Facebook and Google May Be Going Too Far

First appeared in USA Today

Google and Facebook might have finally gotten the average consumer riled up about privacy.

For the past two years, each company has experimented with different ways to divine more and more about how people live their lives on the Internet, without sparking a revolt.

But the plans the rivals announced on Tuesday, which critics say could dramatically rev up their respective abilities to gather intelligence on individual Internet users, seem to have struck a chord. An informal and unscientific survey of Web users by USA TODAY found a majority speaking out against the new business practices announced by Google and Facebook.

"It's dangerous for two companies to have so much personal data, regardless of whether the specific threats of that data consolidation are immediately clear," says Sarah Downey, a privacy analyst at software maker Abine.

Compelled to tap what many experts predict will be the next big Internet mother lode — online advertising — Google and Facebook laid down very big bets, during a week when European regulators are hashing out strict new rules that could prevent much of what the tech giants seek to do.

Google signaled its intent to begin correlating data about its users' activities across all of its most popular services and across multiple devices. The goal: to deliver those richer behavior profiles to advertisers.

Likewise, Facebook announced it will soon make Timeline the new, more glitzy user interface for its service, mandatory.

Timeline is designed to chronologically assemble, automatically display and make globally accessible the preferences, acquaintances and activities for most of Facebook's 800 million members.

Google and Facebook have repeatedly insisted that the changes are intended strictly to improve users' experiences.

"Facebook works the way it always has," says spokeswoman Meredith Chin. "There is no new information on Facebook as a result of Timeline, and no privacy settings have been changed with the introduction of it. It's simply an updated version of the profile."

But the changes have stirred anger from many consumers. Some, such as Joyce Norman, a writing consultant from Birmingham, Ala., are considering ways to limit their exposure to Google's and Facebook's new business practices. "Mine is not a lone voice crying in the wilderness," says Norman.

Benjammin Gaultney of Montague, Mich., sees it differently, looking forward to the possibility of more appropriate ads coming to his screen. "You have to deal with ads all over the Internet either way," he wrote on USA TODAY's Facebook page. "Advertisers could at least try to sell me something I'm actually interested in rather than life insurance."

Meanwhile, a high-stakes lobbying effort is unfolding in Washington aimed at shaping policies favorable to U.S. tech companies and blunting any potential move to follow Europe's more conservative proposals to limiting online tracking by companies.

The tech giants sharply increased their lobbying spending last year. Google spent $9.7 million in lobbying in 2011, up from $5.2 million in 2010, says the Center for Responsive Politics. Facebook spent $1.4 million in 2011 vs. $351,000 in 2010.

The driver: advertising revenue. The global online advertising market is expected to swell to $132 billion by 2015, up from $80 billion this year, according to eMarketer. Google and Facebook are putting their abilities to index individuals' online activity and behaviors into high gear to tap into this market, analysts say.

"If they can make the ads more relevant, the logic goes, they can increase the number of advertisers and the price they can charge per click (on each ad)," says Alex Daley, chief investment strategist at Casey Research. "Because the click will be from more qualified leads — customers who are more interested in the product — they can grow the revenue base."

But security analysts, privacy advocates and technologists say consumers probably should be very concerned. While making richer behavioral data more readily available to advertisers, Google's new data-correlating practices and Facebook's new Timeline and Open Graph, a more powerful way to express preferences on third-party websites, also tend to aid and abet more unsavory uses.

Beware of cybercrooks

Richer personal details are very beneficial to identity thieves and cyberspies, as well as to parties motivated to use such data unfairly against consumers, such as insurance companies, prospective employers, political campaigners and, lately, hacktivists, security analysts say.

"What these unilateral decisions by Google and Facebook demonstrate is a complete disregard for their users' interests and concerns," says John Simpson, spokesman for Consumer Watchdog. "It's an uncommonly arrogant approach not usually seen in business, where these companies believe they can do whatever they want with our data, whenever and however they want to do it."

Google has a long history of running into privacy problems.

Its Gmail raised hackles early on when the search giant decided to mingle advertising alongside users' e-mail. The move initially concerned people because the ads' relevancy was linked to e-mails inside users' accounts. For example, if a person was writing about buying a car, ads for cars could appear alongside that individual's e-mail. To many, that felt like a privacy intrusion.

The search giant maintains that such contextual ads, where advertisers can bid on keywords that relate to a users' content, don't reveal personal identities. Gmail users can turn some of the ads off, but adjusting the feature requires some work.

Much of this type of product development is the result of Google taking a very engineer-focused approach to mining data rather than serving consumer interests, say industry experts. Google engineers want to play with technology first, but they think about how the product plays with consumers and privacy second, says IDC analyst Karsten Weide.

When Google tried to build its Buzz social network in 2010 from Gmail contacts, it ran into privacy problems. It began publicizing users' contacts without asking. The Federal Trade Commission last year charged Google with "deceptive privacy practices" in the handling of Buzz.

Google "did not respect" consumers' expectations of privacy, says Helen Nissenbaum, a professor of media, culture and communication at New York University. "They (Google) seem to be doing the same thing here" with the privacy update.

Under terms of the FTC consent order, Google agreed to a 20-year independent review of its privacy practices.

But the changes announced Tuesday may again set it on a collision course with the FTC.

"We do believe the proposed changes — they have not yet been adopted — violate the FTC consent order," says Marc Rotenberg, executive director of the Washington, D.C.-based Electronic Privacy Information Center. Those changes could subject Google to monetary damages under Google's agreement with the FTC, says Rotenberg.

But Rachel Whetstone, Google's senior vice president for public policy and communications, says the company would not have proposed privacy updates that run afoul of the FTC settlement.

"We try to be transparent about the data we collect and give meaningful controls about how data is used," says Whetstone.

There are also concerns about Google's recent move to roll activities on its Google+ social network into users' search results. The opt-in integration of those two Google products mingles profiles, photos and posts of people a user follows on Google+ into the user's search results if they choose.

Whetstone says it doesn't raise privacy issues because the information is viewed only by the user.

Facebook's issues

Facebook has had its own issues, most recently in November when the FTC announced a broad settlement that requires the company to respect the privacy wishes of its users and subjects it to audits for the next 20 years.

The order, which claimed Facebook engaged in "unfair and deceptive" practices in December 2009, stems largely from the way Facebook handled information its users deemed to be private information.

On Tuesday it announced that Timeline will become the default user interface for all members over the next few weeks.

Combined with the addition last week of some 60 apps specifically written for Timeline, consumers can provide a detailed account, often in real time, of the music they listen to, what they eat, where they shop — even where they jog.

