EightBlack.

Christ there’s a lot happening in the online ad space. Where do you start? And I’m not talking about the ever growing Adwords and its sibling, AdSense.

This year has seen a blistering pace in total ad revenues, with the first half producing in excess of US$10 billion. Not surprisingly, Google has 40% share. And no doubt wants a heap more. It was only a matter of time before they worked out how to fill YouTube videos with AdSense (and they have and did).

Most people, when it is shown to them, understand fully the relevance of an Adwords ad (that little headline and 2 lines of text plus a display URL that the stupid ACCC here in Australia has a hard time distinguishing) - and then recognise it’s sister as an Adsense ad. I dont think I need to explain this any further. Okay, here - look at this.

However, what I can’t seem to fathom is the growing amount of businesses who are hammering away blindly with banner ads across the online horizon, without any thought (or care apparently) as to the return on investment.

I dont think you should ever bundle targeted Pay Per Click advertising in with mainstream banner ads. This is where the new breed of start ups are coming into their own.

There are a lot of smart folks in the industry who have recognised that banner ads via shotgun wasn’t going to last long. Targeted, relevant ads delivered according to user profile, intent, previous history is where savvy marketers would pay a massive premium.

First up, there are start-ups in this space who are getting lucky with hiring some very smart and innovative folks out of Google.

Microsoft wants to play ball in this field and The Chair Thrower (aka Steve Ballmer) wants 25% of Microsofts future revenue’s pinned on advertising, meaning that the USS Microsoft will become a full bore media player.

At least he went on record this past week and stated publicly that Google has set the bar. From the recent ANA ad conference;

“In world search and advertising, Google is the leader; we’re an aspirant,” Ballmer said. “We have a lot of work to do in search and advertising.”

His must have taken twice as much ritalin when he gave this speech. Either that, or he swallowed a vallium tablet that wasn’t supposed to be taken orally.

Anyway.

New companies such as Admob, (Kevin Scott from Google just defected there), and AdReady are both making a play in either mobile or fixed ad offerings and established sites such as Nielsen Net Ratings (now Nielsen Online) have been working on advanced display advertising solutions for a while now.
Google buying DoubleClick, Yahoo! making a play with its own launch of “Yahoo Smart Ads”, Microsoft acquiring AQuantive for a cool $6 billion. It goes on, but the numbers get smaller. You get the point.

There’s a lot at stake. Traditional media, like News Corp, want a piece of the action. Even rational folks as cool and calm as Warren Buffet have publicly claimed that the newspapers have a limited time left when it comes to protecting ad revenues. And thats coming from a man who has been a long term investor in The Washington Post.

My point is this. There’s a wave of smart, innovative, algorithm driven folks who are going to apply this search knowledge to deliver a technically superior ad platform and a whole host of intelligent ad solutions. One that is targeted down to a users profile. That means, if you are an 18-24 year old, on My Space or Facebook, the ad algorithm will scour your entire profile and if you respond to a banner ad for part time or casual work over the summer, it will be because the intelligence in the adserving application picked up every detail there was available to it and showed you a job ad rather than an ad for new tyres for your car. It would be able to deliver hospitality or retail job opportunities based on your experience, where you lived, your likes and dislikes and “intent”.

It will also mean that advertisers will be able to move away from the traditional CPM model (cost per thousand impressions) and know that if they can deliver highly targeted, highly contextual ads, then click thru rates will be higher, and more importantly, conversion will be higher. Ultimately, an advertiser can change the playing field and set his or her own ad rates, depending on how responsive his site is.

My guess is that a lot of time and energy will be spent discussing online advertising this week at Web 2.0.

Incidentally, we spent the past few weeks developing an add on to the popular “Open-Ads” adserving application for the benefit of a few of our clients. Called “Taguchi-Ads”, it’s been designed to deliver contextual based ads that fits a persons profile, likes, and preferences.

