Yahoo Introduce Video and Images into Sponsored Search.

Yahoo is offering select Y! Search Marketing users the opportunity to integrate images and video into their pay-per-click listings.

Sponsored search remains one of the top-performing tools available to online marketers today. Yahoo’s new service, Rich Ads in Search, would incorporate characteristics of banner advertising into sponsored search ad placements, reports MarketingVOX. Marketers could include videos and images, for example, making the experience "more engaging […] for advertisers," said VP-Search Monetization/Distribution Tim Mayer of Yahoo.

Google is currently piloting a less "rich" program called PlusBox, which enables users to click on a "+" symbol beside search results to see more offerings from a sponsor. These can include product images, posted in a format that mimics auction listings on eBay.

Display advertising is among Yahoo’s strengths. But as the recession presses hard on budgets, marketers are increasingly scaling back on less measurable ad options, including display, and pouring more cash into performance-based models like sponsored search. This trend was reflected in Yahoo’s Q4 earnings report, which saw display advertising fall 2% from the previous year as search ads rose 11%.

Rich Ads in Search was tested for a year with clients like dog food vendor Pedigree. A query for "Pedigree" on Yahoo brings up a pale blue box atop the search results page, where users can click to watch a Pedigree ad.

Other participants in the pilot included Sobe, Pepsi and Home Depot. Yahoo claims some advertisers saw click-through rates rise by as much as 25%, according to The New York Times.

"What the search results look like is a very different experience with rich ads in search versus the text link," said SVP-Revenue/Market Development Joanne Bradford. "There is consistency to the experience, which all advertisers want, and were unable to get until this point."

Instead of following the auction-based price model that rules rates in keyword-based sponsored search ads, Yahoo is charging a monthly fee for Rich Ads in Search. For the time being, only major advertisers with existing ads or logos will be permitted to participate.

Early last year, a JupiterResearch study found users prefer to have relevant content - such as maps, images, reviews and videos - blended into search results. It stands to reason that a similar media-blending method may increase ad relevance to users within sponsored results.

Google’s Footprint: The Environmental Impact of Internet Searches Article by Keith Johnson @ www.wsj.com

Forget the economic meltdown, rising unemployment, and trillion-dollar deficits. The burning question of the day is: Are your Google searches killing the planet?

To recap: The Times of London reported on Sunday research purportedly showing that Internet searches, by flitting from desktops to servers around the world, have a significant environmental impact—7 grams of carbon-dioxide emissions, to be exact.

Or, to use the British standard for energy consumption, about half as much as comes from boiling a “kettle of tea.” Multiply that by Google’s five billion searches a day, and Google, the green-talking Internet darling started to look like an environmental villain.

Except that the numbers in the study were widely inflated, Google contends. It says a Google search produces about 0.2 grams of carbon dioxide. Tech outlets and the blogosphere have been buzzing with claims and counter-claims about Google’s true environmental footprint.

Amusing as sniping between engineers may be, it entirely misses the point, argues Wired, calling the spat the equivalent of “complaining about a wobbly leg on one of the deck chairs on the Titanic.”

The bigger issue is the environmental footprint of information technology in general, not the environmental impact of your furtive searches for the lowdown on “24.” The IT sector globally accounts for about 2% of greenhouse-gas emissions, not far behind commercial aviation, long the target of environmental campaigners.

And it’s not just power-hungry data centers, like those that drive Google searches. As environmental initiatives by companies like Dell illustrate, the bigger problem is right there on your desk, whether you’re googling or not—simple power consumption from computers makes up a bigger share of IT’s carbon footprint than huge, air-conditioned server farms.

So if you’re still wracked by green guilt in front of the search engine, try googling “energy efficiency.”

Google an energy villian? come on what politically connected environmentalist came up with this study. Did the group responsibile for this non-sensical study recevie some stimulus money?

Google Radio Closes.

Google will stop selling ads on radio in May 2009. This retreat from radio sales is the latest example of how the recession is forcing Google to more quickly reassess its ambitions to move beyond AdWords and online advertising by entering in traditional forms of media.


