Insider Chatter by Donna Bogatin

Google to the Yahoo rescue? Hardly. I have long underscored that Barry Diller sells IAC shareholders short by selling out Ask.com’s search advertising to Google.

In announcing the IAC plan to spin-off HSN, Ticketmaster, Interval and Lending Tress as four distinct publicly traded companies, Diller said his online advertising focused “Internet conglomerate,” of which Ask.com is a trophy property, will benefit from “standing on its own.” YES, but so would the competitive operations of Ask.com, far from competitor Google’s monopoly seeking hands.

Google is Ask’s prime competitor. While Google is a cheery proponent of coopetition, the only chance for an underdog to become the big dog is to rely on itself for its independent, proprietary future, rather than piggybacking on the success of the single, biggest, arch competitive rival. Yahoo has long understood the need to remain independent of Google and ought to continue to maintain the integrity of its core product offering, come what may.

My question for Diller last year was:

You indicated this morning that starting as the number five search engine is not a bad thing. Yesterday, you inferred that being the number four search advertising network may not be a good thing.  Why are you willing to share Ask’s monetization with competitor Google when you believe “if there is no other ad network than Google, then we are all in trouble.”

Diller told Wall Street:

As far as doing it ourselves, we thought originally and we continue to do work in this area. We do do it ourselves; we do all sorts of ad products inside Ask.com for ourselves, for our own account. But as far as the ad network business, there are, as you know, three players in it currently. I think there probably won’t be a fourth. At some point, I can’t say what will happen out of the growth of advertising in this area, but right now, I would much, much, much prefer to rent it. I think that we will be well-served by that, certainly for a period of time.

Diller’s short-term sell out to his search enemy weakens Ask.com long term and strengthens Google’s winning position, at the expense of contendor Ask.com.

Microsoft’s bid for Yahoo changes the market landscape, but does not render a Yahoo capitulation and amputation at the hands of Google a worthy option. Microsoft is being straightforward about its intentions towards Yahoo, buy and control. Google, as is its fashion, offers a friendly carrot to Yahoo, while seeking its Googley end goal of usurping search advertising share to eliminate a strong competitor and using Yahoo to hurt Microsoft, Eric Schmidt’s despised foe.

Yahoo seemingly has no shareholder value option at this time other than to succumb to new Microsoft ownership. Yahoo owned by Microsoft is NOT the end of the Yahoo brand world though. Microsoft wants Yahoo and needs it as a full partner in a mutually beneficial attack against Google. Google, on the other number one hand, only wants to use Yahoo to further consolidate its search monopoly grip on the Web, for its sole Google shareholder advantage.

Microsoft is NOT a Yahoo enemy, Google is.

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PLUS: LinkedIn To Mine User Data For Corporate Espionage

CONTACT DONNA BOGATIN

Oh, no! Here we go again? AOL-Time Warner redux.

If that instant analysis of one Yahoo shareholder is representative of Yahoo investors at large, Microsoft’s all-in bid for Yahoo is not being welcomed as a long-term equity booster.

When I broke the Microsoft-Yahoo news this morning to a holder of Yahoo shares, the investor looked forward to his own personal short-term financial gain, thanks to a generous Microsoft, but feared for the future of a (not so) integrated Microsoft-Yahoo.

Facile tech blogosphere punditry headlines: “Why Microhoo: To stop the Google machine,” courtesy of Dan Farber, ZDNet Editor-in-Chief.

Oh, if it were only true, though. Microsoft money and financial market power is NOT all it takes to out-Google Google, as Google’s own earnings report presentation yesterday reveals.Google disappointed Wall Street with its 2007 Q4 performance, but deflected responsibility by trying to move the blame to heavy hitter Rupert Murdoch’s MySpace. Google lamented large ad inventory in social sites that doesn’t “yet” monetize well, but shrugged of its decision to seek a long-term, exclusive right to serve those money-losing ads on MySpace and similar non-performing UGC properties. Microsoft has also ponied up to the tempting social graph, throwing hundreds of millions of dollars at Mark Zuckerberg for the “privilege” of calling his highly-trafficked, but not highly-monetized, Facebook a “partner.”Microsoft’s math now deems that a Number 2 plus a Number 3 can cancel out a Number 1!Web runners up Yahoo and Microsoft have stumbled against Google independently. If their respective managements could not figure out how to beat Google, a hard-to-combine merger of losing propositions does NOT make for a strong anti-Google front.

YAY! “Make ad changes without replacing code” is the latest greatest AdSense invention. “Fancy,” Google pats itself on the back, heralding “simplify the process of optimizing ad units.”

