Another insane Kafka-esque email from the Yahoo Search Marketing API team. I get about two of these a week (another example), and they remind me of Orwell or Kafka in their impenetrable bureacrat-ese.
Dear Valued Client,We have encountered unforeseen circumstances from the maintenance on end-point https://ews11.marketing.ews.yahooapis.com/ Currently, we do not have an estimated time of resolution for the residual system slowness and delay in books closed time for Keyword/Ad reports. However, our technical teams are working around the clock to resolve this as soon as possible and we will continue to update you on the status of this delay constantly. We greatly apologize for the inconvenience and appreciate your patience.
[emphasis mine - on the stuff that's just pure obfuscation].
Yes, Yahoo search marketing (i.e. Panama), does have an API. But with Yahoo giving up in search, it's probably not worth your time to use it, and have to parse these maintenance emails.
At this point, what Yahoo search marketing needs most is a copy of Strunk & White.
¶ 6/19/2008
Ugh. Sometimes the end does come with a bang and whimper at the same time.
Yahoo is giving up in search.
The stock lost 10% today, and will continue to descend to it's proper level of about $15 / sh. Until someone picks up the pieces for about half of what Yang was holding out for.
It's not just the shareholders - the search customers and Yahoo's regular users are all losers here. Not to mention the employees. It's not that fun watching a CFIT (controlled flight into terrain), which is what Yahoo! has been on ever since they hired Terry Semel.
Meanwhile, Google is up, and feeling good about the monopoly it has!
As Ash writes:
Microsoft offered $44.6B to acquire all of Yahoo! in early February.Yahoo! Chief Yahoo spent 4 months trying to make that go away… today he settled for $800M in top line incremental revenue.
That means in some 50+ years (44.6B/$800M), investors will be indifferent. So net-net, “Jer”gets what he wants today, investors can go pound sand and come back in 2024.
Way to go, Jer.
I dumped my YHOO at $24.68 after MSFT pulled out. And I rolled it into GOOG. So I guess I can be thankful for that.
This is sad on so many levels. Back in 1995, I was the first employee of an ad serving company whose first customer was Yahoo!. It's sad to see Yahoo capitulate and march towards nothingness.
Oh, and did I mention that Jeremy Zawodny is leaving too. Need any more proof?
Maybe Yang and Decker can treat the remaining team to a premiere of "The Happening". Cause that seems depressingly similar to the nightmare Yahoo has committed against itself.
¶ 6/12/2008
After the saga of Yahoo is over, many people will find reasons as to why Yahoo failed. I know the real reason: it's a boring, impersonal, faceless bureaucracy. Although Yang and Filo try to keep it culturally cool (free soda and coffee for all employees!), they have utterly failed.
The Yahoo brand has no identifiable or consistent "voice".
The amazing thing to me is that someone hasn't renamed Yahoo to:
Here's all the proof you'll ever need - an email from the people that run Panama (aka "Yahoo! Search Marketing".)
YSM-Tier2Support to me Dear Valued Client, We will be performing a routine system maintenance during the following time frames on Friday, June 6, 2008: 6:00AM PST to 11:00AM PST 7:00PM PST to Saturday June 7 2:00AM PST The following end-points will be unavailable during maintenance: https://ews11.marketing.ews.yahooapis.com/ https://ews12.marketing.ews.yahooapis.com/ https://ews13.marketing.ews.yahooapis.com/ https://ews41.marketing.ews.yahooapis.com/ Should you have any questions regarding this matter,
please contact your account manager directly or technical services at ews-help@yahoo-inc.com. Thank you for choosing Yahoo! Search Marketing! Sincerely, Technical Services Yahoo! Search Marketing
Note how there's not a real person's name in the whole email - including mine. FYI, my actual name is not "Valued Client".
Look at the 4 deep subdomains that Yahoo forces on it's services. https://ews12.marketing.ews.yahooapis.com/. There's two ews's in there! No wonder I can never remember that URL to login to my account. Compare to say: http://adwords.google.com, or even adwords.com.
And WTF is a "end-point"?!?