The closing of Google Radio could lead to at least 40 layoffs among Google's 20,000 plus workforce. The decision to stop selling radio ads comes less than one month after Google scrapped its efforts to sell newspaper advertising.

Google radio actually began in 2006 along with Google Newspaper and Google TV.
Google said it still intends to sell ads on television.

The Google Blog posted this announcement:

In 2006, we launched Google Audio Ads and Google Radio Automation to create a new revenue stream for broadcast radio, produce more relevant advertising for listeners and streamline the buying and selling of radio ads. While we’ve devoted substantial resources to developing these products and learned a lot along the way, we haven’t had the impact we hoped for.

So we have decided to exit the broadcast radio business and focus our efforts in online streaming audio. We will phase out the existing Google Audio Ads and AdSense for Audio products and plan to sell the Google Radio Automation business, the software that automates broadcast radio programming.

Three years ago Google paid over $100 million for dMarc Broadcasting (against a potential price of more than $1 billion), which formed the basis for its Radio Ads program. The founders of dMarc left Google about a year later.

Hopefully the closure of Google Radio and Google Newspaper will allow Google to return their focus to keyword search and the Google search results pages. Keyword search is by far the most powerful and cost effective advertising medium and deserves the full attention of its Mountain View Industry Leader.

Google Net Hit by Charge, but Ad Sales Are Strong.

By Jessica E. Vascellaro
The Wall Street Journal

Google Inc. posted a 68% drop in fourth-quarter profit, dragged down in part by its investment in AOL, but sales were strong despite the worsening economy.

Results suggested that Google's search-advertising business and cost-cutting campaign are helping it weather the recession better than other Internet companies.

The Mountain View, Calif., company posted net income of $382 million, or $1.21 a share, down from $1.21 billion, or $3.79 a share, a year earlier. Revenue rose at an 18% annual rate, down from 31% in the third quarter, to $5.7 billion, from $4.83 billion. Profit was hurt by a $1.1 billion impairment charge on its investments in Time Warner Inc.'s AOL unit and wireless company Clearwire Corp. Google acquired both stakes over the past several years.

Google's results suggest that Internet advertising is holding up relatively well. Google said paid clicks -- a measure of how frequently consumers clicked on its ads -- rose 18% from the fourth quarter of 2007, a sign that consumers are still responding to ads during the down economy.

Shares were up 2%, or $6.15 a share, at $312.65 in late trading. The company released results after the close of regular trading. Google shares have slid dramatically in the past year as analysts have reduced their forecasts for the company amid concerns over slower growth and the downturn's impact on Google's search-advertising revenue.

Companies without the buffer of search advertising have been harder hit. Yahoo Inc., which is more exposed to other forms of online advertising, said Thursday that it is freezing salaries for all employees, except in a handful of cases. Yahoo laid off approximately 1,500 workers late last year.

Google acknowledged the "increasingly difficult economic environment" and also unveiled further steps to prop up its business, including a new plan to retain employees. Employees will be able to exchange all or a portion of their existing stock options for the same number of new options, with an exercise price equal to the value of Google shares in early March, when the program is expected to conclude.

Chief Executive Officer Eric Schmidt said in an interview he was satisfied with the steps Google had taken to rein in costs to date, but said the future was cloudy. "We adjusted our spending and model and we did well in Q4 but we don't know how long [the economic downturn] will go on."

Mr. Schmidt also indicated that the company was prepared to cut costs further if necessary. Google hired only 99 full-time employees in the fourth quarter, down from 889 during the same period a year earlier.

Search advertising, Google's main business, is expected to rise 15% this year, and overall online advertising is expected to increase 9%, according to researcher eMarketer.

Yahoo Posts Loss as New Chief Plots Strategy.

By Jessica E. Vascellaro
The Wall Street Journal

Yahoo Inc. swung to a loss and warned that the bleak advertising market will continue to hurt sales, intensifying the pressure on new Chief Executive Carol Bartz to turn around the Internet giant.

