Monthly Archives: October 2006

Google may not be evil, but their advertisers often are. Facilitators of illegal ads should be held accountable

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Although I think Google really tries to follow the “don’t be evil” mantra I think it now rings fairly hollow (ha – especially if it’s ringing up a ringtone ad scam at Google Adwords).

The problems are click fraud and downright illegal advertising which is running rampant all over the internet. This is a great set of PPC fraud advertising examples displayed at Google from a Harvard Law researcher, a proverbial drop in the online bucket of fraud.

Google, as the 800 pound gorilla, is the major beneficiary but this is an area that is simply ripe for legislation to prevent the plethora of PPC fraud schemes, ringtone scams, false advertising, and many, many more from polluting the online advertising space.

Why is this such fertile ground? It’s the new and fascinating combination of young users, young advertisers, young and old scammers, anonymity, global reach, and more that make this a complex and growing problem. Google et al are taking a “let the buyer beware” approach which is both evil and ignores the fact that many of the buyers are kids who wouldn’t know a scam from a treasure trove.

Ironically the solution to the scam ads is very simple. One new Law: If you run an advertisement you are responsible for any refunds in the event of a dispute with the advertiser. Make the publisher deal with their friend the advertiser who they are implicitly endorsing by showing the ad. This would clean it up very fast.

PPC fraud solution is not as easy, though I’d consider this:

1) Have teams of objective ombudsman researchers evaluate the fraud component at the different search engines.

2) Engines must refund to each account this average fraud component.

This incentifies the SE’s finding out and killing off the fraudulent clicks quickly, rather than the current lackluster efforts to root out the problems.

Myspace users are getting older according to Comscore. Danah doubts it.

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Myspace users are older than you think says a new comscore report. Yet Yahoo and Berkeley’s Danah Boyd, almost certainly the sharpest and most knowledgeable researcher in this space, is challenging Comscore’s finding.

It’s good to question methodology, but I think Comscore is “correct” here though Dana’s right that we need more slicing and dicing of data to assess the significance of this finding.

1) I’m pretty sure the methodology is very strong in terms of demographic specifics. I think they have a pool of people they interview or measure regularly and then mine this data from this controlled and “known”, but very large online population.

2) Users *are* visitors! They are using the term “users” in the normal metrics sense of “unique visitors to the site”. Dana is making a distinction between users and visitors as active vs passive participants.

We’d want to see more info about time spent at the site to generalize more about this but I don’t think this time issue would refute the “user demographic” they are talking about.

Of course, if young users spend 10x the time at the site as older ones it would make the Comscore finding less important. They don’t seem to suggest this is the case however, so until further notice I’m going to keep thinking “wow, Myspace is getting to be an olderspace!”

Update: Fred’s take on this seems to be that method is OK but this needs more elaboration in the press which he thinks is “conflating” the terms user and visitor. He agrees with Danah that “user” and “unique visitor” are not the same. I’ve never seen anybody make that distinction but perhaps we need a new term?

Seems to me that they have been working with *subscriber data* and thus are surprised by this user data. Subscribers are probably are younger than visitors and spend a lot more time at the site. Relevant, but does not dismiss the Comscore findings.

Update:  Mike Rubin at Comscore comments here.     Appears my analysis was correct – Comscore’s data is solid but reflects visitors and not registered users, and young people stay on longer.

Got a few *billion* lying around? Buy an internet company!

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Here’s a nice list of internet purchases over the past few years. I’m starting to come to grips with the fact that even if you create a great company the payout is not that spectacular unless it’s the one in a hundred deal like a YouTube, Skype, Broadcast.com, etc. As one of the VC’s down at Mashup Camp pointed out those are the exceptional exceptions to the normal rule of deals worth millions, not billions. Even in those deals only a handful of people make more than a few million.

In a 20 million deal once you’ve paid off the VCs and generously dealt with other key employees I wonder what the average “founder payout” would be?   The average VC funded buyout is about 47 million.   This sounds high, but there are many, many VC fundings that end up dying.    Thus the ‘average value’ of a VC funded company would be way below the average buyout price if I read that number correctly.
As my old pal Rick likes to say “A million dollars isn’t what it used to be!”

NYT summarizes the Google Youtube deal

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Here’s a good summary of the Google YouTube deal from the New York Times.    They note that one analyst suggests this is not a spreadsheet valuation as much as a way to keep competitors away from all the juicy eyeballs at YouTube.

I still just don’t understand how any big player could not put the money to better use and grow their own.  I was under the impression that many used YouTube rather than Google Video because the latter took longer to post – presumably because they screened content more aggressively -I would have thought that Google Video would have tried the same configuration as YouTube before spending so much, but this also supports the idea that this was a way to keep MS and Yahoo (who is currently the video stream leader), from gaining the market share Youtube will now provide to the Google family of sites.

I don’t think this is a shark jump by Google, but I think this may go down as the most expensive “junk content” site aquisition in history.

Danny Sullivan says he does not have much to say about it over here at Search Engine Watch.  (Hey, I thought you left SEW Mr. King ‘o Search Optimization?!)

Mark Cuban to Google – you are crazy! JoeDuck to Google – just show me some money!

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Mark Cuban, no stranger to online video having made about a billion in that field, challenges Google’s sanity in the YouTube deal here.

It seems to me Cuban’s been the most insightful of those reviewing this deal and my first reaction is “brilliant stuff from an insider”, but I also respect how clever Google is and will continue to be at re-railing the online train.

Big producers will do big deals with Google as they are right now.   The growing community of small time content producers (e.g me) is a lot more willing to share and forget about copyright encumbrances *as long as you cut me in on the action*.

