Less evident is how search has fundamentally changed how we consume news. Instead of passively accepting the information provided by any single news source, search has taught us to be active news consumers, so seek out news from the wealth of sources on the web.

I had a close encounter with the increasing influence of search on news consumption thanks to a spelling error. My post last Sunday about about how news sites were covering the breaking news about the Bear Stearns bailout originally had the misspelling “Bear Sterns”. (Anyone who reads this blog regularly knows about my travails with spelling.)

Well, it turns out a lot of other people don’t know that Stearns has an “a” in it. Overnight, I started getting an avalanche of traffic because the post was ranking for searches with the keyword “Bear Sterns” — after I corrected the error, it started to rank for searches with with correct spelling.

In most cases, my post appeared in Google blog search result cluster, which Google sometimes adds to a search result the same as it does with Google News results (part of Google Universal Search) — this appeared at the bottom of the search result page.

My post was a meta news story, i.e. it didn’t have any real news about Bear Stearns, it just discussed how the story was being covered.

Despite all these limitations — ranking for misspelling, not appearing as a main search result, and having a less than newsy title — I still got thousands of visits.

Imagine how much traffic the top search results got.

The real significance is what this tells us about news consumption on the web. When a news story is of great interest, news consumers are not content just to read what CNN, Yahoo, or NYT have to offer.

Instead, they go to the one place where they know they can get information from many different sources — they go to search.

It’s hard to appreciate the significance of this shift until you’ve seen it from the inside — so let me invite you to take a look. Here’s a partial list of keywords that brought news searchers to my Bear Stearns post:

bear sterns
bear stearns
bear sterns news
bear stearns news
bearsterns
bear stearns”"
bear stearns story
bear sterns story
bear sterns”"
news bear sterns
bear stearns collapse
bear stearns crisis
bear sterns collapse
bearn stearns
bear sterns, news
bearn sterns
jp morgan buys bear sterns
jpmorgan bearn stern
news about bear sterns
news on bear sterns
analysis on bear stearns collapse
bear & sterns
bear sterns crisis
bear sterns melt down hits insurance segment
bear sterns problems
bear-sterns
bearstearns
jp morgan and bear sterns
jp morgan bear sterns
jp morgan buys bear stearns
jpmorgan and bear sterns
jpmorgan+bearsterns
what is bear stearns
bear sterns”" employees
bear sterns”" j.p. morgan
bear sterns”" jpmorgan
bear sterns”"+news
bear & stearns
bear and stearns
bear n stearn
bear stearn , emc, jp morgan
bear stearn news on march the 17th
bear stearn’s
bear stearnes breaking news
bear stearns and 2008
bear stearns employees
bear stearns in the news
bear stearns jp morgan
bear stearns news 2008
bear stearns the real story
bear stearns’ collapse
bear stern crisis
bear stern investment banking
bear sterns and jp morgan chase
bear sterns bank
bear sterns employee stories
bear sterns employees
bear sterns fire sale
bear sterns green
bear sterns in news
bear sterns is a
bear sterns jp morgan
bear sterns jp morgan recenet news
bear sterns jpmorgan
bear sterns reporting
bear sterns transition
bear sterns”"
bear sterns, news,
bear,sterns
bear-stearns
bearn stearns crisis
bearn stern
bearn stern jp morgan
bearn sterns and jpmorgan
bearns and stearns+jp morgan
bears stearns story
bearsterns story
breaking news, bear stearns
breaking news about bear stearns co
cnn breaking news bear stearns
does jp morgan has to do anything with bear stearns
emc after bear stearns collapse
emc bear sterns
google bear sterns
google news bear sterns
j p morgan bear scream
jp morgan +bear stearns +summary
jp morgan and bear and stearns news
jp morgan and bear deal closing date
jp morgan and bear stearns don’t understand the deal
jp morgan bear stearns
jp morgan bear sterns deal closing date
jp morgan buys bear stearn
jp morgan buys bear sterms
jp morgan buys bearn stern
jp morgan buys bears stearns
jpmorgan bear sterns 16 march 2008
jpmorgan buys bear sterns
news + bear stearns
news + bear sterns
news about bears sterns and jp morgan
news bearn stearns
news emc bear strens
news jp morgan bear stearns
news with bear sterns
news, bear sterns
ny times on bear stearns
ny times story on jpmorgan and bear stearns
read “”bear stearns”" report “”online video”" monetization 2008
stories of bear stears employees
story of bearsterns
the bear stearn story
the bear stearns story
the collapse of bear sterns
usa buys bearn stears 2008
what about bear stearns
what led to bear stearns collapse
what led to the sale of bear stearns
why bear stearns collapse
wsj bear chronology
how did jp morgan buy bear stearns?
how did the government help sell of bear stearns?
news emc bear sterns

Still not convinced that search is driving a fundamental shift in how people consume news? Still believe that most people are content with their favorite news site’s homepage?

Well, don’t take my word for it — ask news sites about their faith in maintaining and growing direct traffic to their brands.

How about the New York Times? Or Reuters? Here’s the most interesting item I found on the Google search result for “Bear Stearns news“:

Yes, that’s right — those are ADS for news about Bear Stearns on Reuters.com and NYTimes.com.

If you search for news on Google, you’ll find these ads everywhere, e.g.

The Financial Times is advertising its news. Even Yale is advertising its global news blog.

And why? Because these news brands are savvy enough to realize that they have been disintermediated, and that news consumers may turn first to a site like Google that can give them coverage of a news story from EVERY source on the web, not just one.

New York Times killed TimesSelect because they realized more people would discover that content through search than would coming in through the NYT brand front door — and all of those news consumers coming in through search are casting a net as wide as the web.

News brands that only publish their own version of the news will increasingly disappoint news consumers whose expectations have been fundamentally changed by search. Publishing only your own content is increasingly a great way to accelerate the disintermediation of your news brand by other brands that give news consumers more of the wealth of the web.

Increasingly, news consumers will read a news brand’s reporting on a story of interest and say, OK, what else have you got?

If they don’t find anything else, they will go elsewhere — to Google and other aggregators that aren’t biased in favor of one source of content. (There’s a reason why Digg is so popular with its niche — and it has nothing to do with democracy.)

NYTimes.com may have embraced search engine optimization — and search engine marketing — but that doesn’t meant they have capitulated to disintermediation. Here’s what you’ll find on the NYTimes.com Technology section:

So rather than just publish their own technology content, NYTimes.com is aiming to provide news consumers interested in technology with more of what the web has to offer, by publishing links to the best technology news on the web.

Of course, these are links off of the NTY site, but they are simply applying the Google rule of linking on the web — the better job you do sending people away, the more they will come back.

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Here’s what you see when you click through to the Privacy Settings For Search:

Facebook will claim, not unreasonably, that they have alerted all of their users to the new public search listing feature and given them full control of their privacy. There’s only one problem with that — the public search listing is turned ON by default, and many users won’t take the time to decide whether it makes sense for them to turn it off.

As Om Malik points out: “One of the great features of Facebook was privacy. You could be assured that what was in Facebook remained in Facebook.”

While business professional may want to be found on the open web, other people (especially teenagers and college students) who just want to connect with their friends, don’t necessarily want or need to be found publicly. The value proposition that you can be discovered by one of your “friends” who does a Google search for you but who didn’t think to look for you in Facebook rings false — is there anyone under 25, or over 25 for that matter, who wouldn’t think of searching for their friends directly on Facebook?

That leaves only the value proposition for business users of Facebook. Search optimizing public profiles for business users is a smart move and potentially creates a lot of value for professionals who want to control their identity in search.

The problem for business users (which you can add to the other Facebook business use problems), is that there’s not a lot of utility in having a public profile if the details are locked behind a garden wall that prospective business contacts are forced to scale in order to gain access.

By comparison, the LinkedIn public profile is FAR more useful for business use, since you don’t need to be a LinkedIn user to view someone’s public profile. (Here’s my LinkedIn profile.) Of course, you do need to join LinkedIn to contact someone through LinkedIn, but the public profile has huge value for finding out about a business contact’s professional background and experience before contacting them by phone or email (if you have that direct contact info).

Facebook itself will undoubtedly enjoy more search traffic, page views, and new user registrations — focusing on search and SEO is generally very smart. But it’s not clear the way they’ve implemented these public search profiles creates a whole lot of value for their users — as is typical for one-size-fits all applications, one-size-fits feature implementations often underperform for all users. It will be interesting to see how Facebook users react.

Danny Sullivan points out that Facebook actually implemented and experimented with this feature prior to announcing it — wonder what the backstory to that is.

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Contrast your average interruptive TV ad with the other end of the advertising value spectrum, which is currently occupied by search advertising. Search advertising brings you relevant information about a company’s products or services, in the moment when you’re thinking about it, and typically takes you directly to the company’s website where you can actively “engage” (depending on the quality of the site).

The push for “branded entertainment” as a form of online advertising is still closely aligned with the traditional TV commercial ethos — it’s also aligned, on the positive side, with the YouTube Web-as-micro-entertainment ethos. But as anyone who has ever tried viral video knows, creating value for consumers around entertainment — to actual ENTERTAIN — is very hard to do well.

In contrast, creating value for consumers by providing useful, relevant information is MUCH easier. That’s why there are tens of thousands of advertisers that have done so successfully with search advertising — and so few that have succeeded at creating truly entertaining content.

Certainly there is an emotional component to branding — a world of pure utility information-based advertising wouldn’t be a panacea either.

But it’s embarrassingly clear how bankrupt of value most traditional TV advertising is — and how wasted the majority of those billions of mass advertising dollars are.

How long before big TV ad spender wake up to the imperative of creating REAL value for consumers? How long before the shareholders of big public company advertisers spending millions on valueless advertising start holding their feet to the fire?

Until advertising agencies realign themselves to themselves with digital advertising platforms that create more value for consumers, it may still be awhile.

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The problem is scalability.

Just as audiences and media have fragmented, so too must advertising. The problem is that traditional advertising paradigms — the 30-second TV spot or the glossy print — are one-size-fits-all, i.e. you make the ad once and then show that same ad to everyone in every medium. Data-driven digital media, with platforms like behavioral targeting, make it possible, in theory, to show a different ad to each person in each medium, each time they interact with that advertising.

But, yikes, that’s a lot of work — and it couldn’t be farther away from the traditional ad agency business model.

Search advertising doesn’t quite reach that extreme, but it has made it logistically possible to create different variations of ads for different keywords. Search advertising has also come the closest to achieving the great promise of online advertising ROI — optimization, i.e. trying different variations from the endless range of possibilities to see which performs best.

That is not to say that most search advertising campaigns achieve this level of sophistication. But by creating a self-serve platform, Google, Yahoo, MSN, and others made it possible to distribute all of the work involved in leveraging the myriad ad possibilities — that’s why search advertising has scaled so beautifully.

But search advertising is also at the extreme end of simplicity — just a few lines of text. When you get to visual display ads, and then video ads, the complexity increases geometrically.

Yahoo is trying to tackle this complexity with its SmartAds platform, which is a great first step. Google has tried to bring the same scalability of text ads to every other traditional form of advertising, including TV, radio, and print, but scaling in those formats is a much tougher slog.

Facebook and other social networking sites have a huge opportunity to leverage social connections for commercial purposes, but again, there’s a huge scalability challenge. I suggested that Facebook should look to Google for lessons on how to monetize — the key to any successful social networking platform is going to be scalability. All the debate about Facebook’s revenue and the potential for an IPO really hinges on a scalable monetization platform.

Perhaps the best lesson from search advertising is this — get your customers to do all the work for you. But as with successful search advertising campaigns, there has to be a huge payoff for doing so.

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In any case, the Times and others are reporting some radical notions that had been floating around Yahoo prior to Semel’s stepping down as CEO — acquiring MySpace from News Corp in exchange for a 25% stake in Yahoo and conceding search to Google.

The MySpace deal, which apparently never got past the kicking around phase, would have valued MySpace at $11.1 billion based on Yahoo’s closing price yesterday, which is 10X what Yahoo reportedly bid for Facebook last year.

With Facebook transcendent with innovation and MySpace apparently just resting on its laurels, the MySpace deal would seem the height of insanity on the face of it — not least because Yahoo already reaches half a billion people — it just hasn’t found a way to connect them. $11 billion seems like an awfully expensive price to pay for a terribly designed platform for connecting people — although it would have been a truly brilliant move for Rupert Murdoch, had he pulled it off. That would have been quite a return on his $580 million investment in MySpace.

As for conceding search to Google, this is probably a deeply emotional question for Yahoo, after everything they’ve invested in search and Panama. But according to the Times, Panama “starved many other projects of much-needed resources.”

Yahoo needs to look at search with its MBA hat on. If you concede that Yahoo is never going to catch up to Google on search advertising, then the question becomes what market share can Yahoo reasonable expect to grab, even with perfect execution going forward? And then, what are the opportunity costs of other projects that Yahoo might not be able to pursue? If Yahoo hadn’t been so focused on search, could it have become MySpace or Facebook?

No doubt that Yahoo needs to take some radical steps, and not just stay the course — buying MySapce for $11 billion or giving up on search entirely may not be the right steps, but that’s the kind of radical thinking that Yahoo needs to put into practice.

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A few weeks ago the New York Times announced they would use third-party content for their new auto site. And today Inform announced that 16 of is traditional media clients, including WashingtonPost.Newsweek Interactive’s Newsweek.com and Conde Nast’s Portfolio.com, would be adding third-party sites to their search results (via WSJ):

The new technology automates that process and creates a new search results page that includes information and articles about related topics from a variety of sources, such as other newspapers or blogs.

For these traditional media sites, the aim of this feature is “encouraging readers to use them as a first stop for information gathering, just like Google or Yahoo.” Suffice it to say that transforming an original content site into a general purpose search destination is a tough sell. Nevertheless, these sites will be doing a better job serving the needs of their users by not assuming they have a monopoly on the best content, and that can only be a good thing.

Also worth noting is this odd claim for the WSJ article:

The goal is to get more people to visit these sites more frequently, which would in turn cause the sites to show up higher on the results page of search engines like Google.

Since when does increased traffic mean higher search ranking? Paging SEO helpline.

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Here’s a small but telling example:

AUGUSTA (May 23, 2007): A legislative committee has voted 11-2 in support of a bill that would no longer require the state to put legal notices in newspapers, and instead use the Web to keep the public informed – a plan opponents say would leave those without an Internet connection out of the loop.

The bill is being sponsored by Rep. Teresea Hayes, D-Buckfield, as a way to save state government an estimated $750,000 a year – money that newspaper executives readily admit would hurt their bottom lines.

It would require the state to maintain a Web site to post those notices, including upcoming public hearings on legislative bills and rule changes proposed by state departments and agencies.

State agencies aren’t exactly billion dollar ad spenders, but they are part of the traditional advertising ecosystem. Now that a state agency can create its own media, i.e. just put up a site, findable by search, there’s no need to pay other media, i.e. newspapers, to distribute the information to the public.

On the other hand, it may be that the ad revenue still exists, just not in the same form. Here’s what you get when you search on Google for “public notices augusta“:

The ad revnue is indeed there — it’s just going to Google instead of local newspapers.

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What I think is occurring is that we news types are mourning our lost autonomy and power. We’re angry that, like everyone else, we’re subject to business and financial pressures. Editorial independence has subtly eroded. Decisions about what topics to cover (health, technology) are increasingly tailored to appeal to advertisers. Splintering media markets have weakened the economic base for newsgathering. In 2005 and 2006, Time magazine cut its news staff by 14 percent, says the Project for Excellence in Journalism; it reckons that NEWSWEEK’s staff is half its 1983 level (though Web hiring has offset some losses). Even if the Journal rebuffs Murdoch, it cannot escape these pressures. It has already put ads on section fronts.

The changes involve more than economics. When I started, print journalism required two basic skills: reporting and writing. Now, journalists are expected to be multimedia utility players, feeding Web sites, posting videos and doing TV. Up to a point, this is valuable: finding new ways to engage and inform. But it’s also time-consuming and detracts from reporting. Just what constitutes journalism is less clear. Hitwise, a survey firm, counts 8,001 news and media Web sites. The largest (Yahoo! News) has only 7 percent of the traffic. The skills that are rewarded are shifting from diligent, curious and clear, to tech-savvy, quick and edgy.

vs.

I think the big long-term distinction between what Google considers low quality and of quality is going to be brand equity. Do people visit your site from channels other than Google? Large brands get more return out of buzz marketing, while smaller businesses lean hard on search. inbound made a great post in that WMW thread about the arbitrage and MFA changes, which notes that Google is getting better at coming up with proxies for visitor value.

Based on Google’s authority-centric relevancy algorithms and this move it is clear that Google wants to trust the larger businesses so they have less work to do policing the web. The way around getting forked by Google is to create something that does not need Google to exist. Create the type of site that people would link at if Google did not exist, and the type of site that they would want to advertise on directly. I have a large AdSense site that needs a re-brand and some serious work on content quality if it is going to stay viable in years to come.

Can you identify the source of BOTH of these quotes? I’m guessing most people can’t — in fact, I might lay claim to being the only person on the web who reads both Aaron Wall’s SEO Book (second quote), a blog about search engine optimization, but also, more deeply, about the fundamental dynamics of the web, and Romenesko, a Poynter Institute blog that covers the news businesses with an emphasis on the newspaper industry, which is where I found the first quote from a Newsweek column by veteran journalist Robert Samuelson. (It’s a shame if I am in fact the only crossover reader because Romenesko readers could learn a lot from Aaron about how the web really works.)

What linked these two articles in my mind is that they are both lamenting the loss of content business models, but at opposite ends of the content quality spectrum.

On the one hand, Google (as emblematic of the web’s content economy) punishes publishers that spend too much money creating content that can’t survive in the web’s brutally efficient disaggregated content market, e.g. investigative journalism. On the other hand, Google is now also punishing publishers in its AdSense network who spend almost nothing on content, just enough to hold the ads together.

The grand irony here is that Aaron is advising new media Made For AdSense publishers to be more like old media, i.e. develop a brand that people would seek out even if Google didn’t exist, and Robert Samuelson is advising old media journalists to relax and embrace new media. Compare:

The real news about the news business is that it isn’t collapsing. It’s merely changing.

vs.

From a risk management perspective, I think every web publisher should own at least one real branded site, even if it offers low returns for the amount of work required to maintain it.

Even more interesting is the net effect on content — a regression to the mean of content quality. Neither hacked together crappy content, on the one extreme, nor Pulitzer Prize journalism, on the other, can any longer thrive in a Google-driven content ecosystem.

Why? Because most people don’t find either to be sufficiently valuable. Not valuing Made For AdSense content isn’t difficult to fathom. As for investigative journalism, etc., it’s not that people didn’t value it when it came packaged with the newspaper. It’s just that most people don’t search for it (and search drives the web), and there isn’t a market for running ads next to it.

This doesn’t mean that investigative journalism will cease to exist or that clever online publishers won’t find ways to make money from online advertising without investing in content. It’s just that the economics of both have shifted to the middle — at least for now.

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David Weinberger’s Digital Media Argument

For decades we’ve been buying albums. We thought it was for artistic reasons, but it was really because the economics of the physical world required it: Bundling songs into long-playing albums lowered the production, marketing, and distribution costs because there were fewer records to make, ship, shelve, categorize, alphabetize, and inventory. As soon as music went digital, we learned that the natural unit of music is the track. Thus was iTunes born, a miscellaneous pile of 3.5 million songs from a thousand record labels. Anyone can offer music there without first having to get the permission of a record executive.

Nick Carr’s Rebuttal Of David Weinberger’s Argument

And yet it is the wholesale unbundling of LPs into a “miscellaneous pile” of compressed digital song files that Weinberger would have us welcome as some kind of deliverance from decades of apparent servitude to the long-playing album. One doesn’t have to be an apologist for record executives – who in recent years have done a great job in proving their cynicism and stupidity – to recognize that Weinberger is warping history in an attempt to prove an ideological point. Will the new stress on discrete digital tracks bring a new flowering of creativity in music? I don’t know. Maybe we’ll get a pile of gems, or maybe we’ll get a pile of crap. Probably we’ll get a mix. But I do know that the development of the physical long-playing album, together with the physical single, was a development that we should all be grateful for. We probably shouldn’t rush out to dance on the album’s grave.

To recast old media with new media buzzwords, albums and newspapers are content agregation plays. Nick is right that the problem is not in the aggregation — it’s in the efficiency and flexibility of the aggregation.

A newspaper is one size fits all. It is created once and can only be dynamically re-aggregated with a pair of scissors. But that doesn’t mean hunting and pecking for content on the web is superior. Search is so successful because it’s a hyper-efficient, dynamic form of aggregation, creating “information-papers” around any key word. Digg is really just a dynamic newspaper.

On iTunes, an individual can aggregate music by creating a mix, thus creating an album. While consumers do highly value the freedom to buy individual songs, they also still value discovering songs that go well together in a bundle.

Disaggregation — taking apart media — is only step one of the media revolution. Step two — or 2.0 — is finding dynamic ways to put it back together.

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For example, the lead story on the New York Times site right now is Paul Wolfowitz Said To Push For Deal To Quit. But if you do a regular Google search for “Paul Wolfowitz Resign,” links from Google News are the first results:

If you click through to the Google News results, although many of the items cite the New York Times piece, the Times piece itself is nowhere to be found.

Google’s new feature that makes videos appearing in the universal search results playable right on the search result page is also hugely disruptive (from Search Engine Land):

It certainly makes you think twice about shunning video distribution through YouTube.

Google is already the gatekeeper for a huge percentage of online activity — and a significant percentage of traffic to media company content. That percentage is now likely to increase.

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What I’m wondering is — how will Twitter affect search, and what will search make of Twitter?

Much of the hype over Twitter has characterized it as short-form blogging. But if you look at a Twitter pages and see all the messaging going on (e.g. @thisguy), it appears that Twitter is as much if not more a form of public instant messaging.

Nonetheless, many prominent bloggers are channeling content into Twitter instead of their blogs. Jason Calacanis announced he was taking a month off from blogging but would continue to post to Twitter. Looking at Jason’s and other Twitter pages, the content on these pages raises a number of interesting issues for link-driven search algorithms:

1. Links from individual Twitter pages on the Twitter.com domain

Twitter.com already has a PageRank of 8 out of 10. Jason Calacanis’ blog has a PR of 7. But Jason’s Twitter page only has a PageRank of 3.

2. Use of TinyURL for links

With 140 characters per post, many Twitter users are using TinyURL. Here’s one of Jason’s Twitter posts:

how much equity do digg shareholders get in Kevin Rose’s 3rd startup? http://tinyurl.com/25l4gc

3. No anchor text for links that use the direct URL

Twitter doesn’t permit the use of HTML. From Jason:

davewiner on podcast device… http://mp3.morningcoffeenotes.com/cn30Apr07.mp3

4. Little surrounding context for links

Again, with only 140 characters, there’s not much room for keyword rich context. From Jason:

i love http://www.thefunded.com/

5. Fewer links overall

Many Twitter posts make references to ongoing Twitter conversations, with no referring URL. From Jason:

doesn’t that guy have a non-compete or something!?! whoever did his employment contract please call me… I want that deal!

and also from Jason:

@Genuine: that webpage showing AdSense earnings is FALSE/MISLEADING. I didn’t make $100k a month in ADSENSE.. WEBLOGSINC DID…w/ 75 blogs!!

6. Not much linking to Twitter posts

You rarely see one Twitter post link to another because the assumption is that everyone has added each other as friends and that everyone is following the conversation. Twitter posts also contain so little information that there is little reason to link to them from non-Twitter sites. So with no links in, it will be more difficult for search algorithms to determine the value of links out. So on the rare occasion that a Twitter post does contain useful information that someone might want to find, it will be difficult for that information to rank high in search results.

Twitter may represent a new paradigm for online communication and information sharing, but it’s definitely not enriching the link-driven semantic web.

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So when Ms. Wilson, now 32, was pregnant with her first child, she ran every baby name she and her husband, Justin, considered through Google to make sure her baby wouldn’t be born unsearchable. Her top choice: Kohler, an old family name that had the key, rare distinction of being uncommon on the Web when paired with Wilson. “Justin and I wanted our son’s name to be as special as he is,” she explains.

There’s the story of how Ted Leonsis took over the search engine results page for “Ted Leonsis” by starting a blog and linkbaitng through celebrity name dropping. I don’t recall what the Google results for Scott Karp looked like before I started blogging, but now it’s me for pages and pages — not why I started blogging, but a striking consequence. I even have the top results for Scot Karp with one “t,” displacing Scot Karp, a Miami real estate agent (of course I put a “nofollow” tag on this link).

I don’t necessarily like all of the items on my SERP, but a high volume of links doesn’t mean you have control over the links — it’s probably sound advice not to “mess” with anyone who has access to high authority domains. Your SERP can be a reflection of how effective you have been at relationship management online. I certainly learned my lesson about playing nice with the SEO community (most of whom, to their credit, played nice with me, even when I was on my soapbox) — this could be applied to dealing with any group, although it’s particularly true when dealing with a group that knows how to work the web. I suppose you could argue that, just as there’s no such thing as bad PR, there’s no such thing as bad inbound links — just ask Jason Calacanis.

The problem for most people is that they don’t have a platform for influencing their identity in Google or other search engines. Anyone can start a blog, sure, but that may not help if your name is John Smith, or even a less common name if you don’t get any inbound links. This has, not surprisingly, lead to a demand for identity SEO (from the WSJ piece):

Some people in similar straits have used services that can help generate more prominent placement for them in search results. Krishna De, a personal branding and marketing consultant in Dublin, signed up with Ziggs Inc. in 2005 after she left a corporate career and set out on her own. At the time, results for the Hindu deity Krishna crowded out links to her site. Ziggs tries to get profile pages individuals create with it to appear high in search results, and for a $4.95 monthly fee buys ads that appear along search results on sites such as Google’s to link to a client’s profile. “If you’re not found in search results, people start to wonder why,” says Ziggs CEO Tim DeMello.

A number of players, from the new to old, are trying to provide a user-controlled platform for identity management in search:

Professional networking site LinkedIn Corp. says its members’ profile pages often turn up high in Google search results when the users opt to make the pages accessible to the public. Marquis Who’s Who, whose print directories were a go-to place for finding important people in pre-search-engine days, says it has been testing a service where individuals can search its online database of more than 1.3 million people, paying on a per-search basis.

Matt Cutts had some interesting suggestions that imply the couple who researched baby names in Google maybe isn’t so crazy:

“Any time you can distinguish yourself with a distinctive name or a distinctive characteristic that sticks out in people’s minds, that’s going to be the best solution,” says Matt Cutts, a Google software engineer.

It’s striking how complete Google’s dominance is in the realm of search-driven identity. I get traffic from Yahoo Search and Live Search, but never navigational or identity traffic, i.e. people searching for “Scott Karp” or “Publishing 2.0″ in order to find my blog or find out more about me.

It will be interesting to see whether pieces like the one in the WSJ will intensify the interest in Google identity management and in services and platforms for such management. There are few professions or careers that couldn’t benefit from effective Google identity management.

You can imagine all the “John Smiths” battling it out for the top positions like sellers of ringtones.

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Microsoft and Yahoo have businesses that leverage the online network.

Google increasingly IS the network.

AdSense is the largest content network in the world, and Google’s search market share continues to accelerate (from Hitwise):

Yahoo and Microsoft/MSN are fundamentally Web 1.0 portals, and email is still the universal portal feature. But in an advertising-driven online business model world, email has little value itself — it’s all about driving traffic to more valuable content sections of the portal. But search, as Google has demonstrated, is an advertising goldmine — although Google AdWords is still a fare more efficient moneymaker than Yahoo’s Panama and Microsoft’s AdCenter.

Search is catching up to email as the top daily online activity (via Pew Internet & American Life Project):

DoubleClick extends Google’s control of the network — the DoubleClick’s Motif platform, like AdSense/AdWords, is a distributed platform for optimizing online rich media advertising…where everything passes through Google.

Everything passes through Google. How can Microsoft/Yahoo compete with that?

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Nick Wilson has an excellent podcast on the topic, in which he observes that Google is perversely incented NOT to clear up spam in its search results because it actually makes money off of those spam sites by supplying the ads.

Nick also sides with the argument, which I’ve heard many times, that these auto-generated crap pages filled with ads are not spam IF the ads on those pages bring you somewhere useful relative to your search. There I disagree. The ends do not justify the means. I do NOT appreciate being a pawn in that game. I want to search, get good results, and go DIRECTLY to them.

But here’s the big question. Google clearly profits from spam. The question is how much? If they cancelled the AdSense account of every spammer, would their earnings take a sufficient hit that their stock would plunge?

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In trying to keep pace with the rapid evolution of the online world, I’ve made plenty of mistakes, but I feel like I have a fairly good grasp of what’s going on, subject to daily learning, testing, and correction. Search, however, stands out as an area of where people keep saying to me, well, duh, Scott, how could you not know X, Y, or Z? Or, duh, why don’t you stick to topics where you’re not so totally clueless. Or, for example, duh, how could you not know that it’s easy as pie to name bomb someone simply by putting their name in the title of your post, if your site has some authority and/or you get a few links to that post?

(For the record, if it’s so easy to rank your post for someone’s name, then knowing this and still putting someone’s name in the title of your post, particular in the “Joe Schmoe Doesn’t Get It” format, imeans that you’re not just engaging in a “debate” but also actively gunning for someone’s search results. This is an area of online etiquette where, if in fact all you really want to do is engage in an honest debate, you need to tread carefully, lest you be misinterpreted as being more hostile than you really are.)

I keep making the mistake of characterizing the black box of search as an SEO issue, when that’s not really fair, so I’m done with that. Because the reality is that the black box is Google (and other search engines). SEOs have learned how to get inside that black box, and they make a living off of their knowledge, but they didn’t create that opacity.

I will point out, however, that people (like me) are inherently suspicious of an ecosystem that thrives on a certain amount of opacity — and I’m speaking here of all parties involved (i.e. the entire search industry), without pointing any fingers specifically — because an outsider can’t help wondering whether that opacity is maintained, by one or more players in the ecosystem, on purpose. (It wouldn’t be the first time in the history of business.) Remember, you can explain the reality until you’re blue in the face — it’s all about perceptions.

With all that said, I’m done with the SEO outsider blogging and provoking name bombing posts on Threadwatch. I hope you’ve learned something useful from my travails. I’m moving on to calling up some SEOs and seeing what they have to offer. If I have anything further to say on the topic of SEO, it will be from the inside.

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Much of the controversy over SEO can be reduced to these two fundamental truths about SEO:

Truth #1: Links matter most

This was Google’s innovation, and it remains the driving force. This doesn’t mean that site design, content tagging, keywords, etc. don’t matter — but a site that gets lots of links can overcome most shortcomings in other SEO elements. Publishing 2.0 has never been “search optimized” (other than being on Wordpress), which means I’m probably leaving search traffic on the table, but I’ve got tons of links, a PageRank of 6 (doesn’t mean as much as it used to, but still a directional indicator), and lots of search traffic. I write stuff that people often link to, and I’ll bet that matters more than anything else.

Truth #2: There are two types of content on the web:

1. Content that other people want to link to

2. Content that nobody wants to link to

SEO is controversial because everyone who produces content in the first category thinks that SEO is all about scamming links for content in the second category, and that the only legitimate approach is to produce content in the first category. BUT…good SEO IS about helping people who typically produce content in the second category to produce content in the first. There are sites like Brian Clark’s excellent Copyblogger that explore this topic in great depth.

SEO is also controversial because linking is both a fundamentally social activity and a fundamentally network-driven activity. Linking is social because when you link to a site, simply because you think it merits a link (as I did above), there is no guarantee that you will get a link back. But the more you link to others, the more they tend to link back to you. It’s just like developing good friendships. There are no guarantees in life, but you generally have to give to get. Linking is network-driven because linking tends to snowball for several reasons, e.g. joining a blog “conversation” by linking to something everyone else is linking to, getting your trackback to show up on a highly trafficked post that’s getting a lot of links, and other similar dynamics where links beget more links.

It’s the social aspect of linking that makes people instinctively uncomfortable with many SEO link strategies — kind of like buying friendships. But the reality is that controversy, “trolling,” and other link baiting strategies, which non-SEOs like me sometimes use, aren’t all that friendly on the surface.

So, that explains some of the SEO controversy, but not all of it. There’s another aspect of SEO and online marketing generally that make people like Jason Calacanis and me, who have a background in traditional media, instinctively uncomfortable.

To illustrate this aspect, I’m going to pick on someone who has a fantastic reputation for cranking out smart, high quality content that lots people want to link to, and whose reputation needn’t fear my little exercise — Darren Rowse of Problogger. Darren made his reputation in part as a “six figure blogger,” but it’s fairly evident that the volume of ads on Darren’s excellent Problogger site can’t alone be generating all that income. So what does? Sites like this:

This site is called a “blog,” but it’s all other people’s content (e.g. CNET Australia has a preview of the Casio Exilim EX-Z1050 and writes, ” OR Vnunet has a review of the Nikon D40 and writes, “). There are LOTS of ads and affiliate links, including those that masquerade as content (e.g. “tips“) and those that link to advertorials like this:

When you look at the site, you wonder, what would ever compel anyone to come here? It’s appears to be (and appearance is key here) just a formulaic aggregation drenched in marketing. The answer to the mystery is in the site’s Sitemeter referral stats:

That’s right, it’s all search engine traffic:

Search Google for “digital camera review,” and there, amidst original content sites like Digital Photography Review and DCViews (at least I think they’re original content — it’s so hard to tell, which is much of the problem), is Darren’s site, which produces little or no original content and simply “points” to other people’s content.

In fact, when you search on Google for “digital camera” from Australia, Darren’s site is the #1 MOST RELEVANT site on this topic:

:

So, what, you may ask, is wrong with this? Well, maybe nothing. Maybe Darren’s site has done the best job aggregating the best camera reviews on the web. Maybe Darren’s site delivers the highest possible value for anyone in Australia interested in digital camears. If that’s the case, the maybe it deserves to rank #1 on Google.

But nothing about the site gives me the feeling that it’s a high quality editorial site. And the problem here, and its implications for SEO, is really about gut feelings — about whether there’s an imbalance of value between publisher and consumer.

Based on what I know of Darren from Problogging, I have absolutely no reason whatsoever to impugn Darren’s integrity. In fact, I feel guilty using this example because I’m sure there is much here that I don’t understand — Darren, I apologize for my ignorance and any resulting misunderstanding about how your site works.

But that’s precisely the problem. SEO is judged on appearances, and the appearances of things that even highly reputable people do can leave an uninformed layman with a certain amount of uncomfortable doubt.

So ask yourself this — if SEO were transparently all about helping the best sites rank as high as possible, and thus improving overall search result relevancy, would there be any controversy?

But let me be clear — I am really NOT trying to impugn anyone’s integrity. I learned my lesson when I attacked domainers, only to meet a bunch of them and realize most are honest folks just trying to run their businesses online. Lot’s of people have used SEO to make lots of money online WITHOUT using link farms, spamming, or other shady practices that are of questionable integrity.

I am NOT a search expert (clearly), but I have read a lot about search and SEO, I’ve been to Search Engine Strategies, I’ve received many very well deserved lectures from Danny Sullivan (and tried to learn from them), and I’ve read a good chunk of Aaron Wall’s excellent, encyclopedic SEO Book. (It’s not as if there isn’t a TON of information about SEO out there by smart folks like Danny and Aaron.)

But if I still have doubts about SEO, there’s a good chance that most other non-search experts are in the same boat. That doesn’t mean I would take Jason’s extreme stand, but let’s just say even after reading Danny’s impassioned defense, I still can’t help feel a connection to Jason’s point of view. I might have talked to someone like Aaron or Danny before writing this post, but part of the point here is that my unvarnished, semi-informed perspective on SEO is part of SEO’s liability.

Part of me thinks, if publishers like Darren can rank their sites high through SEO, well then more power to them. Live and let live. But part of me is still uncomfortable with it on the surface.

Here’s a challenge to SEOs: Can someone produce a list (perhaps it already exists) of the top 10 SEO practices, and also a list of 10 sites that deserve to rank higher in search engines but don’t because of poor SEO?

To any SEO’s who might read this, there are two approaches you might take:

1. Karp is an uninformed idiot (understandable).

2. If Karp doesn’t get it, is it just his problem?

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Digg and other social news sites have captured the imagination of publishers because of the massive amounts of referral traffic that Digg in particular can drive, leading to the obvious comparisons to Google and search engine traffic. Danny Sullivan points out that, in terms of raw traffic, sites like Digg seem to beat out non-Google search engines. (TechCrunch’s referral sources was an important reference point.)

But mounting evidence suggests that Digg traffic in particular is less like networking with like-minded individuals at a social event and more like getting attacked by a pack of wild dogs, who leave nothing of value in their wake, other than lessons learned on closing comments and crashed servers.

SiteLogic has a great, detailed analysis of how traffic from different sources behaves on three different sites. The third analysis, of Kim Kraus Berg’s CRE8PC, has specific data on Digg vs. Del.icio.us vs. link traffic vs. search traffic. The difference is striking.

Digg referrals spent an average of 3.6 seconds on the site, compared to link referrals that spend an average of one minute or more. Search and Del.icio.us traffic don’t spend much time, but Digg’s average is only 25-50% of the other averages.

Kim herself wrote a post titled “I Don’t Digg Being Dugg”, where she observes what many others have –Digg users are abusive and generally uncivilized:

Another way of looking at it is this. You take a walk through a park and quietly enjoy it and the experience. Perhaps you will recommend it to someone else. Or, you can visit the park and leave graffiti all over the benches, paths, and toss toilet paper into the tree branches.

Many sites, including the New York Times, have put “submit to Digg” buttons on their content pages, figuring that they need to bow down to the traffic gods like everyone else. But it appears that the Digg traffic god is not a benevolent god.

At some point sites are going to start to discriminate among traffic sources in terms of quality rather than quantity. Sure, if you have advertisers who are willing to blindly monetize any page view, it might not seem to matter on the surface. But I wouldn’t count on that lack of discrimination to last.

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I saw Danny Sullivan’s conversation with Google CEO Eric Schmidt at Search Engine Strategies this past summer, and one exchange has stuck in my mind:

Danny: In some ways search feels like it’s marginally boring in that we’ve got these new…

Eric: Boring to you.

Q: Well, not boring. It’s never boring to me, but the experience of, I go to this page, there’s still a box. I put in the words. I know we’ve got new verticals that are coming out and the results have gotten much better. But the way I dialogue with a search engine on Google might as well be Open Text or AltaVista in the basic of I’m putting words into a box, I push a button, I get results that come back.

Eric: People actually like that. They like the simple interface. They tell me this all the time. Do you not?

Danny: That’s my question – I agree with you, people are largely comfortable with it. And when I’m asked about that, all of the analysts and reporters, they’ll say to me, “Well, what’s the next big thing?” And I’m like, “Well, it’s like saying what’s the next big thing in television sets.” You went from black and white. And then you went to color. You had a long period where we didn’t feel like it was working. I could put all sorts of things but then they’d confuse you. And we’ve made a jump to HD, but a television set largely works as a television set and it feels like that’s because people are comfortable with it. So I’m wondering, is search like television sets where we get HD search or are we going to have an “Oh, wow!” moment which just completely changes and we have something different in how we dialogue with them?

Eric: For many people, many people are very, very happy with the very simple Google search. And we think that’s wonderful. There’s a set of people who want to personalize it. And so we have a version which is currently known as iGoogle, where you have a login name and a password, and then if you personalize your homepage, you can add what are called gadgets. We started off with a number of gadgets that we wrote. But more importantly we created a developer program and the developer program enables people to build gadgets. The first gadgets were the obvious ones: What’s the weather in this town and the stock prices and so forth. [But now] the gadgets are getting much more sophisticated. So my personalized Google homepage, for example, has information sources, newspapers, magazines that I care about. It has pictures; it has video and so forth.

The importance of this exchange is even more apparent if you watch Eric Schmidt (26 minutes in).

When Danny suggests that there’s an opportunity to innovate the basic search interface, Schmidt looks at Danny like he has three heads and jumps in to insist that most people like it that way — no, they REALLY like it that way. Schmidt then goes on to talk about Google’s customizable home page, which has absolutely nothing to do with the question that Danny asked.

What’s evident in this exchange is that despite all the lipservice about customization, Google is deeply invested in keeping the basic search application simple and with limited (or no) customization.

Why? Because they realized that they could get away with it. Google dominates search with a ridiculously simple application interface, with advanced features that almost no one uses. Google gets away with this because getting search results is fast, easy, and, in almost every case, the results are good enough.

Until recently, the software industry was dominated by applications that made it easy to do complex tasks and complex to do easy tasks (think Microsoft Office), and by software that required massive customization (think enterprise software).

But the software industy has taken note of Google’s success with its one-size-fit-all search application — perhaps even Microsoft, as Preston Gralla observes in Why Has Microsoft Abandoned the Power User?:

The upcoming final releases of Windows Vista and Internet Explorer 7 make one thing exceedingly clear: Microsoft has abandoned the power user, allowing fewer and fewer customizations and tweaks. By doing this, they’re leaving behind a very loyal audience.

Internally, Microsoft has created a mythical typical user it calls “Abby” who knows very little about computers. It now targets the operating system and browser at this imaginary Abby, potentially leaving the rest of us out in the cold.

I think Microsoft has abandoned the power user because Google has shown that, in the age of Web as platform and software as a service, it’s much more profitable to create applications that err on the side of simplicity — even to the point of significantly limiting user options.

Just look at Gmail, the email program of choice for nearly every early adopter. Customization and other “power user” features (such as integration with other email programs) are nearly non-existent, but still everyone uses it. Why? Search. That one feature is so useful that we put up with all of the other limitations. And Google gets away with it. Google’s new word processor and spreadsheet package are also a bet that less is more.

The Googlization of the software industry may make many applications easier to use — but it may also lead software companies to develop applications based on the belief that less is more in every case. That is a good thing when an application makes it really simply to do what you want — but maybe not so good when the application simply won’t do what you want.

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Why does Google dominate search? Brand. Google’s original search brand is so successful that they can’t even get people to use their vertical searches, e.g. Maps, Images, Video, Books, even when those tool better serve users needs. Use of Google’s core search is no longer a function of whether Google is better (in many cases it’s not). People use Google the same way they use P&G products – out of brand loyalty and often just out of habit.

Why did YouTube beat Google Video? Brand. Notably, it’s the community that defined the YouTube brand as much as the technology. Ultimately, it was the strength of the brand — and Google Video’s inability to compete with the brand’s dominace — that drove the acquisition. What makes the top blogs so successful? Brand. Again, community is a key driver, which you can see in the active comments on successful blogs. In many cases, blog brands are built around individuals, but they are brands nonetheless.

Why were Weblogs Inc. and Gawker among the first successful blog media companies? Because they built brands. I’ve heard Jason Calacanis say the reason he didn’t aggregate existing blogs, as Federated Media is doing, is that he wanted to own the brands.

Why is Yahoo the largest portal? Brand. Why do so many people shop at Amazon despite the proliferation of online shopping alternatives? Brand. Why is Digg so popular? Brand — again, a community-defined brand, but a brand nonetheless.

Even the social networking wars are being fought over brands. Here’s Jay Stevens, vice president of sales and operations at MySpace:

“Ultimately people identify with [online] publishing the same way they do in the offline world. The newspapers we read and the television channels we view are representative of what you are about,” said Stevens. He went on to say that there is some interaction but that people use different social networks for different purposes. “Some people might be on Bebo to communicate with friends but will then go to MySpace to check out what’s new in popular culture.”

A media brand can be an individual voice, a social networking platform, or an online software application. It’s undeniable that traditional media brands no longer have a monopoly over our attention — but as Jay Stevens points out, the fundamental dynamics of media brands hasn’t changed. We self-identify through our media brand choices, which now include all of the technology brands we use. Increasing, there is no meaningful distinction between technology and media brands in the consumer space – they all compete for our attention. We are defined by the devices and applications we used as much as by the content we consumer. I’m an iPod user, Gmail user, Pandora user, Firefox user, Basecamp user, Feedburner user, Amazon shopper. I listen to the Gillmor Gang and read Rough Type (and without my head exploding). I am part of the TechMeme community.

It all comes back to brand. There may be new drivers of brand loyalty in media, and the barriers to building a brand may have fallen away. But brands still rule.

Although I am still the sole author of this blog, much of the value has accrued to the Publishing 2.0 brand, which you can see in a (now brand-defining) Google search.

Domains are brands, which is why domain investing has become so lucrative.

All of the Web 2.0 companies, with their oddball brand names, are fighting a battle for brand dominance. Are you a Del.icio.us user or a StumbleUpon user? Are you a PodShow listener or a PodTech listener? Do you use YouTube or, well, I guess that battle is over.

Despite all of the proliferation of content, media/technology is still largely a winner take all industry. Google. Yahoo. Amazon. Ebay. YouTube. MySpace. These are the dominant brands.

Media/technology companies are not only competing for our attention, they are competing for our loyalty. Consumers may be in control, but they are still creatures of habit who seek the comfort of familiar brands.

At the end of the day, brands are about trust. Which brands do you trust? Which brand has a community that you can trust, a community where you can belong?

Whether you are a blogger, a traditional media company, a new media company, or a technology company, your brand is your most valuable asset. Nuture it. Grow it. Form a vibrant community around it.

But never lose sight of your brand.

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Google’s problem with vertical search adoption (as documented by Bill Tancer at Hitwise) is a lesson on how average people adopt and use applications. Most people use Google’s main search rather than the vertical options (which are plainly listed on Google’s main page) because they see “Googling” as a simple, elegant, one-stop-shop for any and every search need — this is how most people function. Using different search engines for different types of searches is several standard deviations of complexity away from average user behavior — the people who adopted Google for its simplicity are the same people who won’t stop to think what type of Google search they need to do. They just Google search. Just one, plain, simple application.

Life is complicated. People cling to simplicity and proven results. Behaviors are deeply ingrained and do not easily change.

The law of average users tells us that most people have significant limits to the amount of variation, complexity, and nuance they can tolerate in their daily application use. Adopting a new application for one purpose is a huge hurdle. Adopting multiple applications for variations on that purpose is just too much for most people.

This is another example of the Zen of 2.0. One search application is Zen. Many search applications is not Zen.

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Like everyone else, I wish Danny the very best, and I look forward to seeing what he does, knowing there will be, as always, much to learn from him.

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That’s certainly progress. But here’s a consumer need that isn’t being fulfilled: Which local businesses that offer the products/services I need are offering the BEST coupon deals?

Here’s the real problem: When local businesses use AdWords to promote their Google-hosted coupons, they will be taking some of the money that could have gone to consumers and instead paying Google to promote the coupons. Businesses will have to weigh how much they want to give to consumers through the coupons against how much they need to bid on AdWords keywords to drive traffic to the coupons.

So consumers are getting deals — but not the best deals. And businesses are competing — but on keyword bids, not on giving consumers the best deals.

Lending Tree’s tagline is: When Banks Compete, You Win

The tagline for Google Coupons should be: When Local Businesses Compete, Google Wins

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1. Search marketing has come of age

You can see this in the standing room only sessions in the ballrooms at the San Jose McEnery Convention Center. You can see it in the parade of representatives from Google, Yahoo, Microsoft, Fortune 100 companies, small businesses from every imaginable sector, and the swarms of SEM consultants, agencies, and software vendors. You can feel it in the energy of the conference that everyone knows search marketing has driven the renassaince of online advertising (and, and one might argue, advertising in general). I haven’t attended SES conferences in years past, but many people commented to me on the tremendous growth in the size and stature of SES, which reflects the maturing of the industry.

2. Goolge’s dominance is still growing

You can see this in the competitive analysis charts from Hitwise, comScore, and Nielsen/Netratings showing Google’s still growing dominance in visits and total searches. You can see it in the way AdWords dominates the case study presentations. You can see it in the Google clone features of Yahoo’s new Panama platform. You can see it in the widespread hand wringing over the negative impact of Google’s landing page quality score. You can see it in Google’s ostentatious display of power and wealth at the Google dance. You can see it in the packed auditorium listening to Danny Sullivan’s conversation with Google CEO Eric Schmidt.

Google’s dominance was evident when makers and users of search marketing management software railed against Google’s “API tax,” i.e. Google’s decision to charge advertisers for the once free access to Google’s AdWords API. They also complained about the Google API terms of service that prevents Google data from being used in apples-to-apples fashion alongside data from competing search engines — its clear to many SEMs that Google wants to control the whole search marketing landscape.

Google is to this decade what Microsoft was to the last decade. In a session on “Search Engines: Friend or Foe,” I asked David Jakubowski of Microsoft’s AdCenter about the irony of Microsoft’s effort to be the anti-Google, and he wisely declined to comment.

What struck me most is that few people were ready to concede the war to Google — of course, you hear this from Yahoo and Microsoft. But you also hear it from SEMs, who are begging for Yahoo, Microsoft and others to give Google a better run for the money.

3. Effective ROI measurement is far from universal

There is no shortage of software and SEM consultants that do a great job helping companies measure the ROI of search marketing — but my sense is that many companies are still far from state of the art. You can see this in the rudimentary questions that advertisers ask — and these are companies that had the wherewithall to attend Search Engine Strategies — and the way SEM consultants talk off the record about the state of practice. On the click fraud panel, Lori Weiman of KeywordMax cited statistics that 1/3 of advertisers aren’t tracking post-click customer behavior, and 50% of those who are don’t analyze the data to make bid adjustments and optimize performance.

There was undoubtedly a huge learning curve on display at SES, and all to the good — companies are making progress on ROI with the help of consultants, agencies, and new platforms. But the amount of learning still to be done makes me more skeptical than ever of arguments that assume most search advertisers are operating at best practice when it comes to ROI and optimization, e.g.

- The market can compensate for click fraud

- Pay-per-click key word prices reflect a high degree of market efficiency

- Pay-per-click arbitrage will diminish as the market becomes more effient

Of course, paid search remains several step functions more efficient than tradiitonal paid media advertising — effective ROI measurement is actually possible for the first time — but in practice, it still has a long way to go.

4. Transparency is declining and the black box is growing

In Yahoo’s new search advertising platform, Panama, advertisers will no longer be able to see how much their competitors are bidding — like Google’s AdWords, which Panama imitates, this data will be drawn into the “black box.” Yahoo had little choice but to reduce the transparency of its ad system in order to compete with Google.

Eric Schmidt reaffirmed the black box party line in his conversation with Danny. Google will not release data on anything, from click fraud to spending on search vs content ads — Google has developed a number of standard “reasons” for this lack of transparency:

Competition — this is a universal catch-all excuse

Bad actors — they can’t disclose click fraud data because that will help the click fraudsters

Misinterpretation — they don’t want to release data without context because it can be misinterpreted — this was a new one for me

Every Google rep I saw at SES — Shuman Ghosemajumder, Business Product Manager, Trust & Safety; Kim Malone, Director of Online Sales & Operations; Shashi Seth, Product Manager for Google Co-op — was carefully tight-lipped about revealing any data of any sort that might help anyone understand what’s happening inside the black box.

And the frustration among advertisers and SEMs over the search advertising black box is growing. With all the talk of market efficiency and ROI, it’s sobering to listen to Dana Todd of SEMPO and SiteLab make an impassioned plea for a full click-by-click data audit — who clicked on each ad, how much they paid, etc. — and she knows she’ll never get it.

The battle lines have been drawn in the war over data — the issue of click fraud is of course front and center, with Google’s surprise attack against third-party click fraud measurement at the SES panel.

But I was also struck by the view of some SEMs that paid search is getting harder, given the risk of triggering Google’s quality score algorithm, which can explode keyword prices overnight. Because Google’s effort to prevent abuse of the system is done with so little transparency, it may have the unintended consequence of stifling innovation and making advertisers afraid to do the kind of experimentation necessary for optimization and better ROI.

5. Advertisers are getting frustrated and suspicious of search engine hegemony

I asked a diverse set of advertisers whether they planned to use Google Checkout — NEVER, was the near universal answer. I’ll never share my data with Google. I’ll never put my data into Google’s black box, because then they will know how much I’m making on keywords and they can raise prices to squeeze my margins. I heard similar attitudes towards Google’s conversion tracking tool and Google analytics. The collateral damage of the landing page quality score has only hardened this view.

Dana Todd talks about Google addiction — the inability to look beyond Google’s unequaled capacity to drive traffic. She is clearly worried that advertisers are becoming blind to the risks of over-reliance on Google.

The risk of over-reliance on Google is nothing new — advertisers learned that lesson after Google’s “Florida” algorithm adjustment in 2003, which drove so many merchants out of natural search results and inevitably into paid advertising. But the introduction of landing page quality scores and the growing awareness of click fraud is leading more advertisers to question Google’s degree of control.

On the click fraud panel at SES, Jessie Stricchiola of Alchemist Media pointed to a little publicized section in the Tuzhilin Report which disclosed that Google waited until 2005 to stop double charging advertisers for double clicks:

The change in the doubleclick policy that was considered in Winter 2005 and implemented in March 2005. It turned out that the change in the doubleclick policy (i.e., not to charge advertisers for the immediate second click in a doubleclick) had non-trivial financial implications for Google. Being a publicly traded company at that time, this change would have had a noticeable effect on Google’s total revenues with corresponding implications for the financial performance of the company.

Advertisers, of course, had no idea that they were being double charged because it all took place inside Google’s black box. And advertisers are starting to wonder what else may be going on inside the black box to maximize Google’s revenues at their expense, with click fraud being only the most publicized issue.

6. Search marketing is still in its infancy

Most SESers agreed that we are just at the beginning of the road with search and search marketing — with the notable exception of Eric Schmidt.

When Danny Sullivan made the observation to Eric Schmidt that search is “boring” and wondered whether it has matured like the TV set or whether there was something new and exciting over the horizon, Eric looked at Danny like he had three heads and said defensively (regarding Google’s simple interface): “People like that. Don’t you?” When Danny pressed him, Eric responded by saying that anyone wanting a “complex” search experience could use Google’s personal homepage with RSS feeds and gadgets.

Yes, indeed, we’ve still got a long way to go.

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In a conference call, FIM executives noted that a very large number of people leave MySpace to go to Google. According to data collected by Hitwise, an Internet traffic tracking service, nearly 10.8% of Google’s traffic was coming from MySpace.com for the week ending July 29, 2006. Had Fox gone with Yahoo or Microsoft, it could have been a serious blow to Google.

It also gives them access to inventory to sell more ads, and thus become even a bigger player in the fast-growing online advertising business. But the ad-inventory that can be sold is unlikely to come from MySpace. Rich Greenfield of Pali Capital notes that most of the safer (read advertiser friendly) “Myspace-programmed” sections such as the homepage, main Music page, main Comedy page, etc are off limits for Google. Eric Schmidt, Google CEO during the conference call said that they would not serve ads on all MySpace pages and in fact they will let a lot of ad inventory go unserved.

First, I disagree with Om that FIM’s going with Yahoo or Microsoft could have been a serious blow to Google because of the loss of traffic from MySpace. Here’s what Bill Tancer of Hitwise observes about the 10.8% statistic:

Since over the last year there has been no formal relationship between the two companies, this high volume of traffic flowing from MySpace to Google would most likely be the result of users using their Google toolbar or manually navigating to Google while engaged in their MySpace session.

Google gets 10.8% of its traffic from MySpace because so many Google users are also MySpace users, and so they just happen to be on MySpace when they decide to do a search. Does that mean these MySpace users would suddenly stop wanting to use Google if Yahoo or Microsoft was the default search for MySpace? Unlikely. Perhaps Google will gain more search users from other FIM properties, but I’m not sure that was worth paying for.

So what about the advertising component of the deal? As Om observed, “the ad-inventory that can be sold is unlikely to come from MySpace” — Google is even more savvy than most corporate advertisers when it comes to avoiding ads running next to questionable content.

Through Om, Robert Young speculates:

“The real story here (in my opinion) is how Google is now going to adjust/modify their ad network to optimize for social networks.”

It seems on the face of that there should be a huge opportunity to better “monetize” social networks, but I don’t see how this deal is going to make the problem of uncontrollable MySpace content any easier to solve.

MySpace still can’t get more than $1 for a big chunk of its page views. Maybe Google can figure out how they can do better…good luck!

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A rigorous technical analysis by Google engineers has found fundamental flaws in the work of several click fraud consultants – flaws that help explain why widely quoted estimates of the size of the click fraud problem are exaggerated. We would like to share this research so that advertisers can be aware of these problems and so these consultants can use the information to improve their services.

The report includes an indictment of AdWatcher, ClickFacts, and Click Forensics. Tom Cuthbert of Click Forensics was on the panel and he shot back with this site: www.resonableisnotenough.com — a reference to the Tuzhilin report, which found that Google’s effort to combat click fraud is “reasonable”:

There is a solution available. It does not ruin pay per click advertising as we know it, in fact it breeds trust. It is technically possible and is based on a process that has worked successfully in traditional media for many years. It has been built and is ready to roll. It even allows the search providers to remain the final arbiter while giving advertisers a sense of comfort.

You can help solve the problem of click fraud by working with industry organizations, search providers and joining our Network. While “reasonable” is not enough, it is a step in the right direction. You have my commitment that Click Forensics will continue to work together with advertisers, industry organizations, search providers and smart guys like Alex. We will remain focused on realistic solutions that benefit the entire industry. Together we can build trust and continue to grow the pay per click advertising industry.

John Slade, Senior Director of Global Product Management at Yahoo, made an effort to redirect the discussion to the “bright side,” i.e. the industry council that was formed with IAB and Media Ratings Council to come up with a standard definition of clicks and click fraud.

Jessie Stricchiola of Alchemist Media Inc. drilled down to the core issue — even if there was a industry standard definition of clicks and click fraud on the table right now, the foxes would still be guarding the hen house because Google, Yahoo, etc. will still be the final arbiters of whether an advertiser has to pay for a click.

John Battelle reported on the Google report this morning, which was embargoed until 9AM, the time of the SES click fraud panel. John saw in the report the gloves coming off that we saw live on the panel:

Wow, the document reads far more combative than I thought it would. It’s more of an indictment of the nascent click fraud detection industry, and three firms in particular are called out.

Shuman Ghosemajumder brandished the report like a trial lawyer out for an indictment — despite many efforts to cut the tension in the moment, it was clear that there’s a hard gravel road to getting everyone in the click ecosystem to work together for its long-term survival.

The increase in acrimony makes the comparison I drew with Nielsen and TV advertising all the more apt.

The long-term survival of the click ecosystem is going to depend on the emergence of an objective third party that can arbitrate the situation. I keep coming back to the Catch 22 that Tuzhilin pointed out:

An operational definition [of click fraud] cannot be fully disclosed to the general public because of the concerns that unethical users will take advantage of it, which may lead to a massive click fraud. However, if it is not disclosed, advertisers cannot verify or even dispute why they have been charged for certain clicks.

Even with all the data, defining fraudulent “intent” will never be clear cut — but unless the full data set, i.e. advertiser and publisher data, is arbitrated by a third party, the situation is poised to deteriorate as advertisers get more savvy (and more unhappy) and Google (and others) consider more aggressive steps.

(See Auditing Paid Listings & Click Fraud Issues on the SES agenda for overview of the panel and who was on it.)

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This is the very data that google won a legal battle to keep from the government. What is going to happen to the search industry now? What are peoples privacy rights? If people are using AOL to search for ways of killing their spouse what should be done about it?

After reading AOL’s press release, it seems that they are just as horrified as everyone else. What’s clear is that information submitted to a search engine is as sensitive as the information given to lawyers and priests. In the case of lawyers, there are laws that protect the confedentiality of the information. In the case of priests, there are “higher” laws. But the law governing search data, online clickstreams, etc. is in its infancy — no, it hasn’t even been conceived yet.

Clearly, our societal and legal infrastructure is not prepared to deal with the human mirror of the Internet.

We need public debates. We need Congressional hearings. And, unfortunately, we probably need legislation.

I’m inclined to say that everyone who has posted copies of the data after it was taken down is acting in a socially irresponsible manner — but I know the complexity of the situation far exceeds gut feelings.

Here’s the bottom line: what’s inside our minds is no longer private (or a lot less private). Nothing we do on the Internet is private. And there is a not insignificant risk that if we don’t come to terms with this as a society, there will be many unintended consequences — and it won’t be pretty.

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Pay-Per-Click Ad Council
(From CNET)

The Interactive Advertising Bureau (IAB) and the nonprofit Media Rating Council said they are teaming with Google, Yahoo, Microsoft, Ask.com, LookSmart and others to form the Click Measurement Working Group.

The group’s mission is to establish guidelines for what constitutes valid clicks and invalid clicks on ads. Guidelines can help the industry measure how prevalent click fraud really is. Third-parties who sell click-fraud-combating services to advertisers claim that click fraud rates are as high as 30 percent. Google and Yahoo counter that click fraud rates are minimal.

TV Commercial Ad Council
(From MediaPost)

IN THE WEEKS SINCE NIELSEN revealed plans to begin providing ratings for TV advertising minutes significant problems have emerged in the way those ratings are processed. Now a coalition of influential buyers and sellers wants to put the brakes on that process before and is planning a meeting to rethink how the so-called commercial ratings should be manufactured. The meeting, which is expected to take place next month, before the launch of the new TV season, and before Nielsen begins doling out the new ratings, will likely lead to a new round of discussions on what data should – and should not – go into the commercial ratings, how they should be processed, disseminated and used in TV advertising deals. “I don’t think there’s anyone out there who thinks that Nielsen has a full grip on this,” acknowledges Alan Wurtzel, president of research and media development at NBC, who is one of the executives trying to organize the summit. We need to find a forum in which the industry can get together and start to deal with some of these details.”

In both instances, the problem is a lack of data transparency. Greg Stuart, chief executive of the Interactive Advertising Bureau, who is part of the click council, said (from BusinessWeek):

Media need to operate with transparency. There’s marketers and agencies who are paying money for things. They need to know, what are they paying for? What does that look like? What is the standardized way in which that’s being counted? And also ultimately, is that audited? Can we validate that (using a third party)? And so, in an industry that is now going to be close to $16 billion this year, it should be relatively obvious that we need to operate with the principles that all media operate under.

The problem is that the current pay-per-click and TV ad systems both make it difficult, if not impossible, to provide data transparency. For clicks, it’s the ad networks, e.g. Google AdWords and Yahoo Search Marketing, that can’t provide all the the data. For TV ads, the problem is Nielsen, who acts as the data proxy for the TV networks.

Pay-Per-Click Ads
(From the Tuzhilin report)

An operational definition [of click fraud] cannot be fully disclosed to the general public because of the concerns that unethical users will take advantage of it, which may lead to a massive click fraud. However, if it is not disclosed, advertisers cannot verify or even dispute why they have been charged for certain clicks.

TV Ads

One of the chief problems surrounding the new ratings is that the commercial ratings are processed by using a relatively shaky system for identifying when the commercial minutes actually air. That system, Nielsen’s Monitor-Plus service, was designed as a competitive advertising monitory system, which apparently does not have the same level of detail or rigor as the systems Nielsen uses to compile and process TV ratings.

I can’t fault the formation of these ad councils because, given that they can’t fix the real problem of data transparency, it’s the only way that all of the interested parties can address the problem. Of course, having interested parties like Google, Yahoo, ad agencies, and TV networks on these councils turns them into a tug of war between deeply entrenched economic interests.

Advertisers will begin to get wise to the similarities between the lack of transparency in pay-per-click ads and TV ads. Although pay-per-click is a leap forward in measureability and accountability, it still falls far short of a truly transparent system. You can see it in how Greg Stuart talks about pay-per-click ads (i.e. “search” ads):

Search produces results. End of story. It produces results. My guess is that these advertisers would like to see any concern that might seep into the view that their management has, or anybody else. Because they know in their heart of hearts that this really works. It’s in everybody’s interest to clean this one up.

“They know in their heart of hearts that this really works” — old media companies have been using such language for years to describe advertisers’ ostensible faith in poorly-measured and unaccountable TV and print advertising.

Wouldn’t it be great if there were an advertising system that was fully transparent and thus didn’t require advertisers to form industry councils and adopt articles of faith to prop it up?

That’s why we will we soon see the transition from clicks to actions and conversions.

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If you’re going to be there and want to meet up, drop me a line.

Stay tuned for dispatches next week.

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As readership declines for newspapers and online readership grows, every publisher faces the threat coming from the edge of the network. Sites like Google News, Yahoo News, and Digg are becoming the new destination sites because of the mere fact that they point to where the news is, no matter where on the Web it may be. But on Monday, news Websites ranging from the Washingtonpost.com and The Oklahoman’s NewsOK.com to the Huffington Post will have a new way to counter that threat. New York-based startup Inform, which last year launched it’s own consumer news aggregation site, is rebooting as a search utility for mainstream news sites (yes, HuffingtonPost, welcome to the club). Inform is offering to replace the sub-par search on most news sites, and add in results not just from their own articles and archives, but from the Web as well (including blogs, video, and audio).

Since Erick has all the details, I’m going to delve into two key questions that Inform’s strategy raises:

1. Can content sites with relevant links and search results pull people out of search pathways that originated with Google, Yahoo, etc.?

2. Can parked domains improve ad performance by providing links to real content?

On the first question, Inform’s theory of the case is that searchers who come across a news story on an Inform-powered content site will find relevant links aplenty and continue their quest through those links rather than backing up to the original search results that brought them to the content page. This is an intriguing theory — the key question here is how important are the search engine’s results relative to other relevant links that a searcher encounters? Do searchers have such deep faith in their search engine’s results that they will always go back to the original results page? Or are they sufficiently fickle that a good list of additional relevant links will pull them off their usual path?

My gut says that for Google or Yahoo search, it will be hard to shake users loose from their habit of exploring search results. But for Google News or Yahoo News, it might be an easier task.

So much depends on the value of the content brand. If someone goes from Google News to the Washington Post and finds relevant links, how important is it that those links are being provided by the Post vs. impresonal Google News?

For that reason, I think combating Digg is much tougher, because there the driver is not relevancy than but popularity — users are more likely to go back to their exploration of Dugg stories.

All of this is just speculation, of course — what I’d really love is to see the traffic data from Inform’s first set of clients a few months out. That will be very telling for the future of news online.

Interestingly, Inform is also trying to compete in the search engine wars with key features like clustered results (a la Ask.com) and “did you mean?” keyword clarifications:

The second question arises from one of Inform’s first clients — parked domain powerhouse NameMedia. Erick argued a while back:

As domainers account for more of the search advertising inventory one of two things will happen. Either the price per click will go down because advertisers will figure out that all those clicks coming from the domainers (which will make up a bigger and bigger portion of Google’s external ad network AdSense) are worthless, or the domainers will get smart and figure out that the best way to get people to click on those ads is if they actually build out their sites with real content. NameMedia, for one, intends to go down that route for at least some of its major domains.

Many parked domains already use scraped content from Wikipedia and other open sites, but Inform seems to be more in the business of providing relevant links than content (of course, links are a form of content).

So here’s the question — will links to actual content compete for clicks with pay-per-click ads that now dominate most parked domains? And if so, why bother with the content? Unless the goal is to turn some of these parked domains into real information sites that people may have reason to go back to.

What could change this equation — and make the domain game a lot more interesting — is the transition to cost-per-action ads, where the goal is not just clicks but actual purchases (or some other high-threshold action). In that case, there maybe a stronger argument for parked domains’ providing a more substantive context CPA ads.

One last interesting question is how Inform fits in with all the deals that Google and Yahoo have been cutting with news organizations:

Google and Yahoo, along with dozens of other Internet companies, have been quietly agreeing to deals that compensate some of the country’s top news organizations for their content and help drive more traffic to their Web sites.

Recently completed deals, which include arrangements in which media organizations such as the Associated Press will be compensated on a pay-per-click basis, could herald a major shift in the relationship between the old media and new Internet gatekeepers.

“The people who own the content did a lot of work to generate the content,” Google Chief Executive Eric Schmidt said in an interview with the Mercury News. “We want them to get the majority of the revenue from advertising.”

Looking at the big picture, Inform’s approach speaks to a future where the competition over relevant links, the coveted click, and the holy grail of meaningful actions will become ever more intense.

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Yahoo clearly saw an opportunity with its tremendous homepage reach to leverage its strong portal brand to try to change users’ default searching habits. Interestingly, the pitch is not “use Yahoo search because it works better,” but rather “use it because it’s Yahoo.”

I use the Firefox search box many times a day, but mine is still set on Google — if I change it, I’d be much more inclined to check out the buzz around Ask.com.

I wonder what other users will do — can people still be swayed by brand affinities that have nothing to do with the feature in question? Or will people stick with what they think works best?

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Click on the top ad on the right and you’ll find this:

Maybe the guy in the picture is named Scott, but other than that I can’t figure out what this has to do with the keyword “Scott.”

The two other ads are at least selling products related to the word Scott (although it’s hard to tell from the ad copy). But they couldn’t get the top spot because TheWebLoan.com is essentially spamming this keyword.

Try Googling “Karp” and you find the same thing:

Click on the top ad and you’ll find:

So what is up with all this spam? How can AdWords make any claim to being an efficient marketplace? And what about relevancy — clearly these keywords were sold to the highest bidder, the hell with relevancy.

Paging Danny Sullivan.

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* our mail account would still have 2MB or 4MB of storage and we would be happy about that.

And we’d all be more disciplined about deleting email — my Gmail-driven never-delete approach to email has my corporate Outlook always on the verge of collapse.

* we would find a mail by manually reviewing each subject and sender.

Or maybe someone would have invented an email search app that works with ANY email program, so we wouldn’t be locked into Gmail and it’s never-ending stream of ads — and/or someone might have developed a killer email app that was so good we’d be willing to pay for it.

* we would pay for software like Picasa, Keyhole (now Google Earth), Sketchup.

And maybe it would be well worth it, because the independent owners of those apps would have been forced to innovate at a rapid pace to earn our money — instead, Google can let its apps languish until they’re ready to throw up AdWords.

* many startups would not exist without Google AdSense, so there would be less innovation.

Or maybe there wouldn’t be such a bubble in Web 2.0 start-ups with so many me-too apps, because developers would be forced to think more about business models and REAL innovation — without the crutch of AdSense cash, business model innovation might actually keep pace with application innovation.

* our homepage would be a portal, or about:blank.

Google isn’t my homepage — it’s the New York Times, because I actually like information about what’s going on in the world pushed TO me. I’m not always looking for something, and I don’t always know what it is I need to know when I go online.

* our search engines would be cluttered, would mix ads with organic results and wouldn’t care about the users.

AdWords does not really care about users — “relevance” is only a variable in the equation to drive more clicks and thus more revenue.

* we would think beta software is just for the testers and it’s dangerous.

We might also expect beta software to get off its ass and out of beta in less than three years.

* technology news would be less exciting.

We might also have something to talk about OTHER than Google, which sucks up all the air in the room every time they write a line of code.

I, for one, would have time to devote to other targets for iconoclastic rants — like MySpace. Although…I guess from that perspective, Google isn’t such a bad thing.

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Here’s the problem with this strategy — from the consumer perspective, Google is not an efficient way to shop online. Google’s blog mentions Starbucks are one of the merchants that signed up for Google Checkout, so let’s try searching for “gourmet coffee.”

There’s nothing wrong with the ads in the search results — each of these gourmet coffee merchants is potentially relevant. The problem is that I have no way to compare them — all I can do is click and browse, click and browse.

Google revolutionized search by leveraging the network effect of hyperlinks to determine relevancy — but the 2.0 efficiencies of page rank are completely missing from AdWords. Sure, advertisers compete on keyword relevance, but I as a consumer am unable to benefit from the network effects of the larger online shopping community. Which of these merchants has the best value proposition for people like me? Where do people like me most often shop? Which has the most relevant products? Which has the best prices?

Navigating Google ads feels like Yahoo circa 1997 — a lot of clicking and browsing in hopes of finding the right fit. The organic search results may be super-relevant, but the “sponsored” results are of limited value because the cost-per-click bids are too big a factor in ranking and there is no information available from my peers. The advertisers are in complete control. The ads are relevant to a degree, and certainly more relevant than the random interruption of old media models, but as a consumer, I’m still at the mercy of the system. And the return on my attention is marginal at best.

To put it simply, shopping through Google is a very 1.0 experience.

Here’s Umair:

Media is deeply personal, social, cultural, human, creative – and so it’s economics aren’t those of simple technological scale, because, more often than not, technological scale kills those things (think Clear Channel roboDJs). The real opportunity is in leveraging the new forms at the edges of the firms – markets, networks, communities – to explode just how personal, social, cultural, human and creative media can be.

It should be painfully clear that, in the Googleverse, media is none of those things – it’s just a commodity filtered, sorted, and “processed” by machines. Which is deeply reminiscent of the 20th century’s scale and scope driven Great Rationalization of consumer industries, where goods ultimately became “commodities” which were “processed” by machine, assembly line, and bureaucracy (think meat-packing, clothes, and cosmetics).

I don’t want an algorithm and a bunch of ad copywriters determining what’s “relevant” for me. I want my peers — people like me — to determine what’s relevant.

If Google increases its dominance of search advertising by dominating checkout, it will drive up the costs of search advertising, which, even in a new cost-per-action model, will ultimately be passed on to me as a consumer.

So Google gets more profitable. And we hand over more data to Google for not a whole lot of return. As Marshall Kirkpatrick observes:

The biggest question then appears to be whether consumers trust the Google brand enough to look to the company for more than just access to the rest of the world’s data, but as a repository for our own data kept private from a world of online shopping vendors.

This of course, brings me back to Jellyfish’s vision — they want to create a system that rewards peer reviewers who help people make smarter buying decisions by putting money in the reviewer’s pocket — a value per RELEVANT transaction — this creates a virtuous cycle, increasing the network effect of information and in turn helping me find what I really want at the best price.

The obvious implication here is that Google is becoming the new Microsoft — far more focused on its own dominance than on innovating and creating life-changing value for it users.

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I get this comment all the time when I’m trying to describe what I think is a (r)evolutionary change. It’s human instinct to cleave to what we already know, to hope that we can continue to live comfortably in the world that we’ve already wrapped our minds around.

Sometimes, what’s hailed as a revolution is in fact just a lot of old (or stolen) hype. But sometimes the failure to recognize something new is a failure of imagination.

Jellyfish launched its new “buying engine” yesterday (see coverage in Mashable, WSJ, and ClickZ), and some of the feedback has inevitably been — “it’s nothing new.” I’ve spend a fair amount of time talking to founders Brian Wiegand and Mark McGuire, and I think what they’ve imagine with Jellyfish IS new, and potentially revolutionary.

Jellyfish is drafting off all of the deeply entrenched modes of online marketing and advertising, including pay-per-click search advertising, affiliate marketing, cash back rebates, and comparison shopping. Jellyfish takes elements from all of these approaches and combines them into a platform that aspires to create a liquid and efficient market for e-commerce transactions.

The keys here are “market,” “efficiency,” and “liquidity.”

Despite all of the dramatic gains in efficiencies that online advertising, marketing and e-commerce have introduced, each of the current systems retains deep inefficiencies. Jellyfish is (through its beta) on the path to creating a truly liquid market where all of the following elements can dynamically interact to increase efficiency and consumer value (or “value per action,” as Jellyfish calls it):

- Search result rankings by key word relevancy
- Search result rankings by best price
- Cash back rewards
- Sales volume and purchase patterns
- Product reviews and ratings
- Merchant ratings
- Refer-a-friend networks
- Channel-specific merchant control over pricing
- Actual purchase transactions

I’m probably missing something, and not all of this has been rolled out yet in the beta. But already you can see the outlines of where Jellyfish is going in the beta’s product page, which cleanly combines merchant ratings, sales volume, and cash back discounts.

I’ve looked at Ebates and Fatwallet, Shopzilla and Pricegrabber, Google AdWords and Yahoo Search Marketing, Commission Junction and Linkshare, and even Google’s new cost-per-action program, and I can’t find anyone else who is combining all of these elements with an eye towards creating a liquid market. (If I’ve overlooked anyone, please let me know.) The only other player I’ve found who sees the opportunity in the market is Root.net, although they’ve headed down the data collection path as opposed to Jellyfish’s more consumer-facing shopping application. (Root is worth watching as well.)

Closer to the ground, Jellyfish has all the Ajax features you would expect, including filtering and refinement of searches by manufacturer, store, and price:

They also have an innovative approach to merchant ratings, based on the Better Business Bureau model of complaint management, rather than the star rating approach, which lacks in nuance:

Many people will judge Jellyfish based only on what’s in their beta or based on the easiest comparison to an existing site. I continue to be excited by Jellyfish’s vision of what a liquid online market COULD be, and how it could change the dynamics of online advertising and e-commerce — which, let’s face it, haven’t seen much game-changing innovation since Overture, Google, Ebay, and Amazon.

I will be watching closely as Jellyfish grows and enriches its market with data through utilization to see whether they are able to continue down the path to realizing this vision.

But until then, you’ve got to use your imagination (and, if necessary, read Umair Haque on the virtues of “liquidity”).

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Laura Desmond, chief executive of Mediavest USA, which advises clients such as P&G, Masterfoods and Kraft on buying and planning media, said: “Google is going to have to change its business model soon. Search alone isn’t where marketing is today. It is about search and branding and putting the two together.”

Of course, Google and Yahoo push back:

At the Cannes Lions, Google and Yahoo!, two leading search engines, on Monday promised to share more research with advertisers to persuade them search can be used in effective combination with traditional advertising to build brands as well as generate sales.

Damian Burns, head of European agency relations at Google, said: “There is a need for self-education among agencies and clients. But I don’t believe that you can have people being exposed to brands on search results day after day without that having an impact on brand building.”

Ok, let’s try an empirical test. I went over to Style.com and found this ad for Prada Perfume at Neiman Marcus.

If you click through, you’ll find that Prada Tendre perfume sells for $95 — not cheap. Why would anyone spend that much on a bottle of perfume? Hmmm.

Next I went to Google and searched for “designer perfume” — sure enough, there was “Prada Perfume” at the top of the “sponsored” listings.

So there, you see, search advertising is just as effective.

Except it’s not.

There is only ONE reason why anyone would click on the Prada Perfume text ad — the Prada brand. And how did Prada build that brand? Through compelling IMAGES.

If it’s just text vs. text, then the transactional, price-driven ethos of search kicks in and instead the click likely goes to the Scentiments.com ad, because who wouldn’t want to “save up to 80% on perfume”?

So without brand, instead of shopping here…

You shop here…

Google needs to figure out brand advertising or it’s going to hit a wall very soon.

That concludes our demonstration.

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But despite this huge innovation, search advertising still provides a relatively low return on consumer attention — in ad brokering systems like Google AdWords, which are based on auctions, relevance is often in conflict with revenue per click. AdWords must balance the likelihood of a click — and its correlation with relevance — against the amount of revenue Google receives for that click. And advertisers who win the key word game can direct consumers to sites that may not be fully relevant to the actual intent of their searches.

Let’s look at a specific example. I’m thinking about buying a video camera, but I don’t want to spend too much. So I Google “best inexpensive digital video camera” (I may be cheap, but I still want the best I can get):

So now I have two options:

1. Explore the “organic” results for reviews to help me choose which camera to buy
2. Explore the “sponsored links,” i.e. the ads

The headlines of the sponsored links sound good — “Best Video Camera,” “Inexpensive Video Camera” — but if you try the search and click on any of the links, you’ll find that there’s no way to know whether you’re getting the “best” or the most “inexpensive” video camera.

What I’m getting is not the “best inexpensive digital video camera” but rather offers from the best gamers of the AdWords system with the deepest pockets.

But here’s the bigger problem: In my search for the video camera that I will ultimately purchase, money will change hands between advertisers and intermediaries as my attention — and my intention to buy — is “monetized.” But not a dime of that ad money will make it into my pocket.

It’s MY attention, MY intention, and MY purchase — Google and other intermediaries will make all the money, and I won’t see a dime.

In a previous meditation on this problem I wrote:

Imagine a Robin-Hood-like application that could somehow take a percentage of the revenue that we generate through our attention and redistribute it to us. Imagine if Google had to pay YOU for the attention that you give each AdWords advertiser when you click.

The other day I spoke to Brian Wiegand and Mark McGuire, who have dreamed up just such an application, which they call Jellyfish (more transparency, etc.). Here’s how Mark describes it in the Jellyfish blog:

I think we will soon reach a tipping point where consumers are going to realize that when it comes to their buying intentions, search intermediaries like Google/Yahoo/MSN (and a host of vertical engines) are keeping too much value for themselves (advertising $’s) without delivering a corresponding increase of value to the consumers participating in this system.

At Jellyfish, we want to be this tipping point. We think the way to do so is to fix the underlying advertising model to align the incentives of all three parties involved in a sale (buyer, seller and intermediary). The advertising market does a good job of maximizing the value your intention (GYM have PPC auctions that do this everyday); it just hasn’t done such a good job of fairly allocating that value among the key stakeholders. In our marketplace, we plan to allow the existing advertising system to set a value on your intent to buy, but that value (e.g., your intention currency) will flow to you, to the advertiser, and to us only when we do a good job of using that intent (and your historical buying intentions) to connect you to the product or service that is right for you. This will happen seamlessly and without you even thinking about it in terms of driving a maximum return on your buying intention. In the transparent marketplace at Jellyfish, advertising will transform into intention currency and that currency will be used to efficiently match buyers and sellers.

And this is the way we think the attention economy will start to catch on for the masses: By integrating its core concepts into an easy to use application that has direct, tangible benefits to the end consumer and advertiser alike. The average consumer may not think about it as intention currency, but we hope the increased value to that consumer will ensure that she continues to come back each time she has intent to buy something online as opposed to just an intent to search for information.

Brian and Mark shared with me the details of how Jellyfish works, which got me more jazzed than I’ve been in a while about the prospect of some game changing evolution. I promised not to disclose the details pre-launch, but that should happen any day now, and I’m eager to delve in once they’re live.

The folks at AttentionTrust have of course been all over the return on attention issue — in fact, they have an interview with Mark.

What we need to really change the attention game — and to dramatically increase advertising’s return on consumer attention — is a way for AVERAGE PEOPLE to increase their skin in the game “seamlessly and without you even thinking about it.” We’ll soon see whether Jellyfish can seize this opportunity.

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Here are some Google watchers commenting on Co-op:

From Search Engine Watch:

This is Google making a giant and somewhat perplexing leap into mass tagging.

(How Co-op works is rather perplexing.)

From
Search Engine Roundtable:

Is it spamable? Ha. Well, lets give you the forum threads on this topic. I would call it more hackable, than spamable…

(Hackability is any interesting question.)

But as to Google’s strategic objective, here’s the forest:

From Marissa Mayer of Google’s search division:

“People can create vertical searches built on Google Co-op technology,” Mayer said. “It provides a deeper search experience inside the main search on specific topics.”

From Magazine Publishers of America’s upcoming event on “Vertical Search-An Opportunity for Media”:

While no one doubts the power of the big search engines, there is increasing frustration about the inexact nature of results they deliver especially for specialist media sites. Enter Vertical Search, which might be better than Google.

See now what Google is really trying to co-op(t)?

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But as advertisers enter each bid, they will see an estimate of how many clicks they will receive each day. More important, a graph will show how many more clicks they can expect for each increased bid.

“One of the primary complaints we get is users can’t explain to their bosses what they could get for spending the next $1,000,” said Steve Mitgang, the Yahoo senior vice president who oversaw the development of Project Panama. “Now they can take this to their bosses to justify spending more.”

While Yahoo, Google, and Microsoft pour millions of dollars into perfecting search advertising efficiency, TV, magazines, and other old media dream up ways to scam advertisers into believing that old advertising models can still “work” — as if there were ever any real evidence that they did work.

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1. Company Memetracker

The company tearsheets have mainstream media stories over here and blog posts over there — this is light years behind memeorandum and its Web 2.0 cousins. Google Finance provides a “Related articles” link on mainstream media stories, but it’s hardly dynamic meme tracking, and is completely useless on a day like today when there’s lots of talk about a company.

If you check out the tearsheet on Google, it doesn’t contain any of the massive blog discussion of Google Finance (which of course is dominating tech.memeorandum) — this not surprising, given that the blog content is powered by Google’s crumby Blogsearch.

2. Bull/Bear Filter

The technology already exists to sort content by positive and negative tone. Wouldn’t it be great to take finance vertical search to a new level by being able to search for bullish and bearish coverage of a company?

With the same technology, Google (or anyone) could produce a bull/bear meter to track how positive or negative the discussion of a company is on a given day or over time.

3. Mutual Fund Holding Search

What if I want to find a mutual fund with large holdings in a company, e.g. Google. Wouldn’t it be cool to be able to search mutual funds by key holdings?

I’m just making these up — I’m sure there are much better ideas out there.

Maybe Google has some truly whiz bang features in store. What’s disappointing about the Beta is that it doesn’t make any great strides in Google’s core value proposition: helping me find the information I need.

In a conversation with John Battelle, the product manager of Google Finance, Katie Jacobs Stanton, said:

“We’re up to par,” with the other services.

What a missed opportunity. Just being “up to par” doesn’t cut it anymore. In entering a vertical, Google’s ambition should be to blow away the other services.

Google Finance represents a failure of Google to innovate within a vertical, which leaves the door open for vertical players to get there first (and which should reduce the fear among verticals that Google is going to eat their lunch).

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I think the Web 2.0 (and MySpace) fan club is wearing a heavy set of blinders. We are only just beginning to understand the implications of this new technology. To say there’s nothing new or unknown about people’s use of it is DEEPLY NAIVE.

Have all the parents like Fred Wilson and Kathy Sierra, who think they are hip enough to “understand” what their kids do on MySpace, thought through the implications of the BW article? They may remember showing poor judgment as teenagers — that’s why we don’t let them drink or vote — but none of their coming-of-age mistakes has a permanent digital record.

This is the blindness of orthodoxy that the bandwagon causes, which is why no one saw the crash coming for Internet 1.0. (Some did see it coming, of course, but they were told they didn’t “get it” either.)

The supremacy of contextually relevant advertising is another example. Here’s the initial results from an eye tracking study by behavioral targeting ad agency TACODA:

In tests late last year, TACODA’s researchers recruited 30 human guinea pigs at malls in New Jersey and Southern California. They hooked them to an eye-scanning camera and recorded every darting movement as the subjects were shown 50 identical Web pages. The result: The ads placed on pages unrelated to the advertisements’ message actually attracted 17% more looks.

Or how about the related belief that search advertising will continue to grow forever (the following is from the same BW article):

But advertising executives predict that the display banners and videos that appear on Web pages will outpace search this year. “Most of the big money [advertisers] — cars, movies, packaged goods — are putting more of their budgets into display,” says Jeff Lanctot, general manager at agency Avenue A/Razorfish (AQNT ), the world’s largest buyer of Internet ads. “We think growth in search will fall back in ‘06.”

I remain committed to the position that it is better to be skeptical and question than to rationalize away — or worse — remain completely blind to the risks and the unknowns.

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Everyone is talking about the $90 million click fraud settlement, and the Google apologists are out in force, arguing that $90 million is a drop in the bucket and that the settlement reduces the likelihood of major legal liabilities in the future. I’m not a lawyer, so they may very well be right that Google is in good shape from a legal perspective. Of course, you can count on Google bear Henry Blodget to find a way to rag on Google, but even he’s missing the big problem here.

The issue is not whether advertisers can sue Google for any significant amount of money. The issue is whether advertisers will begin to lose faith in search advertising.

While everyone was getting their knickers in a twist over the settlement yesterday, I came across this article in the Financial Times–Search engines are not the only sites–which makes this disturbing observation (disturbing from the perspective of the Google fan club):

But, looked at another way, the search engines run by Google, Yahoo and MSN have a weirdly high share of internet advertising. Most people spend 95 per cent of their time onthe internet doing other thingsthan searching. They read newsand entertainment sites, send e-mail or instant messages, blogabout their beliefs or even displayindecent photographs of themselves.

So 5 per cent is the number that Google, Yahoo and Microsoft’s MSN Search should worry about: the amount of internet time devoted to searching. Perhaps it is even lower, since a lot of searches are so broad and unconnected with any impulse to spend money that no one will buy a linked advertisement. Whatever it is, an awful lot of advertising revenue flows from a single digit.

Advertising does not work this way in other forms of media. On television and radio and in newspapers and magazines, adverts are sold according to ratings and circulation. This means the number of people who read each edition of a magazine, or who view each showing of a programme. Publishers and broadcasters gain advertising by offering the chance to reach these people in a block.

If internet advertising followed suit, revenues would not be concentrated overwhelmingly on a small portion of internet traffic, but spread more evenly. In practice, however, it is hard to find sites with enough traffic (and therefore advertising potential) to attract large blocks of advertising. There is fierce competition to place brand advertisements on the few that do exist, such as the home pages of Yahoo or AOL.com.

This is media economics 101. Ad dollars follow audience. If search only represents 5% of online media time, it shouldn’t have 40% of the dollars, no matter how measurable search advertising is. Or as FT put it:

But can search engines maintain a 40 per cent share of advertising on a 5 per cent share of internet viewing indefinitely? That seems unlikely, no matter how smart their engineers and how valuable the signals their users send. As Mr Reyes bluntly indicated, Google and its peers have already made their easiest money.

I’ve cited other evidence that Google and search advertising are at risk:

Is Google Like a #1 Band on the Decline?
Is Search Advertising Reaching a Plateau?
NO LUV 4 GOOGLE
The Short-Term Value of Google Advertising

Google and search advertising rode the hype train all the way up the mountain, and there’s a long way to fall. If advertisers lose faith in Google and the value of search advertising, there’s a rapidly growing and vibrant digital media universe that’s waiting to absorb those search ad dollars.

Google understands this risk, which is why they are working so hard to get some revenue eggs into non-search advertising baskets. Again, there are many reasons to be skeptical:

Google and Its Watchers Don’t Get Print Advertising
Google Tilts at Offline Advertising ROI
Google Chases the Declining Print Ad Business

When you live by the ROI sword you can die by it too. Will advertisers start to question the ROI of all the money they’ve dumped into search advertising in general and Google in particular? If they do, we all know how quickly the flow of ad dollars online can shift.

UPDATE

I wanted to respond to some of the comments below.

First, just because you can’t easily measure the ROI of brand advertising like you can transactional search advertising doesn’t mean the value is not there. And advertisers know this.

So the “search audience” is inherently more valuable than one, say, watching sports or reading cnn.com.

But surely the argument is that users who are searching are in a state of mind that it far more “open” to adverts than users of other services.

This is really the crux of it — do people have arms wide open to marketing while searching but have their back’s turned when engaging in other online activities? Other than rhetorically, it’s difficult to prove that all other forms of online ATTENTION are significantly less valuable than search attention.

On this point, Dave says:

How do we know it’s undervalued? All you’ve suggested so far is that search is 5% of online minutes, but gets 40% of the dollars. Are you suggesting that search ads should be no more valuable “per online minute” than other kinds of brand-building ads?

My response to Dave is that we just don’t know. It may well be that search attention IS more value than other online attention. The question is how MUCH more valuable? 5% of the attention getting 40% of the value is a significant imbalance — like Google’s stock price, you have to wonder whether the premium is justified.

Dave also says:

Also, do ads displayed on other websites through google’s adsense program fit into that 40%?

Great question, to which I don’t know the answer. But even if the stats were properly adjusted, I suspect there would still be a large imbalance.

I still come back to the issue of advertiser perceptions. Danny may be right the Google has locked in the money from the small business who are running their search marketing as a P&L. If that’s true, then Google may be facing a wall rather than a cliff, because at some point (if not already), they will have squeezed all the monetizable value out of search attention.

And if Phil is right that AdSense for content is what’s really at risk, Google may find themselves facing stiff competition in the effort to monetize non-search attention online.

If this weren’t the case, why would Google be chasing Old Media forms of ad targeting, e.g. by demographics?

UPDATE #2

Comment from Jakob Nielsen:

When on non-search sites, users do not look at the ads. So if you value attention and brand-building, you’re not getting it, because users are not allocating their attention to the ads.

You can see one example of an eyetracking plot from a study I am currently running. All of the pages we have analyzed so far look like this: almost no fixations in the ads. (More formal results to be reported later, after the study is done.)

The eyetracking plot is fascinating. But just because current advertising formats (including AdWords) do not attract attention on non-search sites, that does NOT mean it’s not possible to find ways to redirect that attention for marketing purposes.

Also from Jackob:

I agree with several other commentators on this thread that you also have to account for intent: Are people looking for something new? Are they researching or buying, or just browsing?

Sure it’s easier to market to people when they’re looking to buy something — that was the search marketing innovation — but effective marketing DID happen pre-search. Brand-building CAN happen even when people don’t have buying on their minds.

With all due respect, this huge faith in the status quo that is evident in all the comments below strikes me as a failure of imagination. It’s the same failure of imagination that kept online advertising in the doghouse until the Google AdWords revolution reinvented the rules of the game.

Why should we just walk away from the challenge of discovering a new way to effectively monetize the 95% of non-search attention?

When someone figures out a way to do this, THAT’S when the correction will happen.

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I try to avoid the dangerous business of prognostication, but consider these statistics that have caught my eye the past few days:

Keyword Costs Show Seasonal Spike

SEARCH MARKETING COSTS SURGED DURING the fourth quarter, thanks to a combination of increasing cost-per-click prices and a growth in overall number of clicks, according to data released Tuesday by DoubleClick’s Performics unit.

Overall, the “cost-per-keyword” rose to around $55 in December, from around $26 at the end of August, according to the report. To arrive at a cost-per-keyword, Performics combines cost-per-click with the volume of clicks; the figure represents the average cost to a marketer of purchasing a keyword for the entire month. The agency declined to release information about average cost-per-click.

and

Marketers also went on a holiday spending spree, upping the number of keywords under management. Active keywords–meaning keywords that triggered a sponsored search link resulting in at least one click–increased by 58 percent from the fourth quarter of 2004.

In January, keyword pricing fell to pre-December levels, as happened last year, said Chris Henger, vice president of marketing and product development for Performics. “The slope in the trend line went right back down, similar to how it performed in years past,” Henger said.

Some retailers over-relying on Internet search, analyst says

As retailers deal with rising competition over Internet paid-search keywords, they need to rely less on search engine marketing and develop a more comprehensive, multi-channel strategy, says Aaron Kessler, senior research analyst who follows e-retailers for investment research firm Piper Jaffray & Co.

“Three years ago, Internet search was a good value for any retail category, but now it’s not always the value it was,” he says. “It’s a great marketing channel when it works, but many retailers have become too reliant on it.”

The key to successful search marketing, he and other experts say, is to find a way to fit it into a complete marketing strategy. “Our SEM effort has been very profitable because we manage it as part of an overall online advertising portfolio and because of our strong brand, which we build through multi-channel national advertising and in-store service,” says Sam Taylor, vice president of online stores and marketing for Best Buy Co. Inc., adding that Best Buy will aggressively expand its budget for search engine marketing this year, just as it did last year.

Display Ads Balloon 12%

ONLINE MARKETERS SERVED MORE THAN 138 billion display ads last month, marking a 12 percent increase from December, according to new data from Nielsen//NetRatings AdRelevance.

Financial services advertisers accounted for the most impressions by far–22 percent last month, up slightly from 21 percent in January 2005. Telecoms purchased 19 percent of all online ads, more than double last year’s 8 percent. Retail goods and services marketers accounted for 16 percent of impressions, compared to 15 percent last year.

Where did marketers spend their online ad dollars? E-mail sites were a favorite choice, garnering 35.1 percent of impressions–up from both last year’s 20.2 percent and last month’s 32.1 percent. The bulk of those ads were on Yahoo and MSN; Yahoo Mail drew 22.3 percent of all impressions, while MSN Hotmail garnered 9.6 percent.

General community sites accounted for 13.1 percent of impressions–up from 6.3 percent last year–while portals and search engines claimed 11.8 percent of impressions, down from last year’s 16.5 percent share. MySpace once again surged in popularity with marketers, drawing 10.1 percent of all impressions. In December, MySpace accounted for 4.8 percent of ads, which marked a downturn from September’s high point so far of 12.4 percent.

Is there a pattern emerging here? I would put this evidence alongside my previous observations about the short-term value of Google advertising.

I don’t think there’s evidence that search advertising is about to decline, but the growth spurt may be coming to and end. With ad dollars still pouring into digital media, the flattening of search ad spending suggests that the growth of display advertising could represent a trend, as marketers try to balance long-term brand building with short-term sales efforts.

Even Best Buy, which promises to “aggressively expand its budget for search engine marketing this year” is still focused above all on building its “strong brand.”

Fears that search would take over advertising have been way overblown — driving sales is important in the short term, but it’s brand that builds long-term value.

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“In some case,” [Devitt] wrote in a report, “pure-play Internet companies have shifted advertising to TV, newspapers and branded alternatives on the Internet, at just the same time that traditional offline media buyers are heading to the Internet in droves.”

In other words, just as the smart money is pulling out of search advertising, the dumb money is flowing in. But it’s probably only a matter of time before everyone figures out the economics involved.

I’ve made the case before that traditional brand advertising will weather the storm of search marketing and other non-traditional forms of advertising (e.g. word of mouth), and that Google will ultimately need to get into the brand advertising business.

But this is the first time I’ve come a across evidence of advertisers eschewing the short-term gains of Google advertising in favor of a long-term focus on “lifetime customer value.” Is it possible that the dynamic nature of search, media fragmentation, content atomization, and contextuality actually makes it more difficult to achieve long-term goals like brand-building?

This is also the first time I’ve heard the assertion that “pure-play Internet companies have shifted advertising to TV, newspapers and branded alternatives on the Internet.” I will be on the lookout for evidence of this (please let me know if you have any). If it’s true that the “smart money” is exiting search, then we could be in store for another major pendulum shift that would favor “branded” media over impersonal networks.

But wait, you say, what if Google is successful in its efforts to broker brand advertising? After all, it already introduced CPM advertising and is experimenting with rich media.

I found this fascinating thread on Webmaster World (by Googling “Google CPM fail”):

Like most of you I am now totally frustrated with site targeted cpm ads. I have been monitoring all the discussions and negative feedback about them in this forum and unfortunately have deduced the same conclusions. My primary reason for being upset about these ads is Intensive targeting of my site by major advertisers.

My main bread winning site is in a low competitive but reasonably paid niche. The relatively small size of market in my niche has resulted in a fragmented distribution of advertisers. There are two to three major advertisers and about a hundred small time advertisers. Traditionally, majority of my income has come from these small time advertisers as almost all the visitors on my site know about the major players and do not convert well for their ads(*i). However, they (the visitors) do get inquisitive when they see a new small advertiser and obviously want to find out more about it. This behaviour on the part of visitors is quite expected as products need in my niche is still unmet. My site is an authority site in this niche and I thought that introduction of cpm ads will increase competition and therefore bidding for my ad space. Theoretically my revenue should have been on an upward climb, but in reality the opposite is happening. I would have been happy if the revenue stayed the same, but a decrease (significant, gradual, consistent decrease approaching alarming levels now) is almost unbearable.

In my understanding, the reason marked as (*i) above is mainly responsible for this decline. I always see only a couple of advertisers targeting my website with cpm banners. I guess they must be bidding at a higher amount to keep the lesser beings away. But this reason seems less likely as total revenue has been falling. Other reason could be that the new and small players are apparently still not aware of site targeting feature of adwords or do not know how to use it effectively. Apparently the campaigns of these two biggies are being managed by professionals and they started cpm as soon as it was launched. This invasion by these two advertisers has literally driven away all other ads from my premium ad space and as a result my CPC is sinking day by day.

No one is interested in knowing more about them and they are not allowing others to show ads on my website.

What happens if the big money in advertising stays in branding, but web publishers find they are more successful selling to advertisers directly (albeit less efficiently) than using Google as a broker (which should, in theory, be more efficient)? The case quoted above is interesting because this site does better with smaller advertisers — and thus when Google’s CPM system allowed two large advertisers to dominate, the publisher saw no benefit in the short-term gain of this outbidding. Instead, the publisher focused on the long-term interests of site users, given that the “products need in my niche is still unmet.”

This is just a microcosm of how the market for media and advertising value is beginning to sort itself out. And these issues were raised last spring when Google first introduced CPM ads:

A stumbling block may lie on the publisher side. Many larger publishers who sell their own ads have used Google’s AdSense ads to monetize unsold inventory. If advertisers can get a better CPM rate through Google, the publisher loses money, and Google becomes a competitor for ad sales.

“If you ask the larger publishers if they’d be willing to outsource additional inventory, my guess would be ‘no,’” Pahade said. “Most of them would probably be able to get better CPMs on their own.

Will Google (or its wannabe rivals, Yahoo! and Microsoft) ultimately dominate digital media advertising? The answer to that questions is increasingly complex — and increasingly uncertain.

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Ask BMW, whose SEO strategy violated Google’s “orthodoxy,” leading Google to unceremoniously excommunicate BMW’s German website from its “organic” search results. The BBC reported this action as a “death penalty.”

Google controls a huge percentage of the traffic flow on the Internet — and it has annoited itself judge, jury, and executioner for anyone who violates its “quality guidelines.” As Alexander Muse puts it:

No trial, no jury – just death… Sorry guys!

It’s one thing for Google to tweak its algorithms to lower the search ranking of sites they perceive to be “gaming the system” (although even this is Big-Brotherish) — it’s quite another to summarily reduce a company’s page rank to zero.

You could argue that Google has searchers best interest in mind, but when you smell the stench of “orthodoxy,” you have to ask yourself — is Google’s unchecked power really serving its users well, or is it being blinded by its own definition of “right” and “wrong” in the struggle to get noticed online.

Alexander had a rather chilling update to his post:

Update: Brian IM’d me that he was worried Google would zap our pagerank for writting this post. WOW! He was seriously concerned. Are you concerned too?

Is Publishing 2.0 at risk for this display of dissent? How far down the slippery slip does Google have to slide before they start Stalinistically stamping out dissent?

We might be inclined to trust Google’s technology — algorithms do what they are programmed to do — but can we trust the corruptible human intelligence behind those algorithms, which may be tempted to take their power to unfortunate extremes? Will history repeat itself in the politics of online information flow?

Matt Cutts, Google’s enforcer of search orthodoxy, turned off comments for his blog post on BMW — stamping out conversation — not a good omen.

Add this to the China censorship fiasco.

Paging George Orwell.

UPDATE
Google has competitors, so their power is not “total.” BMW got what they deserved and won’t really suffer in the long run. Google had no choice but to crack down on BMW because they would have been damned if they didn’t. Google is trying to help sites from running afoul of their rules. Other search engines do what Google does. It’s implausible that Google would ever exercise any kind of overt retribution. And it’s not like Google is the Government. There are other things going on in the world that are truly “Orwellian.”

Valid points all. But somehow I find little consolation.

If you’re absolutely certain there isn’t — or could ever be — anything amiss here, then you should sleep well at night. I won’t try to keep you awake. Sweet dreams. Good night.

I’ll be up re-reading Animal Farm:

“We pigs are brainworkers. The whole management and organisation of the farm depend on us. Day and night, we are watching over your welfare. It is for your sake that we drink that milk and eat those apples.”

UPDATE #2
Man, talk about “overheated rhetoric.” The opportunity to observe the spirited, even angry defense of Google is well worth the heat I’m taking for the conceit of this post. (And it was a conceit — it struck me as Orwellian, so I tried playing it out — I guess some thought experiments are inherently dangerous.)

BMW’s SEO was spam, and spam is evil, so Google’s actions are righteous, and how dare you suggest otherwise.

If it’s so wrong to suggest that there’s something creepy about all this, then dismiss it out of hand and move on — why take time out for all the righteous outrage?

The righteous defense of Google makes this all feel more Orwellian, not less.

Seriously, I’d love nothing more than to be wrong about this — I would sleep better at night. But I’m not about to start trusting Google unquestioningly.

When a company’s mission is to “organize the world’s information and make it universally accessible and useful,” that’s aspiring to truly awesome power. And the notion that the market will immediately spot and punish any abuses of that power still strikes me as a bit too optimistic.

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Of course, Stowe already has a reputation for the great blogging he’s done at Get Real, on the Corante network, so he really doesn’t need my help. But hopefully the thought still counts.

Worth noting: in his post, Stowe points out “Eh? List,” which “collects statistics about your blog from all around the blogosphere.” The site is of course aggregating from other sites, but the interesting discovery was a link to Google’s blog search. Low and behold, I found some sites linking to Publishing 2.0 that aren’t showing up in Technorati (at least not yet). Worth checking out for those of you keeping score for your sites.

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