Even the email addresses they use are robotic. Apparently, it's not a real Yahoo email unless there is a dash in it somewhere: ews-help@yahoo-inc.com
But luckily, they recover from this unbranded, un-personal, techno blather form-letter email with the friendly closing:
Thank you for choosing Yahoo! Search Marketing!
Yay!
Labels: yahoo
¶ 6/03/2008
ComScore (SCOR) is taking some heat for convincing Wall St. that Google's year over year click growth was very low. Kedrosky thinks it was a factor as to why expectations were so low:
I lean to the first bullet: Blame Comscore. As some are pointing out, and as Comscore's aftermarket weakness is showing, this is turning into an acid test for Comscore -- and it's failing.
The funny thing to me is that ANYONE ever believes ComScore any more. Not only have they been demonstrably wrong on query counts, search share, and click growth before, but the people who run Google, Yahoo and other publishers have said as much.
Eric Schmidt gave comScore the equivalent of the Obama finger in yesterday's earnings announcement.
Paid Clicks - Aggregate paid clicks, which include clicks related to ads served on Google sites and the sites of our AdSense partners, increased approximately 20% over the first quarter of 2007 and approximately 4% over the fourth quarter of 2007.
Here's Anand from datawocky describing comScore's methods.
ComScore sets a lot of store on their "panel-based" approach, which collects data from a panel of users, similar to Nielsen's method of collecting data on TV viewing using data from a few households that have their set-top boxes installed. ComScore has been in this business longer than anyone else, and has arguably the best methodology (i.e., algorithm) in town to analyze the data.
I don't think they have the best model, simply because it's been wrong many times before. Here are a few of the ones I've documented in my blog - not a comprehensive list of all of their mistakes, since I gave up whining about this in 2007...
- 11/2005 - How many searches does Google really get?
- 4/2006 - Google VP Peter Norvig Clues Us In
- 4/2006 - Yahoo earnings call (Sue Decker upbraids comScore subtly).
- 8/2006 - ComScore Traffic Numbers - Wrong Again
- 10/2006 - MySpace Demographics
You can find other bloggers who discuss comScore's data in 2007. I believe that comScore has never been very good at analyzing the traffic or click patterns of top 10 web properties like Google, Yahoo and MySpace.
comScore did release a press release two days before the earnings, which seems to provide some cover contra Kedrosky's off-the-cuff "blame comScore":
The data from Comscore, which was not released publicly but provided by Wall Street brokerages, was seen as welcome news for Google after a difficult month in which many financial analysts lowered their expectations for the search company's first quarter.Comscore last month prompted concern among investors and analysts when it reported weakness in the number of consumers clicking on the Internet giant's search ads in February.
The explanation that the data "was provided by Wall Street brokerages" doesn't make much sense as written - probably comScore secretly provided a CYA set of data TO Wall St... who knows?
Just remember this the next time comScore reports on some key metric.
Labels: comscore, google, yahoo
¶ 4/18/2008
There's a lot of press out there predicting that the incipient Microsoft takeover of Yahoo is doomed to fail. It's the dominant meme.
However, one set of potential users is rooting for it: People who buy search ads.
Andrew Goodman estimates at the London SES conference, attendees are for the merger at a 7-to-1 ratio.
When you look at it, it makes sense, and I've highlighted the key reason before:
Google market share in search is something like 60-65%, and in Europe, it's higher.
Yahoo's share is currently around 25%, and Microsoft is about 10%.
Put together Microsoft and Yahoo, and you have a decent #2 at 35% share.
Simply put, PPC buyers want to go to fewer places, and want a more viable alternative to Google.
Microsoft could throw away most of Yahoo, except Mail and the front page, and have hopes to turn this acquisition into something useful - simply because search is where the money is! Sure it's expensive just to compete with Google in search, but when you are Microsoft, you need to protect your cash cows from incursion by Google.
I think Ballmer's best option and natural tendency is to go after Google's cash cow. Yahoo's really the only way to do that.
I'm still pretty sure Microsoft's current management isn't the team to do it, but at least you can understand why it makes sense from a PPC buyer point of view.