The deeper personal data of Timeline — which Facebook users willfully share — are potentially online advertising gold for marketers and advertisers. This is especially crucial, analysts say, as Facebook steamrolls toward an initial public stock offering this year.

The company is under pressure to increase sales and profits to meet the lofty expectations of shareholders, and online advertising is the most logical place to do that. Facebook gleaned 89% of its estimated $4.3 billion in revenue last year, or about $3.8 billion, from online ads, according to eMarketer.

"If Facebook has richer behavioral targeting data than Google, then it has an edge up in relevance," says Casey Research's Daley. "And an edge up in relevance is an edge up in revenue."

Some Wall Streeters believe the changes made by Google and Facebook will have only an "incremental" effect on the battle between the two giants in going after online advertising dollars.

Both companies continue to be dominant in their markets, which "tend to be winner-takes-all markets," says Ryan Jacob of the Jacob Internet fund. Google continues to hold strength in online search and is a strong player in online video with YouTube and in mobile with its Android operating system, he says.

But "Google has a long way to go before it can be considered a credible competitor to Facebook," he says.

Google's moves, if anything, are "somewhat defensive," he says. "For them (Google) to maintain their position in search, it's important for them to be players in other areas," he says.

Channing Smith of money management firm Capital Advisors, which owns shares of Google, is more optimistic. "If it continues to put up numbers for Google+, it can be a competitor to Facebook," he says.

Rep. Ed Markey, D-Mass., who has already been pressing Facebook to explain its tracking systems, said on Wednesday that he would ask the FTC to take a close look at Google's new privacy policies.

"Google's privacy policy changes mean consumers can't say no to sharing their personal information across Google's websites," Markey said. "Consumers, not Google, should be able to make these decisions."

Cookies Aren’t Safe

First appeared in SiliconValley.com

Your computer's appetite for cookies would put the Cookie Monster to shame.

Without letting you know, your Internet browser gulps down hundreds of the digital tracking beacons fed to it by the websites you visit, sometimes storing them for months or years, enabling an array of companies you've never heard of to monitor what you do online.

Cookies are not inherently dangerous -- they are a kind of virtual ID card that helps browsers perform a number of online tasks that most users have come to expect: allowing you to stay logged in to your Google (GOOG) or Yahoo (YHOO) email service, or to go from page to page on Amazon.com while filling up your shopping basket with books.

But the useful cookies are far outnumbered by those that serve no other purpose than to keep track of what you do online. They often come from sites you have never visited. This can happen when you open pages that carry embedded advertisements, which are capable of adding cookies to your browser without your permission or knowledge -- and often do.

These tracking cookies allow ad firms to follow you from site to site. Over time, the trail of sites you visit may allow them to build a demographic profile about you that includes your hobbies, place of residence, income level and even health status.

To remove all of your cookies in Internet Explorer 9, open the "Tools" menu at the top of the window and select "Delete Browsing History." Make sure the "Cookies" check-box is selected, and press "Delete." Internet privacy buffs may want to delete the other categories of data as well -- stored passwords, Web histories and temporary Internet files.

You can go a step further and prevent your browser from taking cookies from obscure advertising sites in the future. To do this in Internet Explorer 9, click again on the "Tools" menu and select "Internet Options." Click on the "Privacy" tab at the top of the dialogue box, then press the "Advanced" button (between "Import" and "Default"). Check the "Override automatic cookie handling" box, then check "Block" under "Third Party cookies." Leaving first-party cookies enabled will allow for easier use of Web email and commerce sites.

New York Times Email Disaster to Millions

Story first appeared in the Associated Press.
The New York Times accidentally sends an email to millions offering a 50 percent discount.

In today's digital age, it's easy to send out an email by mistake — even for a company that's in the business of communication.

The New York Times thought it was sending an email to a few hundred people who had recently canceled subscriptions, offering them a 50 percent discount for 16 weeks to lure them back.

Instead, Wednesday's offer went to 8.6 million email addresses of people who had given them to the Times.

That was the first mistake. The second came when the Times tweeted this: "If you received an email today about canceling your NYT subscription, ignore it. It's not from us."

But the Times did send the original email.

This email should have been sent to a very small number of subscribers, but instead was sent to a vast distribution list made up of people who had previously provided their email address to The New York Times. The NYT said they regret the error.

The damage had already been done, however.

Many people called or wrote in. The newspaper initially honored the discount, even to people who were already paying full price and had no plans to cancel. Murphy said the newspaper stopped giving out discounts to people who received the email in error by early afternoon. She did not say how much the gaffe cost the company or specify how many people contacted the newspaper.

A parody Twitter account called (at)NYTSpam amassed 152 followers by Wednesday afternoon by making fun of the slip-up. The account's description of itself says: "Parody account. Not affiliated with (at)NYTimes or actual spammers -- just sick of bad digital strategy."

The newspaper has made big strides in raising revenue from digital subscriptions. It says it has gained 324,000 digital subscribers since restricting full online access to paying subscribers in March.

AdKeeper Wants You to Store Ads, Not Block Them

PC Mag

Some users use ad-blocking tools to eliminate ads from their Web browser. But a new startup, AdKeeper hopes that you'll bookmark them.

AdKeeper, a new online advertising service run by the former chief executive of About.com, Scott Kurnit, hopes that by storing the ads into a small online repository, users will go back to the ads, interact with them, and ultimately, buy.

The service is in beta and will formally launch in 2011. But AdKeeper said its group of "charter advertisers" included Allstate, Ally Bank, AT&T, Best Buy, CBS, Ford, Gap, General Mills, InterContinental Hotels Group, JetBlue, Kmart, Kraft Foods, Macy's, McDonald's, Pepsi, Sara Lee, Sears, Showtime, The Advertising Council, Unilever and Warner Bros.

The service supplies interactive ads, as others do. The difference is that ads designed by the AdKeeper service contain a small "K" on them. When the a user clicks on the "K" (for "keep") the ad goes into a Keeper application for the user to interact with later. The Keeper is actually the AdKeeper Web page, where users don't even have to log in; the service "tracks you with very anonymous cookies," a company spokeswoman said.

"Internet advertising was modeled after TV advertising – where the consumer views content, then interruptive ads, then more content. But the web is a totally dynamic environment that places consumers in the driver's seat," said Scott Kurnit, the company's founder and the former founder of About.com. "It's time for the advertising experience to catch up with the rest of the web experience. AdKeeper affords consumers the opportunity to engage with the advertising that interests them most, at the time and place of their choosing. It's 'on my time advertising.' It's invitational, not interruptive. It's for brands that respect their consumers. And it's for consumers who want to take charge."

AdKeeper representatives were not immediately available for comment.

