More Modest Results for Microsoft’s Marketing Blitz. Now It’s Yahoo’s Turn.

poolAnother month, another half-point: Microsoft’s search market share crept up again in August, according to the newest numbers from comScore. Since Steve Ballmer and company launched Bing at the end of May with a $100 million marketing push, they’ve moved from eight percent to 9.3 percent.

Per usual, you can either argue that these modest gains are good news for Microsoft (MSFT), especially because they come after months of declines. Or you can argue that they are way too modest, given the hype and the media blitz that accompanied the launch.

My question: If you’re Carol Bartz and company and you’re about to launch a Bing-sized marketing campaign of your own, do Microsoft’s results give you encouragement or pause?

Again, the half-full argument is that the Bing blitz proves that given enough brute force, you can indeed use offline advertising to change online behavior, at least in the short term.

Half-empty: At least Microsoft’s pitch has an intriguing come-on–”Hey you! We’ve got a search engine that works better than Google (GOOG)! Come see for yourself!” But unless I’m missing something, there’s nothing equally compelling powering Yahoo’s “Its You!” push.

Maybe I’m wrong: Yahoo (YHOO) formally takes the drapes off its campaign this morning at a series of Advertising Week events. I’ll report back a little later today.

In the meantime, here are the newest comScore (SCOR) numbers, courtesy of JP Morgan’s Imran Khan (click on table to enlarge):

comscore august search share

[Image credit: Seattle Municipal Archives]

The New York Times, Brought to You – Literally – By Twitter

new-york-times-buildingIt’s easy enough to be skeptical about Twitter’s influence and staying power — I do it all the time. But there’s no denying that it has become a powerful driver of Web traffic.

Just ask the New York Times (NYT), which says Twitter is about to become one of its top 10 referral sources to the paper’s site.

Impressive. But what exactly does that mean?

There was a flurry of excitement this afternoon on  Twitter — of course — when Simulmedia CEO Dave Morgan threw out a much more exciting data point: Reporting/Tweeting from an industry conference, Morgan said Times digital boss Martin Nisenholtz had announced that “Twitter now drives 10% of NYT digital distribution, up from 0 a year ago.”

dave morgan twitter

Other attendees report hearing the same thing. But whether they were participating in a mass hallucination, or Nisenholtz misspoke, here’s the Times’ official line, via spokeswoman Diane McNulty: “At its current growth rate, Twitter is, or will soon move into, the top 10 in terms of referrals to NYTimes.com.”

If that’s the case, then Twitter likely accounts for much less than 10% of the Times’ traffic. If you assume that Google (GOOG) is the paper’s largest external referral source, and that it likely accounts  for a third of the site’s traffic (these are semi-educated guesses, but I’m happy to adjust), then Twitter and other sources at the bottom of the top 10 are going to be in the low single digits.

Still! It is a lot of traffic, and a year ago it either didn’t exist, or someone else was directing it to the Times. Now the trick for Twitter (and its investors) is to figure out a way to capitalize on that phenomenon.

The New York Times, Brought to You–Literally–by Twitter

new-york-times-buildingIt has easy enough to be skeptical about Twitter’s influence and staying power–I do it all the time. But there’s no denying that it has become a powerful driver of Web traffic.

Just ask the New York Times (NYT), which says Twitter is about to become one of the top 10 referral sources to the paper’s site.

Impressive. But what exactly does this mean?

There was a flurry of excitement this afternoon on Twitter–of course–when Simulmedia CEO Dave Morgan threw out a much more exciting data point: Reporting/Tweeting from an industry conference, Morgan said Times digital boss Martin Nisenholtz had announced that “Twitter now drives 10% of NYT digital distribution, up from 0 a year ago.”

dave morgan twitter

Other attendees report hearing the same thing. But whether they were participating in a mass hallucination or Nisenholtz misspoke, here’s the Times’s official line, via spokeswoman Diane McNulty: “At its current growth rate, Twitter is, or will soon move into, the top 10 in terms of referrals to NYTimes.com.”

If that’s the case, then Twitter likely accounts for much less than 10 percent of the Times’s traffic. If you assume that Google (GOOG) is the paper’s largest external referral source, and that it likely accounts for a third of the site’s traffic (these are semi-educated guesses, but I’m happy to adjust), then Twitter and other sources at the bottom of the top 10 are going to be in the low single digits.

Still! It is a lot of traffic, and a year ago it either didn’t exist or someone else was directing it to the Times. Now the trick for Twitter (and its investors) is to figure out a way to capitalize on this phenomenon.

AOL: More Org Chart Shuffles Coming; So Are Ad Dollars. But Mum on Microsoft.

092009ATDaolIt’s Advertising Week in New York! Which means that for the next few days, ad sellers will be meeting, greeting and buttering up ad buyers in hopes of prying some of their dollars free. Just like every week in New York.

One difference for the likes of me: Big ad sellers are making themselves very available to the press. This morning, for instance, AOL sent out CEO Tim Armstrong, sales boss Jeff Levick, sales deputy Erin Clift and content boss Bill Wilson to poke at eggs and ignore a plateful of bagels and lox.

