Google+ U.S. Visitors Spend Less Time on Site, Hitwise Says

Bloomberg News
July 27, 2011

July 27 (Bloomberg) -- Google Inc.'s new social-networking service, Google+, saw fewer U.S. visitors last week and users are spending less time on the site, signaling that its momentum may be slowing, according to Experian Hitwise.

Total Google+ visits fell about 3 percent to 1.79 million in the U.S. in the week ended July 23 from the prior seven days, said Experian Hitwise, which tracks Web traffic. Google+ visits had risen 283 percent in the week ended July 16. The average time spent on the site in the most recent week declined 10 percent to 5 minutes and 15 seconds, the research firm found.

Google+, an online tool started last month that lets users create and communicate with groups of friends, is the company's latest effort to challenge services such as Facebook Inc. and LinkedIn Corp. Google co-founder Larry Page, who took over as chief executive officer in April, announced earlier this month that Google+ had more than 10 million users -- less than three weeks after it started.

"We are seeing over 1 billion items shared and received in a single day," Page said July 14 on a call with analysts. "So while we still have a lot of work still to do, we are really excited about our progress with Google+."

Experian Hitwise's research methods, which rely on visits to websites, don't include mobile users and third-party application traffic, according to the New York-based company.

Google+, which aims to help users better organize and manage contacts and sharing, began a test version on June 28 by invitation only.

Google, based in Mountain View, California, fell $15.30, or 2.5 percent, to $607.22 today on the Nasdaq Stock Market. The shares have risen 2.2 percent this year.

Groupon's Accounting Lingo Gets Scrutiny

Wall Street Journal
by SHAYNDI RAICE And NICK WINGFIELD
July 28, 2011

Groupon Inc. has attracted scrutiny from regulators over a newfangled accounting metric it is using to market itself to investors ahead of its initial public offering, said a person familiar with the situation.

The Securities and Exchange Commission has asked Groupon to answer questions about the unusual measure it invented, which paints a more robust picture of performance by excluding marketing and other expenses, this person said.

The company's IPO, expected this fall, is one of several multibillion dollar technology offerings teed up for this year. Some of those companies, which are unprofitable, also highlight creative ways to measure their businesses.

The financial gymnastics harken back to Silicon Valley's late 1990s dot-com boom, when companies introduced terms like "eyeballs," or the number of people visiting a website, to reinforce how much traction they had with consumers, even if the start-up had no revenue.

John Coffee, a professor at the law school at Columbia University, said the SEC has become more cautious about using nontraditional metrics after the dot-com bubble and subsequent bust. "The more we get into a bubble, the more we have analysts wanting to use numbers giving a sense of momentum," said Mr. Coffee. "In social media, there are signs of a bubble and that creates some nervousness at the commission."

SEC spokesman John Nester declined to comment specifically on Groupon. He said the agency's "staff currently reviews all IPO filings, and an average range from filing to effective date might be three to six months."

Groupon, whose IPO is expected to value the company at $20 billion, has highlighted in regulatory filings something it calls "adjusted consolidated segment operating income," or adjusted CSOI. Investors and analysts said that draws attention away from marketing costs, which are causing the company to hemorrhage money.

While it isn't unusual for companies to use nonstandard financial measurements, Ben Strubel, a portfolio manager with Strubel Investment Management, a money management firm in Lancaster, Penn., says he has "never encountered" the one Groupon is using. "In essence Groupon is asking investors to look at their profit before any expenses," says Mr. Strubel, who doesn't plan to invest in the IPO and has no intention of shorting the stock. "It's not a surprise they want investors to focus on measures that don't include expenses since their expenses have been rising."

Groupon's adjusted CSOI is one of several nonstandard growth metrics that have increasingly come to prominence along with the new set of Internet companies.

Internet games maker Zynga Inc., in its July IPO filing, used a metric called "bookings." The term reflects the total amount of revenue from Zynga's two main businesses—the sale of virtual goods and ads—if it had recognized all of the revenue immediately at the time of a sale. Facebook Inc., the fast-growing social network, occasionally discloses MAU, or monthly active users.

Facebook hasn't filed to go public, and it is unclear whether it would use the MAU figure in regulatory filings. A person familiar with the matter said the SEC hasn't questioned Zynga's filing.

Pandora Media Inc.'s first IPO filing included total listener hours and total registered users as "key indicators of the growth of our business," though the Internet music firm cautioned that the total users figure was an imperfect measure.

The SEC allowed Pandora to keep the terms in its prospectus, along with a measure called "total active users" that was added in its fourth amendment. The original prospectus was amended six times before Pandora went public last month. Such amending is common.

Groupon, a 2 1/2-year-old Chicago-based company, has grown at a torrid pace with its approach of selling daily deals to consumers in partnerships with local merchants. But it has been racking up losses as it spends heavily on marketing to acquire customers.

Groupon's IPO filing says that adjusted CSOI gives investors a look at the company's performance by excluding "expenses that are noncash or otherwise not indicative of future operating expenses."

Groupon said it generated $81.6 million in adjusted CSOI in the first quarter of 2011, though if marketing costs are taken into account that figure would be a loss of $98 million.