Labels: microhoo, microsoft, yahoo
¶ 2/20/2008
Henry Blodget has been en fuego with his coverage of the Microsoft / Yahoo deal. Today he adds this little nugget:
Because of the overlap of Yahoo and Microsoft shareholders, many of Yahoo's largest shareholders also own even larger stakes in Microsoft. It is in the economic interest of these shareholders to have Microsoft keep its bid exactly where it is. Their interpretation of what is "best for Yahoo shareholders," therefore, may be different than that of shareholders who don't also own huge stakes in Microsoft.
You aren't reading that kind of stuff anywhere else.
¶ 2/11/2008
Even though Yahoo's board may try to reject the Microsoft takeover, there is no resisting the borg. Microsoft will buy Yahoo.
If you haven't tried Microsoft adCenter, they have a great promotion for US customers: they give $50 in free clicks when you sign up for a Microsoft adCenter Account.
I've griped about usability in the past, but for many of my campaigns, AdCenter has the highest conversion rates, more than Google AdWords or Yahoo Panama. The problem is low volume.
In all likelihood, Microsoft will buy Yahoo, and AdCenter will eventually have 35%+ search market share.
So get ahead of the game, and get started learning adCenter today.
Labels: adcenter, coupon, microsoft, yahoo
¶ 2/09/2008
I just woke up from a dream where I met with Steve Ballmer. I told him how to make PPC search advertising much more profitable once the Yahoo deal closes.
In my dream I kept my sentences short and to the point. I pounded the table a few times. I speak Ballmer-ese, at least in my dream.
Here's what I said:
Me: Steve. You can make your $53B acquisition of Yahoo work!
SB: It's $44.6B, actually.
Me: It'll end up at 53 when all is said and done.
SB: OK.
Me: Here's what you do.
Me: 1. Focus on search monetization. That's where the profit is. That's where you can attack Google.
SB. I'm listening.
Me: 2. Throw away the Yahoo search marketing interface
SB: Good.
Me: 3. Build a fat client interface for advertisers.
SB: I like that... on top of .Net!
Me: No! - it can't be on top of .Net!
SB: Why not?
Me: It has to run on Macs, too.
SB: Crap.
Me: OK - focus, here's the important part.
Me: It must look and feel like Google's AdWords editor.
SB: OK, we know how to copy look and feel.
Me: Right. And it must export data into Yahoo Panama and AdCenter.
SB: Why?
Me: That way people can instantly buy on both from one interface.
SB: What about the web UI?
Me: Well, once you have the fat client it won't matter much, but you should just copy (and I mean exactly copy) Google's.
SB: I kinda like this.
It went on from there. I told Steve that Google is pissing off advertisers left and right with all of their quality score BS. I told him that Microsoft could write the AdWords Editor equivalent right now, and people would love it.
I also gave Steve the names of projects he should cancel at Yahoo - he really liked that. Integrating display and search is a waste of time. Just sell, sell, sell. He ate that up.
But then I went too far - I told him that he's ruining MSFT with his army of non-technical bureaucrat VPs, and he just got up and left (taking his chair with him). I don't think he's gonna follow any of my advice now.
Oh well. I, for one, welcome our new Google masters.
Labels: ballmer, microsoft, yahoo
¶ 2/04/2008
Microsoft's buying Yahoo. A ton of early reactions. Here's what comes to my mind:
Ah, love, let us be true To one another! for the world, which seems To lie before us like a land of dreams, So various, so beautiful, so new, Hath really neither joy, nor love, nor light, Nor certitude, nor peace, nor help for pain; And we are here as on a darkling plain Swept with confused alarms of struggle and flight, Where ignorant armies clash by night.
Labels: matthew arnold, microsoft, yahoo
¶ 2/01/2008
Henry Blodget refers to an analysis of ComScores Year-over-Year traffic data and reports that Yahoo is really sucking wind. Basically, they are losing users, while Google is growing by 20%+
Actually, the traffic growth has been slow to non-existent for Yahoo for a while. Of course, for the past 2 years, the incredible lameness of the search monetization has served to distract people from the fundamental overall lack of user growth at Yahoo.