Standby. More to come…

(Image courtesy wizbit.net) 

This piece courtesy AdNews. It just shows how big the gap is for Yahoo! and Microsoft Live to close if they want to compete with Google at “vanilla” search. In some respects, it’s the very reason Mahalo, MyLiveSearch, ASK and others are pursuing completely different models.

Jerry Yang at Yahoo! has got to be doing some soul searching and you can bet Ballmer at Microsoft threw another chair at the wall when this latest Comscore report came out. I’m looking forward to seeing Steve next week speak live on Day 2 of Web 2.0 in the US. I personally think John Battelle is going to go easy on him for fear of him blowing a valve in public. Or something like that.

Anyway, back to search. Here’s some data that puts Googles’ massive share into perspective.

(Data courtesy Comscore)

My ignorance in looking at this chart is that I wasn’t even aware that Korea had its own search portal. Nor did I realise that the Chinese search platform, Baidu, had so much critical mass - given the censored content it provides.

Of the 61 billion searches conducted in August this year, Google had 37 billion of them (60%), 4 times that of Yahoo! and over 18 times more than Microsoft. Sixty per cent share of any market is massive, some would say too dominant. My take is that Google is just getting started.

When Battelle wrote “The Search” I remember a quote by the 2 founders of Google stating that they thought that the whole “area” of search was only 10% solved. Now, 2-3 years on, they might say that they are closer to 20%. But there’s still a long way to go.

There’s a lot of money being spent on local search - for good reason. It’s essentially the domain of the printed directories, like Yellow. And Google knows this, knows what money is at stake, and wants a piece of the action.

I don’t think the average person switches search engines easily. The advantage Google has is that its now a part of our DNA, our dictionary and vocabulary.

My question to you is this. What would make YOU switch?

Stephen Ellis writes an excellent piece in the Australian today. He’s far more polite than I am capable of being. Previous posts are here, here and here in case you missed my previous rants.

I think Ellis makes an excellent point here,

“The ACCC is going into battle using claims and tactics that show scant understanding of advertising on the internet, and hence is likely to do little for its reputation or international perceptions of Australia’s regulatory regime”.

Exactly. I think I’m going to put a call into Mr. Ellis and ask him for a chat.

And finally, the comic above is by Hugh McLeod from Gapidvoid I thought appropriate.

The ACCC in it’s wisdom have decided to drop their recent landmine case against Google Australia and Google Ireland and decided to pick on an easier target.

Google Inc, USA.

Which of course makes perfect sense. About the same goddam sense as it makes to pick on the 1st Airborne Division of the US Army, knowing full well that just over the horizon is the entire US Defence Force. You might be able to beat up the sibling but there’s no way you’ll end up kicking the shit out of their parents. You get what I’m trying to say, right?
Actually, I can’t help feeling sorry for Google. They must be thinking,”what the hell is going on downunder?”.

The ACCC need to realise that the US are clearly the worlds best litigators and defendants. Their legal system eats this shit for breakfast. Whatever the planned budget the ACCC had allocated to this streetfight, it had better go back with cap in hand to Canberra and ask for a boatload more.

Google Inc, USA have survived this battle before, both in Europe and in the USA. It should hardly be concerned about a pot smoking regulator in Australia.

More here, here and here.

This is getting more insane by the minute.

God I hope this doesn’t happen. News today running in the US edition of the Wall Street Journal talks about Microsoft taking a 5% stake in the social networking darling for anywhere between US$300-$500 million. The full article is here.

Mark Zuckerberg, the young CEO and founder is no fool. He’s already knocked back a billion (or just under) from Yahoo! a little while ago. And Google has made it abundantly clear that it wants to play.

Microsoft, for whatever reason, has the tactical advantage given that it already has an ad syndication deal with Facebook which has been running for just over a year now and continues through to 2009.