To address concerns over adjusted CSOI, Groupon filed an amendment on July 14 to its initial SEC filing. In that amendment, Groupon clarified the metric "should not be considered as a measure of discretionary cash available to us to invest in the growth of our business or as a valuation metric."

Instead, the company said investors should look at standard financial metrics such as cash flow, net loss and others when evaluating its performance.

Groupon plans to file another amendment to address the SEC's concerns over adjusted CSOI and still aims to go public in mid-September, said people familiar with the matter.

CNBC earlier reported the SEC was reviewing Groupon's accounting metrics.

The flap over adjusted CSOI is the latest issue Groupon has run into during the regulatory period before its IPO. Eric Lefkofsky, a Groupon co-founder who is now executive chairman, was quoted by Bloomberg News as saying that "Groupon is going to be wildly profitable" just three days after the company filed for its IPO. Speaking publicly about the financial projections of a company that has filed to go public is restricted by the SEC.

In its July 14 amended filing, Groupon said Mr. Lefkofsky "requested that the statement not be published. The reported statement does not accurately or completely reflect Mr. Lefkofsky's views and should not be considered by prospective investors in isolation or at all."

Lou Kerner, an analyst with Wedbush Securities who covers privately held Web firms, said he believes the new metrics like adjusted CSOI aren't unique to Web companies, but are part of the regular course of how businesses evaluate themselves.

"This is more art than science and it's ever evolving," he said, noting that earnings before interest, taxes, depreciation and amortization, or Ebitda, a regularly used metric of cash flow, was once unknown. "Smart investors should look at the metrics they want, not the numbers that a company shoves in your face."

Google+ adds $45 billion to Net giant's market value

USA Today
by Scott Martin
July 26, 2011

The launch and hyper growth of Google's ambitious Google+ social site has helped fuel a meteoric rise in the company's stock.

Thursday marks one month since the search king unveiled its Google+ to grab attention and advertising dollars away from Facebook. Google+ is the search company's foray into social networking that numbers more than 10 million members since launch.

In that time, Google stock (GOOG) is up nearly 30%, boosting the company's valuation by $45 billion to a market capitalization of roughly $200 billion.

"Google+ has had a lot to do with the perceptions," says Scott Kessler, equity analyst at Standard & Poor's Equity Research. "People look at Google as being … a pretty important player in social media."

Put into perspective, the valuation gain is more than half the estimated value of privately traded Facebook. The social-networking giant holds an $84.7 billion valuation on the private stock-trading network Sharespost.com. And Facebook launched more than seven years ago.

Google's one-month valuation jump is more than five times Twitter's estimated $8 billion value and more than double Groupon's $18.1 billion, according to Sharespost.com. Twitter hasn't filed to go public.

Google stock traded at $482.80 on June 27, the day before Google+ launched, and closed at $622.52 Tuesday. Google shares touched a 52-week high of $642.96 earlier in the year.

To be sure, Google's blockbuster second-quarter profit gains of 36%, reported July 14, didn't hurt in nudging up the stock. But Google opened the earnings call trumpeting whopping adoption numbers for Google+ and focused praise on the product's mojo companywide. CEO Larry Page used the call to tout Goggle+'s 10 million users, grabbed in just two weeks.

Still, it remains to be seen how well Google+ fares once the honeymoon is over. Google has already taken some lumps over its axing of business users. Google responded by saying it plans a launch for businesses later this year.

Early reviews of Google+ are mostly favorable. Many say Google's concept of letting people group those they interact with into different social circles is a key differentiator from Facebook.

"This is a nice, clean service that's really working well," says IDC analyst Karsten Weide. "Whether it's a win or not remains to be seen. Those user numbers look good."

Social media find place in classroom

USA Today
by Greg Toppo
July 25, 2011

Among educators, Eric Sheninger is something of a social networking hero.

The principal of New Milford (N.J.) High School has nearly 12,300 Twitter followers (his handle: @NMHS_Principal). He and his teachers use Facebook to communicate with students and parents, and students use it to plan events. In class, teachers routinely ask kids to power up their cellphones to respond to classroom polls and quizzes. Rather than ban cellphones, Sheninger calls them "mobile learning devices."

He replaced the school's "static, boring" website with what has become a heavily used Facebook page, and his teachers encourage students to research, write, edit, perform and publish their work online.

Sheninger is one of a growing number of educators who don't just tolerate social networking in school — he encourages it, often for educational purposes. He says sites such as Facebook, Twitter and YouTube — long banned and roundly derided by many peers — actually push kids to do better work and pay attention to important issues such as audience, quality research and copyright laws.

"The Internet as we know it is the 21st century," he says. "It is what these students have known their whole lives. They're connected, they're creating, they're discussing, they're collaborating."

He and others say working online also pushes education beyond the confines of school, allowing kids to broaden discussion of their work. And it forces them to do "authentic" work that gets tested out in the real world, as outside viewers see it and respond to it.

Challenging a new generation

"Being literate in 2011 means being digitally literate," says Chris Lehmann, principal of Science Leadership Academy, a public high school in Philadelphia that has been using social media since it opened in 2006.