Nevertheless, while AdSense blog publishing partners hail Google for “Wow, reading my mind,” AdSense advertisers are lamenting that the click fraud rates for the Google content network AND the Yahoo Publisher Network have grown to 28%, according to Tom Cuthbert, CEO, ClickForensics.

I spoke with Cuthbert about the current state of click fraud in the pay-per-click (PPC) search advertising market: “Click fraud activity continues to grow,” Cuthbert told me, underscoring “advertisers and agencies continue to be deeply concerned about the issue of click fraud.”

ClickForensics describes itself as “the leading provider of click fraud management solutions for identifying and eliminating click fraud.” The company also runs the Click Fraud Network (CFN), founded 18 months ago and now claiming 4000 plus online advertiser and agency members. The CFN collects and tracks data on PPC ad campaigns, correlating information from both the search providers and the advertisers’ own Web sites, for “the industry’s most accurate view of click fraud to date.”

The latest Click Fraud Index (CFI) data reported by the CFN shows click fraud has grown, with dramatic increases in the content networks, particularly on “parked domains” and “made for ads” sites.

Cuthbert told me: “Content networks are becoming the fastest growing source of click fraud.”

Specifically, the average click fraud rate of PPC advertisements appearing on search engine content networks, including Google AdSense and Yahoo Publisher Network, was 28.1% in Q3, 2007, up from 25.6% for Q2 2007, 21.9% for Q1 2007 and 19.2 percent for Q4 of 2006, as calculated by the CFI.

What’s more, the CFN reports over 60% of traffic from parked domains and made for ad sites was click fraud.

How can ClickForensics be so sure? Cuthbert described to me how a “heuristics engine” scores each click recorded and tracked based on multiple attributes, such as visitor behavioral data, technical data, economic data, country of origin, whether or not the traffic is from bots, botnets or click frams, or other types of unwanted traffic.

Cuthbert told me well over 60% of clicks in made-for-ad sites and parked domains are “fraud or clicks that the advertiser shouldn’t have paid for.”

I pointed out to Cuthbert that Yahoo is claiming a dramatic decrease in advertiser complaints; SEE my interview with Reggie Davis, Yahoo Vice President, Marketplace Quality, Reggie Davis: Yahoo Click Fraud Claims Plummet, INTERVIEW.

Cutherbert told me that while a Yahoo VP overseeing advertiser quality initiiatives demonstrates the number two search engine is taking the click fraud problem seriously, he believes an onerous advertiser claims submission system results in an under estimation of actual damages.

What about number one search engine Google? “Trust us,” Cutherbert indicated to be the reigning unsatisfactory advertiser facing modus operandi of the Googleplex.

Advertisers ought not uniquely trust Google or Yahoo to fully solve the click fraud problem, is the core message of ClickForensics. After all, the search engines even have “a financial incentive to allow it to occur,” Cuthbert told me.

(Google CEO Eric Schmidt did once famously say about click fraud, ‘let it happen’ is perfect economic solution; Google’s public facing comments have radically changed since.)

In the words of Cuthbert’s ClickForensics: “Does your bank balance your checkbook? (We didn’t think so)…”

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PLUS: Google Nielsen TV Ads STILL Blurry: NOT AdWords for Television

CONTACT DONNA BOGATIN

When Google’s celebrity blogger, Matt Cutts, used arch rival Microsoft’s PowerPoint to make “Gadgets, Google & SEO” points last month, I asked, “Hey Google, When Can Matt Cutts Ditch PowerPoint?”

Well that day has arrived? Google says “let’s break out the champagne”!

“Just like spreadsheets and documents, it means we can now share, edit and view presenations online in realtime. Awesome!”

Way to go Google.

But what is one of the the big “selling points” of Google’s online slides tool? The ability to import Microsoft PowerPoint shows! Sharing is caring, of course, in the Google Apps online collaboration strategy.

Google’s Presentations is presently not designer friendly! Templates? Transitions? What do you expect, another Microsoft PowerPoint!:

Specific templates, designed for specific purposes, aren’t offered.

At this time, it isn’t possible to add multimedia effects to your presentation OR a table OR embed documents and spreadsheets.

Display your presentation one slide at a time; To skip from one slide to the next, use your keyboard’s arrow keys.

Matt Cuts WILL undoubtedly get on his own Google Presentations bandwagon though: HIS Microsoft PowerPoint slide style will fit right in with Google’s “basic editing” options:

Move and resize an image
Bulleted or numbered lists,
Backgrounds and colors.