If Google can monetize my stuff better or close to as much as I can then more power to Google.   I’m rooting for Yahoo! winning the monetizing battle though because …. I like them better and have stock.   But there’s room for both, and I think we’ll see in the coming years that the rising tide of online ads will lift most of the ships.

I’m confident I’m speaking for 80%, and probably 98%, of the long tail when I say that the long tail, especially in video, is going to attach to the entity that can best monetize their work be it professional full length movies or stupid cat trick clips.

Can the other 2% of content people sue them?  Sure, but not painfully enough to stop the online video train o’ progress, a train that’s sure to bring us the most garish, irrelevant, superficial, and poorly produced video yet seen on earth and then find a way to turn a few bucks on showing it off to people.    God bless America!

Web 2.0 Metrics? Aren’t we still trying to figure out Web 0.1 metrics?

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Jeremy often asks the questions people will be asking next year. Here, Zawodny notes the difficulties as Web 2.0 brings a lot more than pageviews to the browser table and cites this article about how pageviews are problematic as a measure of online success.

There are challenges galore as we move to Web 2.0 analysis. The YouTube deal alone showcases how irrelevant a ‘page view’ may become to full analysis. There, advertisers will probably want a small clip inserted before the video as well as pay per click or aquistion modes of advertising – at least until all advertisers start demanding cost per sale terms.

I think commercial metrics will (must) trend towards firmly establishing costs per sale and/or customer aquisition. At the point where that gets good the advertiser really does not need more detail. Much of the current advertising mis-analysis industry is based on analysis of things that only indirectly lead to sales.

In many cases I’ve been floored by how mathematically unsound so called “objective” conversion studies can be. In Travel and economic development this relates to the fact that those sponsoring the studies typically benefit from high ROI numbers so a cottage industry of “impact inflation” studies and firms has developed that serves the vested interests rather than the taxpayers.

Non commercially focused website metrics are even more complex than commercial, since many bloggers would probably rather be read by a handful of movers and shakers who provide thoughtful commentary than by legions of regular Joes.

A blog read by all G8 world leaders would be about 1000x more influential in terms of changing history than one read by American Idol fans, but would probably have limited commercial value. How do you measure that? Perhaps Yahoo or Google need a “BigWhig Rank” that pulls in personal data and assigns importance to the … person?

Hmmm – they already have been nabbing your search streams so maybe next they’ll take your … soul! I think that is OK with me as long as it’s …. measurable!

Google and Youtube

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Deals with Youtube and Google are flourishing today in the fertile ground of a 1.6 billion dollar aquistion of the online video leader* by the online money and search leader. The announcement is expected this afternoon or evening that Google’s bought Youtube for 1.6 billion. If Yahoo picks up Facebook (rumored but I think unlikely) it’ll signal an interesting consolidation of key Web 2.0 sites by the more established huge players. This consolidation seems to support the idea that the big guys see it as cheaper to wait until the rich and creamy high traffic sites rise to the top and then buy them up (Microsoft made an early and successful habit of doing that as well).

However at these billion+ valuations I’m skeptical the strategy can work as effectively as buying smaller companies to consolidate niche traffic. ie Flickr=good deal for Yahoo, Facebook=bad deal.

CORRECTION:  Really, Yahoo is the online Video leader, Myspace second and Youtube third.  Google video added to Youtube will probably push them to number one, but as usual Yahoo!’s doing it right but not getting credit for their leadership.

Online News Association to Arrington: Hey, let’s get Mikey!

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Poor Mike Arrington. From his blog it sounds like Mike was the token sacrificial lamb at the recent Online News Association conference where his comments were not taken well by the crowd of what sounds like mostly conventional journalists (or conventional *thinkers*) hoping to get a grip on the sea change going on, and going online, right now. They should listen to Mike carefully, because he’s been good at seeing the future. (ummm except Edgeio, which probably won’t fly).

There’s a lot of news in the news business but journalists are often missing the critical factors which include blogs, user interaction, and emphasis on real time reporting in real time from real people who are making that news themselves or direct witness to that news (e.g. who really wants a journalist in the middle when you have webcams on all the parties in the dispute?)

I remember how intense Mike got at Mix06 in his remarks about the future of offline Yellow pages, telling them “You are DEAD!”, and I can only imagine how the ONA folks reacted to his insights about the future of news and media in the online world.

His real sin was to become an expert early on in the Web 2.0 world and to profit from that expertise. Nothing pisses people off like somebody figuring things out early and profiting from that knowledge.

Good for him, but he better stick to events like Yahoo Hack Day or Mashup Camp if he wants a warm reception from like minded folks….folks who also understand that the changes are only beginning and will rock the news world like it’s never been rocked before.

Google to buy Youtube for 1.6 billion

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It’s now almost official that Google will buy Youtube for a whopping 1.6 billion. They’ll announce it after the close today.    Here’s the NYT take on things. I’d have listened to Mark Cuban because it seems to me he’s in a very unique position to analyze the prospects here, but they didn’t and soon Google will have a huge video footprint. Google Video has about 1/4 the traffic of Youtube. Combined I think they’ll dwarf the competition – at least initially, though this market, which should really be called “American’s stupidist and most mundane home videos” is still in it’s infancy.

It’s not clear to me that people will continue to spend hours and hours surfing and watching for the few gems in an ocean of crappy short clips but Google seems to think so, and it’s also true that there is an enormous amount of advertising money now spent on network TV that may flow to this venue. Google’s recent talk about NOT producing their own content and moving into offline advertising venues may relate to this decision – they want to become a key source to soak up as much of the dumb money now spent on extravagant, low ROI offline campaigns.