Online advertising generates $300 billion of economic activity in the U.S., according to the Interactive Advertising Bureau, which tracks online advertising. But site operators are making less on them. Although cost-per-million estimates are difficult to acquire, online ad network Adify released data last year that found that ad impressions on automotive Web sites fell from $17.26 to $12.47.

While Web site operators make money from ads, installing FlashBlock or plug-ins like AdBlock have become more of a common practice for users; note the comments in our list of recommended add-ons for Firefox; Mozilla itself also recommends the plug-ins.

An IAB representative said that the group does not have any estimates for the amount of revenue lost via ad-blocking software.

To compensate, advertisers have become increasingly focused on serving targeted ads to specific users, attempting to determine their online habits through a variety of methods, including identifying their location and browsing habits. AdKeeper represents another avenue to boost CPMs.

The IAB will release its semi-annual report on the online advertising industry on Tuesday, in conjunction with PWC. Internet advertising revenues in the U.S. hit $5.9 billion for the first quarter of 2010, a 7.5 percent increase over the same period in 2009, the IAB reported in May.

In March, Conde Nast-owned Ars Technica served users with a blank page each time the site detected ad-blocking software was in effect, canceling the experiment after 12 hours.

"Technologically, it was a success in that it worked. Ad blockers, and only ad blockers, couldn't see our content," editor-in-chief Ken Fisher wrote in a response. "We tested just one way of doing this, but have devised a way to keep it rotating were we to want to permanently implement it. But we don't. Socially, the experiment was a mixed bag. A bunch of people whitelisted Ars, and even a few subscribed. And while others showed up to support our actions, there was a healthy mob of people criticizing us for daring to take any kind of action against those who would deny us revenue even though they knew they were doing so. Others rightly criticized the lack of a warning or notification as to what was going on."

AdKeeper's board includes Jeremy Allaire, founder and chief executive of Brightcove; John Battelle, founder and chief executive of Federated Media; Peggy Conlon, president and chief executive of the The Advertising Council; Janet Robinson, president and chief executive of The New York Times; and George Schweitzer, president of the CBS Marketing Group.

Texas AG Probing Google's Searches

The Wall Street Journal

 

The Texas attorney general's office is conducting an antitrust review of Google Inc.'s core search-engine business, a sign of widening government scrutiny of the Web giant.

Texas's top prosecutor has inquired about allegations by several small companies that Google unfairly demoted their rankings in search results or the placement of their advertisements on the search engine, Google said Friday.

The Internet giant disputed the allegations, which have been reported previously, tracing them to three companies with ties to rival Microsoft Corp.

A spokesman for Texas Attorney General Greg Abbott said an investigation of Google was ongoing but declined further comment. A Microsoft spokesman declined comment.

Don Harrison, a deputy general counsel at Google, said in a blog post that the company is sometimes asked about the fairness of the search engine and why some websites are ranked higher than others.

"Given that not every website can be at the top of the results, or even appear on the first page of our results, it's unsurprising that some less relevant, lower quality websites will be unhappy with their ranking," Mr. Harrison wrote.

Google said Texas officials asked for information about the cases of Foundem.co.uk, TradeComet.com LLC and myTriggers.com Inc., which have each claimed separately that Google unfairly demoted their search rankings to eliminate them as competitors.

TradeComet, a business search engine, has sued Google in federal court in New York, but the case was dismissed. It is appealing. MyTriggers, a price comparison site, sued Google in Franklin County, Ohio, common pleas court. Google has denied wrongdoing.

The European Commission is also conducting a preliminary inquiry into the complaint by Foundem, a British price comparison site. Google has denied violating European law.

In its blog post, Google said Foundem is backed by ICOMP, an organization funded largely by Microsoft and added that TradeComet and myTriggers are represented by the same antitrust attorneys Microsoft uses.

Microsoft, which competes with Google in multiple businesses, has acknowledged helping direct the complaints of small companies about Google to antitrust authorities. It has denied being behind their antitrust suits. The owners of Foundem, SourceTool and myTriggers have all denied they are acting on behalf of Microsoft.

TradeComet's chief executive, Dan Savage, said: "Obviously, Google is just trying to distract from its own problems by pointing to others and their lawyers."

A spokesman for myTriggers said: "Though there are probably a lot of other victims too, MyTriggers' concern is just the harm to MyTriggers done by Google's anticompetitive conduct and bullying tactics. We have a strong antitrust claim and look forward to our day in court."

Foundem couldn't be reached for comment.

Under Mr. Abbott, who is facing re-election this fall, Texas has been active in antitrust cases. His office has been examining the electronic-book market, which saw price increases for some titles being sold by Apple Inc. for its iPad device, people familiar with the matter have said. In 2008 Mr. Abbott reached a $28 million civil settlement with Abbott Laboratories over alleged false reporting of drug prices.

In targeting Google's core business, Texas has moved ahead of the federal agencies charged with enforcing U.S. antitrust laws, the Justice Department and Federal Trade Commission. Both agencies have conducted antitrust reviews of Google's transactions.

The Justice Department, for example, moved to block Google's advertising deal with rival Yahoo Inc., forcing it to abandon the deal. This year, the FTC approved Google's $750 million purchase of mobile advertising company AdMob.

The Justice Department currently is reviewing Google's $700 million acquisition of ITA Software Inc., which powers the airfare search for numerous websites including Kayak.com and Microsoft's Bing search engine.

But neither the agency or the FTC is known to have conducted a monopolization inquiry that targets Google's core business of search advertising. Google accounts for more than 65% of all U.S. search queries, and an even larger portion of total search advertising revenue. Google handles about 90% of search queries in other countries such as France.

Google places text ads near search results, and it also ranks them based on the amount an advertiser bids, the popularity of the ad—how often users click on them—as well as the relevance and quality of the ad. Those ads now account for the majority of Google's $24 billion in annual revenue.

Separately, Google agreed Friday to pay $8.5 million to cover attorneys' fees and set up an education fund to settle a private class-action lawsuit that alleged its Buzz social-networking service violated users' privacy. The service, launched in February, at first created a network of contacts based from Google's email service, Gmail. Each user's network was visible to other users.

After an outcry, Google changed the settings so that contacts were kept private by default.

The proposed settlement of the case, filed on Friday in federal court in San Francisco, also requires Google to make further announcements about the privacy aspects of Buzz and fund Internet privacy efforts by public-interest groups.

YouTube Advertisements Turn Videos Into Revenue

CNBC

 

After shifting its focus to making money about 18 months ago, YouTube is expected to turn a profit this year, on revenue of about $450 million, with help from its onetime critics.  The New York Times reports.

