Yelp’s new funding round.

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TechCrunch has a nice summary of several travel review sites and notes that Yelp has now had 31MM in funding and is rumored to be worth about 200MM.   For a company that makes under 10MM per year this seems pretty high, but the Yelp model has been fairly strong in Silicon Valley and Yelp appears to be extending the model to other areas successfully.        

I do think Yelp will have a lot of challenges as they move out of their Silicon Valley travel sweet spot.   Yelp has done a nice job of connecting people offline who meet online by hosting Yelp parties at Bay Area venues.   This probably won’t work as well outside of Silicon Valley where hip young net users are …. not as concentrated, even in the large urban areas.

Click Fraud Class Action against Miva / Lycos: Good idea, but payoff and motives questionable.

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Update upon closer examination of the terms:   Holy crap, BatClickMan, this action is pretty bogus unless you are on the legal team.   Here’s the deal:  Lawyers get a bunch of cash from MIVA while the defrauded customers get 50% off future purchases of clicks from MIVA.      Given that MIVA clicks are generally of  questionable value and positive ROI is tough even with PPC campaigns at Google where they do much better job making sure clicks are legitimate and relevant, this is almost a worthless payment for the defrauded folks unless they have accounts with MIVA now and are spending huge amounts AND are getting some good  ROI.

I won’t even be bothering with this nonsense which appears more like the legal firm looking to nab a few million for an interesting case rather than much if any justice getting done. 

As a MIVA advertiser I just got the email announcing a class action lawsuit against Miva/Lycos that alleges:

… MIVA and Lycos breached their contracts with class members, unjustly enriched themselves, and engaged in a civil conspiracy by failing to adequately detect and stop “click fraud” or other invalid or improper clicks on online advertisements.  MIVA and Lycos deny Plaintiffs’ allegations and contend that all payments they have received from class members for online advertising were legally and properly charged …

I’m surprised there have been so few of these lawsuits because there has been and still is a staggering amount of click fraud, and despite some crackdowns all the advertising places are essentially misleading people about the extent of the fraud.    Part of the reason the wrath has been lower than one might expect is that you generally can get pay per click refunds from search engines  for many types of complaints and I assume they have done a lot of crediting of major ad accounts if fraud was discovered or even suspected.

Of course this may not be worth the trouble as the payout is in … wait for it … more MIVA clicks!    Ha – I guess this could be called the “one fraudulent click deserves another” class action?

Under the settlement, MIVA will establish a settlement fund of $3,936,812.00 on behalf of MIVA and Lycos, of which a portion will be used to pay class counsel’s fees and costs, and the remainder will be available to class members in the form of advertising credits that may be applied to up to 50% of the cost of future online advertising purchased from MIVA.  To receive credits, you must submit a valid and timely claim form.  Credits will be awarded on a pro rata basis, taking into account the amount that you paid to MIVA and/or Lycos for ads that you believe in good faith to have been result of click fraud and the total amount of credits available.  For example, if the amounts that you paid to MIVA for the affected ads were 1% of the combined online advertising revenues of MIVA between January 1, 2000 and September 30, 2007 and Lycos between September 23, 2002 and March 30, 2006, you would be eligible to receive 1% of the total available credits.  You must certify in your claim form the percentage of your ads you believe were the result of “click fraud.” Credits must be used within one year of issuance and may be used only for advertising on the MIVA Media US Network.

Here’s the online claim form and a lot more information:  www.PayPerClickSettlement.com

Microsoft’s Engagement Mapping … a quantum leap … in BS?

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Initially I read the Microsoft engagement mapping announcement thinking this would be a remarkable innovation. They are claiming that EM will track a consumers interaction with advertising all the way to the point of sale which if done accurately would be a watershed in advertising accountability.

We’ve noted in many posts before how poorly advertisers track offline and even online advertising effectiveness, usually resorting to opportunisic reporting and explanations by their advertising agencies or reporting firms that stay in business because they support the agency advertising spends using questionable metrics.

Enter Engagement Mapping. Microsoft says:

“The ‘last ad clicked’ is an outdated and flawed approach because it essentially ignores all prior interactions the consumer has with a marketer’s message,” said Brian McAndrews, senior vice president of the Advertiser & Publisher Solutions (APS) Division at Microsoft. “Our Engagement Mapping approach conveys how each ad exposure — whether display, rich media or search, seen multiple times on multiple sites and across many channels — influenced an eventual purchase. We believe it represents a quantum leap for advertisers and publishers who are seeking to maximize their online spends.” (bolding mine)

Read the bolded sentence again. Although I’ll have to see the methodology before rejecting it as bogus, that last line does not really suggest objectivity here. Rather it appears this is yet another way for a metric to support a course of action (increase online ad spending) rather than measure the effectiveness of that action.