In her first earnings conference call, Ms. Bartz said she didn't join Yahoo to simply sell all or parts of the company, a move some Yahoo investors have vigorously encouraged.

"I did not arrive here with preconceived notions about anything," she said, adding that she believes Yahoo's search business is an important and improving part of the company. Ms. Bartz has promised to better focus the Sunnyvale, Calif., company's array of products.

She said she is encouraged by the enormous amount of traffic generated by major properties such as the Yahoo homepage and Yahoo Finance.

"This is a fantastic Internet property," she said. "It really doesn't deserve everybody trying to pick it and pull it apart."

Ms. Bartz joined Yahoo earlier this month after the company concluded a two-month search for a CEO to replace Jerry Yang, whose year-and-a-half tenure included an unsuccessful takeover bid from Microsoft Corp. and a search alliance with Google Inc. that was scuttled.

Yahoo on Tuesday reported a net loss of $303.4 million, or 22 cents a share, compared with net income of $205.7 million, or 15 cents a share, a year earlier. It was the first quarter the company posted a loss since 2002. Revenue for the fourth quarter was $1.81 billion, down 1.4% from the same period the previous year.

The latest results included about $600 million in charges and write-downs the company booked for layoffs and other items. Yahoo ended the fourth quarter with 13,600 employees, down from 15,200 at the end of the third quarter.

For the current quarter, Yahoo forecast $1.53 billion to $1.73 billion in revenue, compared with revenue of $1.82 billion in the first quarter of 2008.

Some analysts took the projection as evidence that tough times will continue and may worsen.

"Bartz has her work cut out for her to turn around the business from a revenue-growth perspective," said Mark May, an analyst for Needham & Co.

In an interview, Yahoo Chief Financial Officer Blake Jorgensen said the company elected not to issue full-year of guidance as it usually does, given the uncertainty in the market.

"We're cautious and we're careful but at the same time we're pleased that advertisers are consolidating their buys toward higher-quality properties, of which we are one," he said.

In the fourth quarter, Yahoo struggled to offset a sales slowdown of high-priced banner ads that run on heavily trafficked sites such as its homepage and media properties by trying to drive growth in other areas, like search advertising.

Display advertising on its own sites fell 2%, down from 3% growth in the third quarter and double-digit growth during the first half of 2008. Search-advertising revenue rose 11% world-wide, down from 17% growth in the third-quarter.

The report comes at a pivotal time for the slumping company. While online advertising is still forecast to increase this year, Yahoo's share of the market is slipping and many of its new investments -- including a new homepage design and a new service that eases the process of buying and selling display ads -- are unproven or in a very early phase.

In 2008, Yahoo commanded 15% of U.S. online ad spending, down from 16% in 2007, according to estimates from market-research firm eMarketer.

Shares of Yahoo, which reported its results after the close of regular trading, increased 5% after hours to $11.95 after finishing at $11.34 on the Nasdaq Stock Market.

Yahoo, Investors Shout.

By David Gaffen
The Wall Street Journal

Investors have had a euphoric reaction to Yahoo's earnings in trading Wednesday — after the company surpassed analyst expectations with its report, despite the poor outlook for display advertising in the weak economic environment.

But the company's losses and coming challenges put the analyst community in a Missouri mood. Multiple Wall Street researchers, in commentary said they were taking a wait-and-see approach as the company's new CEO, Carol Bartz, sets the company's direction and after the company declined to provide annual guidance for the first time.

For the quarter ended Dec. 31, Yahoo reported a loss of $303.4 million, or 22 cents a share, compared with year-ago net income of $205.7 million, or 15 cents a share. However, excluding certain items, the company earned 17 cents a share, which surpassed the 13-cent consensus, according to Thomson Reuters.