Last month, a YouTube user, TomR35, uploaded a clip from the AMC series “Mad Men” in which Don Draper makes a heartfelt speech about the importance of nostalgia in advertising.

Viewers wouldn’t notice, but that clip also makes an important point about modern advertising — YouTube is an increasingly fruitful place for advertisers.

In the past, Lions Gate, which owns the rights to the “Mad Men” clip, might have requested that TomR35’s version be taken down. But it has decided to leave clips like this up, and in return, YouTube runs ads with the video and splits the revenue with Lions Gate.

Remarkably, more than one-third of the two billion views of YouTube videos with ads each week are like TomR35’s “Mad Men” clip — uploaded without the copyright owner’s permission but left up by the owner’s choice. They are automatically recognized by YouTube, using a system called Content ID that scans videos and compares them to material provided by copyright owners.

Those two billion views, a 50 percent increase over last year, according to the company, are just 14 percent of the videos viewed each week on the Google-owned site. But that’s enough to turn YouTube profitable this year, analysts say.

“YouTube is a big component of our display revenue, and display is our next big business,” Eric E. Schmidt, Google’s chief executive, said in an interview.

In the last year, the video site has become a significant contributor to the family business at a time when Google, which makes more than 90 percent of its revenue from text search ads, is seeking a second act. Though Google does not report YouTube’s earnings, it has hinted that it is hovering near profitability. Analysts say YouTube will bring in around $450 million in revenue this year and earn a profit. Revenue at YouTube has more than doubled each year for the last three years, according to the company.

YouTube’s new profitable relationship with content creators was not always so easy. For a long time, YouTube executives spent their time across conference tables with lawyers worried about copyright violations, said Chris Maxcy, YouTube’s director of content partnerships.

“It was 90 percent lawyers in a meeting and the marketing people faded into the background,” he said. “Now the partners we are working with get checks that get bigger every month. And now when you walk into a meeting there’s almost no lawyers, or there’s a couple of lawyers but they are deal lawyers there to help you get your contract done.”

The shift is also an important development for Google, which bought YouTube for $1.65 billion in 2006. The video site at first played the role of Google’s profligate son, throwing money at building out bandwidth and storage to handle all the videos but making little money of its own.

Mr. Schmidt said that YouTube’s role began to change about a year and a half ago, when he asked the unit to start focusing on revenue.

The strategy had been to amass “an audience first, then figure out the tools that will create the revenue, then you go to the content partners and say, ‘Hey, look guys,’ ” Mr. Schmidt said. “And I think we’re at that point now.”

Salar Kamangar, YouTube’s co-head, who also co-founded Google’s AdWords search advertising program, started spending his time figuring out how to make money on the video business.

YouTube gives Google the chance to get a piece of the television ad market, Mr. Kamangar said, by bringing videos straight to the television over an Internet connection, or Internet protocol, as the industry calls it. “Ads can be a lot more effective when they’re delivered over I.P. instead of cable or broadcast, because they’re delivered personalized to you.”

YouTube now offers several types of ads, including display ads on its home page and on the video pages, ads that promote videos and ads that run in the video stream or pop up on the bottom of a video.

When someone uploaded a recording of the Eminem song “Not Afraid,” for instance, instead of taking down the recording, YouTube ran pop-up ads that let people buy the song or the ring tone and shared the revenue with the copyright owner.

“Google smartly realized that consumers consume different types of media throughout the day,” said Dave Marsey, senior vice president of media at Digitas, the online advertising agency. “Search is a huge component of that, but there are times when you want some entertainment or you want to solve a problem and going to YouTube makes sense.”

YouTube shares advertising revenue with content partners, who may be big entertainment companies like Lions Gate or amateur videographers who have developed a following. Hundreds of these partners make more than $100,000 a year. Some, like Sal Khan, a former hedge fund manager who now makes math and science education videos, have quit their day jobs.

YouTube’s next challenge is to attract more advertisers by offering more professional, long-form content to supplement the videos of cooing babies and surprised kittens. YouTube is testing a pay-per-view film rental service and broadcasting live events like concerts, and it just signed a deal to show on-demand Major League Baseball games in Japan.

Hulu, the site started by TV networks that streams movies and shows, makes considerably more revenue per stream than YouTube because it has more professionally produced content, said Jordan Rohan, an Internet and digital media research analyst at Stifel Nicolaus. “YouTube is certainly the market leader in terms of streams. They’re certainly the market leader in terms of revenues,” Mr. Rohan said. But only a small percentage of its revenue streams would justify a high ad rate, he said.

YouTube must also follow its viewers as they increasingly watch videos away from their computers, on small mobile phone screens and big TV screens. YouTube now has 160 million mobile views a day, almost triple last year’s number. When Google introduces Google TV later this year, people will be able to watch YouTube videos on Internet-connected televisions.

UK Regulator to Expand Supervision Over Online Ads

PC World

The U.K.'s advertising regulator will increase its oversight of online marketing, scrutinizing how companies advertise on their own Web sites as well as social sites such as Facebook and Twitter.

The Advertising Standards Authority (ASA) said on Wednesday that the new code, which will take effect starting next March, is in response to nearly 3,000 complaints in the last year over advertisements that were not within its purview to act on.

The ASA already oversees paid-for online advertisements and sales promotions, investigating complaints over misleading advertisements and other issues, such as social responsibility and child protection. In some cases, advertisements have been withdrawn or removed by search engines, said Matt Wilson, ASA press officer.

For advertisements that are not withdrawn, the ASA has worked with search engines to publish a notification next to the ad that there is a problem with it, Wilson said.

The new rules will cover companies or organizations running promotions in unpaid space, including their own Web sites and social-networking sites. Companies are increasingly using platforms such as Facebook and Twitter to draw people to their brands or causes.

The ASA said that assessing whether material constitutes advertising or marketing communication will require a "careful assessment."

User-generated content, for example, is created by private individuals, the ASA said in its guidance notes. But if a website owner solicited the content and used it in marketing material, it would be subject to the code. Even if a private individual provided unsolicited content that is incorporated into marketing material, that would also be subject.

The code will apply to companies and organizations that have a U.K. presence or a U.K. registered website, Wilson said.

Advertisements targeting the U.K but placed outside the country "are subject to the jurisdiction of the relevant authority in the country from which they originate if that authority operates a suitable cross-border complaint system," the ASA said.

The initiative will be funded by a 0.1 percent levy on paid-for advertisements appearing on Internet search engines through media and search agencies. The ASA, which has a £7 million (US$11 million) annual budget, will have to add 9 or 10 staffers to enforce compliance, Wilson said.

