Yahoo Buyout Rumor – this one is real


The faulty Times of London rumor over the weekend about a pending major Yahoo search deal with Microsoft was likely spawned in part by what appear to be correct reports that Jonathan Miller, former CEO of AOL, has been working to pull together at deal that would value Yahoo in the $20-$22 per share range and lead to a takeover of the company, presumably the deal would put Miller in a key role.

Jessica V at Wall Street Journal Reports

Miller’s interesting history as an AOL innovator and corporate rescue man who was fired after what many think were successful actions suggests to me that he’s eyeing Yahoo as a way to get back in the internet saddle in a major way.    Yahoo’s internet footprint remains *larger than Google’s*, yet Yahoo’s legendarily inept monetization of this online traffic has let Google leave them in the revenue dust.    As a company Yahoo is a lean shadow of its former self, but as an internet empire they are still doing just fine.   One caveat is that Yahoo continues to lag Google big time in the most lucrative online activity of search.   However, as one of a handful of global website empires that can shape user behavior simply by adjusting their offerings, advertising, and navigation elements Yahoo optimists like me continue to think that Yahoo’s problems can be fixed, leaving them in a position to double revenues in short order.    They do not have to match Google’s revenues or monetization to be wildly successful – they just need to *do somewhat better than they do now*.   I’m betting they can.

Disclosure: Long on Yahoo (in fact I just bought more today)

Microsoft to Aquire Yahoo Search for 20 Billion… or not?


While the Times of London is reporting that Microsoft is close to announcing a Yahoo search aquisition at 20 billion with a slew of details suggesting they have a lot of inside information, Venture Beat is suggesting this might be a bogus report as they’ve been told by a key player in the deal, Ross Levinsohn, that he knows nothing of this.   Although it’s possible Levinsohn is … covering for the deal it seems odd he’d issue a flat denial if there was something to the rumors.

My wild guess is that the Times had a hot tip about one of the dozens of potential deals that are surely percolating around Yahoo as the stock (and thus buyout value) dips to very low levels, and that they ran with it rather than spend much time researching.   This has become a major pitfall of “real time” media, where there is increasing pressure to shoot first and hope your story is correct later.   Another possibility is that this is a carefully contrived rumor to pump and dump the stock on Monday – without more denials this is likely to spike Yahoo a few bucks or even more Monday morning.

Disclosure:  Long on Yahoo

Who is clicking at your online business door?


Back in July I missed this great post by Dave Morgan at AOL but thanks to Danah Boyd’s post it has surfaced again.    The findings are very surprising and very relevant to anybody running click or online advertising campaigns.   Dave summarizes the findings very concisely as follows:

We learned that most people do not click on ads, and those that do are by no means representative of Web users at large.

Ninety-nine percent of Web users do not click on ads on a monthly basis. Of the 1% that do, most only click once a month. Less than two tenths of one percent click more often. That tiny percentage makes up the vast majority of banner ad clicks.

Who are these “heavy clickers”? They are predominantly female, indexing at a rate almost double the male population. They are older. They are predominantly Midwesterners, with some concentrations in Mid-Atlantic States and in New England. What kinds of content do they like to view when they are on the Web? Not surprisingly, they look at sweepstakes far more than any other kind of content. Yes, these are the same people that tend to open direct mail and love to talk to telemarketers.

What does all of this mean? It means that while clickers may be valuable audiences, they are by no means representative of the Web at large

Indeed, this means that many online marketing campaigns may need to dig a lot deeper to obtain a positive ROI, and for some campaigns positive ROI is not attainable.    If, for example, irrelevant clickers (not to be confused with click abuse) mean you’ll have to spend a few dollars to reach a single prospect, and your margin on your product is only a few dollars, you may be fighting a losing PPC battle for online hearts, minds, and pocketbooks.    On the other hand if your target audience is, say, midwestern stay at home soccer moms, you may want to up your PPC spend dramatically because your nickel or dime per click could be worth many times that in prospective sales.

Obviously Dave’s post is only the beginning of the big story which has yet to be written,  and I’m not clear how representative this sample was of all PPC activity (I think it was broadly representative though – they looked at billions of data items).  However this helps me understand why some of my PPC experiments have failed to yield much of a return.     A good travel experiment given these findings would be to look at midwestern travel patterns and try to advertise popular packages to Mexico  or other commonly travelled points south in the winter.   Since women are the main travel planners this match could work well to increase the normally very low conversion I have seen on travel related PPC spends.

How Artificial is your Intelligence?


This is Jabberwacky, winner of the top Artificial Intelligence award.

More artificial intelligence bots are at this AI link, showcasing several programs that are designed to communicate as a human would communicate.

While Jabberwacky makes extensive use of user input to create it’s answers, most of those at the other link are based on A.L.I.C.E., a remarkable chatbot program that often fares well in Turing Test competitions, though no computer has yet to pass the Turing Test which suggests that a skilled judge’s inability to distinguish an artificial intelligence from a human one will be a key milestone in computing. I’d guess this is only a few years away, though computer consciousness appears a more elusive goal with most experts estimating the date of that milestone to be around 2020.

Ian notes the limitations of these ALICE bots in the comments below, and at his blog suggests a Googley alternative that would take Google query info and embed it in a conversational style to pass Turing.