Oh, and they talked, too! The big message was that they’re still in the process of overhauling the Internet giant on behalf of Time Warner (TWX), which brought in Armstrong from Google (GOOG) earlier this year and says it still plans on spinning off the company by the end of 2009.

Afterward, I got a brief interview (along with PaidContent’s David Armstrong) with the AOL chief. The video is at the bottom of the post, and you may need to turn up your speakers to hear it. But the takeaways are:

  • AOL is still looking for a chief marketing officer. The search is in the “early stages.” Do you know anyone? Internet experience is not a prerequisite.
  • More org chart moves, like the one that saw COO Kim Partoll pushed out last week, are coming. They’ll be part of the internal review process Armstrong has dubbbed “Project Everest,” which should be complete by the end of the year.
  • So are layoffs. See above.
  • Internet ad dollars are beginning to flow out again–or if they’re not flowing, Armstrong thinks they will be, as big marketers like Procter & Gamble (PG) make permanent shifts in their advertising mixes.
  • Armstrong professes to be surprised by a report last week that he had met with Yusuf Mehdi, who runs Bing and MSN for Microsoft (MSFT). “I know Yusuf. I’ve known him personally for years. So if I saw him I would be happy, but….”

Wave and news

When Google Wave was announced, I got all jittery-happy about the possibilities it presented for news. Now, from a Belgian site, via a German site, I find a video interview with Wave’s project manager, Stephanie Hannon, speculating about its use in news:

Google Wave, une opportunité pour les journalistes ? from Labs RTBF on Vimeo.

In that video, the interviewer asked about the newsroom moving to the cloud. But in this one, Sergey Brin says it’s already there:

“Les rédactions sont déjà dans le nuages” Sergey Brin (Google President) from Labs RTBF on Vimeo.

DoubleClick Ad Exchange: Myth (2009) and Reality (2012) of Display Ad Market Efficiency

Google has finally launched DoubleClick Ad Exchange with full plans to integrate the system with the AdWords platform. Although a long-anticipated development, it's still a "wow" time for our industry.

Google joins a number of other true exchanges of note, companies that have pioneered the idea of a true "bid-ask" system on display ad inventory. The most notable of these are ContextWeb, having gone so far as to dub their system "ADSDAQ," and Yahoo-owned Right Media.

The designers of such systems are the best ones to provide detailed explanations of how ad exchanges differ from ad networks, but transparency of bid and ask prices is probably how to sum it up. If you're a publisher in an ad network like AdSense or the thousands of others that have graced the industry since the 1990's, there is no direct communication with ad buyers. The intermediary tells you what you're going to get on a CPM or CPC basis, either in advance, or after the fact. You don't get to enter into a direct transaction with the buyer, and you don't have any clear sense of what the intermediary's "markup" is. That might lead publishers and advertisers to want to make a lot of individual transactions with one another, to cut out the intermediaries.

And that leads to a patchwork quilt whereby inefficient individualized ad buying and selling is taking place on "premium" inventory, and networks are stereotyped as buyers and sellers of "remnant" inventory only.

Meaning: the state of display today combines two unattractive qualities: a lack of transparency and a lack of efficiency. That there are too many networks just adds to the inefficiency problem: it's an industry ripe for consolidation.

Jonathan Mendez, in one ("The Market Forces Killing Display Advertising") of a series of complex posts, seems to agree that this is the sort of problem facing the display advertising sector. He also, however, predicts that the new exchanges will only make the problem worse: they'll "drive down media costs even further and become a new haven for performance advertising at the expense of [publishers]." If so, I suppose that's great news for advertisers. But there could be a different long-term dynamic at work. Mendez's point seems sound in that he integrates it with a perspective that shows market forces from search advertising being rudely applied to the formerly fat and happy world of display. In short, direct response is what drives much of paid search, whereas something else entirely (brand integration) is supposed to drive display, like it does on radio and TV. If display is being forced to play in the direct response world, those who formerly profited from that channel are at a loss as to what to do next as their margins (and raison d'etre) fade. If I interpret even 10% of Mendez's message right, it's sobering food for thought, regardless of how many brand channel strategists Google layers on top of its direct response and search-savvy core.

Perhaps, though, it's simply far too early to make this call. I'm drafting a potential counterpoint to Mendez's analysis that roughly says: maybe the display ad market today is simply prehistoric and inappropriately organized as far as buying and selling dynamics goes; what if it's like Google AdWords in the pre-CPC, fixed-CPM, non-tested, non-measured, clueless-buyer era of 2001? What if the number of participants in a well-designed auction matters a lot to publisher revenues, and we simply need more? What if measurement and attribution right now are in the dark ages, and the introduction of assists will help? What if new technology (features) to rate publishers, classes of inventory, characteristics of content, got built into the system for either manual or automated use? But that could be another 1,500 words.

For now, a few more thoughts on where the DoubleClick ad exchange may take us.