US FDA warns Pharma firm about Facebook Promotion

Bloomberg / Business Week

The U.S. Food and Drug Administration has warned a pharmaceutical company that its use of the Facebook Share button to promote a cancer-fighting medication violates FDA requirements for disclosing information about drugs.

The FDA, in a letter sent to drug-maker Novartis Pharmaceuticals July 29, tells the company that its use of Facebook Share to promote Tasigna is incomplete and misleading.

This is likely the first time the FDA has issued a warning to a pharmaceutical firm for using Facebook to promote its products, said Jeffrey Chester , a privacy advocate and executive director of the Center for Digital Democracy.

The FDA, which posted the warning letter on its website this week, asks Novartis to stop using Facebook Share to promote the leukemia drug.

"The shared content is misleading because it makes representations about the efficacy of Tasigna but fails to communicate any risk information associated with the use of this drug," said the FDA letter, signed by Karen Rulli, acting group letter of the agency's Division of Drug Marketing, Advertising, and Communications. "In addition, the shared content inadequately communicates Tasigna's FDA-approved indication and implies superiority over other products."

FDA rules require that most medication promotional pieces contain information about risks associated with taking the drug, the letter said. In addition, promotional materials are misleading if they suggest a "drug is safer or more effective than another drug when this superiority has not been demonstrated by substantial evidence or substantial clinical experience," the letter said.

Novartis also failed to notify the FDA of the Tasigna promotion, as required by the agency, the letter said.

Novartis, in a statement, said it takes the FDA letter "very seriously."

"We have addressed its concerns by taking the direct and immediate action of taking down the widget referenced by the FDA," the company said. "Novartis will continue to have active discussions with the FDA to understand fully all of the concerns. We also will assess all of our Web assets and materials based on these concerns."

The warning letter highlights a problem with Facebook and other websites targeting advertising dollars from pharmaceutical and companies, said Chester, who asked the FDA in March to investigate the online marketing of drugs. Facebook should be responsible for creating safeguards for the marketing of medications and other health products on its site, he said.

Websites "see digital dollars in their bottom lines and are ignoring the health risks confronting consumers who are targeted using social-media marketing," Chester said. "This letter is a wake-up call -- for the pharma industry, Facebook, and social media application companies."

The FDA's letter is appropriate, Chester added. "Risk warnings must be prominently disclosed -- and not purposefully ... hidden by making a consumer click for more information," he said.

A representative of Facebook didn't have an immediate comment on the letter or Chester's perspective.

Facebook Advertisers Boost Spending 10-Fold, Sandberg Says

Bloomberg

 

Facebook Inc.’s biggest advertisers have boosted spending by at least 10-fold in the past year as the social network crossed the half- billion user mark, becoming more alluring to marketers that want to reach a broad online audience.

Some advertisers have increased spending by as much as 20-fold or more, Facebook Chief Operating Officer Sheryl Sandberg said in an interview. The site’s ad prices have held steady even as user growth fueled a surge in inventory, or pages that can carry ads, she said.

“Two years ago the big brands were experimenting with us,” said Sandberg, 40, declining to identify which customers were spending more. “They started buying with us a year ago. Now, they’re going big.” As a closely held company, Facebook doesn’t disclose revenue figures.

Facebook is courting advertisers and ramping up the pace of acquisitions to wring profit from its more than 500 million users, who don’t pay to use the site. The owner of the world’s largest social network may put off an initial public offering until 2012 to give Chief Executive Officer Mark Zuckerberg more time to add sales and lure users, people familiar with the matter said last week.

The company plans to make more purchases to help it build features to keep users glued to its pages -- and the ads that run on them -- longer. While Facebook has mainly focused on startups with smaller staffs, it may start pursuing bigger transactions, said Vaughan Smith, director of corporate development.

Bigger Deals

“As we get bigger and our platform gets more stable, I fully expect that we will be doing more significant acquisitions,” Smith, 43, said in an interview. “This is working for us, and it’s working for the people that we’re acquiring.”

Founded in 2004 by Zuckerberg in a Harvard University dormitory room, Facebook lets users share photos, video, short messages and other information with groups of friends. After surpassing News Corp.’s MySpace as the world’s biggest social network in 2008, Facebook nudged aside AOL Inc. to become the fourth-most visited site in the U.S. last year, according to ComScore Inc. Only Google Inc., Yahoo! Inc. and Microsoft Corp. are bigger.

Facebook’s sales may rise to at least $1.4 billion in 2010 from $700 million to $800 million last year, two people familiar with the matter said last week.

‘The Reach’

Facebook, based in Palo Alto, California, gets much if not most of its revenue from advertising. Its customers include Coca-Cola Co., JPMorgan Chase & Co. and Adidas AG.

“You can’t ignore the reach that’s there, but it’s also the true engagement that we have,” said Michael Donnelly, Coca-Cola’s director of global interactive marketing.

Facebook’s future growth will hinge partly on whether it can overcome privacy concerns and stave off a threat by rivals including Twitter Inc. Consumer groups and lawmakers have alleged that Facebook doesn’t do enough to protect the personal information people add to their profiles.

“Facebook’s value is being able to preserve that user base,” said Michael Gartenberg, a partner at researcher Altimeter Group in San Mateo, California. “Those 500 million users -- advertisers not only want to make sure that those people aren’t churning and that they’re actually using their accounts, but that there’s growth here as well.”

Advertisers ‘Dig In’

To make marketing messages more appealing to marketers and less intrusive to users, Facebook has incorporated social elements. Below an ad, users can see which of their friends may be fans of the advertiser, for example.

“Some clients have actually been pretty active on Facebook for a while, but we’re finding a number of clients that are starting to dig in a little bit more,” said Joe Mele, a managing director at Publicis Groupe SA’s Razorfish agency. “We’re seeing increased interest.”

With each new user, Facebook gets more pages on which to place ads, resulting in an inventory surge. Yet prices for ads based on the number of times they are viewed have held steady in the past year, Sandberg said. The prices of the social ads may rise as Facebook brings more “value” to companies, she said.

“A movie studio last year that did three movies with us -- this year, if they’re releasing 12 movies, they’ll do 10 of them with us,” Sandberg said. “A company that did one product launch with us -- this year they’re going to do half of their product launches.”

Display Leader

Also buoying ad prices, about half of Facebook users return to the site daily, the company says. That makes the users valuable to advertisers that want messages viewed multiple times.

Much of Facebook’s ad growth comes from so-called display ads, graphic messages that usually appear as boxes on Web pages, rather than the search-related ads that are Google’s mainstay. Facebook displaced Yahoo as the top U.S. site for display ads, with 16 percent share in the first quarter, up from 11 percent in the fourth quarter, according to ComScore in Reston, Virginia.

