UBS Analysis of Comscore Search Numbers for Feb

Many of you have noted that my postings have been hurried and cursory lately, that will continue for some time. I've been dealing with some family issues (my father) and things have been unusually busy over at FM lately as well. That said, I don't want you to miss the stuff I've been reading simply because I don't have the time to lard it up with my trenchant analysis. Here's a summary from UBS's Ben Schachter, for example, on the Feb Comscore search numbers and Google's performance. Just wanted to pass it along.

Overview of comScore Search data
This report gives investors a monthly snapshot of internet search trends focusing on the 5 largest sites. We issue this report on a monthly basis, focusing on the same data points. We examine U.S.-only paid-search and world-wide search data as provided by comScore.

U.S. Sponsored Click Data for February
Google's sponsored clicks were down 3% m/m, up 45% y/y, and 6% q/q. Yahoo's were up 4% m/m, up 25% y/y, and 4% q/q. MSN's were down 5% m/m, up 95% y/y, and 14% q/q. AOL's were down 4% m/m, down 38% y/y, and down 10% q/q. Ask's were down 6% m/m, up 3% y/y, and down 7% q/q.

World-Wide qSearch Data for February
Google's total searches were up 50% y/y, 2% m/m, and 10% q/q. Yahoo's were up 34% y/y, 1% m/m, and 8% q/q. MSN's were up 19% y/y, 3% m/m, and 1% q/q. AOL's were down 35% y/y, -2% m/m, and -14% q/q. Ask's were down 4% y/y, flat m/m, and up 1% q/q.

Key Points
For U.S. sponsored clicks, GOOG showed 45% y/y growth vs. 54% y/y in Jan and 62% in Dec (2nd consecutive m/m decline, but was +6% q/q), while YHOO's grew 23% y/y in Feb vs. 23% in Jan and 28% in Dec. YHOO's click through rate increased 43bps m/m (Panama went live 2/5). GOOG's coverage ratio decreased 118bps m/m to 47.5% although the % of searches w/ a sponsored ad and a click was 27% vs. 22% y/y.

Bottom Line
If one were to trade on this news (and we do NOT advise doing so because we think this data is only directionally accurate), it was not a good month of data for Google. Sponsored clicks were down for the second consecutive month and year-over-year growth rates are decelerating at a faster pace than expected.

However, there is an interesting aspect of Google’s February data that we think might be misinterpreted: the coverage ratio is down significantly (118bps m/m and 522basis points y/y). Intuitively, one might think this is a negative for revenue, however, Google stated on its last call that it was proactively lowering the coverage ratio while increasing its RPS. This is possible because while it is showing fewer ads, we think the ads are more relevant and getting higher click-through-rates and most likely meaningfully higher costs-per-click. This is shown by looking at the percentage of sponsored clicks on search results that have an ad. This metric is up more than 400 basis points year over year. Unfortunately, all of this makes it that much harder to quantify how this data translates into revenue for Google.

We also note that, as shown in the charts below, toolbar searches continue to grow in importance, and are growing significantly faster than the overall search market.

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Google and AFP Settle Dispute

Earlier this year I had a chance to spend some time with the head of AFP (Pierre Louette). He seemed to want to make it work with Google (background), and it's clear he finally has. From Yahoo News:

Agence France-Presse, a global news agency based in Paris, has settled its lawsuit against Google Inc. and will allow the Internet search leader to post news and photos from AFP journalists.

The deal, announced Friday, settles the copyright infringement lawsuit that AFP filed in March 2005 accusing Google of posting news summaries, headlines and photos without permission.

Financial details of the settlement weren't disclosed.

The deal will allow Google to use headlines and photos on Google News and other services that drive online traffic to sites displaying AFP news. The companies didn't disclose where else AFP's news would be used by Google.

The nut here: "Financial details of the settlement weren't disclosed." This has significant implications. More to come.

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Look, It's Almost Friday

And honestly, it's been one hell of a week. So when a major artist makes fun of another major artist via YouTube, you have to just smile, and love the fact that the web lets all this happen. For your consideration:

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Google Joins the Conversation in Maps

With My Maps.

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WSJ on Ask On Google

A public article, so I'll point to it, on Ask's campaign to differentiate from Google in the UK....

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Autonomy: Use my ACID, Please

Autonomy, an enterprise search co out of the UK, is sure to add to all the hoo-ha about copyright technology in the Google/YouTube/Rest of World kerfluffle with this announcement on deep copyright search from its Virage subsidiary. The release, in part:

Autonomy Corporation plc (LSE: AU. or AU.L), a global leader in infrastructure software for the enterprise and proponent of Meaning-Based Computing, today announced the release of Virage Automatic Copyright Infringement Detection (ACID). Virage ACID enables copyright owners such as broadcasters, production houses and publishers to maintain control of their Intellectual Property by automating the detection of illegal distribution of copyrighted material on the Internet.

Using Autonomy’s unique Meaning-Based Computing, which includes patented image and audio analysis technology, and powered by the Intelligent Data Operating Layer (IDOL), ACID offers a fast, accurate and scalable method of detecting breaches of copyright, wherever they are located and whatever format they are in. By automatically detecting any rich media that infringes an organization’s copyright, Virage ACID eliminates the need for content owners to spend hours trawling through video sharing websites, or manually scanning p2p file contents.

More coverage at Internetnews.com here.

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Local.com Crows: $35 RPM

Local.com is a public company, so it has to be ready to defend its numbers. I just got a release which claims a $35 RPM for the site. That's pretty darn good. Not Google good (estimates say Google's at nearly twice that) but still, very good.

IRVINE, CA, Apr 04, 2007 (MARKET WIRE via COMTEX News Network) -- Local.com (NASDAQ: LOCM), a leading local search engine, today announced that it has surpassed the $35 milestone for search traffic monetization during March 2007. This milestone reflects consistent monetization of over $35 in revenues per thousand pages viewed (RPM) on Local.com.

The company previously targeted a $35 RPM based on current ad partners, and expects RPM to increase as it adds direct advertisers, a major initiative for the company in 2007. For the fourth quarter 2006, Local.com achieved a $29 RPM.

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Jobs on Searchblog

Huh, what do you know, there are six jobs on the Searchblog jobs board. I expected maybe two. Hey, maybe I'll post a few more myself!

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Auction, we Got Auction Sez DBCLK

See Paid Content on the NYT:

DoubleClick, the online ad firm, which is in talks with Microsoft and Google for a possible sale, is in the process of launching an online ad auction exchange, reports NYT. In this online exchange, to be launched in Q3, publishers and ad buyers will participate in auctions for ad space. It has signed up 35 Web publishers, advertising networks, agencies and advertisers to test the system. Two of the testers are Advertising.com, a large ad network, and Media Contacts, an interactive media buyer that is part of Havas. DoubleClick will charge a commission for each ad impression traded on its exchange.

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More Google News

First, they finally gave me a Google Desktop for the Mac. But I will be honest with you. I am not eager to have Google scan my desktop and organize my information. It's not that I don't trust the folks at Google, the people I know there are all high integrity and I'm convinced their values pretty much mirror my own. It's that I don't trust Google, the corporation. Am I alone? Or a paranoid freak?

And in the spirit of helping the web be more efficient, and therefore make more money for everyone (including Google), the company announced Website Optimizer.

Website Optimizer, Google's free multivariate testing application, helps online marketers increase visitor conversion rates and overall visitor satisfaction by continually testing different combinations of site content (text and images). Rather than sitting in a room and arguing over what will work better, you can save time and eliminate the guesswork by simply letting your visitors tell you what works best.
Free multivariate testing

Website Optimizer is a self-service application designed to give marketers full control over testing. Not only does Website Optimizer - integrated into AdWords - test messages on all site traffic (not just AdWords traffic), but it also works alongside Google Analytics and all third party site analytics packages.

This one I think I'll be testing!

• Posted by John Battelle at 7:42 AM
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Searchmob Roundup

The Enormous List of Linkbuilding Tips, Articles and Resources

Ask.com Launches Anti-Google Campaign on London Underground Trains

The ABC's of GBS: Part One, Google Book Search Explained

TripSync: Streamlines Travel Plans

Playing Nice With Google

• Posted by Melanie Colburn at 2:45 PM
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Google TV Trial Details

From an email from Google:

Google Announces TV Ads Trial

At Google, we are constantly looking for ways to improve the user experience and bring value to advertisers, publishers and partners. Users spend a lot of time watching TV so improving the relevance of advertising information on that medium is important. That's why today we are excited to announce our trial to deliver Google TV ads. Working closely with our partners, EchoStar and Astound Cable, we are currently running a trial to deliver better ads to viewers and help advertisers, operators and programmers more efficiently buy, schedule, deliver and measure ads on television.

Deliver more relevant ads to viewers and provide better reporting for advertisers
Advances in set-top-box technologies make it possible to report aggregate statistics on how many times an ad was viewed and whether it was watched through to the end. As part of this trial, we will be working with partners to use aggregate, anonymized set-top-box metrics to deliver timely and accurate viewing reports. Advertisers can use this data to understand the effectiveness of their TV ad campaigns and use this information to provide more relevant ads to viewers.

Bring more advertisers to TV and help inventory owners
With our AdWords™ and AdSense™ advertising programs we have seen the benefits of the long tail and we think we can apply these principles to help grow the TV advertising industry. Our goal is to extend the reach and visual power of this medium to include more advertisers, large and small, and help monetize more TV programming with relevant ads.

Create efficiencies in the existing model
With Google TV ads, the entire process is automated – from planning the campaign to uploading and serving the ad to reporting on its effectiveness. Like our AdWords advertising program, Google TV ads are bought using an auction model and through a single online interface that is already familiar to agencies and advertisers. Advertisers can target by demographic, daypart and channel and pay only for actual impressions delivered. Pricing is on a CPM basis. Because the entire process is automated and online, advertisers can plan their TV ad campaigns efficiently all year long. The flexibility of this model also allows advertisers to make changes to their campaigns as often and as quickly as they like.

This is an early trial. We look forward to getting feedback and working closely with advertisers, agencies and partners to improve and expand our TV ads offering.

more from SEL

• Posted by John Battelle at 7:35 PM
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Monday

I'm traveling for family reasons today, a few stories worth noting:

Topix Does the Citizen Journo Thang

Facebook is growing. A lot.

Blogging Code? Here're FM's Mores.

Google might buy DoubleClick after all. But...why? Oh wait, now I know. To push Microsoft to spend even more for it. If Google buys DoubleClick, I'll eat this post.

Well done, EMI.

Yahoo is testing new approaches in search too.

New Orleans Google Maps kerfluffle.

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BizWeek Says It All

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Health: Watch This Space

No. Really. Watch this space.

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More on GoogleClick: It Will Be Free, And Partners Worry

(image)
From a source who is in a position to know, news that Google's DoubleClick competitor will be ... free for all to use. Like Analytics. Think about that for a moment. How did Microsoft kill Netscape? Yup, made the browser free. How will Google try to own the entire ad serving biz? Make it free. Why would they do this? Because the most valuable thing in the world of advertising is not the commodity , it's the information the commodity will provide.

Providing a scaled ad serving solution? Free. Knowing the margins of every media and marketing company in the world? Priceless.

And who figured this out? Why, Google's partners, who have been nervous ever since the YouTube acquisition. Think about it. Newscorp was ready to sign a deal with Google for their ad server, sources tell me, but they got nervous about "the fox in the hen house." And then, what happened? Newcorp went and bought SDC, an ad serving technology and inventory optimization company. Sure makes sense now.

Hmmmmm. It just gets more and more innaresting. Note Barry Diller on Google today in an FT interview:

FT: Do you think Google has taken the right approach, has had the right attitude in its negotiations with the content creators?

MR DILLER: I don’t know. They’re an impossible situation.

FT: Why?

MR DILLER: Because they bought a company and paid fair value for it. They paid what they paid.

FT: Did they pay too much?

MR DILLER: I’m just saying, they paid what they paid. It is too early to tell, and they’ve got this wonderful site with a huge amount of traffic, and that traffic primarily is dependent upon things other people own. So, you go to them and you say, Okay, let’s make a deal. And they look at what you’ve just paid for the service itself, and say, Well, you know, we actually deserve some of that. And Google says, Well, no you don’t. So it is a very difficult tug between what is now an every hour mention, Google, in everything it does, and these people who actually own the stuff, so I’m not saying they handled it well or badly. I think it is a very tough negotiation, handled by Henry Kissinger.

My advice to Google? Don't make it free. Make it better, make it cheaper, and let those who use it own the data. Ah, hell, make it free, but let those who use it own the data and guarantee them you won't use it to your advantage. But then....why do it at all?

Hmmm.

• Posted by John Battelle at 9:30 PM
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Revisionist History at IDG

I have a lot of respect for Pat McGovern, he backed me when I was young (at the Industry Standard ) and he let me make mistakes, but we butted heads more than we agreed, and unfortunately, we could not see our way to making that business work.

I had pretty much left it at that till I read this interview on MediaShift. Asked why the Standard died, McGovern claims that management (er, that'd be me) refused to sell and blindly pursued an IPO. For the record, he has this entirely backwards. I tried for all of 2000 to get Mr. McGovern to let us sell the company to a stronger buyer, one who believed in our vision of the Internet Economy. He refused, and pushed us to go public instead. It was this very conflict that led to our differences and, partially, to our demise. I had three very real offers on the table that I took to McGovern, and three times he refused them, telling me that instead, we'd make more taking the company public or, at the very least, telling the potential buyer to double the price. Given that the price was between $250mm and $750mm, such a response was, to my mind, non sensical. But he owned the majority of the shares, and his word was what mattered.

McGovern taught me a lot, and I'd wager he may have learned a thing or two from me as well. But while not many things get me upset, this attempt at revisionist history requires it's own revision. Now, onwards....

• Posted by John Battelle at 5:56 PM
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Searchmob Roundup

Will Social Networks and Vertical Search Combine to Challenge Google?

TripSync: Streamlines Travel Plans

Playing Nice with Google

New Service Creates Custom News Sites

Another Day and Another Video Search Service Announced, This Time from TV Guide

Will Social Networks and Vertical Search Combine to Challenge Google?

• Posted by Melanie Colburn at 3:52 PM
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Flickr-like Tube?

BeetTV says so:

Beet.TV has learned that You Tube will introduce new functionality to its platform tonight which will allow users to organize clips around specific categories.

Up to now, clips saved to an account or uploaded to dedicated channel are organized in what often seems a random process -- usually arranged chronologically, but not always.

The new interface will allow users to organize clips according to designated categories.

I can't imagine that such a feature was anything but "long time coming...."

Related: Gary has a list of YouTube like mobile apps...

• Posted by John Battelle at 7:54 PM
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CUban v. EFF on YouTube

A good roundup of the etech debate over YouTube's use of the DMCA can be found at NewTeeVee:

Cuban used the the evening to shed some light on his position. He thinks Google should be held liable for copyright infringements because YouTube doesn’t establish commercial relations with its users, in effect allowing them to upload videos with fake accounts and without any verification of their identity. This distinguishes the site, in his eyes, from traditional web hosters, who are protected from the misdeeds of their users through the “safe harbor provisions” of the DMCA. Says Cuban: “If you are a web host it should be natural to know who your customers are.”

Von Lohmann disagreed with the notion that there is a clear line between YouTube-like sites and traditional web hosting businesses. He illustrated his point by bringing up other companies that are also offering their services for free. “What about Hotmail? What about free web hosters? What about Six Apart?” he kept asking. “What about Pando? Should they be held liable too?”

• Posted by John Battelle at 10:01 AM
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GoogleClick

Google does not take third party ad tags. That means that if you want to advertise on Google, you have to run your creative through Google. But a huge portion of the advertising world that Google is now going after - graphical CPM ads - runs through third party ad servers like DoubleClick.

Now, DoubleClick is for sale, the WSJ reports. Actually, I've heard it's been shopped since early last year, but anyway....Microsoft is seen as an interested suitor.

Google can't let this stand. It's a major risk to its business to force advertisers to change behavior - it needs a third party ad serving solution.

So it will, without a doubt, build one. More soon.

• Posted by John Battelle at 9:51 AM
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And In Other Reading...

GigaOm on Google and its video problem...

Google's giving bikes out to employees, G B'scoped says. What, the Segway isn't enough?

With respect, I disagree with #6 here. See this post.

Man, I wish I was at etech. I am missing it for the first time in three years. A roundup...

More Google focus on mobile...and mobile ads are hot...

Microsoft has a new search head.... (more)

Oh, via SEL, Timesearch. I love the concept.

More Panama good news.

So Yahoo is feeling generous, unlimited mail storage, TechCrunch reports...

Wow, Best Buy bought my ISP. Huh.

The Microsoft iPhone.

• Posted by John Battelle at 9:12 PM
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Rich Speaks Again

Every so often, Rich gets up and rips one off. His most recent is called "How to beat Google, part 1."

From it:

Our entire industry is scared witless by Google's dominance in search and advertising. Microsoft and Yahoo have been unsuccessful at staunching the bleeding of their search market share. VCs parrot the Google PR FUD machine that you need giant datacenters next to hydroelectric dams to compete. They spout nonsense about how startups should just use Alexa's crawl and put some ajax on top of it. Ye gods.

Grow a spine people! You have a giant growing market with just one dominant competitor, not even any real #2. You're going to do clean-tech energy saving software to shut off lightbulbs in high-rises instead? Pfft. Get a stick and try to knock G's crown off.

• Posted by John Battelle at 8:54 PM
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It's Trench Warfare Now

Google, Microsoft, Yahoo... It's now a war of distribution as much as innovation. Why do I say this? Read on, a release from Google:

LG ELECTRONICS AND GOOGLE TEAM UP TO ENHANCE THE MOBILE EXPERIENCE

LG Handsets to integrate Google Search, Google Maps for mobile, Blogger Mobile and Gmail for mobile

Seoul, Korea, and Orlando, Florida March 28, 2007 - LG Electronics (LG), a leading worldwide provider of advanced wireless handsets and accessories, and Google today announced a global collaboration to pre-install Google's services on millions of LG mobile phones. Mobile users around the world will now be able to easily search for information, find locations, update blogs and manage email while on the move.

"Building on our efforts to set new standards for wireless handsets, we are excited to partner with Google to offer extra value to consumers with enhanced mobile Internet experiences,” said Mr. Paul Bae, Vice President of the Product Planning Team at LG Electronics Mobile Communications Company. "LG's mobile devices, combined with Google, will provide consumers with easy access to their favorite Internet services even without a PC and make it easy for them to stay connected while in motion.”

Say it with me: Distribution Distribution Distribution Distribution Distribution Distribution Distribution Distribution Distribution!

Previously in the distribution wars: Dell, Facebook, AOL, Pack....

• Posted by John Battelle at 8:41 PM
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COPA Is Struck Down

Remember when the DOJ went on that enormous fishing exercise under the guise of defending/resurrecting COPA, the Child Online Protection Act? Well, a Ed Felten tell us that the Federal judge just killed the act dead. We hope.

This is the end of a long legal process that started with the passage of COPA in 1999. The ACLU, along with various authors and publishers, immediately filed suit challenging COPA, and Judge Reed struck down the law. The case was appealed up to the Supreme Court, which generally supported Judge Reed’s ruling but remanded the case back to him for further proceedings because enough time had passed that the technological facts might have changed. Judge Reed held another trial last fall, at which I testified. Now he has ruled, again, that COPA is unconstitutional.

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