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IN THE NOVEMBER ISSUE...
CLICK-FRAUD RATE ON GOOGLE, YAHOO DOWN, REPORT SAYS
cNet News, Elinor Mills, 10/18/06
According to a new report on the scope of fraudulent clicks on search-related ads, the click-fraud rate among top-tier search sites like Google and Yahoo is dropping. It fell to 11.9 percent in the third quarter, compared with 12.8 percent in the previous quarter.
But at second-tier search providers, it rose to 23.2 percent from 20.3 percent. The overall industry rate inched down to 13.8 percent from 14.1 percent, according to figures released on Wednesday from Click Forensics, which operates the Click Fraud Index. The index compiles data from more than 2,500 online advertisers and agencies.
To be fair, the figures don't necessarily mean advertisers are being overcharged for 12 percent of the total keyword search ads they buy on Google and Yahoo. That's because the figures include all clicks detected on the advertiser side that are believed to be fraudulent, including clicks that Google or Yahoo may have either not charged the advertiser for or credited them for after the fact, said Click Forensics Chief Executive Tom Cuthbert.
Click fraud--a hot issue in the search industry--occurs when search-related ads are clicked on for the purpose of boosting revenue to the Web site hosting the ad or depleting the budget of the advertiser.
Advertisers complain that they are credited for only a small fraction of the total of fraudulent clicks detected on their network, Cuthbert said. Google has said that the percent of fraudulent clicks advertisers are credited for or never charged for is less than 10 percent.
Since Google and Yahoo won't release aggregate click-fraud numbers, citing competitive issues, it's nearly impossible to come up with accurate figures for how much search engines might be overcharging advertisers, Cuthbert said.
Robert Peck, an analyst at Bear Stearns, said he was impressed that Google and Yahoo were able to drive down the click-fraud rate.
"As the concerns of click fraud have been plaguing the online search industry for a while now, we think it is a mild positive for the industry overall that the index indicates click fraud is under control," he wrote in a research note released on Wednesday. "While we find the indication that click fraud is under control encouraging, we note that click fraud issues might become more pronounced as we are approaching the big holiday shopping season starting late November."
Both Google and Yahoo have settled lawsuits over the issue. Those companies, the Interactive Advertising Agency and others are working together to establish guidelines for quantifying click fraud.
MarketWatch Blogs, Bambi Francisco, 10/17/06
Way to turn around a stock. Yahoo executives said on the conference call after the company's disappointing results, that its "Panama" ad platform is now live. That positive news helped kick the stock into positive territory in after-hours action. Additionally, Yahoo (yhoo) CEO Terry Semel said that Yahoo plans to further invest in social media, Internet video and mobile access.
All this sounds great and positive, but the proof will be in the execution.
Earlier, shares were down after Yahoo gave a disappointing outlook for the fourth quarter. Since Yahoo already pre-announced its third-quarter results last month, the key to Yahoo's report was its fourth-quarter outlook. And, it didn't look good. Late Tuesday, Yahoo reported results in line with its reduced forecast, though the cash-flow figure was slightly better than analysts expected.
But for the fourth quarter, Yahoo said that it expects to earn $475 million to $575 million in cash flow and $1.145 to $1.265 billion in sales. The street was expecting earnings before interest, taxes, depreciation and amortization of $587 million on sales of $1.3 billion. The $3 billion buyback is certainly significant. But Yahoo has already bought back some of its shares, and that hasn't really helped its stock this year.
Separately, Jordan Rohan,
an analyst at RBC Capital Markets points out that Yahoo's sales in the
U.S. grew "only" 14% y/y, while international sales grew 29%.
This reflects loss of share in search and loss of affiliate deals. Rohan
also expects to lower his 2007 EBITDA expectations by 5%.
OPEN INVITATIONS TO REGISTER FOR [MSN] U.S. CONTENT ADS!
Official Microsoft adCenter Blog, 10/18/06
As you might have heard, we recently started our adCenter Content Ads pilot on a few channels on MSN. It’s been an exciting journey and a lot of work to get this far. I think back to the beginning when I and two other team members, Saleel and Ewa, began working on this project. Not long after, our team grew as more and more folks were committed to making this happen. So many teams spent countless hours to getting the product ready. It’s amazing to see how far we’ve come. And, we even managed to start the pilot on my 30th birthday. I always said I wanted to release Content Ads by the time I turned 30.
But seriously, it truly is exciting to know what lies ahead and to work with the amazing people that will make that happen. And we’d like to share that excitement with you and let you know that we are now opening the pilot registration to all current adCenter advertisers in the US!
If you are interested in trying out Content Ads, you can register with our Pilot Sign-Up form. We’re still ramping up participation, but by signing up, you will be on the priority list to receive an invitation.
Participating in the pilot will not only offer you access to our high-quality MSN inventory, but it will also allow you to see a technology preview of a few new UI features. Content Ads offers the same flexibility as Search, as you can set separate keyword bids for Content, and still use advanced targeting settings. Check out our FAQs or the Content Ads Overview to learn more.
GOOGLE EXPECTED TO POCKET 25% OF ONLINE AD REVENUE IN 2006
eMarketer, Kris Oser, 10/17/06
eMarketer releases estimated ad revenue and market share for Google and Yahoo!
NEW YORK, NY (October 17, 2006)—As Yahoo! and Google report their third-quarter earnings this week, eMarketer's new estimates of US full-year advertising revenue, growth and market share for the two companies can help put their earnings in perspective.
Google's US ad revenue growth rate in 2006 will soar almost 65% over last year's. Yahoo! still shows a respectable 17.5% growth rate, an increase that would satisfy most companies. But not one competing against Google. Just a year ago, Google and Yahoo! both posted US ad revenues of more than $2.4 billion. For the full year 2006, though, Google at $4 billion in ad revenue will eclipse Yahoo!'s ad revenue of $2.9 billion.
These numbers are particularly dramatic when considering market share of total US ad revenues. In 2006, for the first time, Google is expected to pocket one-quarter of US Internet ad revenue, while Yahoo!'s share drops to 18%.
These growth numbers establish Google as the unrivaled king of the online advertising universe, and leave Yahoo!, with its greater advertising diversity and years of media experience, struggling in second place.
"By gobbling up YouTube last week," notes David Hallerman, eMarketer senior analyst, "Google acknowledged that even though paid search gives it a robust revenue stream, that alone won't be enough to compete against Yahoo!, MSN and other major players in the years to come."
When analyzing the ad revenues of search engine companies, it is important to determine whether the numbers cited include the traffic acquisition costs (the amounts paid by search engines such as Google and Yahoo! to the sites where the clickthrough ads appear).