Spending on display advertising is expected to rise 13 percent to $8.56 billion in the U.S. this year, after a 4.5 percent gain in 2009, according to EMarketer Inc.

To chase that growth, Facebook is relying on dealmaking. It has made five acquisitions so far this year after one apiece in 2009 and 2007, Smith said.

Another Dealmaker

The company buys small startups -- typically with a dozen or fewer employees -- to gain entrepreneurs who can become future leaders, Smith said. Chief Technology Officer Bret Taylor came from FriendFeed, acquired last year.

Facebook will keep up the acquisition pace and may pursue larger, more complex transactions, Smith said. He plans to hire another corporate development executive, adding to the one person helping him clinch deals now.

The company doubled the number of salespeople last year from 2008. It now has more than 1,400 employees.

Among potential targets are companies that focus on virtual currencies and mobile social networking, Smith said. The company also is looking for acquisitions that may bolster its advertising effort, he said.

“We’re doing advertising, especially brand advertising, in a different way than has been done before,” he said.

Twitter Bans Third-Party Ad Networks From Using API
PC Mag

 

Twitter on Monday said that third-party ad networks will not be allowed to use the company's API in order to include paid tweets in the Twitter timeline.

"Aside from Promoted Tweets, we will not allow any third party to inject paid tweets into a timeline on any service that leverages the Twitter API," Dick Costolo, Twitter chief operating officer, wrote in a blog post. "We are updating our Terms of Service to articulate clearly what we mean by this statement, and we encourage you to read the updated API Terms of Service to be released shortly."

Promoted Tweets, which Twitter unveiled in April, displays advertiser-backed tweets atop search results. The effort is the micro-blogging's site's first foray into traditional online advertising, and started with several partners, including Best Buy, Bravo, Red Bull, Sony Pictures, Starbucks, and Virgin America.

Twitter said at the time – and again in Monday's blog post – that the ads would only display to relevant users; those searching for Starbucks mentions, for example. Twitter said it wants to keep it that way, and that it doesn't trust third-party ad networks to serve up ads in a similar manner.

"Third-party ad networks are not necessarily looking to preserve the unique user experience Twitter has created," Costolo wrote. "They may optimize for either market share or short-term revenue at the expense of the long-term health of the Twitter platform."

If Twitter becomes too cluttered with useless ads, people will leave the service, and Twitter will be done, he continued. "Third party ad networks may be optimized for near-term monetization at the expense of innovating or creating the best user experience."

There is, of course, also money. "Twitter will bear many of the support costs associated with any third-party paid Tweets, as Twitter receives support e-mails related to anything a user sees in a tweet stream. The third-party bears few of these costs by comparison," Costolo wrote.

So what's an advertiser to do? Costolo said the company's Annotations effort, which will allow people to add metadata to their tweets and was announced at this year's Chirp conference, is still a go.

"When Annotations ship, there are going to be many new business opportunities on the Twitter platform in addition to those currently available," he said. "We know that companies and entrepreneurs will create things with Annotations that we couldn't have imagined."

Costolo acknowledged that the new policy will prohibit activities in which companies have invested time and money. "We will continue to move as quickly as we can to deliver the Annotations capability to the market so that developers everywhere can create innovative new business solutions on the growing Twitter platform," he concluded.

Microsoft, Yahoo Offer Roadmap for Search Deal

eWeek

Microsoft and Yahoo aim to have major aspects of their search-and-advertising deal in place by end-year holidays 2010, according to official blog postings by both companies, including porting Yahoo’s U.S. advertisers and publishers onto Microsoft’s AdCenter platform.

Under the terms of the companies’ agreement, Bing will power backend search for Yahoo’s online properties, while Yahoo takes over worldwide sales-force duties for both companies’ search advertisers. Microsoft’s AdCenter platform will power search advertising for Yahoo, as well. For the first five years of the deal, Microsoft will pay Yahoo traffic acquisition costs (TACs) at an initial rate of 88 percent of search revenue generated on Yahoo’s sites.

“The Yahoo and Microsoft teams have been working hard to design a high quality transition experience for customers,” Carolyn Miller, a member of Microsoft’s AdCenter Community Team, wrote in a May 6 posting on the AdCenter Blog. “We’re working toward completing this transition in the U.S. and Canada before the start of the 2010 holiday season, with additional countries following on a staggered schedule beginning in 2011.”

Yahoo customers “will start to receive emails from Yahoo in the coming months with tips on how to prepare your campaigns for Microsoft AdCenter,” Miller added. “Beginning in late summer, Yahoo customers will be able to initiate the transition process, and have several weeks to complete it.”

In a separate May 6 posting on its Search Marketing Blog, Yahoo indicated that the transition to AdCenter would be delayed until early 2011 if problems threatened to drag the process into the holidays.  

The U.S. Department of Justice and the European Commission both cleared Microsoft and Yahoo to begin their 10-year search and advertising agreement on Feb. 18. “U.S. market participants express support for the transaction and believe that combining the parties’ technology would be likely to increase competition by creating a more viable competitive alternative to Google,” read a statement at the time from the Justice Department. “Most customers view Google as posing the most significant competitive constraint on both Microsoft and Yahoo, and the competitive focus of both Microsoft and Yahoo is predominantly on Google and not on each other.”

According to a recent report from analytics firm Experian Hitwise, Bing’s share of the U.S. search-engine market dipped slightly to 9.43 percent in April, compared to Google’s 71.40 percent and Yahoo’s 14.96 percent. While Google dominated with regard to overall searches, Bing experienced strong gains in a number of vertical industry categories, including health, travel, automotive and shopping.

If Yahoo’s search numbers are ported over to Bing with no attrition—a highly theoretical prospect—then Microsoft will be competing against Google with roughly a quarter of the U.S. search engine market. While that may not be enough to threaten Google’s commanding share, it will certainly alter the competitive dynamics of the search-engine landscape.

But the actualization of the Microsoft-Yahoo alliance also carries some risks.

“We believe the challenge now lies in implementing the partnership so that the transition is smooth for customers and partners,” analysts for FBR Capital Markets wrote in a Feb. 18 research note. “Microsoft and Yahoo need the implementation process to proceed smoothly in order to prevent business disruption of their customers and partners… Any glitches could result in customers and partners diverting more of their business to Google.”

Yahoo’s Sales Forecast Misses Analysts’ Estimates
Bloomberg

Search Engine Loses Market Share

 

 

Yahoo! Inc., owner of the second- most popular U.S. Internet search engine, forecast sales that missed analysts’ estimates after the company lost market share.

