Bronte Media

There are always blurry lines between what is right and wrong.

For instance, Google began cracking down on sites with no links and just adsense ads. Yet ironically their adsense links product on their own site hypocritically creates a similar experience.

The reaction of that move by ‘webmasters’ was to ’scrape’ content from other parts of the web which they then slapped Adsense ads to the side. The content was boring but was enough to trigger the keyword they were targeting and having the intended consequence of making the ads appear more interesting in comparison. They then bought cheap traffic, drove it to the site and hoped that enough people would click on the higher value keyword-targeted ads that they would make money on the micro-transactions.

You can bet that Google and Yahoo are pretty much trying to create a pattern for such activity and ban it.

But in an interesting twist, Yahoo has launched its ‘brand universe’ program which ’scrapes’ [side note: industry-friendly terms for ’scrape’ are ’syndicate’ (old-skool media), ‘mash-up’ (new-skool media) and crawl/index (hi-tek non-media industry)] information from Yahoo properties (Flickr, Answers, Bix, Delicious etc.) around certain brands. Here is one site for the Nintendo Wii.

They aren’t running content targeted ads but rather display units. Is this kind of site right or wrong? I am not passing judgement, just like I would not pass judgment on the supposedly ‘wrong sites’. That’s for Google and Yahoo to decide who they do business with. But the line of hypocrisy is a thin one.

In another SEO trend, ironically the example Yahoo gave on the wii, is part of ‘forecasting keyword demand’.

Sometimes it’s all about the lipstick and polish.

I attended the New York Video Meetup last night at Columbia. It was the first meetup I had attended from the video group. I loved the Tech Meetups until the New York Times covered then, ruining the intimate setting and networking opportunities by subsequently skewing the crowd away from hackers and toward ‘business development executives at large media companies’ (who aren’t working on any deals that eventually get implemented).

I loved last night but had the lingering feeling that I had missed the boat on this meetup by one or two meetings as well. There were probably 120 or so people at the event. The ideal number I think is around 50, although heavily dependent on the quality of the audience.

That said, the presenters were of top quality and Yaron, the moderator, did a great job of keeping things ticking along.

Initially I went along to see Jeff Pulver, who I had read a lot about, but he didn’t really have that much to say and the mission of his new startup, Network2, is a little ambiguous (getting the word out about online video? isn’t YouTube spreading the word about online video by virtue of its popularity?).

By far the best speaker was Aaron Cohen, who founded Bolt.com. Aaron had the charming nonchalance of someone who had lost a lot of fuckload of money and ridden the roller coaster ride of the late nineties. He founded Bolt.com a decade ago, raised $60m, nearly went public, left and then came back and bought the company through a management buyout in 2003. The company did about $10m in revenue last year, which is not insignificant, and is a top ten video destination.

The strength of the decade old community meant that video adoption recently was fairly easy to achieve. Without the fabric of community, he doubted the site would have been able to thrive. In the end, video is a new medium for the blur between communications and content, rather than something into itself.

Cohen also said that he had founded another startup to swing for the fences and announced that he had raised money from First Round Capital. But he declined to say the name of the startup, what it was doing (other than trying to supplant MySpace) or how it would do it. Stay tuned.

Maybe I was wrong in my previous post. This from Microsoft’s quarter:

“OSB revenue increased during the three months ended December 31, 2006, primarily driven by advertising revenue which increased $77 million or 20% to $462 million, due primarily to growth in display advertising for home page, portals, channels, email, and messaging services, partially offset by a $42 million or 31% decrease in access revenue.”

Considering search is abysmal, that is actually quite good for display.

I’m beginning to take the view that Panama wont mean anything. I know, that’s in direct contrast to what I said last July. But stay with me.

My fundamental driver for the company, greater search yield will happen in the future, will still happen although I think it will be a weaker force than the competitive pressure on display advertising.

Display advertising is a lot more important to Yahoo than search advertising. I don’t believe the comscore/netratings numbers for a moment that show that Yahoo has roughly half of Google’s queries (or 50 Google/30 Yahoo/20% rest. I have never seen this split in any advertiser or publisher who receives organic or paid search traffic. I believe the number is closer to 70% Google/15% Yahoo/15% the rest.

Yahoo has premium advertising opportunities, for sure. But they also have a shitload of remnant inventory from Yahoo Mail that competes with the huge explosion of inventory on social network sites like MySpace and online video sites like Youtube. The later gets about 5 cent CPMs at the moment.

Which lead to this statement: “Revenue per Unique User was 97 cents. Down 2% from Q4 2005.”

Considering that the figure has international properties baked in which are growing monetization rates faster than the US and you have a pretty bleak picture. Not so long ago this metric was doubling year over year.

Revenue in the US grew 8% year over year. 8%! A number only MSN execs could love.

Yahoo may be the leader in display advertising but it, along with MSN and AOL, is being attacked by low priced sites with huge traffic and an inability to monetize it. That creates a strange market situation. Soon, when Google links search behavior to the inventory agreements they have guaranteed, the heat will be turned up. The problem is not search monetization, it is the competitive pressures of display advertising competitors, both on the monetization levels of display advertising and on the growth rates of Yahoo’s traffic.

p.s Go read John K’s recap of the Yahoo quarter too. An excellent run down of the call/results.