This is standard fare for ad agencies who feed their kids by exaggerating the effectiveness of their campaigns so I guess it’s no surprise that Microsoft is going to help them do that for the online spends, which benefit…..wait for it ….. GOOGLE! And Microsoft too. But given Google’s approximately 50% share of all online spends I think Eric Schmidt should send Steve Ballmer a really nice gift. Maybe a even a Lazy Boy CHAIR?

Google economist on Google’s success: Huh?

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Hal Varian is an economist at Google, and I’m sure he’s a good one.   However his Freakonomics and Google blog analysis of why Google has done so well in search leaves a lot to be desired.    After knocking down a few straw man items that obviously have nothing to do with Google’s search   monopoly   dominance, he goes on to conclude that Google is just better than the competition because they have been doing search for so long.

Hal – Excuse me but you call that economics?    I doubt this would be your internal Google explanation (assuming you want to keep your economics job, let alone your degree).  In fact it was so thin and almost bogusly “cheerleading” that it raises for me the ongoing questions about Google’s questionable mantras about doing no evil and transparency:   Transparency in all things except those that might affect our bottom line!

As I’ve noted ad nauseum I do NOT think Google has more than a modest obligation to be more transparent, but I’m tired of how often Google *witholds information* to protect Google and then pretends this is in the interest of users.  Google screws users and webmasters regularly – this is common knowledge in the search community.   The most glaring challenge is with ranking errors, mistakes, penalties, and rules.   In this area literally tens of thousands of mom and pop websites, and sometimes larger enterprises, are indexed in questionable ways by Google leading to serious economic challenges.   Unlike almost any other business however Google has only a tiny team of specialists who generally can only offer vague and often useless canned information, even when the problems are fairly obvious to an experienced search person.   

But I digress into ranting….!  

My working hypothesis about Google’s success is simple and I think would hold up far better than Hal’s silliness:  Humans are creatures of habit, and Google was the best search at the time when most formed their internet search habits.   Yahoo, LIVE, and even Ask are only marginally inferior to Google search now, but there were dramatically inferior a few years ago when the online ranks swelled with people looking for information.   Google provided (and still provides) high quality, fast, simple results. 

This hypothesis helps explain the following facts:
Google is not the search of China where Google.cn traffic is dwarfed by Baidu.com
Even as Yahoo improved search quality they did not improve their search market share. 
Quality differences are slight, yet Google search share in USA is very large.
 

Another indirect factor in the Google success equation is that Google’s monetization remains superior to the competition by a factor of more than 2  (per Mike Arrington .09 vs .04 per search at Yahoo).   In this monetizing sense Hal’s “we are better from experience” would ring very true, and if he had written about *economics* he would have noted that Google’s brilliancies in monetization are a lot more notable than in other areas, and are more of a key focus area at Google than is generally talked about.    In fact such a focus area that they are downright opportunisic in the effort to monetize the heck out of the searches.  My favorite examples are when Google violates their own guidelines to bring users …. non-information from advertisers.   I ran into this last week with the following search for airline tickets.   

Google Query: “Xiamen to Beijing”

The top result on the left side, which is supposed to be reserved for non-commercial results, at first seems helpful, giving you the ability to order tickets from several places:

Flights from Xiamen, China to Beijing, China

Departing:   Returning: 

CheapTickets – Expedia – Hotwire – Orbitz – Priceline – Travelocity

Unfortunately though, you can’t order the tickets because at least some of those clicks lead to commercial websites that do not offer that route.  

No big deal?  I guess not, but this is a clear violation of the Google Guidelines which call for clicks to a page where you can really get the thing advertised.  Also it would be refreshing for me if Google stepped down at least half way from the high horse of claiming they never put money ahead of users, and more importantly used some of the enormous profits to bring more transparency and helpful information into the mix.

In summary I want to be clear:  Google has the right to make big money online.   They also have the right to be very aggressive in making money.   However with their success goes an obligation for quality communication and transparency.   They are failing in that obligation and perhaps as importantly are not even recognizing that they are failing.   Google is a great company.  But they can do much better by users whose habits have made Google the most successful company of this generation.