Sheninger and others also say it is naïve to think that kids raised online will respond to school the same way as previous generations. "Kids are coming to us bored, disconnected, and it's a challenge for us to figure out how to leverage the tools inherent in the real-time Web," he says.

The American Library Association encourages schools and libraries to think twice before keeping kids off social media, saying such prohibition "does not teach safe behavior and leaves youth without the necessary knowledge and skills to protect their privacy or engage in responsible speech." Their policy statement on the topic says that instead of restricting access, librarians and teachers "should educate minors to participate responsibly, ethically and safely."

Federal regulations have long kept most popular social networking sites off-limits, since school districts that receive federal E-rate funds to wire schools to the Internet must block material that's obscene or "harmful to minors." But as more educators discover the virtues of social networking sites, they're using a variety of approaches to get around the rules: Often they ask kids to access the sites at home or on mobile devices; sometimes they tweak in-school Internet filters to allow blocked sites that they find appropriate (the regulations allow schools to make this call). Still others simply look the other way when kids inevitably find a way around the filters.

Karen Cator, the U.S. Department of Education's director of educational technology, says it's important to find a good middle ground.

"The Internet is not going away," she says. "We need to do everything we can to make it safe and really a wonderful place for children."

Providing structure, guidance

Perhaps the biggest objection to widespread use of social sites is the likelihood that kids will encounter irrelevant or even offensive material — a fear that many teachers say is overblown. While the Web can seem like "a sea of pornography and idiots," says James Lerman, the author of several books on educational technology, schools must help students figure out how to navigate it so they "can get to the good stuff" that's applicable to school.

"We as educators need to do a better job of advertising and sharing the meaningful work done with social media," says Matt Levinson of Marin Country Day School in Corte Madera, Calif. He writes about the struggles schools face using social media in his 2010 book, From Fear to Facebook. "If you keep it out, kids are creating their own cultures in this space with no guidance from adults — and that's not responsible."

The other big misconception: that schools with open Web access are simply letting kids "play freely as if there's no structure," says Lisa Highfill, a 5th-grade teacher in Pleasanton, Calif. A longtime devotee of YouTube — she used it recently to show her Oakland-area students videos of tornadoes and mudslides — Highfill says she chooses videos in advance.

"I don't just search in front of the kids," says Highfill, who also uses a YouTube add-on that strips "related videos" off the right-hand side of the page.

She admits that even with careful planning, learning online carries risks. But the risks shouldn't be overstated. "When we go on a field trip, when we go anywhere," she says, "we warn (students) of the dangers of where we're going."

How to: Use Google+ for your job search

USA Today
by Erica Swallow, Mashable
July 25, 2011

Google+ hit 20 million unique visitors this week, and the company launched a mobile app. The stats are impressive, but the new social network has room to grow in catching up with its massive competitors Twitter and Facebook.

Early adopters of Google+ are captivated by the network's growth, as many tech elites — including Mark Zuckerberg, Robert Scoble and Kevin Rose — have amassed large followings in just weeks.

Google+ hasn't hit a mainstream audience yet, but it does seem to be romancing the tech geeks with strong force. Yes, I'm talking about you, fellow Mashable readers. Early adopters, social influencers, tech innovators, digital natives — call yourselves what you will. The bottom line is, you understand the value of digital tools and how they can connect you to people and ideas all over the world.

With so many influential techies flocking to Google+, it's a great place to showcase expertise and learn from others. Here are some tips for using Google+ for your job search.

Announce your availability

Once your profile is completely filled out, and you've begun growing and interacting with your network, don't be shy about letting your contacts know you're on the prowl for work.

This could be as subtle as mentioning it in the "About" section of your Google+ profile, or as public as posting an update to announce that you're looking for new challenges on the career front. If you choose the latter, be original with your post and how you frame it. Try not to sound hopeless — make sure you are confidently communicating your unique skill set and the value you can add to a project or company.

Organize contacts with circles

The key to a fulfilling Google+ experience is Circles, the heart of this social network's organization system. Circles give users control over who sees their content. To connect with another user on Google+, you must add him or her to a Circle, such as "Friends," "Family," "Work" or "Softball Team." Users can create as many Circles as they'd like, though we'd recommend limiting them to a manageable number — having too many can dilute the experience.

For the purposes of seeking a job, it's important to denote which Circles you want to see your messages when you post. If you're posting about your job search, it makes sense to include your industry contacts — which you might put into "Social Media" or "Tech" Circles, for example — but that same post might not be as relevant to your "Friends" or "Family," where a more personal post may be more appropriate.

On the flip side, make sure you're not sharing unprofessional content with your business network. As usual, just use common sense when dealing with privacy and sharing settings.

Host a relevant hangout

John Havens, formerly of Porter Novelli, plans to enhance his job search with Hangouts, Google+'s group video-chat service. Instead of focusing his chat on getting a job, Havens plans on inviting a number of influential contacts to discuss relevant topics, such as the state of social media and virtual currency. He says he'll let participants know that he has been "digitally downsized," and that he's open to discussing new positions afterwards, but that his Hangout will focus on generating intelligent conversation.

"Essentially, I'm trying to think of the best ways to show potential employers that by running a campaign to get myself hired, I'm showing them how I'd bring value to their organizations," Havens says.