Second-quarter revenue will be $1.6 billion to $1.68 billion, the company said today in a statement. Hamilton Faber, an analyst with Atlantic Equities LLP in London, had projected $1.69 billion.

In search, the company has lost ground to Google Inc., making its site less attractive to advertisers. Yahoo now must also compete for marketing dollars with social-networking sites, including market leader Facebook Inc. To win back share and trim expenses, Chief Executive Officer Carol Bartz is selling businesses and leaning on Microsoft Corp. to support its search service.

“Their search business is doing really poorly,” said Jason Helfstein, an analyst with Oppenheimer & Co. in New York. “They’re outsourcing the search business, so over time they’ll be able to help offset some of that search weakness with lower costs. In the interim, it still matters.”

Yahoo fell 66 cents, or 3.6 percent, to $17.72 in late trading after the report. The shares, up 9.5 percent this year, closed at $18.38 on the Nasdaq Stock Market.

Excluding revenue passed on to partner sites, sales totaled $1.13 billion last quarter. Analysts in a Bloomberg survey had projected $1.17 billion on average.

Profit Increase

While losing search market share hurt revenue, Yahoo increased the amount it makes per query compared with the previous quarter, said Tim Morse, chief financial officer. Revenue per search declined from the year-earlier period.

“Our underlying business performance is clearly improving,” he said in an interview. Yahoo’s search-engine market share also is stabilizing, Morse said.

First-quarter net income attributable to Yahoo more than doubled to $310.2 million, or 22 cents a share, from $117.6 million, or 8 cents, a year earlier. Sunnyvale, California-based Yahoo reported a 5 cent gain from the sale of its Zimbra unit, as well as 2 cents in payments from its Microsoft partnership.

Last July, Microsoft and Yahoo struck a 10-year agreement to team up against Google in the search market. Yahoo plans to use Microsoft’s Bing on its sites and sell ads next to the results.

Microsoft Payments

Yahoo should get about $75 million to $85 million in operational-cost reimbursement from the deal this quarter, Morse said during a call with analysts. The company received $35 million during the first quarter for operations costs. It also got $43 million in transition payments, Morse said.

The companies aim to complete the integration in the U.S. by the year-end holiday period, Bartz said on the call. Yahoo is seeing strong interest from advertisers and expects its search market share to climb this quarter.

“The economy continues to improve,” Bartz said. “We delivered what I call a solid quarter.”

Yahoo had 16.9 percent of the U.S. search market in March, down from 17.3 percent in December, according to Reston, Virginia-based ComScore Inc. That compares with 65.1 percent for Google. Microsoft’s Bing ranks third, with 11.7 percent.

Ad Recovery

Yahoo investors are counting on a rebounding ad market to lift the company’s fortunes. The U.S. online market will grow 13 percent this year, outpacing the 3 percent expected for total ad sales, according to Magna Global, a unit of Interpublic Group of Cos., the second-largest U.S. owner of ad agencies.

Bartz has pared back operations, eliminating some efforts to spur ad revenue via Yahoo SEO that didn’t work out. Last month, Yahoo said it would shut down its Publisher Network, a service that helps small businesses and bloggers display ads on their sites. The Publisher Network, which was still in a testing phase after almost five years, competed with Google’s AdSense.

In February, Yahoo agreed to sell its HotJobs employment site to Monster Worldwide Inc. for $225 million. The previous month, Yahoo approved the sale of its Zimbra e-mail and collaboration software to VMware Inc. for an undisclosed price. Last year, Yahoo closed the Web-hosting unit GeoCities and an online storage site called Briefcase.

Even as she offloads businesses, Bartz expects to make more acquisitions this year. Last month, the company agreed to buy Citizen Sports, adding mobile and social-networking features to its sports site. Citizen Sports lets customers check live scores on smartphones.

Twitter Finished! Now with Ads!

National Enquirer

Networking phenom Twitter may see last Tweet as Jessica Simpson status updates to have ads embedded.

The celebrity micro-blogging net will soon be rolling out commercials with "all the tweets that are fit to Tweet."

"Promoted Tweets" will be transmitted via internal search engine on Twitter.com, The ENQUIRER has learned.

"Users will start to see Tweets promoted by our partner advertisers called out at the top of some Twitter.com search results pages,"  a Twitter spokesperson announced.

Initial advertisers include Best Buy, Virgin America and Starbucks.

Twitter admits on its website: "Our business model is in a research phase, we spend more money than we make."

So expect more pop-ups, roll-overs and full fledged celeb endorsements  when you need to alert the world The Situation is over.

Twitter Rolls out Ads

The Wall Street Journal

Twitter Inc. launched its long-awaited advertising system, marking the four-year-old company's first significant attempt to turn its so-called microblogging service into a profitable business.

 

The new service lets brands pay to have their tweets listed as the first result when a user conducts a search on Twitter. Over time, Twitter plans to show the promoted tweets in the stream of messages people see when they log into the site and to allow partners—from small developers to large Internet companies—to display the sponsored messages as well.

The start-up is balancing a mix of variables to determine when to show a promoted Tweet and, eventually, how to price it. Advertisers will bid to have their Tweet displayed when users search certain keywords. Then the company will determine a "resonance" score, based on factors like how many people clicked on or forwarded the promoted tweet.

Twitter's chief operating officer, Dick Costolo, said in an interview Tuesday that the company considered ad models that included charging brands for every new follower they attracted through a promoted tweet, but worried that it didn't capture the full value of what a tweet was worth to marketers.

Several months ago, an engineer approached him with the idea of blending lots of variables and it stuck, he said. Now, the company plans to start testing the formula. "The clock on the testing is just starting to tick," he said.

Twitter began showing users Promoted Tweets from a handful of brands Tuesday, including Starbucks, Virgin America and Best Buy. Marketers trying out Twitter's new ad product at launch aren't paying for the initial tests, according to two digital-ad executives, who said Twitter is still working on its bidding platform and on technology to help marketers track how the ads perform. Mr. Costolo declined to comment on the initial deals but said the company will initially charge marketers based on the number of times their ad is viewed, before moving to a resonance model.

He said that the company plans to discuss more details about opportunities for Twitter's partners, including how much revenue it would share from the ads, at its developer conference in San Francisco Wednesday.

Twitter's announcement received an enthusiastic reception from some marketers, who have been using the free service to blast out deals and messages.

Starbucks praised it as a more direct way for it to interact with consumers. "When people search for 'Starbucks' in Twitter they will be more likely to see our Tweets with this new product," Chris Bruzzo, vice president of brand, content and online, said in a statement.