Morrison:
Yahoo attracted total worldwide users of 476 million in July, down 1% annually. Pageviews declined 7% in the period, and minutes spent were down 1%. Annual usage at Yahoo Mail declined by 9%, at Yahoo Games by 47%, at Yahoo News by 6%, and Yahoo Sports by 11%. On the positive side, Yahoo Messenger grew by 36%...Yahoo Answers by an astounding 332%, and Flickr by 198%. While [this is] promising...these areas are typically monetized at a fraction of the rate of Yahoo!'s premium content areas.Short of saying "Comscore is wrong," it's impossible to put a positive spin on this. In fact, it's an absolute disaster. Perhaps the reason Jerry Yang doesn't plan to announce a significant restructuring when he finishes his 100-day review is because he's realized there's no reason to bother.
OUCH.
ComScore is usually wrong about market share numbers, but they are probably correct on overall traffic counts relative to their own data from last year.
As for Google, things are growing nicely.
From July06 to July 07:
- worldwide users +20%
- US users +18% (now 22% of 552 million global total)
- time spent on sites +113%
- page views +56%
- Google Maps: blows past Yahoo to 682 million pageviews/mo +98% (vs. Yahoo's 397 million, +32%)
Anecdotally, I find myself moving more and more to the Google world. I'm using spreadsheets and docs, I'm using gmail for enterpise, and I still use this crappy blogspot thing.
I have started to use Panama a lot more however... But even there, I create the campaigns in Google's AdWords editor first, and then convert them over.
Labels: yahoo
¶ 9/11/2007
This is bad for Yahoo. The Yahoo insiders that I know have always said that Wenda Millard (Chief Sales Officer) was absolutely great. Key to their success on the display side - which was their only success, since search was so screwed up.
So it's a bad sign that she's leaving as Decker and Yang take over.
Even more ominous - she's going to work for Martha Stewart Omnimedia.
I mean, does Yahoo really suck that much? I guess so. On the bright side, I'd take it that there will a bit of needed upheaval at Yahoo for the rest of the year...
Labels: yahoo
¶ 6/24/2007
What's Jerry Yang gonna do to revitalize a slumping Yahoo? Andrew Goodman has a very good list of action items for Yahoo!
The biggest thing I'd suggest is: "Be the Next Facebook".
Yahoo has all the pieces to build a next-gen homepage portal, and they should copy most of Facebook.
Facebook's weaknesses are:
- It's legacy user-base (i.e. college kids).
- A LOT of people over 25 have never heard of it.
That's it. Those are really the same things. It's not clear how useful Facebook is in organizing your life if you are not mainly into hooking up with hotties. And Facebook is run by a bunch of 24yr-olds who are trying to figure out how to make it more appealing. That's a limitation.
Yahoo already has the platform. They have, what, about 10X more profiles than Facebook. Yahoo has properties like Yahoo! Groups which are incredibly useful for soccer-moms. Yahoo is good at APIs. They have the Flickr braintrust.
Also, Yahoo already shows MUCH BETTER ads than Facebook does. And they do have a great ad salesforce.
Yahoo needs to re-invent My Yahoo, copying the best of Facebook's social features (like friends 'confirming' where they met you), opening the the social graph, integrating useful features like Groups, Flickr, Finance, Answers, Sports, etc.
They need to copy some of the design minimalism that Facebook is good at. They don't need to keep adding slow-loading graphics everywhere - like they've done with sports.yahoo.com - ruining the experience for someone who just wants to check the damn scores.
Anyways, I think Yahoo has the kernel of this idea already. Semel talked about it endlessly.
To do this, MASSIVE FOCUS is needed. That's what Facebook has that Yahoo does not! Either Jerry Yang turns the battleship around fast (like BillG did back in '95), or he'll watch Mark Zuckerberg take over Yahoo's last bastion of hope.
¶ 6/21/2007
Terry Semel is gone, out as CEO of Yahoo. Founder Jerry Yang taking over. I guess my proxy vote really was the straw that broke the camel's back.