Share and follow relevant expertise

In order to be seen as an industry expert, you need to showcase that you know what you're talking about. Tech enthusiasts tend to use Twitter and blogging for this purpose, but Google+ is quickly becoming another outlet for sharing and discovering tastemaker opinions and interesting content.

If you're not a natural at finding and sharing content that connections in your Circles may find valuable, check out Sparks, the product's content recommendation engine. You can define topics you're interested in — or that you want to learn more about — and it will bring up content the algorithm believes you'll find useful. You can add your favorite sparks to the left-hand navigation for easy perusal when you're on your Google+ homepage.

Choosing the right mix of sparks to read each day may lead to you becoming more informed about news and conversation in your industry.

Web restrictions draw ire of some educators

USA Today
by Greg Toppo
July 25, 2011

Book banning has long been a controversial issue in the nation's schools. Now some educators say banned websites pose as great a threat to kids' education and intellectual freedom.

Filtering software and school rules designed to keep out violence and pornography are also blocking key educational and otherwise useful sites, teachers say, including Facebook, Twitter and YouTube — not to mention Google and National Geographic.

The Pinellas County (Fla.) School Board in June voted unanimously to block teachers from communicating with students via Facebook or Twitter, even about school-related matters. The school board said it hopes to prevent the appearance of inappropriate contact between students and teachers via social media.

This fall, a handful of schools and libraries across the USA plan to celebrate Banned Sites Day to draw attention to the issue, according to New Canaan (Conn.) High School librarian Michelle Luhtala. The day was her idea. She says the same issues of censorship, fear and free speech that make banned books resonate also apply to social-networking sites that most public schools block.

"Teaching with social media shows students how to responsibly use those platforms," Luhtala says. "Blocking access in schools denies kids the chance to practice sharing their knowledge with the real world in a supervised setting."

Many schools use "brute force" tools that block good educational sites, says Karen Cator, the U.S. Department of Education's director of educational technology. Cator says she has urged schools to use more sophisticated, updated software and to educate themselves on the actual filtering rules, which are less restrictive than many educators believe.

"The Internet is not going away," she says.

Along with social networking, many schools block teachers' personal e-mail and seemingly harmless sites. In a survey for the education website MindShift, Editor Tina Barseghian found that teachers at some schools couldn't access National Geographic or Flickr, as well as the video- conferencing site Skype.

Google Bows to Web Rivals

Wall Street Journal
by AMIR EFRATI
July 23, 2011

Google Inc. has made changes to the way its search engine displays information about local businesses, a move that follows the disclosure of a U.S. antitrust investigation of its business practices.

The company said it removed snippets of customer reviews that were taken from other Web firms for its Google "Places" service, which has millions of pages for local businesses. Google's practices have drawn fire from some of those Web companies, and is believed to be among the issues the Federal Trade Commission is investigating.

Since last year, TripAdvisor, Yelp and Citysearch—sites with local-business reviews generated by their visitors—have complained Google effectively stole their content and posted it on Google's own pages. Google Places competes with those sites and provides information on millions of restaurants, hotels and other businesses, including store hours, location and photos.

Following Thursday's change, Google Places showed a marked decline in the number of reviews listed for some businesses. For example, Keens Steakhouse in New York displayed 60 reviews Friday, compared with more than 3,000 last month.

While some rivals welcomed the change, they continued to support the antitrust investigation into Google and complained the company still gives preferential placement to Google Places over links to their sites in search results.

Stephen Kaufer, TripAdvisor's chief executive, said in an interview Friday he will "continue to object to" Google's promotion of Places pages above TripAdvisor and other competitors.

Mr. Kaufer said he has responded to requests for information from the FTC that included questions about the service. He said the agency also asked questions about Google's search-advertising business as well as how Google is "leveraging its dominance as a search engine" to promote other Google services. He didn't elaborate.

Vince Sollitto, a Yelp spokesman, said Google had essentially been building its business on the back of others' efforts. "It's too bad it took an antitrust investigation for them to do something people have been clamoring for for more than a year," he said.

Google, which hasn't been accused of wrongdoing by the FTC, has denied anticompetitive practices while stating that it creates services to benefit users rather than other websites. Copyright lawyers have said Google's use of reviews from other sites could potentially be protected under the so-called fair-use doctrine, which Google has cited as a reason it can excerpt news articles in its Google News service.

Earlier this year, a Google product management director said in an interview that Places helps users reach sites such as Yelp and TripAdvisor because each excerpt includes a link to the source of the content. Google wants to "shuttle you to the best sources as quickly as possible," he said.

In its blog post Thursday explaining the changes to Places, Google doesn't mention the FTC investigation, which the company disclosed last month. A Google spokeswoman declined to comment on Friday.

"Based on careful thought about the future direction of Place pages, and feedback we've heard over the past few months, review snippets from other web sources have now been removed from Place pages," wrote Avni Shah, director of product management, in the post.

The company launched Places in April 2010 as an improvement to the prior business listings displayed by its search engine. Besides posting excerpts of reviews from other sites, the service aggregated multiple reviews from Yelp, TripAdvisor and other sites to produce a kind of average review score for individual businesses.