Here are some principles to consider:
  • Interoperability of networks: ecosystem sensitivity
  • Continued migration of ad dollars away from inefficient media
  • Applying the efficient auction principles of paid search to media buying as a whole
  • Chicken-egg scale issues
  • What kind of market is this? Will Google win with a capital W?
First, if a variety of networks can plug into the exchange and act as buyers, publishers may have a decent floor on their middling and remnant inventory. A "buyer" for a particular ad impression, then, could be any number of direct bidders participating in the DoubleClick exchange, or it could come in through outside networks who are also publishing in the DoubleClick exchange. That could mean a dual role for Google: (1) on one hand, hoping to create "the" platform for buying and selling ads, that improves the overall viability of the industry as it grows in size; (2) on the other, keeping the better outside networks in business, allowing them to buy and sell and even play around with arbitrage opportunities.

Second, the trend that won't appeal to traditional ad agencies and traditional publishers: dollars that can show clear ROI will be happier, so they'll be spend in this medium. The ongoing stampede continues.

Third - and this point is either scary or a forgone conclusion depending on your perspective - these principles will apply to all media someday: billboards, television, radio, product placement, etc. If you're a company like Google or Microsoft, you're thinking about organizing a platform to run that. Google did a pretty embarrassing job of doing this the first time around (radio, newspapers), which just proves you don't just snap your fingers and accomplish something like this. It's very early days.

Fourth, it looks like the early exchanges were sort of unsatisfying in the sense that their scale was understandably limited by how many participants were on either side of the transaction. If the buy isn't big enough, it's not worth the time to monitor your involvement with the platform. Signing up "sellers" (publishers) is a major prerequisite to making this work. And the pitch to them has to say something like: "we have millions of advertisers eagerly logging into our platform every day". Pretty much only Google (and maybe one or two other companies...maybe) can say that. This is a game-changer, potentially.

Point 4.5 is simply along the same lines, but it's probably important not to sidestep this issue. You don't draw up "market maker" logic in the abstract and then from there find great success. If the results to advertisers or publishers are lukewarm, they won't hide that fact, they'll simply stop using you. And unlike traditional ad networks and traditional media buying, your whole principle is that the exchange technology itself drives liquidity and sets prices. If that isn't working, you can't fall back on the sales team to grease the wheels; that would be incoherent. To date, some existing exchanges have suffered from the critical mass problems. Others have meted out condescending treatment to ad buyers, reverting to salespeople who promise to make a custom buy on the system, or work the system for you, as long as you commit to a certain budget. Hey guys, if you're trying to prevent me from logging in directly, then you're a mutual fund salesman exacting a fee; same old, same old.

So, point 5: is this a market like the one Amazon took by storm - a winner-take-all market where Google will enjoy market dominance? Or is it a market where first and second movers continue to do well (like the browser market, where Google only has 3% share, or the -opedia market, where the Google upstart product knol has nowhere the brand adoption of the original, Wikipedia)? How will Yahoo and Microsoft respond? For the record, I caught up with Jay Sears, EVP of ContextWeb, and he said: "We welcome Google to the ad exchange business. It's a terrific market validation to now have the two top exchanges in the market, including one that is independent."

We'll see how things shake out.

Something to think about: interoperable networks -- those less evolved creatures -- may do better in this ecosystem than competing exchanges. A clash of platforms is a true clash of superpowers; non-superpowers die. At most 2-3 leading platforms will win. Meanwhile, "app" creators (sub-players in the system) that work well within the leading platform are non-threatening to the leading platform makers, and don't need critical mass to be profitable within that environment.

In any case, to conclude by explaining what I meant by the title of this post: the display ad business is in a frustrating state, as every company developing products and services to serve that market seems to tell you in their booth pitch. The problem is that virtually none of these companies solve the problem; most make it worse, or sell you a futuristic solution adorned with "truthy" FAQ's, and then revert to old-school methods. In 2009, it's simply a myth that there is any satisfactory display ad system that is built to scale with a scaled-up marketplace of buyers and sellers. If that scale is reached - and I don't think it will be before 2012 - we may be in a quantitatively new ballpark.

Is YouTube’s Biggest Star Ready for the Big Screen?

fredWho’s going to be the first Web star to make it to the movies? One alarming possibility: Lucas Cruikshank, better known to a staggering number of YouTube viewers as “Fred.”

Fred is one of those weird cultural phenomena, like Rascal Flatts or the Wiggles, that are hugely popular in some demos and unknown in others. So while you may have never seen him, he was until very recently the biggest star on Google’s (GOOG) video site, and has generated more than 300 million views.

And now, a movie? I’ve yet to hear about anyone committing to financing, and/or distributing one, but Tubefilter has found what it says is a casting call for a Fred-based flick. That makes no sense to me, but then again, I thought “Beavis and Butthead” wouldn’t translate to the big screen, and that worked pretty well, in my humble opinion.

Then again, in my humble opinion, this stuff is unwatchable. Be warned: