by Jason Wilk on January 19, 2009
- Google earnings expected to be grim when they are released Thursday. According to the WSJ, U.S. search advertising spend fell 8% in the fourth quarter of 2008 from the same period in 2007, according to a new study from search advertising firm Efficient Frontier, whose search industry spending index was flat for most of 2008. The study — which covers an undisclosed portion of the $750 million in annual spending the company manages globally — marks the first quarter of negative annual growth for its index in the several years Efficient Frontier has been gathering such data, says James Beriker, president and CEO of the firm”.
- Sampling a search advertising firm may not predict the whole industry pie that includes Google, Yahoo and MSN, but if search marketers are seeing revenues drop, it should be a good sample of what is to come.
- Here are a few things that might throw off the numbers for Google.
- First, if market share had anything to do with it, Google’s has actually grown to 72% over last year’s 65%. That a direct result of more online search adoption, and could help to offset falling revenues. I said the same thing with Amazon, where the reason why they had such a big holiday season was a simple math problem.
- Second, Google has been pulling out all the stops this quarter to find new avenues to drive revenue. In September, Google began allowing beer and wine companies to advertise, and as of recently hard alcohol companies. In addition, they have begun monetizing Google Maps, casual games, mobile search, and more for the first time ever.
- Third, Google has always said that in a bad economy, many retailers and other advertisers flock to Google because it’s one of the few places to keep a close eye on your pennies. Between Google Analytics and conversion tracking, it’s unlike any other form of advertising. Holiday advertising spend showed this.
- Fourth, Android, Google’s mobile operating system is expected to pick up quickly this year and is expected to out sell the iPhone’s OS by 2010.
- To me, it’s not this 4th quarter that is worrisome. Between Google adding new ways to monetize different products, adding significant market share and branding themselves as ‘the place to go to advertise in a bad economy’, they will be fine. However, I think Q1 will see tougher times for the search giant. Q1 will see a Google that has squeezed out revenue from any potential products, no holiday season and a slowly growing online search adoption through the first 2 quarters. Here are a few more stats from the study:
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- “Advertisers who spend less than $50,000 on search ads cut their spending by 23% year-over-year, while advertisers that spend more than $200,000 on search per month cut spending by 9% during that time. Purchases by advertisers who spend between $50,000 and $200,000 were relatively flat.”
- “Finance and automotive advertising continued to deteriorate. Search-ad spending among financial advertisers fell 20% compared to the fourth quarter of 2007. Search spending from automotive advertisers declined 15% during that period.”
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by Jason Wilk on January 5, 2009
- 2009 Tech predictions coming from Wall Street analysts. I have included my own below. Sorry about the spacing, something with the HTML on this article that I can’t figure out.
- Imran Khan’s 2009 Tech Predictions (J.P. Morgan)
- Potential search deal likely between Yahoo! and Microsoft
- Net Neutrality should become an important mainstream issue
- Challenges in monetizing video advertising should persist
- Mobile usage should continue its strong growth momentum, but mobile
advertising will likely be challenging this year
- Possible bankruptcies in brick-and-mortar retail should create opportunities
for eCommerce companies
- M&A consolidation activities could potentially resume during 2H’09 (IPO market is dead until 2010)
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- Doug Anmuth’s 2009 Tech Predictions (Barclays Capital)
- Yahoo and eBay will make major strategic decisions
- Performance-based advertising will be more important than ever
- Increased Competition For Search Distribution Via Toolbars, OEM Deals, and Partnerships
- Proliferation of Smart Phones Will Drive The Mobile Internet
- Small Strategic Acquisitions Will Re-Emerge
- Ad Networks To Consolidate
- My 2009 Tech Predictions (Me)
- Google stock back over $500
- New Yahoo CEO will get back to an offer from Microsoft closer to the original.
- eBay will continue to struggle, lose market share to Amazon/niche.
- Valueclick will continue to fall and either go under or get acquired.
- Online advertising will creep back in the summer.
- Microsoft will gain in online search with Kumo.
- Mobile OEM’s will realize platform standardization isn’t their answer.
by Jason Wilk on December 19, 2008
- Y Combinator startup Scribd
has raised its 4th round of financing – $9 million from Charles River Ventures, Redpoint Ventures and Kinsey Hills Group. This puts their total funding at around $12.8 million in an attempt to become the YouTube for documents.
- Launched one year after Scribd, Los Angeles based, DocStoc jumped onto the scene to capture some of the market. DocStoc has raised a total of $4 million and has executed well although still trails Scribd’s traffic. Both companies lack many direct hits and both are heavily reliant on search engines, which happen to love giving embeddable documents a high page rank.
- The battle next year will be to see who can become profitable. Both companies are seeing a lot of visitors, but converting dollars on those people are difficult when the only form of revenue is from google text ads. Although much of the content found on either site (such with YouTube) is unmonetizable, there is a considerable amount that is. Legal, tutorial, career, health & fitness, etc. documents all bring in people to the site that are looking for something specific and the document they eventually find was probably submitted by someone who is able to offer that service. Example: Someone looking for an NDA may be interested in talking with a lawyer, and the document they find may have have been uploaded by a local lawyer.
- Both companies essentially would need to re-format the way their content in these categories are displayed to users, returning documents submitted by local businesses first. This would help convert leads for businesses as well as provide them with incentive to upload more quality documents to the site. This method would let DocStoc and Scribd monetize effectively by having sponsored documents as well as having users submit their email address to embed or download a document. You can charge companies per click on sponsored documents and sell leads to businesses looking for information about users downloading documents in areas relevant to their service offering. Moreover, by driving revenue from the content, both companies can begin to engage in paid search marketing for the areas that their SEO is lacking. Example: If you are searching for an NDA, places like LegalZoom dominate the space because they are a sponsored search result and can measure conversions. DocStoc or Scribd couldn’t make sense of spending search dollars without any way to bring the dollars back in.
- It will be interesting to see who wins this game. I have to assume that one of the companies will be crowned the winner in the end, since both operations require a decent amount of overhead and dollars will need to be brought in. It will be a battle, since both organizations have incredibly talented management, such as Jason Nazar (CEO of DocStoc).
by Jason Wilk on December 12, 2008
- As we already know, Google is searching high and far for areas to drive more revenue with their ads. Today they add another industry sector to try and monetize, parked domains. Google AdSense For Domains (for everyone) is the search giant’s latest addition, targeting the millions of domain owners out there that are squatting on their names while they appreciate or decide what to do with them.
- Google AdSense for Domains has already been around prior for owners of domain names with at or around 1 million monthly pageviews. The new addition will include anyone with a parked domain and will compete heavily with big name brands Parked.com, DomainSponsor.com and many others.
- This is another questionable territory for Google as the squatter monetizers have recieved harsh criticism from advertisers who question the validity of the clicks which return poor quality traffic. Google may be out to save the industry, which has been accused of serving up fradulent clicks to make money for the domain owners while taking home a nice profit for themselves. Do the math, Parked.com monetizes more than 2.5 million domain names; serving 2 fraudulent clicks a day per domain at around $0.25 is well, a nice profit. I’m not saying they are behind it, but even Google will have a hard time telling whether or not a couple clicks a day coming from mutliple or masked IP addesses are fraudulent ot not. Maybe they don’t care. In either case it’s going to be a nice chunk of extra change for them.
- Currently the program will only be available for publishers located in North America and will expand to other regions shortly. If you are a currently using AdWords to advertise your company and would prefer to opt-out of having your ads served on parked domains, here is a step by step guide
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