Over the past year, however, Google has been able to get more of its own users to write reviews. Ms. Shah said the service will be changed so that "rating and review counts reflect only those that've been written by fellow Google users."

Google sells some ads on individual Place pages, which creates a connection between the company and merchants around the world.

Links to the pages often appear near the top of the search results page when people search for information on local businesses, in part because they aren't subject to the same Google algorithm that ranks other websites in search results.

Google Places links often are ranked above links to Yelp, TripAdvisor and UrbanSpoon and Citysearch, which are owned by IAC.

Since last year those sites have called on Google to stop posting excerpts of their user-generated reviews and to stop directing Google users to Places rather than their sites. Part of the FTC's antitrust probe of Google involves such complaints by Google's competitors, people familiar with the matter have said.

TripAdvisor's Mr. Kaufer said Google's move Thursday "is a positive sign, but I'd love for them to come out with a statement that 'we promise not to do it again."' He said Google was "stealing our content to create a competitor to TripAdvisor" and other local-business information sites.

Mr. Sollitto, of Yelp, said the alleged preferential ranking that Google gives to its own services, such as Places, continue to "warrant the numerous investigation into Google's practices."

Oracle's $6.1 Billion Google Damage Estimate Excluded by Judge

Bloomberg News
by Karen Gullo
July 23, 2011

July 23, 2011 -- Oracle Corp.’s $6.1 billion damage estimate in its patent infringement lawsuit against Google Inc. over the use of Java technology in the Android operating system was thrown out by a federal judge.

U.S. District Judge William Alsup in San Francisco ruled yesterday that a new damage estimate should start as low as $100 million, a figure Google was offered, and rejected, in 2006 to license Java from Sun Microsystems Inc., before Sun was acquired by Oracle, according to a court filing. The $6.1 billion estimate assumed that all of the seven patents Oracle is suing over were used in Android and the company didn’t present sufficient facts to support that, Alsup said.

“The court is strongly of the view that the hypothetical negotiation should take that $100 million offer as the starting point,” Alsup said in his written ruling.

Oracle, the largest maker of database software, sued the Internet search-engine company last year, claiming Google didn’t obtain a license for the patents infringed by Android. Besides seeking damages, Oracle wants the court to order destruction of all products that violate its copyrights.

A trial is scheduled for Oct. 31. Deborah Hellinger, an Oracle spokeswoman, and Aaron Zamost, a Google spokesman, declined to comment on the ruling.

‘A Substantial Possibility’

Alsup said that if a jury determines that Oracle’s patents were infringed, there is “a substantial possibility” Google will be ordered to permanently stop selling any infringing products. A new damage estimate should address assumptions that an injunction may be granted and can be based on a portion of Google’s advertising revenue garnered from Android devices, he said.

The $100 million “starting point” can be adjusted upward to assume that all parts of the patents that Oracle cited in its complaint are valid and infringed, Alsup ruled.

Oracle’s new damage report is due 35 days before an Oct. 17 pretrial conference, Alsup said.

Google, based in Mountain View, California, denies infringing and asked Alsup at a July 21 hearing to throw out Redwood City, California-based Oracle’s damage estimate.

The case is Oracle America Inc. v. Google Inc., 10-03561, U.S. District Court, Northern District of California (San Francisco).

Pandora CEO Says Mobile Use Exceeding Demand for Advertising

Bloomberg News
July 22, 2011

Pandora Media Inc. Chief Executive Officer Joe Kennedy said the streaming-radio service isn't finding enough advertisers to buy all the space created by mobile-phone users, underscoring concerns about its ability to convert popularity into revenue.

"The sheer level of aggregate advertiser demand for mobile is limited," said Kennedy, 51. "Pandora is one of the top five players in mobile, so we generate a lot of inventory and are ahead on where aggregate demand is for mobile advertising."

The online-radio company, which held its initial public offering last month, is getting most of its growth from users of mobile devices, such as smartphones and tablet computers. Sixty percent of Pandora listening comes from the mobile market, up from just 12 percent two years ago, according to the company.

Pandora isn't profitable, with losses of $92 million since 2000, the Oakland, California-based company said earlier this year. Pandora's costs continue to grow because of higher licensing fees for the rights to music. Increasing mobile ad sales will be needed to help offset those expenses, said Rich Tullo, an analyst at Albert Fried & Co. in New York.

"They're in a tight spot right now," said Tullo, who recommends selling Pandora shares. "If your content costs are going to accelerate, then the management and monetization of your ad inventory is mission-critical in becoming a profitable company."

IPO Rebound

When Pandora's stock made its June 15 debut on the New York Stock Exchange, it joined a wave of Internet businesses going public this year. Pandora's shares fell 55 cents, or 2.9 percent, to $18.21 at 10 a.m. on the New York Stock Exchange, and earlier dropped as much as 4.9 percent to $17.85. Before today, the stock had climbed 17 percent since the IPO.

Pandora generated $119.3 million last year from advertising, or 87 percent of its sales, and another $18.4 million from subscriptions to an ad-free version of the service and other revenue sources.