Adobe Air – offline to online is good

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Adobe is launching an application that will allow people to work offline on forms and other content which will then automatically be posted to websites when they go back online.   This is an excellent “transitional” application because many users still have to “log on” to the internet via slow modems or other cumbersome connections, and this will help them participate more actively in the online ecosystem.

That said, I’m increasingly convinced that the explosion of user content is to some extent…over.   Certainly we’ll continue to see huge volumes of content pour online, but at least in terms of the USA it is fair to say that internet access and publishing are is now so easy and cheap it seems unlikely there are millions waiting in the wings to jump online.    Some studies are suggesting that “most” internet users have little interest in blogging or commenting or participating actively – rather they want to read and socialize but not produce much content.     Another interesting factor is that young women appear to be the top content producers in many social networking environments rather than geeky boys who are more likely to spend online time playing games.   It’s going to be very interesting to watch the new media trends shake out in the coming years.  

WSJ reports

Computer interface = your brain

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OK, I know what I want next Christmas:  An Emotiv headset, and I’m not even a gamer.   This is the next generation of gaming controllers, and although probably the final product will leave much brain-to-computer control to be desired I’d suggest that the type of human to machine interaction this headset is designed to popularized, combined with other research such as BrainGate with implanted electrodes, is the beginning of what we’ll some day view as a profoundly significant era in humanity during which we increasingly merge with our own machines.   

Sure this sounds a bit creepy, but we’ve been integrating with machines for, oh, at least as long as the species has been around the planet   (and unless you are Mike Huckabee that would be considerably more than 6,000 years). 

In a fairly short time humans have gone transitioned from simple tool use such as spears and fashioned rocks to more complicated tools such as cars and computers.   We’ve also made modest progress actually bringing tools into and onto our bodies – e.g. eyeglasses, contact lenses, corneal implants, prosthetics, cochlear implants for hearing, and most recently projects like BrainGate make it clear that we can communicate with machines using only signals from our brains.

None of this stuff should really startle people’s sensibilities.   There is nothing “magical” about being human.   We are a product of the same physical, chemical, and biological forces that brought us other interesting items on earth such as rocks, trees, toadstools, and chimpanzees.     Although it’s been popular for many years – even in otherwise scientifically sophisticated circles – to suggest humans have a very different relationship to things than other animals this notion will eventually fall into the dustheap of outmoded hypotheses, and we’ll begin to realize that despite our many notable attributes the most noticeable aspects of humanity are our …. limitations.

CNET Reports on Emotiv over at the Crave gadget blog.

Emotiv Website

Kurzweil on cellular level computing

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Ray Kurzweil is shaking up our idea of what will be with his amazing predictions about the future of computing – a future he thinks will soon lead to the emergence of computers so small and powerful they’ll drive our own thinking processes from within.     Speaking to the gaming conference   today Kurzweil noted that the accelerating advances in computer technology will soon allow fully immersive virtual reality experiences which will be coming to a body near you.     Cool.

MicrosoftOxymorons

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OK, not quite an oxymoron, but here is the latest “headline” from Microsoft that comes pretty close to contradicting it’s own strategic premise:

Microsoft Makes Strategic Changes in Technology and Business Practices to Expand Interoperability.
New interoperability principles and actions will increase openness of key products.

Huh?   Oh, OK, now I get it.  Hey, that really is big news, but I wonder if many folks will have a clue what all this means until it’s intrepreted by the media which is generally not all that sympathetic to the Big MS.     Why do they write like this?    It’s bad enough that these initiatives come like Microsoft is Google’s lap dog, chasing away at quality innovation two or three years too late.   Can’t they find somebody to state this stuff clearly?

It seems to me microsoft routinely shoots themselves in the foot before they are even out of the gate.  This happens for many reasons, but it is almost as if the company actually believes all the bad things about them and thinks they can only maintain dominance via monopoly and power plays rather than ….ummm…. working a lot harder to be customer centric, highly communicative, innovative and clever.    They can do it, but they don’t do it. 

Ironically all these goals are a key part of  what they are trying to do with this excellent open architecture  strategic initiative, but I think this great idea is almost lost in the bizarre Microsoft doublespeak we’ve all come to know and shake our heads at.

How would Google write a corresponding headline?

Microsoft Headline:
Microsoft Makes Strategic Changes in Technology and Business Practices to Expand Interoperability.
New interoperability principles and actions will increase openness of key products.

Google Headline: 
We’re OPEN!

