Guardian column: Micohoo vs. Gulliver

My Guardian column this week on the Microhoo search lashup:

In bringing together their search traffic, Microsoft and Yahoo are fighting an unwinnable war. Worse, they are still fighting the last war. . . .

But while they pound their little fists on Google’s shins, Google remains the unchallenged giant in the arena that really matters: advertising revenue. According to the blog Search Engine Land, Google takes almost a third of all online advertising money – $21bn a year – and it doesn’t rely just on search.

And Google is turning to the next battlefields: mobile, social media, the live web, and online tools. . . .

Yahoo can now jettison the technology resources that went into search. That’s rather sad. After all, 15 years ago, it was Yahoo that first organised the web for us. Its original ambition seems quaintly naive today: human editors cataloguing every site worth visiting and deciding which were the hot ones we should visit. Back then, we, and Yahoo, thought the web was a medium, like TV, that we experienced together. Yahoo never quite broke out of that thinking. It still treats its site as a destination we have to go to with walls around it to keep us in. It just introduced a new homepage to some fanfare. Homepages are so 1999. . . .

So, let Yahoo and Microsoft celebrate their deal. Yahoo doesn’t have as much to celebrate. It turned down acquisition offers and now it gets no cash from Microsoft. And it is surrendering its earliest competence to a competitor. Microsoft has more cause to grin. It got Yahoo’s search traffic for no cash and doesn’t have to manage the rest of the old beast.

And Google? One wonders whether it notices beyond that irritating poking at its shins. It’s too busy trying to conquer what comes next.

The John Henry fight of man v. algorithm

I interviewed Josh Cohen, product manager for Google News, this week for the Guardian MediaTalkUSA podcast (out early next week) and asked him how many clicks to news sources Google News causes. The answer: a billion.

And then I saw this PaidContent report on URL-shortener thinking of offering a breaking news service. That doesn’t seem so crazy when you hear how many clicks it causes a month. The answer: a billion.

It so happens I just wrote this in my Media Guardian column, coming out Monday, about the Microsoft-Yahoo search lashup:

Oh, search still matters. But it is beginning to matter a little less. Venture capitalist Fred Wilson recently pointed out that 14% of traffic to his blog,, comes from Google, down from 29% the year before. Wilson argues that the difference is Twitter—that is, links from people over algorithms. (Note that Wilson is a Twitter investor.)

Now I’m hardly saying that Google is being overrun by the power of mankind. Nor will I argue that every link sends to is news – except more of it is than news organizations would admit if they were wise enough to expand the definition of news to the hyperspecific, a word a commenter below suggested I start using instead of hyperlocal. Your friend’s concert photos are news to him and you. Note also that isn’t the only source of human-powered live links; there’s the rest of Twitter and its other clients, not to mention Facebook and fresh blogging.

But I do think it’s significant that given the platform to collect the power of links by people, it can quickly match the power of the algorithm. I also think there’s even more power in bringing the two together.

Vid-Biz: Velocix, Viacom, Google

Alcatel-Lucent Acquires Velocix; terms of the deal not disclosed, according to Dan Rayburn, the company was acquired for its technology and not its revenue. (The Business of Online Video)

Viacom Q2 Profit Drops 32 percent; ad revenue still down for cable nets (though it picked up from the first quarter), and the success of Transformers 2 won’t be truly reflected until later this year. (The Wall Street Journal)

Google Teams Up with Visible World for TV Commercials; partnership will allow advertisers to create multiple versions of ads that can be distributed through Google TV Ads service. (The Wall Street Journal)

Hollywood Files New Suit Against The Pirate Bay; 13 studios demand the site operators (who already lost an earlier case) should be fined and prevented from distributing TV shows and films. (The Washington Examiner)

Epix Gets First Carriage Deal; Verizon FiOS TV to carry the upcoming pay TV service from Viacom, Lions Gate and Paramount. (The Hollywood Reporter)

Web Series Based on The Jerk Movement Starts Shooting; Skinny Jeans: The Movement will feature the hip-hop group The New Boyz, and the 20 episodes will be distributed through sites including Hulu. (Variety)

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Google: YouTube Will Soon Be “Very Profitable”

YouTube will be “very profitable” in the “not too distant future,” Google’s Nikesh Arora said on the company’s quarterly earnings call today. The site’s monetized views have “more than tripled in the past year,” according to Jonathan Rosenberg, SVP of product management. “We’re now monetizing billions of views of partner videos every month.”

Google CEO Eric Schmidt, who’d previously given YouTube a few public spankings about pulling its weight in revenue, said today he was “very pleased” with the site’s money-making trajectory.