Brands such as Anheuser-Busch InBev NV's Budweiser, Yum Brands Inc.'s Taco Bell and A&E Television Networks LLC's History Channel have run ads targeting Pandora's mobile users. In all, marketers will spend $2.55 billion on mobile ads in 2014, according to New York-based research firm EMarketer Inc. That's more than double the $1.1 billion in spending this year.

In the long run, Pandora stands to gain from advertiser interest in mobile, said James Boyle, an analyst at Gilford Securities Inc. in New York.

Gradual Shift?

"As advertising demand on the Internet keeps surging and the logical ad demand for the explosive mobile-device universe also dramatically increases, the supply-demand equation should consequently shift, long term in Pandora's favor," Boyle said in an e-mail. He has a "hold" rating on shares of Pandora.

While Pandora already competes with Sirius XM Radio Inc., a subscription-based satellite-radio service, it may face a bigger challenge from Apple Inc. and other established technology companies, which are investing in their own online-music offerings.

Startups such as San Diego-based Slacker Inc. and San Francisco-based Rdio Inc. also offer music through the Internet. CBS Corp.'s Last.fm competes in the market as well.

Much of the growth from mobile advertising will come from small businesses looking to reach prospective customers when they're nearby, said Rich Greenfield, an analyst at BTIG LLC in New York. Pandora has more experience selling ads to bigger brands and may not be equipped to reach those smaller, local businesses, he said.

"They don't have a sales force to sell local ads the way your local radio station does," said Greenfield, who recommends selling the stock. "We think it's one of the biggest problems of the story."

Google's lobbying bill tops $2M for 1st time in 2Q

Associated Press
by MICHAEL LIEDTKE
July 21, 2011

SAN FRANCISCO (AP) - Google Inc.'s quarterly lobbying expenses surpassed $2 million for the first time as the U.S. government conducts a wide-ranging investigation into the Internet search leader's business practices.

The company spent $2.06 million trying to make its points with lawmakers and regulators during the April-June period, a 54 percent increase from $1.34 million a year earlier, according to documents filed late Wednesday.

This year's second-quarter lobbying bill is by far the largest that Google has run up since opening its Washington, D.C., office in 2005 to push its agenda. The previous high came during the first three months of the year when Google's poured $1.48 million into its lobbying efforts.

In another first, Google is now spending more on lobbying than Microsoft Corp., a fierce rival and critic that has urged government regulators to rein in Google.

Microsoft, traditionally one of the technology's industry's big spenders in Washington, put $1.85 million into lobbying during the second quarter.

Google's increased focus on lobbying comes at a time it is facing the same kind of regulatory heat that Microsoft dealt with during the late 1990s.

The U.S. Justice Department ultimately filed a lawsuit alleging that Microsoft had used its dominant Windows operating system to kill competition in the then-nascent Web browser market. That sparked a legal battle that distracted Microsoft for years and forced the company to change the way it bundled its Internet Explorer browser with Windows.

The U.S. Federal Trade Commission last month launched its own inquiry into whether Google is abusing its dominance of Internet search to funnel online traffic to its own services and drive up the prices of the ads that generates most of its revenue. European regulators opened a similar investigation into Google late last year.

Google Executive Chairman Eric Schmidt is expected to defend the company's business practices in September when he is scheduled to appear before a U.S. Senate committee that focuses on antitrust law.

The state of Internet competition was among the topics that Google lobbyists addressed during the second quarter, according to a statement filed with the U.S. Senate's secretary's office. Google discussed the matter with members of Congress, the FTC and the Justice Department, the filing said.

To help make its case, Google hired Stewart Jeffries, a former antitrust counsel for the House Judiciary Committee, this year. Jeffries was among Google's registered lobbyists in the second quarter.

Other issues covered by Google's lobbyists included: regulation of online advertising and privacy; patent reform; online security; renewable energy, international free speech and censorship; and international tax reform.

The company directed its powers of political persuasion at the Commerce Department, the executive office of the President, the Federal Communications Commission, the Department of Homeland Security and the U.S Trade Representative.

Besides Jeffries, Google's team of lobbyists includes: Pablo Chavez, former chief counsel to Sen. John McCain, R-Ariz.; Harry Wingo, former counsel to the Senate Commerce Committee; Johanna Shelton, former counsel to the House Energy and Commerce Committee; Frannie Wellings, a former legislative assistant to former Sen. Byron Dorgan, D-N.D.; Katherine Oyama, former associate counsel to the office of Vice President Joe Biden; and Seth Webb, who has held a variety of positions for lawmakers and House committees.

Microsoft 4Q profit climbs, Windows revenue dips

Associated Press
by RACHEL METZ
July 21, 2011

SAN FRANCISCO (AP) - Microsoft Corp. reported record fourth-quarter revenue Thursday, helped by strong sales of its Office software suite. Investors still seem concerned about the world's largest software maker's growth prospects, however, as consumers buy fewer computers that run its Windows software.

While all of the company's other business units posted growth in the April-June period, revenue from the division that includes Microsoft's Windows operating system fell 1 percent from the same time last year - its third-straight quarter of decline.

Besides indicating that consumers are buying fewer computers that use Windows, it may signify that more consumers are moving to tablet computers instead of upgrading their existing laptop and desktop computers. Microsoft's stock slipped in extended trading.