Yahoo Headline:
Help, we are about to be held prisoner in a Microsoft Soylent Green Fortune Cookie Factory! 

Google Adsense for Video, Google Health

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Google is the big news today with two major product initiatives.    The first is Google’s entry into the health records management business with trial recordkeeping at a Cleveland hospital.   AP reports

The second Google development is adsense for video, yet another attempt to monetize video.   I tested the last attempt, using YouTube advertising embeds, here at Funniest Online Videos.    The results were abysmal in terms of monetization although I didn’t push a lot of traffic through the site and used cheap low quality traffic.  However notable about the YouTube problems was Perez Hilton’s huge celebrity site with millions of visitors which only had something like $5000 in revenues despite many millions of clip views.    Perez has switched to different advertising approaches.

However I’m guessing Google’s been learning from the poor YouTube system and that the adsense will involve better targeting and probably better returns.    That said, I remain very skeptical that video can monetize well.   As with social networking or a TV show, a person’s relationship to the medium is very important in these money relationships.   Searching offers the potential for good monetization of a person’s natural behavior and relationship to the media – often it’s a “win win” where your search for camera information and camera deals also presents you with advertising you *want to see* because it’s relevant to your needs.    It is very hard to make that happen with video or social networking, which remain pretty barren environments for advertisers. 

…. and in the “old news” department Blodget suggests that the fat lady is singing in the Yahoo Microsoft deal and it’ll go down this way.    This scenario – minor jousting by MS followed by a small increase in the offer followed by Yahoo aquiescence – sounds very reasonable to me.

Gates on Yahoo: “It’s the People” | Yahoo on Gates “OMG! He’s making Soylent Green!”

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As Microsoft prepares for a proxy fight that will pit them agains the Yahoo board in the fight over control of Yahoo, Bill Gates is talking up the deal as a way for Microsoft to access the great talent pool of Yahoo.    Although he’s certainly right that Yahoo’s got a lot of great talent, it is not at all clear that most of them will stay and work for Microsoft.   I think a lot of the Yahoo staff will see MS as trying to consume them into the Micro Borg mother ship, rather than work with them to make a better Yahoo/MS to fight the Google wars.

I suspect they will if MS treats them right, and I think MS would treat them right, but it would not take an extraordinary poaching effort from Google to effectively dismantle the really great parts of Yahoo.   Oh, yes, and this Google poaching has already begun. 

A couple years ago – at the Google Party no less – I was involved in a fascinating conversation with one of the key search guys from Microsoft’s search engineering team and another top engineer from Google.  One of the most interesting topics was how MS felt that Google had very selectively poached a key Microsoft search insider.    The MS guy said until that point he felt Google had been basically playing fair, but that he knew from that episode that Google was strategically picking off people not so much because they wanted them but because Microsoft *needed* them.      He felt this defied the “don’t be evil” Google mantra and had soured him on Google’s honesty in these matters.    Suffice it to say that as much as I think Google *usually* does follow the “don’t be evil” mantra there was some pretty interesting clandestine activity going on at that party to record the MS guy as several beers got him to spill more beans about the MS algorithm.    In fact it was then I realized how weak the MS search effort was with what he said were only 300 engineers working in search, while Google had *thousands*.

Gates is certainly wrong that the cultures are the same.   Based on my experiences with people from these three companies I’d suggest the cultures are pretty clear:   MS culture is a massive corporate empire with lots of heirarchies, corporate bloat, somewhat overbearing, and diminishes the role of the individual as a key part of the big team.  People are not proud to be with MS – they are often almost apologetic.

Google is flexible with lots of lateral motion in terms of project and ideas.   Ideas and cleverness will trump formal designations which are few anyway.   You can stand next to a top engineer worth tens of millions and a new hire and you can’t tell which is which – not even from the way they treat each other and certainly not from the casual dress or styles.    Google people are smart and confident, and generally very helpful and well-informed with the notable exception of questions about ranking quirks where transparency goes pretty much out the window.

Yahoo?   I think they *used to be* just like Google, but managed to mov in the direction of managerial bloat and questionable treatment of engineers several years ago.  They paid people well, but I think the focus moved away from search and engineering and towards a content and entertainment empire.  This was a mistake, and Yahoo’s about to to pay the price – they are about to get absorbed into the MS empire.    But don’t worry Yahoo engineers – they are not making much Soylent Green over there anymore.  Right Bill?

Ina on Gates

Disclosure:  Long on YHOO