Actually, it was probably the fact that Forbes ranked Terry Semel as the 2nd highest paid executive of 2006 (he was #1 in 2005). Not a great thing to be if your company has really under performed during the second coming of the dot-com bubble.
Anyways, good for Yahoo!
(via Paul K.)
¶ 6/18/2007
Here's how I'll be voting my YHOO shares.
Here's my past Yahoo-related blog posts which chronicle the incompetence of Semel and his board. I figure posting this is probably more reasonable than going to the Yahoo annual meeting on June 12 and shouting j'accuse at Terry. Right?
Labels: yahoo
¶ 6/06/2007
Google would be Hawkeye.
Yahoo would be B.J. Honeycutt.
MSN Live would be Frank Burns.
Labels: google, microsoft, randomness, yahoo
¶ 5/21/2007
Here's some WSJ coverage of Microsoft's and Yahoo's "recent talks". Feel free to refer back to this the next time you need to judge how well major newspapers understand Silicon Valley.
Still, Microsoft has technical expertise that might benefit Yahoo. Under one possible scenario, Microsoft could manage the technical platform and infrastructure of the companies' combined Internet activities, while Yahoo's current staff could oversee the consumer parts of the businesses..
That's absurdly funny. Microsoft has no technical skills "that might benefit Yahoo." They've spent billions of their cash on their own infrastructure - and are way behind Google AND Yahoo - is that the skill?
While Yahoo is facing increased competition to sell advertisers the graphical-display ads, such as banners, that have been its bread and butter, the company recently has shown signs of momentum
Really? Apparently the last two consecutive quarters of serious under-performance counts as momentum to the WSJ?
Panama is now running, and Yahoo said recently that it expects the system to contribute to its revenue, starting this quarter.
Even this basic statement is grossly incorrect. Panama is of course, already contributing to revenue. It's revenue growth that's the problem.
Just remember that everything you read in the press is generally wrong in some important way. And it's doubly true for coverage of technical issues.
¶ 5/04/2007
Yahoo reported yet another depressingly weak quarter. The Q1 2007 earnings conference call is a litany of lame excuses as to why Yahoo can't perform.
One thing Yahoo is good at is plying an excuse. This time it's "Wall St. got ahead of itself on Panama." Of course, no mention of their trick last quarter, bogusly hyping Panama by saying they were launching it "earlier than expected".
The story with Google is getting simpler - each quarter they mint $1B in profits by sticking to traffic and search growth, while having a global, diversified ad system that prints the money.
Meanwhile Yahoo's market share has not grown in the past 3 years.
Yahoo!’s market share has been flat and steadily eroding over the past 4 years, while Google’s has dramatically accelerated. Yahoo! had a 28.9% share in February 2003 (according to Neilsen NetRatings ), compared to 29.5% for Google. However, Yahoo!’s share had dropped to 19.5% as of December 2006, and Google’s had increased to 65.4% (according to Bank of America Equity Research).
In a blisteringly accurate critique, seeking alpha columnist Eric Jackson lays out the reasons for Yahoo's failures, with the money quote being:
Google has grown its shareholder value 21 times more efficiently than Yahoo! over this time period, when the Internet ad market has been booming.
It's a theme repeated over and over. While Yahoo claims to be "leveraging it's audience insight" in order to "be in position" to capture "the growth of the internet", Google has ACTUALLY done it. Yahoo has dithered.
EVERY earnings call for the past 3 years has included Terry mumbling something similar to:
“We are on the cusp of witnessing a significant increase in engagement of consumers on the Internet and believe we are best positioned to capitalize on the many opportunities to which we are exposed.”
from the Q1 2005 call
Unfortunately, the fact is that Yahoo has performed worse and worse since then. Google has eaten their lunch. Even Ebay is coming back stronger than Yahoo.
Part 1: They Were Asleep at the Search Wheel
It's bad enough that Yahoo blew the chance to buy Google, but far worse is the fact that Yahoo wasn't even AWAKE on search strategy until it was too late. There were 3 key failures:
- Failure to focus on search share - instead Yahoo wanted "deep user engagement" and invested heavily (i.e. $500M+) in Hollywood type media with the Yahoo Media Group.