Total revenue for the fiscal fourth quarter rose 8 percent from last year to $17.4 billion, higher than the $17.2 billion that analysts polled by FactSet expected.

Growing Office sales helped revenue from the company's largest division climb nearly 8 percent to $5.78 billion. Microsoft said its results were also aided by higher software and server sales to businesses and the popularity of its Xbox 360 video game console and Kinect motion-sensing game control device.

However, sales in the company's Windows and Windows Live division were soft, dipping to $4.74 billion from $4.78 billion. Microsoft said it would have grown were it not for the launch of Windows 7 a year ago, which made comparisons more difficult this year.

Investors have been focused on this segment of the business amid concern that the increasing popularity of tablets like Apple Inc.'s iPad are cutting into sales of computers that use Microsoft's operating software.

And since this unit already declined in the previous two quarters, pressure had intensified on Microsoft to show growth during the three-month period that ended in June- especially since worldwide PC shipments rose in the range of 2.3 percent to 2.6 percent during the quarter, according to reports from research firms IDC and Gartner.

With Apple's report earlier this week that iPad sales nearly doubled year over year to 9.25 million, Microsoft may have an even harder time showing that it can compete as the computing world continues to move toward tablets.

The iPad's success prodded Microsoft to develop an operating system that can run on tablets, dubbed Windows 8, but that isn't expected to hit the market until next year.

Revenue from Microsoft's online services unit, which includes the company's Bing search engine, climbed 17 percent to $662 million. The division's operating loss widened, however, since the company has continued to invest in a mostly fruitless effort to undercut Google Inc.'s dominance of online search and advertising.

Redmond, Washington-based Microsoft earned $5.87 billion, or 69 cents per share during the quarter, compared with $4.52 billion, or 51 cents per share, a year ago.

Analysts polled by FactSet expected a profit of 59 cents per share.

For the full fiscal year, Microsoft earned $23.2 billion, or $2.69 per share, on $69.94 billion in revenue. This compares with net income of $18.8 billion, or $2.10 per share, on $62.5 billion in revenue a year earlier.

Microsoft shares fell 11 cents to $26.98 in extended trading. The stock finished regular trading up 4 cents at $27.09.

Google+ Reaches Affluent, and the 18-34 Age Group

mediabuyerplanner.com
July 21, 2011

In the days following the June 28 launch of Google+ as invites became more readily available, visits to the site steadily increased, particularly between July 5th and July 12th. To date, Tuesday, July 12th and Thursday, July 14th were the peak days for total visits, according to analysis from Experian Hitwise.

The highest share of visits to Google+ since launch is from those between the ages of 25-34 and those between 18 and 34 were more likely than the overall online population to visit. The audience to Google+ tends to be more affluent, over-indexing for those earning a household income of $60k and over, particularly $150k and up.

For the week ending July 19, 2011, the average visit time for Google+ was five minutes and fifty seconds up from four minutes and fifty two seconds the week prior. While the average visit time has increased since launch, in comparison, users spent an average of 21 minutes and fifty seven seconds on Facebook last week.

The combination of Google and Gmail accounted for over 50% of all upstream traffic to Google+ last week, with additional referrals from other Google properties like YouTube and Google Profiles. Facebook ranked 3rd among websites visited immediately before Google+, not surprising since many social network users tend to maintain multiple accounts, especially to experiment with new social networks.

Yahoo 2Q revenue drop overshadows earnings gain

Associated Press
by MICHAEL LIEDTKE
July 19, 2011

SAN FRANCISCO (AP) - Yahoo Inc. plodded through another disappointing performance in the second quarter, a familiar script that's wearing thin with exasperated investors.

The results released Tuesday are likely to intensify the pressure that had already been mounting on Yahoo CEO Carol Bartz as she enters the final 17 months of her four-year contract.

In a sign of discontent, Yahoo shares sagged after the numbers came out, deepening a steep drop in Yahoo's market value that has been driven during the past two months by uncertainty over a key investment in Chinese Internet company Alibaba Group.

The second quarter yielded a "mix of good, encouraging and, at the same time, unsatisfactory" developments, Bartz told analysts in a Tuesday conference call.

Bartz said the biggest problem stemmed from a shakeout in Yahoo's advertising sales force that contributed to a revenue downturn in the U.S. during June.

"We didn't have enough sales people in front of the big clients," she said.

The trouble is spilling over into the current quarter, prompting Yahoo to offer a revenue forecast for the July-September period that fell below analyst estimates.

Yahoo shares shed 31 cents, or more than 2 percent, to $14.28 in Tuesday's extended trading. The stock has plunged by more than 20 percent since Yahoo disclosed in May that Alibaba had spun off an online payment service called Alipay. That move has cast doubt about the value of Yahoo's 43 percent stake in Alibaba.

In Tuesday's conference call, Bartz reiterated her confidence that Alibaba will fairly compensate Yahoo for the Alipay spinoff. She didn't provide a timetable for reaching a resolution.

Bartz, 62, was hired in January 2009 to engineer a turnaround after Yahoo had fallen further behind Internet search leader Google Inc. under its two previous CEOs, its co-founder Jerry Yang and former movie studio boss Terry Semel.