If Zuckerberg knocked back a cool billion from Yahoo!, I can’t understand why he jumped into bed with Microsoft and what is clearly an inferior search partner with their AdCenter platform. It can’t have been money alone - he’s got people throwing the stuff at him in the same way the US Department of Defense spends money on going to war.

It seems on the surface such an unlikely combination. I can’t imagine a guy who wears thongs to work, comes in when he wakes up, and running one of the hottest online gigs around sitting down for sushi with someone like Microsoft’s Steve Ballmer. It’s about a likely combination as Britney Spears and Barry Manilow.

Maybe Microsoft hired some private investigators and has photos of the Facebook team doing unflattering things with 2 camels and a goat.

Because I’m buggered if I know why the ad deal got done in the first place and equally buggered as to know why on earth Facebook would sell a stakeholding to a 30 year old dinosaur.

Maybe you’ve got the answer?

Here’s a recent video interview of Mark Zuckerberg at the recent Techcrunch4.0 gig held last week in the states. Maybe this has the answer I’m looking for.

It still amazes me that Google Analytics is a free service. The cynic in me says that the sheer amount of analytical data that Google are collecting for their own benefit from site owners all around the world must be staggering so no wonder they want to give it away. It’s why the Database Of Intentions argument still exists today.

The challenge for most small to medium enterprises is that while the application might be “free”, the frustration comes with trying to understand the volume of data that’s presented. Where do you start? What numbers do you look at first? (bounce rate, unique visitors, page impressions, time on site etc) How do you learn about what’s important.

As Google matures (it just turned 10), so too must its offerings to the various market segments. There’s a lot of consulting revenue on the table for the search giant and maybe the whole “lets get the user to do all the work himself” is going to have to be re-thought as a strategy.

Most small business operators I know are “time poor”. There’s a lot about the web they still don’t get - and analytics would be at the top of the list. They understand that if they advertise in a Yellow Pages directory, the phone might ring. When the sales rep calls once a year to get them to renew, they’ll instinctively know whether or not they received enough phone calls from the ad (either directly or by yelling around the office to ask for a general consensus).

By the way, you’ve never seen an industry become more defensive about their existence than a physical directory business (like the Yellow Pages). That’s for another time.

My advice to people dipping their toe in the water with analytics is to not worry about what the Google Analytics interface is telling you yet. If you have the internal resource and that person is passionate about the web and the company website, then all well and good. But if you don’t, the all you should concern yourself about is why people leave the site. Not why they stay. Why they leave.

Run an online survey, send out an email questionnaire to past and existing customers, and even consider running one of those often dreaded “exit pops”. There are ways to execute this without becoming totally offensive.

Analytics professionals are in hot demand the world over. I don’t see that trend changing in the near future. Google has done a great job in getting the product out there and who can complain about the price point! But I still think there is an enormous gap between getting a product distributed and having a market actually consume it. If they offered a “free” service and a paid service, not only would Google uncover yet another revenue stream, but also the new found business intelligence would ensure the moat stayed (and widened) around their fortress.

Do you have a question about web analytics that we can help you with?

If you’re looking for a resource, then you will have heard of me talk about this book. An hour a day is all it takes.

Boy, this must be really grating on Steve Ballmer, the beleaguered benevolent dictator at Microsoft.

Here’s a video I strongly encourage you to take the time to view. Grab a glass of wine, shut the door to your home office, threaten to flush the kids Nintendo DS down the toilet. Just ensure you have some peace and quiet.

The content is important because it’s about the critical nature of web analytics. And it features Avinash Kaushik, probably best known as the author of “Web Analytics, An Hour A Day” and also the Analytics Evangelist for a little search outfit based in Mountain View, California.

This video is part of the “Authors@Google” series and was taken at the Googleplex. In front of a lot of “Googlers”. And it’s no mean feat to hold a couple of hundred very smart search folks attention for an hour.

We rate his book so highly that we give a copy to all our clients.

And we rate Avinash so highly that we pleaded with him to do some consulting work with us. Which he did. And still does.

