no longer afford to be complacent.

Cut Into Competitor Distribution

We’ve all heard the rumors about MSN’s attempts to replace Google as AOL’s paid/algorithmic search partner and that would certainly be a step in the right direction. Distribution across AOL represented 10% of Google’s third quarter revenues, so this could represent a significant hit to Google’s financials.

What’s been largely overlooked (and what our Product Director, Prashant Desai, likes to point out), however, is that a possible AOL shift to MSN search could release the latent value of the AOL user base through the integration of MSN demographic targeting capabilities mentioned above. The partners would reap incremental revenue from AOL’s existing user base of 112MM unique visitors to its web properties. As a result, the pairing could ultimately create some of the most valuable traffic in the market - traffic that is free from the equivalent of spam sites.

It’s also worth noting that Microsoft has somewhere in the neighborhood of $37.5B in cash on hand and they continue to generate something like $13.5B in free cash flow each year. If they want to increase their distribution with quality traffic that is currently owned by either Google or Yahoo, they can simply guarantee revenue to some of those potential partners. Google has used generous revenue shares to accomplish a similar goal in the past, but MSN is in a position to guarantee those syndication partners more money than they’re currently making from either of the “Big Two.”

Share the Wealth - With Users?

While scanning yesterday’s news, I came across the following excerpt:

Google, Heal Thyself

Mon, 28 Nov 2005 00:00:00 -0500

While I’ve worked for a number of “internet” companies with varying business models over the past 11 years, one thing has remained consistent - I always get to spend some percentage of Thanksgiving Day trying to explain what I do for a living to friends and/or family.

This year was no different.

What better way is there to answer the usual list of questions about search marketing, I thought (”What do you mean there’s paid advertising on Google?” “How do you know which words to pick?” and my personal favorite, “Can I make up my own word and buy it?”), than by walking people through an actual search on Google? They’d undoubtedly understand for themselves just how logical the model is and all of the reasons why search marketing has proven to be effective for both advertisers and consumers.

With that thought in mind, my relatives and I proceeded to google “Google” and see which advertisers are advertising against its name. To my surprise, this example didn’t make things any more clear for my audience. In fact, what started out as “SEM 101″ quickly turned into a case study on how to violate nearly every one of Google’s editorial guidelines and create an awful user experience.

Here’s a screenshot of the ads that came up in response to my query.

Now let’s take a look at the editorial guidelines that had been violated:

Your ad text and keyword’s must directly relate to the content on the landing page for your ad.

The content on these websites ranges from facial cosmetic clinics to poor credit home loans to the “once in a lifetime” opportunity to get rich by taking online surveys. Any way you look at it, the ads appearing for the term “Google” (the same company largely responsible for the changing face of advertising) are completely irrelevant.

To provide the best possible experience for our users and advertisers, Google does not permit multiple ads from the same or affiliated company or person to appear on the same results page. We believe that pages with multiple ads from the same company provide less relevant results and a lower quality experience for our users.

GetPaid.com, GetRich.com and EarnUSDollars.com - and unbelievably enough, HSN.com - all click-through to the same website - EarnUSDollars.com.

Of course, given that three of the four Display URLs mentioned above don’t correspond with the URL of the website to which users are ultimately sent, the advertiser is also in violation of the following AdWords policy:

Your Display URL must accurately reflect the URL of your website.

While Google has consistently made the point that it’s “not in a position to arbitrate trademark disputes between the advertisers and trademark owners,” they generally forbid advertisers from using another company’s trademark within their ad copy. So that said, I’m sure that Home Shopping Network would love to see a company as reputable as EarnUSDollars.com using HSN’s trademark within their ads.

We do not allow links to landing pages that generate pop-ups when users enter or leave your landing page. We consider a pop-up to be any window, regardless of content, that opens in addition to the original window.

I’m not sure that this qualifies as a “pop-up,” but the crafty folks over at EarnUSDollars.com seem to have found a way around this policy by sending users to this URL. Not surprisingly, clicking on that “pop-up” takes you directly to the same URL that their three other AdWords listings click-through to. A wonderful user experience.

Lastly, I thought I’d leave you with a “bonus AdSense violation” courtesy of our friends at EarnUSDollars.com:

No Google ad may be placed on pages published specifically for the purpose of showing ads, whether or not the page content is relevant.

Not only is their page titled “Home Shopping Network and Ebay Make [sic] Great Team!” completely irrelevant to the keywords they’re buying, but the page is littered with AdSense ads - ten of them to be exact. It would be difficult to make the case that this page exists for any other reason than to generate AdSense revenue.

I’ve often heard web designers and SEO shops make the case that they’re so busy servicing their customers, they don’t have the time to focus on developing their own websites. In other words, they don’t always practice what they preach.

All this makes me wonder whether Google is so concerned with maintaining its $400+ stock price and servicing its paying advertisers that it doesn’t have the time to monitor what’s going on with its own brand name.