Brand display advertising is doing well on YouTube, noted Schmidt and Arora, who is president of global sales operations and business development. And the majority of YouTube views are not professional content, Schmidt added. Google execs called out featured videos on search, the YouTube home page masthead, pre-rolls and long-form content as areas for revenue growth.

YouTube’s bottom line gets a lot of ink, considering there is virtually no confirmed information about the site’s expenses and revenue. Credit Suisse had made a splash in April by estimating that YouTube could lose $470 million this year, however an infrastructure research firm disputed that report, saying the bank had underestimated Google’s ability to minimize costs.

As for the percentage of video views that YouTube monetizes, Rosenberg gave Google’s first real comment on the matter — if only on a relative basis. A YouTube exec had previously said that the assertion that YouTube only monetizes 3-4 percent of views is “grossly inaccurate.” The company gave the slimmest of indications that the portion was at least 9 percent of views, and perhaps higher. In those single digits, tripling might not be as huge of a jump as it seems.

As for pre-rolls, embracing them shows a change on YouTube’s part to reflect the reality of serving video. The site had scorned the format early on for being unfriendly to users. In August 2007, a YouTube product manager told us, “Pre-rolls and post-rolls did not perform well on our platform. [In our testing,] 75 percent of our users were unhappy with them.” Today, Arora said on the call that YouTube users now accept that pre-rolls are a necessary corollary to premium content. Rosenberg noted the site sees “very little drop-off” when it shows pre-rolls.

With reporting by Jordan Golson.

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Google Doesn’t Lack for Transparency for Individual Tentacles, But the Whole Octopus Scares Us

I just wanted to clarify the previous post, given that blog tone can sometimes be as brittle as email.

Compared with the ‘typical’ company, Google has shone far more light on advertising performance than any company that has come before it. If all it had done was to come out with Google Analytics, advanced segmentation, free to everyone, that would have been enough. But in addition — save for a few quibbles — the advertiser has pretty much gotten their wish on all kinds of disclosure points. Running a placement performance report in the AdWords back end, for example, gives you minute information about the click and conversion performance of publisher partners. While such info may be too strict for those seeking reach and frequency to build their brands, it is surely nice (more than nice) that it is offered.

In releasing Google Webmaster Tools on the organic side, Google also took a major stride forward in communicating with site owners about their page indexing status, the true status of inbound linking, etc.

It’s not like we haven’t been noticing this stuff. It is worth noting though that such disclosure and communications have been hard-won. Folks on the outside needed to clamor for them, and there needed to be advocates inside Google willing to spearhead those initiatives.

We’ve written about Google’s transparency previously, here and here. This transparency has been insufficient to convince some analysts, however.


  • We don’t know the exact specifics of how the AdWords ranking algorithm works, especially on landing page and website quality and anomalous words like trademarks or just weird stuff that seems to get you into more trouble. That said, Google publishes a lot about the Quality Score recipe, publicly (anyone who says they don’t is blowing smoke). And spokespersons, primary among them Nick Fox, Frederick Vallaeys, and Hal Varian, have always been extremely forthcoming about details. Nick in particular has helped to combat common myths, including some I tried to dispel here in a Landing Page and Quality Score Refresher over at SEL. In hindsight, it was quite a bit easier to overcome snake oil stories about the ranking formula back when it was essentially CTR X Max Bid. The funny thing is, that’s pretty much how it still works, outside of a few quirks and exceptions. But by making the algorithm sound so sneaky, Google has opened the door to an endless procession of seminars by “experts” (mea culpa on this also), and has indirectly allowed old-school SEO companies to re-enter paid search as the kinds of “experts” who never feel like they’re delivering a service properly unless their spreading FUD and doing a number on their clients’ brains. Quality Score Fascination has risen from its opacity, and has indirectly distracted some marketers from marketing. For example, you really should test landing pages for your users and for business results — not to make Quality Score happy!
  • Disclosure is relatively poor to AdSense publishers;
  • Search partner traffic still performs worse than Google Search traffic, but you can’t bid it lower (though you can opt out). This makes it actually worse than content targeting (placements) today.

Flies in the ointment:

The many products Google has now developed fall under the broad heading of “free” stuff that comes with hidden strings attached, as addressed in Chris Anderson’s new book. Google is a Super Funnel (or perhaps Mega Octopus is a better term) that actually relies on the fact that the terms and conditions of engagement with any given tentacle don’t adequately capture the reality of the fuller relationship you’re developing with the company as a whole. In that sense: you cannot criticize great, free products like Google Maps integrations and GMail… you just can’t! After all, they’re great, and they’re free. So why is it that at some point, these wonderful gifts start to make everyone feel just a little bit uneasy?