Affiliate marketing has evolved from email spam to sophisticated search marketing but in very recent times has gone back to its scandalous ways with social network spamming. MySpace, the biggest social network, seems like it has had enough.

Jon from Wickedfire forums says that MySpace is about to sue more than 20 affiliate networks for actively recruiting spammers for $25m-$75m a piece. He isn’t naming names yet but does cite CPA Empire and says they will be the biggest network hit with a $75m fine.

The contentious issue is that MySpace is apparently relying on spam law that is mostly applicable to email rather than web forums and communication.

Ironically, apparently MySpace was monitoring another forum, Screennameforum.com, to decide which networks to go after.

The basic practice involves ‘hot girls’ asking nerds to be their friends and then sending them affiliate ringtone offers. As smaller affiliate marketers are pushed out of search by Google’s ‘quality score’ and bigger marketers entering their territory with more efficiency they have increasingly turned to MySpace profiles to grow their income.

The impending shake out is much needed at MySpace, although whether MySpace deserves to profit from the activity retro-actively is a little suspect.

BTW, Wickedfire.com forums are a fantastic place to learn more about affiliate marketing tactics in general.

* Title quote taken from movie Spaceballs.

So I have finally surfaced from a sea of email, rss and conferences following the holiday season. Things are really started to take off with Homethinking which is great but unfortunately not great for my life.

In the danger of letting a thread die though, and the kindness of Mike and Charlie to include me in theirs, here are five things you might not know about me:

1. I am not a girl. Yes, despite my parents giving me a name that in 90% of the western world is a female name, I am actually a male. Granted in Eastern Europe, where my family was originally from, it’s not a girl’s name either.

2. In high school, I played in a regional table tennis tournament because a kid who actually qualified pulled out and my science teacher was organizing the event and needed someone to fill in. I didn’t win a game but in my interview for a University scholarship that is all the interviewer was interested in talking about and in the end I was given a $10,000/year allowance and met some of the best people in my life from the course. Somehow, I attribute some of the path I have followed in life to that fateful day of table tennis.

3. I will compete in almost anything. There is a demon inside of me that doesn’t necessarily want to win but beat someone with an equal passion for beating me. In a marathon if I came second last and the person I competing against came last, that would be OK with me. During 2005, I frequently played competitive drunken connect four at 4 am at a local hot dog place with my friends. I was never defeated.

4. I love sport. I love Basketball, Baseball, Rugby and Cricket. I even play cricket in New York. My ultimate goal is to own a professional basketball team in my home town of Newcastle, Australia before I am 35. Call me mini-Cuban.

5. I obsess over the life of Rupert Murdoch and his family. His passion for media is simply amazing and his pragmatism a lesson for anyone. I even believe that people should be given the choice of watching Fox News.

So there you have it. If I am correct Nate, Gary, Jay, Aaron and Ross have not been tagged yet.

Loyal time readers know I have long been intrigued with the direct navigation industry. The process involves buying up domain names that contain commercially related keywords and putting a series of text ads on them so that when a curious user types in the domain, hopefully they will click on the ad too.

Marchex, one of the largest firms in the industry and a publicly listed company on the NASDAQ has often said that besides from pure search, direct navigation is the highest converting sources of traffic on the web.

That maybe so, but like the broader search industry before it, perhaps the direct navigation industry is undergoing a sausagifying phase. That is, blending in junk with some of the higher quality meat to create an end product that is digestable. Here is a great manifesto as it relates to search.

The problem with dressing mutten up as lamb is that eventually people find out about it.

Go and read this post. In it Richard Ball of Apogee Consulting describes in detail of how an overwhelmingly disproportionate chunk of his spending was tied to one Google partner in their domain parking program: searchportal.information.com. It’s perhaps one of the most intriguing online marketing posts you will ever read.

The domain searchportal.information.com is owned by Oversee.net, which runs a large domain division of its own.

The nature of direct navigation is that a huge number of domains each refer a small amount of traffic, which in total adds up to a meaningful business.

Traffic referred from the domain did not convert for Richard. He speculates that it might have been artificially inflated through the use of arbitrage (i.e. Oversee buying or directing cheap traffic in the hopes they would click on one of the ads on searchportal.information.com) or spyware.

A lot of search marketers have opted out of the contextual network because of concerns over click fraud, however Google’s domain parked network - or direct navigation component - resides in the search network along with sites like Ask and AOL.

Richard also digs down further into Oversee.net (disclosure: I am a big fan of Jay Weintraub, who works at the company).

He points to a post that links Oversee.net with another company called Chesterton Holdings. A number of people have alleged Chesterton Holdings inappropriately monitors domain name whois searches and registers the name itself before the person intending to register it has the chance. Laughably, in the post the example given is registering domains that email spammers use to hawk viagra and other ‘pharmaceuticals’, so that when the ‘campaigns’ are sent out, the domains that are contained in the email land on direct navigation pages not owned by the spammer but instead by Chesterton Holdings.

Whatever the truth, the net result is that after reading through the trail of intrigue you hardly come away with the feeling, as an advertiser, of full confidence in the industry.

This quote from Otto Van Bismark has perhaps never been more relevant: “People who enjoy eating sausage and obeying the law shouldn’t watch either being made.”