Without guidance, analysts are left to their own devices to estimate how 2009 will turn out, and current expectations are for revenue of about $5.4 billion, a figure that analysts at Signal Hill say should decline. "We think fundamentals will be under pressure for the foreseeable future due to its heavy exposure to the display advertising market," they wrote.

Ms. Bartz, in her first conference call as CEO, said she did not take over to sell the company, though a deal to sell its search business to Microsoft is still considered a strong possibility. Some believe the company is unfortunately operating from a weak position, though.

ThinkEquity analysts wrote that "we see a search-only deal as unlikely, given the potential risks to Yahoo!'s display sales leadership and its display platform roadmap over the longer term." They advocate a sale of the entire business to Microsoft, or the reverse — a sale of Microsoft's search traffic "or the entirety of MSN" to Yahoo.

Microsoft to Cut Up to 5,000 Jobs.

By Nick Wingfield
The Wall Street Journal

Software Maker's Quarterly Profit Falls 11% Amid Weakening Demand

Microsoft Corp. posted an unexpected 11% drop in quarterly profit and disclosed plans to slash 5,000 jobs, the latest sign that companies dependent on commodity-style businesses such as personal computers are suffering the most in the global slowdown.

Microsoft stunned investors and employees with the news early Thursday, hours earlier than it was scheduled to report results and while its Redmond, Wash., headquarters was largely asleep. Microsoft shares tumbled 12% to their lowest level in a decade, leading a selloff in the broader stock market.

The gloomy news from Microsoft came the same day cellphone giant Nokia Corp. reported a 46% dive in earnings and Sony Corp., the biggest name in the hard-hit consumer-electronics sector, warned of a $2.9 billion operating loss. On Wednesday, PC chipmaker Intel Corp. said it would close several factories, displacing 5,000 to 6,000 workers.

Microsoft Chief Executive Steve Ballmer, in an email to employees Thursday laying out his plans to cut jobs, described the current economic environment as the "worst recession in two generations."

Yet the pain is not being shared equally in techland, as some companies benefit from healthy niches or use strong competitive positions to expand their market share. Internet giant Google Inc. Thursday reported strong advertising sales lifted quarterly revenue 18%.

On Wednesday, Apple Inc. said strong sales of its Macintosh computers and iPhones powered higher profit and sales. Both products have exploited attractive designs to perform relatively well during the downturn, despite pressures that have hurt other makers of PCs and cellphones.

Meanwhile, International Business Machines Corp. Tuesday reported strong financial results and issued an upbeat outlook, thanks in large part to shift over the last several years out of commodity hardware products such as PCs and disk drives into corporate software and services.

The services business is a bright spot in the industry, because many troubled companies are concluding they can cut costs by outsourcing operations to companies like IBM and Accenture Ltd., which reported strong results in December.

In an interview, Microsoft Chief Financial Officer Chris Liddell said the company is bullish that the PC market will again be a growth business. "In the short term, we're very conservative," he said. "Over the medium- to longer-term, there are still five billion people without a PC."

Pip Coburn, president of Coburn Ventures, a New York-based hedge fund focused on technology, said it's far easier in this economic climate for businesses to defer spending on new computers for workers than it is for them to resist pitches to cut technology spending through outsourcing deals.

Microsoft Chief Executive Steve Ballmer, in an email to employees Thursday laying out his plans to cut jobs, described the current economic environment as the "worst recession in two generations."

But some players are doing much better than others. Hewlett-Packard Co., for example, expanded its PC unit shipments by 3.1% in the fourth quarter, research firm IDC estimated. Rival Dell Inc., meanwhile, experienced a 6.3% decline.

Steve Baker, an analyst with NPD Group, says H-P has a wide range of consumer PCs on store shelves and a relatively low cost structure that allows it to engage in price wars and still make a profit. "H-P is not shy about using price as a lever," he said.

Dell has been trying to avoid dropping prices since it reported shrinking profits last summer. It also generates roughly 80% of its sales from businesses, which were quick to defer plans to upgrade PCs as the economy slowed.