The change in command hasn't paid off yet, although Yahoo is making more money under Bartz because of layoffs, service closures and other cost-cutting moves since her arrival.

Google, though, has gotten even stronger in the past two years while Facebook, the owner of the Web's most popular hangout, has emerged as a formidable threat that's attracting more of the major marketing campaigns that once went to Yahoo.

Even a much-ballyhooed Internet search partnership with Microsoft Corp. has gotten off to a rough start. The alliance so far hasn't produced as much revenue as Bartz hoped, although she said the shortfall wasn't as bad in the spring as it was during the first three months of the year. Enough progress has been made to encourage Yahoo to proceed with its plans to adopt Microsoft's technology for selling search advertising in other countries outside North America later this year.

Yahoo earned $237 million, or 18 cents per share, during the three months ending in June. That's an 11 percent increase from $213 million, or 15 cents per share, at the same time last year.

The earnings matched the projections among analysts surveyed by FactSet.

But Yahoo's revenue sank at a time when advertisers are pouring more money into the Internet.

Revenue totaled $1.23 billion, a 23 percent decline from $1.6 billion at the same time last year.

That comparison is misleading because Yahoo had to change the way it booked revenue to account for the Microsoft partnership. Among other things, the deal requires Yahoo to give Microsoft $12 of every $100 in ad revenue flowing from searches on Yahoo's website.

Yahoo's net revenue - the amount the company keeps after paying advertising commissions- provides a more telling indication of how the company is faring.

Net revenue totaled $1.08 billion, down 5 percent from last year. The drop looks even worse compared with what's going on at Google, where revenue surged by 36 percent in the second quarter.

As a privately held company, Facebook doesn't release its financial results but research firms tracking the Internet ad market say it's gaining a bigger piece of marketing budgets. By the end of this year, eMarketer expects Facebook to overtake Yahoo in the U.S. market for online display advertising - a term used to describe commercial messages that include video, pictures and other graphics.

If not for the effects of the Microsoft search deal and the closure or sale of some services since last year, Yahoo said its net revenue would have been 1 percent higher than last year.

No matter how the figures were sliced, Yahoo's net revenue for the second quarter fell about $20 million below analyst forecasts.

The mid-range of Yahoo's third-quarter revenue outlook is $50 million below what analysts hoped.

Facebook bans Google+ ad

cnet News
by Chris Matyszcyk
July 16, 2011

Ingenuity is surely something to be admired. Commercial ingenuity is something to be revered.

Sometimes, though, it seems that certain tech companies only revere their own ingenuity. That seems to be the case with Facebook, which, as reported by TechCrunch's Erick Schonfeld, has removed a piece of fine commercial ingenuity from its site.

App developer Michael Lee Johnson, conscious of the need to be big on Google+ or be nobody, wondered what the best way to levitate his Google+ circles might be. He hit upon a fine idea: he placed an ad on Facebook. It was a simple thing that was headlined: "Add Michael to Google+."

The copy read: "If you're lucky enough to have a Google+ account, add Michael Lee Johnson, Internet Geek, App Developer, Technological Virtuoso."

If those words weren't enough to persuade Facebook users that Johnson was a must for their Google+, he added a fine picture of himself wearing a jaunty cap.

You're not guessing what happened with the ad, are you? You know what happened, don't you? Facebook didn't, according to Johnson, merely erase this heinous horse of Troy from its pages. It reportedly banned all his other campaigns too.

The message he received read as follows: "Your account has been disabled. All of your adverts have been stopped and should not be run again on the site under any circumstances. Generally, we disable an account if too many of its adverts violate our Terms of Use or Advertising guidelines. Unfortunately we cannot provide you with the specific violations that have been deemed abusive. Please review our Terms of Use and Advertising guidelines if you have any further questions."

Because my life's purpose is to be helpful, I scanned Facebook's Terms of Use and Advertising just to see what specific clause might have been besmirched by Johnson's chutzpah.

Perhaps it was Clause 11 in the "Special Provisions Applicable to Advertisers" section: "You will not issue any press release or make public statements about your relationship with Facebook without written permission." Johnson had shamefully declared on Google+ that he was placing the ad.

Perhaps it was Clause 4d of Facebook's Advertising Guidelines: "Ads cannot insult, harass, or threaten a user." He was, some might say, harrassing and insulting Facebook loyalists by his mere suggestion that there might be another place to socially network.

Or perhaps Facebook, its nose feeling tweaked, merely decided to reach for 6a of the same Advertising Guidelines: "We may refuse ads at any time for any reason, including our determination that they promote competing products or services or negatively affect our business or relationship with our users."

Still, ejecting all of Johnson's campaigns seems a touch cruel. Perhaps Johnson will consider an action against Facebook for emotional distress and, well, damage to his reputation.

This he will have to place, so Facebook's Statement of Rights and Responsibilities tells me, in a court in Santa Clara County. For now, Johnson's only public statements have been: "LOL." Oh, and "Facebook. You Suck."

1,460 people currently have Johnson in their Google+ circles. I cannot find Google+'s No. 1 personality, Facebook CEO Mark Zuckerberg, among them.