What about the non-geek, non-Web savvy Microsoft PowerPoint happy world? Who cares!

Google CEO Eric Schmidt famously haiis “don’t bet against the Internet”l:

Microsoft does have a collection of Web-based products. But for people who need presentation apps on the Web, they are going to use this. This is a testament to the strength of Web 2.0.

But what about the strength of Google Presentations? Google promises to improve its “beta” slowly but surely.

No mater that Google Apps-Google Docs-Presentations, is NOT a Microsoft PowerPoint killer, Google Docs blog assures it is good enough for “putting together killer presentations.”

WELL, at least good enough for Google fan boys!

ALSO: Yahoo Buys Zimbra: Beats Google for Web Office Leadership and Gadget Ads: Google is Threat to Media NOT Software

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CONTACT DONNA BOGATIN

Congratulations Eric, Jerry and Steve! Your DC (big) lobbying dollars are going to (not so fair) good use!

As you mandate, the Computer & Communications Industry Association (CCIA) is indeed “proactively” seeking to “protect and promote” what you deem to be your “legitimate interest” in not paying to license copyright content!

Google, Yahoo and Microsoft are power funders of CCIA, a lobbying organization that claims to be “sometimes the only eyes, ears and voice in Washington” for the power companies that fund it.

CCIA’s latest proactive “why should Google, Yahoo, Microsoft…pay for the use of others’ content” salvo is a “study” declaring that “fair use economy represents one-sixth of U.S. GDP.”

YAY! Some good old fashioned hi-tech fuzzy logic: The more Google, Yahoo and Microsoft DON’T put money into the economy to pay for content, the more money they should actually be credited for helping put into the economy!

Viacom is doing some fair use economic calculations of its own, however. A cool one billion in economic value that it gauges Google’s YouTube has taken from it thanks to (not so) fair use business model.

Google, Yahoo and Microsoft CCIA collaboration in championing no need to pay for the copyright content of others is obviously one bred out of expediency.

Earlier in the year, Microsoft blasted Google for Mountain View’s not so fair, fair use business model:

Companies that create no content of their own, and make money solely on the backs of other people’s content, are raking in billions through advertising revenue,” declared Thomas Rubin, an associate general counsel at Microsoft, before the annual meeting of the Association of American Publishers in New York.

Google’s track record of protecting copyrights “is weak at best,” said Rubin. Anyone who visits YouTube will immediately recognize that it follows a cavalier approach to copyright, he indicated.

Fair use is in the eye of the beholder, and dependent upon what vested self-interest is in play!

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CONTACT DONNA BOGATIN

Despite the University of Michigan’s Ross School of Business assertions, Google has NOT stumbled. The University strives to dazzle, though, with its scientific sounding “American Customer Satisfaction Index (ASCI).”

ASCI head, professor Claes Fornell, not only declares with certainty that the number one search engine has “stumbled,” but that when Detroit “makes more cars, chances are quality is going to slip.” Such are the facile, declaratory generalizations ASCI announces as objective fact in “unveiling” its “consumer satisfaction” pronouncements.

SCI “measures” a different set of industries each quarter; This quarter, e-business was up at bat.

I spoke with Larry Freed, CEO ForeSee Results, the for profit corporation that produces the Index on the University’s behalf, in February, when e-commerce was the focus and discussed the ASCI methodology with him.

The University claims ASCI is a “national economic indicator.” Hardly, though. American Customer Satisfaction Index brought to you by the University of Michigan certainly sounds impressive, but the methodology is not.

At its core, ASCI defintive characterizations about individual companies—such as Google stumbles–are based off of 250 vague, subjective telephone questionnaires. The sample size is miniscule and the “inputs” are inconclusive and convoluted.

The indices (shown in the diagram above) are multivariable components measured by several questions that are weighted within the model. The questions assess customer evaluations of the determinants of each index. Indices are reported on a 0 to 100 scale. The survey and modeling methodology quantifies the strength of the effect of the index on the left to the one to which the arrow points on the right. These arrows represent “impacts.” The ACSI model is self-weighting to maximize the explanation of customer satisfaction (ACSI) on customer loyalty.

So, what do the ASCI Yahoo vs. Ask vs. Google numbers mean? Whatever Freed and Fornell say they do.

According to Freed and Fornell: Google’s consistent sparesness is a negative, as Ask and Yahoo change.

Google will say otherwise, and its market share and earnings numbers do as well: Number one, and counting!

Subjective numbers also say so, such as the Millward Brown Brandz ranking: Google crowned the 2007 number one most powerful and valuable brand.

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CONTACT DONNA BOGATIN