The drop in PC pricing has even spread to portable computers, the industry's hottest segment over the past few years. One factor has been the rise of small, low-cost laptops called netbooks, which are typically priced at $300 to $500 and have put pressure on companies to reduce prices on other models.

Although Microsoft has diversified its business to include everything from videogames to Internet search, its bottom line is still tightly coupled to the PC business. Between 80% and 90% of its profit comes from two divisions: its "client" division, which includes sales of the Windows operating system, and its business division, which includes its flagship Office software. Both are highly sensitive to fluctuations in unit sales of PCs.

Netbooks could hurt Microsoft's Windows business, at least in cases where customers choose one of the low-priced portables over a more expensive one. Most netbooks come with Windows XP, an older version; some analysts estimate the company receives about $20 per copy for XP, compared with $50 to $60 per copy for the newer Windows Vista.

Microsoft said revenue from its client business declined 8% to $3.98 billion in the fiscal second quarter from a year ago while business division revenue grew 1% to $4.88 billion.

Within Microsoft, the best performing groups were those that have little to do with the PC market. Revenue from its server and tools division, rose 15%. Sales in the company's entertainment and devices divisions, dominated by its Xbox 360 videogame console, rose 3%.

Even with the difficulties in PCs, Microsoft remains hugely profitable, with net income of $4.17 billion, or 47 cents a share, in the fiscal second quarter, down from $4.71 billion, or 50 cents a share, a year ago.

Total revenue rose 2% to $16.63 billion from $16.37 billion a year ago. The company, in a departure, didn't provide revenue and earnings forecasts because of the uncertainty of the economic climate.

Microsoft's results fell well short of its own forecasts for the quarter. "This is not a company that's in big trouble, but they're too big to be immune to what's going on," says Bill Whyman, an analyst at ISI Group Inc.

Indeed, the company took unprecedented steps to reduce expenses. The 5,000 jobs set to be cut over the next 18 months represent about 5% of its work force of roughly 96,000 people. Mr. Ballmer noted in his email to employees that the company intends to continue hiring in key areas during that period, including workers for its Internet search business that is battling Google.

AOL to Lay Off 10% of Its Work Force.

By Emily Steel
The Wall Street Journal

Time Warner Inc.'s AOL unit is laying off around 700 employees, or 10% of its work force, as a sharp decline in ad spending continues to pressure its transition from an Internet-service provider to an advertising business.

The layoffs will occur during the next several quarters, with most of the U.S. layoffs finished by March, AOL Chief Executive Randy Falco wrote in a memo to staff Wednesday. AOL also is scrapping merit pay increases this year, consolidating facilities and reviewing its services and international operations.

"The deepening economic recession has affected every corner of the economy, including our own. Online marketers have tightened their ad buying across the board, reducing their spend by hundreds of millions of dollars," Mr. Falco wrote. AOL declined comment.

Since it decided to switch its business to an advertising model in 2006, AOL has faced considerable challenges. The company has been hit hard by the tough economic climate and, slim advertising gains have failed to make up for subscriber declines. AOL posted a 6% decline in ad revenue for the third quarter, its worst performance of the year. Display advertising, long a sore spot, tumbled 15%.

Time Warner, which reports fourth-quarter earnings Wednesday, has also been cutting payroll elsewhere, including 800 jobs in its movie division and more than 500 jobs at Time Inc.

The company recently announced a $25 billion write-down for the tumbling value of AOL and other businesses. Time Warner also scaled back its advertising outlook, saying the economic climate had proved more challenging than anticipated at AOL and Time Inc. Google Inc., which owns a 5% stake in AOL, wrote down the value of its holding last week, indicating a current value for AOL of around $5.5 billion. That's down from $20 billion when Google acquired its stake in 2005.

In his memo, Mr. Falco wrote that AOL is "aligning resources and expenses against the real revenue opportunities in this difficult market." AOL has laid off a significant number of people in recent years.

News of the layoffs first was reported by AllThingsD.com, which is owned by Dow Jones & Co., publisher of The Wall Street Journal.