Maybe that’s why I like to focus on their advertising program. You pay. I can wrap my head around that.

Google’s Products Seem Designed to Make “Criticism” Beside the Point

Google’s Matt Cutts generously admits that Googlers are too defensive when it comes to criticism nowadays. On further reflection, though, it will take a lot more than an attitudinal shift to change that state of affairs. Google, it turns out, is now a very large business that has designed so many of its products with the façade of “automated and therefore uncontroversial,” those few years of entrenched anti-institutionalism will take many years to undo, if the problem is even recognized.

As a business owner seeking to transact with Google, your sense of puzzlement may only grow if you’re brutally analytical about what drives Google’s economic engine. Isn’t Google, at the end of the day, a classified advertising company like Craigslist or Yellow Pages, making money from highly targeted advertising? And don’t those companies basically explain how their products work, and have clear mechanisms, rules, customer support protocols, and yep, in some cases, sales forces, to work in a relatively ingratiating fashion with the relevant customers and suppliers? Some of Google works in this way. Most of it does not. And most of us are still having difficulty grasping how we’re supposed to interact with the 95% of Google that doesn’t operate in this fashion.

This isn’t primarily an issue of Google not taking input into the design of its products. It’s particularly good at that. It now uses beta councils to take expert input into many products, and of course it’s got the world’s biggest user community to help it refine everything.

No, it’s a deeper issue of how Google interacts in the transaction of business when it comes to a wide variety of products and how they will affect customers and partners. The informality of the thinking here was appropriate to a much younger company, but is bewildering as the company reaches maturity. They’re not alone here. The bizarre amateur hours, arbitrary decisions, and laid-back communications that Facebook and Twitter users and partners are subject to are easily enough explained away by those companies’ youth. Google is of course going to be held to a higher standard given the privileges they’ve enjoyed with growth, including enormous material gain in a competitive landscape.

My awareness of this broad issue began growing when I began to piece together the shift from older generations of the advertising rules and algorithms to the newer generation, dubbed Quality-Based Bidding. Don’t get me wrong: as an advertiser, technologist, economist, and user advocate, I love the elegance of Quality Score. But it twigged me to a deep shift that was incorporated into algorithmic changes. A host of editorial rules and policy discussions could be baked into what was now referred to an “algorithm,” not editorial policies. While Google kept its published guidelines for landing page and website quality (and indeed beefed them up), it’s safe to say the theoretical need for human explanations, interactions and appeals was reduced greatly; it could, if Google wanted, approach zero. To the average observer with a background in placing advertisements in classified media, that looks like one introverted company! Especially one taking in $21 billion a year from that very revenue stream.

I had become more dimly aware of this issue when shifts occurred in how Google administered their AdSense advertising program from the publisher side, introducing Smart Pricing on clicks, so that an actuarial-style system determined how much less than the market bid price any given publisher should receive for a click, in order to reduce advertiser disgruntlement. That shift, too, had reduced the need for open policing of publisher partners, and over time advertiser satisfaction indeed went up. Efficiency triumphed, and the thing Google fears the most — people in positions of authority taking responsibility for editorial judgments — was submerged.

If these two highly public and highly controversial revenue generators were reduced to mostly algorithmic formality, just imagine how easy it would be for this company to tell that same story about all of its other products. Thus delaying, possibly forever, the need to develop old-fashioned institutional means and published rules for how the company accepts content and money from the many businesses and consumers attempting to interact with Google.

I dedicated Winning Results with Google AdWords (2nd ed.) to Bill Gates, perhaps as another small cry in the wilderness stating essentially this: It was pretty easy for Google to make decisions to avoid “being evil,” and to look a lot less evil than Microsoft, back when it was an an apples-and-oranges case; Google small (as Matt Cutts points out, “many Googlers, especially old-timers, still think of Google from early days, when we were the underdogs in search”), Microsoft incredibly large and successful in its goal to lock users into its workflow environment. Things are now moving closer to apples and apples, or should we say oranges and oranges given that there’s an Apple in this mix too. In releasing an OS, Anil Dash judges Google to be stepping into its “Microsoft moment.” He doesn’t say that is evil per se, but the primary accelerator of Microsoftishness (whatever it means, it was a moment/character that, for Microsoft, began as early as 18 years ago) is insularity.