- Failure to focus on search monetization. Management let the Panama delays stretch to 2 years, losing billions in revenue and never setting the ship right at Overture.
- Failure to grow audience. Market share in Yahoo's non-search properties has been flat for the past 3 years.
What has Yahoo done well? For a while, their display ad business was covering for the lagging search ads. No more. In Q3 2006, Semel warned of weakness in Finance and Auto sector display ads. Unfortunately, no matter how good display ads do, they are sensitive to seasonal and cyclic economic factors - more than search is. They can't make up for the loss of share and revenue on the search side. That's partly why the last few quarters haven't looked very good for Yahoo.
Yahoo's Problem is Leadership. Semel.
Yahoo's strategy has changed basically every 6 months under Terry Semel, as his initiatives have failed and Google has forced him to go someplace he doesn't want to be: Technology and Search.Note the difference a year makes in Terry's opening earnings call summary:
Q1 2007:
"We have been executing aggressively against our plans to improve our search monetization, strengthen our display advertising business, and seize the opportunities we see in emerging areas like social media, mobile and video."
Q1 2006:
"The strategy that we have talked about for the last couple of years, to lead the shift from mass media to my media is starting to coalesce and the next phase of Yahoo! is becoming much more visible. You can see it through the continued development of communities on our network, the expanded programming of head and tail content and the evolution beyond web search to social search. All while providing personalized services for our users whenever and wherever they are."
In 2007 it's all about search. Only one year ago, search is barely mentioned. Media, Community & Personalization was far more important to Yahoo at the time. Terry talked about moving "beyond web search". HA! Somehow I hope he didn't mean that Yahoo would be losing market share in web search... but that's what happened.
As I've written before, Semel doesn't have the technical chops to lead Yahoo, he was brought into to make Yahoo into a media company. (BTW, did you notice that the Dreamworks studio - the much ballyhoo'd Spielberg, Geffen & Katzenberg collaboration was recently sold for a mere $1.6B? - that should indicate why Yahoo CAN'T be a media company.)
Basically, Yahoo has been pulled into a war they didn't want, with a much more focused and powerful enemy. Semel doesn't have the ability to fight that war.
Why Panama isn't the Answer
Panama is not enough. It is worse than Google's current system in EVERY WAY. It's harder to use, it has worse ROI, the inventory isn't there, and it isn't a global diversified ad system - one that has search, content, and many other forms of advertising built-in. Google has all of that. Yahoo could have that in maybe 5 years...
From a channeladvisor post on initial Panama results:
For example, we have a number of clients with strong national brands. Actual CPCs on Google for these brand terms are $0.01 to $0.06. On Yahoo, the CPCs on the same terms are at least $0.10. So, even though Yahoo sometimes has a higher conversion percentage on those terms, ROI on Google can be two to three times or more what it is on Yahoo (using return on ad spend—ROAS—as the measure of ROI). And, because retailers with strong national brands drive a large percentage of their paid search sales through brand terms, brand term ROAS is a significant contributor to overall ROAS. As a result, overall ROAS on Yahoo is lower.
Beyond ROI, Panama has 3 key problems:
- Yahoo's inventory is weak - due to declining search share - 30% to Google's 60%.
- Panama's not rolled out anywhere but the US and Canada
- It's technically 3 years behind AdWords in functionality.
So Panama, for the rest of the year can be expected to be blamed for disappointing results like it was this quarter. It's not the answer.
Moreover, Yahoo announced a re-org late last year. They still haven't been able to hire an executive in charge of "audience", and this quarter's results pretty much bear out what the consensus was on the re-org: "Deck chair shuffling".
What about Microsoft?
The only internet related company performing worse than Yahoo at this time is Microsoft. If Panama hasn't lived up to hype, Microsoft's search and AdCenter products have been total, complete miserable failures. Full of spam, and losing traffic daily, despite huge platform advantages (IE7) that should have propelled them higher.