If you missed the interview I did with Avinash, you’ll find it here.

To me, the crux of web analytics is understanding “the conversation” that takes place at your website. Not “what” happened - that’s the easy part. But “why” it happened.

If you have a website that’s responsible to shareholders, or more importantly, responsible for putting food on a table and paying bills, then web analytics should keep you awake at night.

And the best part about it - getting started is relatively quick and easy. And free. Google Analytics is the best place to start…take the tour right here.

This case just seems so pointless. I posted about it here in case you missed it.

In today’s Australian Financial Review,

“The competition regulators case  against Google for misleading conduct over sponsored internet search results made a shaky start yesterday when the Federal Court ordered it to confine its allegations to two pages - double spaced”.

Clearly, Judge Allsop was cranky. I even think that he thinks the whole thing is a waste of time.

I said it back in the original post and I’ll repeat it here. This is going to get tossed. In one sense, the ACCC have already failed with this flagrant waste of tax dollars in that they were hoping to rope in Google Inc, and Google UK/Ireland into the pissing match.

My bet is that the Google US and Google Europe lawyers wouldn’t even get out of bed for something like this. Judge Allsop also stated that there was insufficient evidence before the court to show that the Google Mother Ship was involved.

Judge Allsop also referred to the ACCC’s presentation of the case as “prolix and irritating”. 

Which it is. And if I knew what “prolix” meant, I’d respond with something equally as pithy. Ok, ok, I just looked it up. It means “tediously prolonged or tending to speak or write at great length”.

Graeme Samuel, the beleagured Chairman of the ACCC needs to pick another fight. And one that he can win. Because this one is already over.  Google’s Adwords model has already stood up to multiple tests in courts the world over and they clearly stipulate what is and what isn’t a “sponsored” link. If someone can’t easily tell - then they need glasses or should rent a teenager for the weekend. Arguing over the shaded box that surrounds text ads is simply nonsense.

Google has also tightened the belt here in Australia on using trademarked names within Adwords campaigns.

I just don’t get it. On the surface, Samuel is a smart guy. He’s even got 2 law degrees - and apparently he even studied for them.

It’s time for the ACCC to let this one go. What do you think?

I don’t know about you, but the year seems to be picking up pace, not slowing down.

David Galt, our Client Services Manager starts a new career with our client Webjet in a week or two. This is an outcome you only ever hear about - not actually witness. More on this later. I couldn’t be happier for Dave. I’m a little stressed about how we’ll try and “replace” him, but we’ll cope. Sort of. You know the management saying that “no one is indispensible”. Thats mostly true and I subscribe to it. But Dave comes close to proving this statement to be a complete lie, in the regard that he just may be nearly impossible to replace.

We’re looking for a Junior Account Manager - the position overview is here.

And we’ve opened offices in London and San Francisco this past quarter.

We also are pushing hard into the web analytics space, with concurrent training with 2 of the world’s most respected platforms continuing (with Google and Omniture), resulting in certification for our team.

I’m hoping to announce the Head of Analytics for Eight Black in a week or so. Stay tuned.

Travel schedule - for those who are interested in where our (my) focus is for the remainder of the year.

1. Seth Godin’s small gathering in New York, September 6. More here.

2. Web 2.0 Summit - San Francisco, October 17-19. I’m delighted that I’ve been accepted to attend Web 2.0 Summit in San Francisco. Like we did for Web 2.0 Expo earlier this year, I’ll be blogging live from the event. Man, was this a tough gig to gain entry to. Attendance by invite only.

3. Blog World Expo - Las Vegas, Nov 8-9. One of the most important relationships we’ve developed in 2007 is with Dave Taylor. Dave and I spent a half a day together recently and Blog World Expo is his baby. I’m glad I introduced Avinash Kaushik to Dave, as Avinash is now a part of the speaking line-up at Blog World. This should be a great event - 5000+ attendees expected and some of the most serious bloggers on the planet in attendance.