Controlling for degree of difficulty (company size, global domination, etc.), it’s quite possible that Bill Gates will ultimately be judged less evil than Google’s founders. By dedicating a book about Google’s main revenue stream to Gates, I guess I was just saying: let’s hope it doesn’t become so. Let’s hope Google starts to recognize when they’re competing too hard, too aggressively, too selfishly against all and sundry (including, sometimes, valued partners and allies). Anil Dash’s analysis suggests cheekily that this will require the company to acquire Theory of Mind (something a two-year-old doesn’t yet have).

One of the biggest tests of whether Google has the capacity to continue living up to their early ideals is precisely in the company’s ability to accept constructive criticism. It’s perfectly understandable for ordinary people to be a bit touchy in response to criticism. But when you’re an entity worth over $100 billion that last time we checked wasn’t formally in the business of eradicating diseases or helping old ladies across the street, thicker skin is going to have to come with the territory. This is what folks like Danny Sullivan (in The Google Hive Mind) and Anil Dash have been alluding to; and it’s great to see yet another example of Matt Cutts’ legendary openness.

I guess people like me and a few others (including Google “oldtimers,” some of whom have moved onto places like Facebook, and Danny) feel a certain stake in the outcome, in the sense that over the years, much of what we’ve written has been accused of being too pro-Google. That’s never been true, but we’ve certainly got a responsibility to be even-handed and to serve our own customers and readers – not Google’s PR objectives (whatever we might guess them to be). I suppose Google may just have to get used to it.

Google has a million things going for it, but it’s become a puzzle for those running businesses that are directly impacted by its decisions. That now numbers in the millions of businesses.

Mature companies develop institutional frameworks and transparent processes that manage their various lines of business. For the past few years, Google has made sometimes halting starts, other times major strides along these lines. But to take just its core area of search, Google today is now a patchwork of aggregation products — news, real estate, reviews, video, product search etc. — that have no common framework for submissions or membership. Communications and criteria often seem to be afterthoughts, and the community around Google (often supplying either content or dollars to Google) is left to scratch its head and wonder what the rules really are.

Looking at it in the context of the history of search, Google’s many search products today stack up as similar to directories, classifieds, or paid inclusion schemes from the past, but without clear explanations of the role of editorial, without the explicitly paid parts, and without stated rules or expectations for what next year’s rules might look like. For why Google is to its own core products as 1896 was to public administration, see The Progressive Era.

(AdWords, for all of its complexity and layers, is in fact a major institutional force at Google and its main cash cow, so is largely an exception to this rule.)

Over the years I’ve met more than a few Googlers who haven’t felt the need to check every statement against the formal public relations protocol. Let’s hope their light is never extinguished.

But it will likely take more than some frank commentary or a different attitude to reduce the ecosystem’s growing bewilderment with Google. There are too many products — even counting only search-related ones — that face towards the legitimate, earnest, content-producing, advertising-dollar-spending community with a set of coded, impenetrable, quasi-rules. Will a new generation of Googlers be empowered to create relationships with affected businesses in a framework of institutional transparency and consistency, or will we continue to experience a “hey, we’re just little guys from Mountain View” culture that spits out a confusing array of search “products” with the claim that their conception and impact is entirely scientific and that there is no editorial function or implicit, shifting rule set lurking underneath, just daring you to try to figure out what they are? In that kind of culture, you can’t blame Google PR for being tentative and difficult to communicate with. In many cases, they wouldn’t know what to say unless given a script; any more than you or I would.

Blogs, Not Email or Search, Drive Video Views

Remember the days when Numa Numa was passed around as an email attachment? People don’t find online video like that anymore. Blogs and other web sites with embedded video and links are the single largest referrer of video views, according to TubeMogul. They even top direct navigation on video sites, for instance through a channel page, search or a related videos list. Seeing a mention on a gossip blog, an out-linking news site, your friend’s online journal or maybe even little old NewTeeVee is the main way people find video.

I was especially surprised to see that email referrals count for only 0.38 percent of video views — links sent via email or instant messenger surely must be a big reason people watch videos. That may indeed be true, though it’s not reflected in the data, because TubeMogul notes that it can only accurately measure click-throughs within web browsers. It has difficulty tracking clicks from software.

TubeMogul’s account of the changing nature of video discovery, first reported by last night, also paints a disappointing picture for video search engines. They only account for 0.35 percent of video discoveries — and they’re pretty much all browser-based, so there’s no undercounting here.

Social networking sites like Twitter, which are a quickly growing source of traffic to video and other sites, only account for 2.01 percent of video discoveries, according to TubeMogul.

YouTube itself is the second-largest search engine in the U.S., according to comScore. Within TubeMogul’s research, clicks from YouTube searches count as discovery through a video site, not a video search engine. But TubeMogul says blogs (just by a smidge) outsize that activity as well.

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