So it's now possible that these two failing companies will get together, with Microsoft wanting to buy Yahoo to compete with the new boss: Google.
That would be a complete disaster. The only good thing would be getting rid of Terry Semel. However, Microsoft is more lost than Yahoo, and folding Yahoo's 12,000 strong workforce into MSFT's 73,000 people would pretty much kill any chance Yahoo has of growing into competing with Google.
Is There Any Hope for Yahoo?
If Yahoo had a technical leadership injection, it could get back into the game. Things are broken, and Semel clearly can't fix them, but Yahoo does have some strength.
Certainly Jackson's recommendations - designed to get Yahoo's stock back up, mostly should be considered:
- Terry Semel, Robert Kotick, Roy Bostock, Ron Burkle, Eric Hippeau, Arthur Kern, and Gary Wilson should be Immediately Replaced on Yahoo!’s Board of Directors.
However, I think the key to Yahoo's recovery is to figure out how to get advertisers to split their budgets closely between Google and Yahoo.
Yahoo mainly needs more inventory. They need to copy Google's strategy of being the ad system for ALL media by 2010. They need to be able to say to big advertisers: "We can give you better deals, better service, better reach than Google."
It's possible to say that because Google is on it's way to becoming incredibly dominant, and it has no shortage of arrogance in dealing with customers. Eventually it will screw up, and piss off big advertisers. Yahoo already has relationships and it could prosper as a strong #2.
However, the likely scenario is probably Microsoft buying Yahoo.
In that case, you should load up on YHOO stock now, in hopes that you get 30%+ premium over the next year on the buyout. And you should buy GOOG like crazy too. Because if Microsoft does win Yahoo, the combined incompetence will ensure that Google ends the biggest winner of all.
Labels: 2007, google, q1, semel, yahoo
¶ 4/20/2007
Well, Google is so dominant that it's kind of boring. They had a basic blow-out quarter, while Yahoo is the sick man of the internet...
In fact, the earnings call WAS pretty boring, with the Google team practicing serious message discipline, everyone emphasizing that they really DO CARE about search and especially advertisers.
Gross revenue increased 63% over Q1 of last year to $3.7 billion. Revenue from Google properties was $2.3 billion, representing strong year-over-year growth of 76%. We experienced healthy traffic growth in our Google.com business both domestically and internationally.Now turning to cash flow, operating cash flow was strong at just over $1.2 billion. Free cash flow, a non-GAAP measure which we define as cash flow from operations less CapEx, increased to $623 million.
In the tradition of Arsenio Hall, here are some thoughts - things that make you go "Hmmmm".
- Quality Score is working. It means Google is showing fewer ads per page that are "worth more".
- They said paid clicks on Google and its partners' sites rose 52% from a year ago. Wow.
- Google spent $597 million dollars in capital expenditures- mostly on servers and data centers. I think the technical term for that is: "shitload". Seriously, it probably equates to something like 250,000 servers.
- Fast growth in UK is coming from attention to big "named" accounts and a successful sales team. Interestingly, the Google team thinks that rapid UK online ad spending growth may stem partly from the more limited TV advertising landscape in the UK (i.e. the BBC doesn't soak up as much ad spend as the US networks)
- Toolbar users search more - a lot more. Google has been very successful in toolbar distribution
- Google has deals to show ads on 15 of the top 20 social networks in the world.
Overall, three things really strike me: 1) Google is making a lot of these gains with big advertisers. 2) Unlike Terry Semel, who says that Yahoo is "well-positioned to take advantage of future internet growth", Google is actually taking advantage of current internet growth in a massive way. 3) Google looks insanely strong internationally. By comparison, Yahoo's over-hyped Panama ad system is NOT live in any countries besides the US and Canada.
Even though every analyst currently has "buy" ratings on Google, which doesn't leave a lot of room for upside surprises, Google's financial performance and increasing dominance should be able to power the stock through the $500 - $600 level.
Labels: 2007, earnings, google, q1, yahoo
¶ 4/19/2007
Here are a few odd notions I have about Google's purchase of DoubleClick:
- Obvious Big Loser: Microsoft
- Potential Winner: Yahoo
- The World benefits from a Google v Yahoo internet.