HBO Comedy Festival and Comic Relief in Las Vegas


In Las Vegas you always have to re-orient yourself to being in a major center of the entertainment world. This week Caesar’s Palace is hosting the HBO Comedy Festival with a lot of household name comics, though major headliner Dave Chappelle has dropped out. After the HBO Comedy Festival event is “Comic Relief”, with proceeds going to Katrina victims.   That’s at Caesar’s Palace on Saturday with Robin Williams, Whoopi Goldberg, and Billy Crystal.

I wandered into the promotional tent/event tonight where they are in the process of giving away cash, cars, T-shirts and cigars. AOL had a bunch of PCs with *superbly* fast internet and an espresso cart serving up whatever you liked. There were a couple of venues with “open mikes” for anybody who wanted to be a comic, but that was not going over very well.   In fact I was really struck (as usual) by how events here tend to be so awash with cash that does not create a direct return on the investment.     The sponsors would say these “branding” events have large indirect value but I think when we can better measure such things we’ll see how much is wasted by these approaches, especially when compared to online advertising methods.

One thing that really strikes me about Las Vegas, especially at the fanciest places, is the very high quality of customer service. Even if you are underdressed and obviously just looking around, the shopkeepers, security guards, and staff of places like Caesar’s Palace or the Bellagio are attentive and polite and even appear to be sincere. This is obviously the right way to turn a profit but ironically you’ll find inferior customer service at many mom and pop tourism joints around the USA even though they’d likely reap rewards for this as well.

Time Warner to Google: We spell your merger “SueTube”. Battelle to TW: Lookout!


John Battelle thinks Time Warner is mistaken to attack Google on copyright, writing over at Searchblog:

a shot across the bow may bring a broadside from the other side

I usually agree with John Battelle but I don’t really follow his logic here. I agree with him and Bob Dylan that “The Times They are a Changin”“, and that we need a new song to show how the old media empires don’t get the internet. I’d call that song “The Time Warner’s .. They Aren’t a Changin’ “.

However, I don’t see how bringing out the big legal beasts will hurt Time Warner. Frankly, I think they just want Google to throw money at them. As the Napster buyout proved all this has little to do with “rights”, it’s a money grab, sung as usual to the tune of that great O’Jay’s tune of years and years ago “The Love of Money” :
Money money money money ….. money!
The HUGE winners in this are the clever YouTube founders who really just created a very clever distribution system at an opportune time. The user community, and then the GoogleBucks, followed. One thing that irks me about all these mega deals – including Google itself – is that they are built on the backs of the swelling supply of (mostly) user generated content and in the case of YouTube a lot of illegally obtained copyrighted stuff. There will be little or no compensation to the *key components* of the YouTube environment other than a distribution vehicle. Now, one might argue that that exposure is enough compensation for an average YouTube uploader but it still seems…”wrong” to me.

I’d agree that those who create and then monetize these efforts should make a lot, but it’s unfortunate that people, like sheep, choose not to aggressively explore all our online alternatives. I think if we did do more exploring and innovative thinking we’d have a stronger ecosystem of companies rather than a few big players and a plethora of “also rans” standing around drooling at the prospect of a Google or Yahoo buyout.

Prediction: Google will buy Facebook for about 1.1 billion


Irrational exuberance in the dot com shopping aisles?

No, it’s a chess game and Google’s winning….again.

I’m really starting to understand what seems like irrational exuberance on the part of Google and the major players. A Google aquisition of Facebook would be consistent with what Robert Scoble suggested is happening: Google is building a moat around it’s advertising business.

Steve Ballmer also suggested this notion in his recent BusinessWeek interview, ironically fretting that Google could monopolize the media business. Yikes, Steve would really run out of chairs then?

I can almost hear Ballmer to Schmidt:
“Hey Cowboy, there’s only enough room in this here internet for ONE monopoly you, you, you dirty monopolistic sonofabitch BASTARDS!”

Schmidt to Ballmer:
“HEY! DROP that chair and step AWAY from the Vista Browser!”

Google, with tons of cash to burn and a staggering market cap, has far less to lose in the high stakes internet poker game than Yahoo, Ebay, or even Microsoft. Microsoft is bigger than Google and theoretically richer, but unlike Google Microsoft has yet to figure out good ways to monetize their (improving) search services and (not improving) content services.

Ballmer’s juggling how to preserve his big ticket MS Office and Vista projects. Yahoo’s worried about plunging valuations and people leaving and the fact that a billion represents a lot more to them than it does to Google.   This is almost certainly complicating the Yahoo Facebook negotiations right now.  Ebay’s pretty fat and happy where they are. Meanwhile, Google can focus in laser-like fashion on keeping Google in the driver’s seat with it’s superb contextual advertising monetization.

The best defense is a good offense, so they are buying up properties to increase their control over the advertising space and keep those hundreds of millions of eyeballs out of the hands of MS and Yahoo.

Will this work? I say probably not for similar reasons it was stupid for Yahoo to buy Broadcast.com years ago. Video is junky and won’t monetize well. It’ll be more of an encumbrance to Google’s core competencies than an asset. But … things change, and in the meantime it’s fun to watch this high stakes game of chess unfold.

It’s a show you won’t see on YouTube.