Obviously Microsoft must be crying in their soup over this. Angry incompetent people crying in their soup. Paul Kedrosky is right when he says this will probably push Microsoft to try and buy Yahoo. That's their brand of flailing.
Yahoo, on the other hand, could be a more solid #2 option if they had more inventory. They already lead in brand ads, display ads and behavioural targeting. I hope Yahoo rebuffs Microsoft somehow, yet manages to convince Gates that Yahoo should run Microsoft's online business.
If Yahoo had Microsoft search inventory back, and they got some good chunk of MSN properties, they'd be a place to spend a good chunk of money no matter what Google did.
The advertising world craves an alternative to Google. Microsoft cannot fulfill an anti-monopolistic craving. Yahoo could be it, but Yahoo and Microsoft alone are not going to beat Google standing separately, and as I said years ago, the only winner when their inventory is split up is Google.
Since Microsoft is incompetent at all things internet and ad related, it would be a DISASTER if they bought Yahoo. However, there's no reason for them not to let Yahoo run their online ad world. (Save for the ego aspect - which hopefully goes away when Ballmer is fired.)
Therefore, the ONLY HOPE for Microsoft is:
- Steve Ballmer is fired
- Microsoft fails to buy Yahoo
- Yahoo runs and rep almost all MSFT inventory online.
Sounds crazy, and it will never happen, right? But it makes a lot of sense. Microsoft is a miserable failure at all things internet. It's losing share and relevance minute-by-minute. It's desperate.
That's my optimistic hope - somehow Yahoo emerges with Microsoft's inventory. And NOT as a subsidiary of Microsoft.
More about DoubleClick
The blogs and internet journalists haven't really broken down DoubleClick and detailed exactly what Google is getting here. The most important thing that people aren't talking about is the DoubleClick Advertising Exchange (adx).
- Unlike RightMedia, the exchange has payment included.
Buyers / sellers don't have to worry about payment from the other side of the transaction (DoubleClick guarantees payments for inventory sold through the system.) This is a huge advantage, and fits great with Google's ability to get AdWords users to participate by offering free imperial credits (a la Google Checkout) to AdWords customers.
Along with the overall display advertising market share, it's the exchange which dovetails so nicely with Google. It's something they need, and Google's eco-system and technology will enhance it. (BTW, someone's now got to buy RightMedia - though Yahoo owns a chunk (~10%) already...)
PS. Another point that few people seem to have remarked on:
Google and DoubleClick are in essentially the same building in NYC. Good for integration until the closing in December (!), n'est ce pas?
Labels: doubleclick, google, microsoft, yahoo
¶ 4/16/2007
Pretty interesting to watch as Yahoo's new property MyBlogLog gets attacked by spammers, and one of the people who is simply pointing out the flaws gets banned.
Yahoo's reaction so far hasn't been warm and fuzzy. A distinctive sound of crickets chirping, emanating from the usual suspects. A bit of a mea culpa from the MyBlogLog (MBL) team, but mostly around the technical issues.
Shoemoney and Andy Beal first raised hackles by having a contest to see who could get the most MyBlogLog readers.
Recently Shoemoney posted on how you could spoof any MyBlogLog User, and "surf" with their avatar. This was just one of a long line of possible spammy exploits. The MBL team must have gotten fed up with Shoemoney, cause they banned him.
The upshot is that when Yahoo bought MBL, they massively increased its mind-share - in the minds of spammers - which follows one of my fundamental laws of the internet: Basically, anything successful will be spammed in proportion to its success.
The MBL architecture was not ready for the spamming, and they are now scrambling to revamp it. Meanwhile, many high-profile sites like TechCrunch seem to be pulling the widget.
I'm mildly surprised that Yahoo & specifically Jeremy Zawodny hasn't handled this better - he's been a strong MBL supporter (even exempting MBL from his anti-badge spiel), but he's gone rather quiet when Yahoo needs him most.
Labels: mybloglog, shoemoney, yahoo, zawodny
¶ 2/23/2007