Others expressed skepticism. "I am happy with the model right now and I am not sure what this does for the consumer," said Rudy Wilson, vice president of marketing for Frito-Lay North America. Frito is a unit of PepsiCo. "From a branding standpoint you can engage on Twitter without an ad model."

The service also sets up a major challenge for the young company: How to make good on a promise not to show its tens of millions of users irrelevant ads. Some users are skeptical. "My gut tells me that after they get a taste of the ad revenue, they'll open the floodgates and soon Twitter will become a constant stream of commercials," said Chris Dunn, 39, a Twitter user and chief executive of social-networking company Mobeze Inc.

Twitter has a lot riding on the ad service. The San Francisco company has raised around $150 million in venture capital, but is under pressure to show momentum as its user growth stagnates in the U.S. After growing nearly ten-fold in 2009, the company's unique U.S. Web visitors have hovered around 21 million in recent months, according to comScore Inc.

Having rebuffed acquisition and advertising partnership offers from Google Inc. and Microsoft Corp., Twitter also faces pressure to prove it can go it alone.

Sarah Hofstetter, a senior vice president at digital agency 360i, said Twitter's focus on monitoring how users are responding to the Promoted Tweets to determine their relevance is compelling and distinguishes it from Google's search-ad system, which looks at the quality of the Web site an ad links to and the rate at which users click on the advertiser's ads.

But she said the company will have to convince marketers of the value of Twitter SEO, many of whom are just dabbling in spending outside of major sites like Google and Yahoo Inc., to continue investing. "Its challenge is longevity," she said. "It gets exciting for a while and then you might move on the next shiny object."

Twitter's service comes as other services that were once "shiny objects" among online marketers have started to become good businesses. Google's YouTube and social-networking site Facebook Inc. were for years viewed skeptically by marketers leery of advertising against user-generated content. Now both are generating hundreds of millions of dollars in annual revenue as advertisers follow their surging users.

Twitter isn't betting its business on ads alone. The company earns some revenue from sharing its stream of tweets with search engines like Google and Microsoft's Bing and is planning to offer paid commercial accounts for businesses. Mr. Costolo said the company is testing what will eventually be paid commercial accounts for businesses. The accounts will allow brands to access data about their tweets and any promotional tweets the advertiser had through the account. Such accounts will also give brands more ways to interact with users on their Twitter profile page he said, citing the ability to display Tweets geographically near their business as a possible example. He declined to comment on the timing, beyond saying that it will depend on the pace of its ad roll-out.

Your Ad Here. Where?

Some web sites are selling advertising that isn't really there
From the Wall Street Journal

Kraft Foods, Greyhound Lines and Capital One Financial have bought some strange ads on the Internet lately. What's so strange about them is that they're invisible.

The companies might not have known about their invisible display ads—the kind that are supposed to appear alongside content on Web pages—if not for Ben Edelman, an assistant professor at Harvard Business School who studies Internet advertising.

Mr. Edelman says his research shows that all three marketers, and many others, have fallen victim to Web sites that use such ads as a way to sell more ad space than they have.

The Web sites can get away with it, he says, because online advertisers don't always audit their campaigns for proof their ads are appearing. It isn't clear how common these ads are or how much they cost marketers.

Mr. Edelman and other Internet-security experts say the ads are created with the use of computer code that makes it look to marketers as though their ads are showing up on legitimate Web sites. But consumers who visit those sites can't see the ads because they have been placed on invisible Web pages.

In one example, visitors to a site called MyToursInfo.com saw an ordinary-looking Web page with one ad for Verizon Communications and another for a weight-loss product. But, Mr. Edelman, who studied the site in January, said software code running behind the scenes opened more than 40 Web pages, each including three ads from marketers such as Domino's Pizza and Capital One, which were invisible to visitors.

Mr. Edelman's analysis of the code was confirmed by computer-security experts at Symantec and McAfee as well as online-ad advisory firms DoubleVerify and Anchor Intelligence.

MyToursInfo.com has since shut down, and efforts to identify its operators were unsuccessful.

Domino's Pizza says it is aware of sites like MyToursInfo.com and is taking steps to protect against them by buying display ads it pays for only when a consumer clicks on them. Capital One said it wasn't familiar with the situation but said it keeps "a close eye" on its online ads.

Verifying that ads appear is an issue that has long plagued traditional media, particularly commercials on local TV stations. But a single online ad campaign can appear on thousands of Web sites, making verification even harder.

Advertisers often buy display ads based on the number of times they are loaded onto a page, rather than the number of clicks they get. Over the past, year, an increasing number of scams have sought to take advantage of that pricing system as advertisers have started buying more of their online ads via middlemen called ad networks, instead of directly from the Web sites themselves. These networks sell ad space at cheap rates across thousands of sites, and they don't always weed out illegitimate players.

Several such networks, including Burst Media and Tribal Fusion, sold ads that appeared on the MyToursInfo.com site, Mr. Edelman says, according to his analysis of computer code.

Tribal says MyToursInfo.com isn't included in its network now but can't say whether it was in the past. Burst says MyToursInfo.com was included in its network earlier this year but isn't now part of its network.

The ad networks say they use a combination of high-tech scans and manual processes to ferret out unscrupulous sites.

"Unfortunately, these bad actors are kind of like ants at a picnic. You constantly have to be vigilant," says Chuck Moran, Burst Media's chief marketing officer.

"It is one of the big challenges of running a network," says Toby Gabriner, president of Tribal Fusion. He said his company now is working with Mr. Edelman to help detect possible fraud across its network. Mr. Edelman does similar consulting work for clients including Time Warner's AOL and Microsoft.

Ads are typically rendered invisible by manipulating computer codes called iframes that determine how a Web page appears on a visitor's computer screen. Iframes allow one Web page to be built inside another, the procedure used to make display ads. But, programmers can also make iframes invisible, so that computer users don't see anything contained in them. In the case of the invisible ads, they typically use multiple invisible iframes. In the case of the invisible ads, they typically use multiple invisible iframes.

Mr. Edelman, who trolls the Web for examples of invisible ads, says ads for Kraft Foods and Greyhound Lines recently ended up buried on invisible pages on a site called MyProfilePimp.com, which offers games, photos and other ways for consumers to personalizetheir profile pages on social-networking sites like Facebook. Mr. Edelman says a visit to the site in June opened a series of invisible pages on the visitor's computer with as many as 46 ads. He says none of those ads could be seen.

MyProfilePimp.com declined to comment.

Kraft says it monitors its online ad purchases but wasn't aware of the MyProfilePimp.com ads. "We are looking into it as we would with any other possible violation of our agreements," it said.

Greyhound was similarly unaware of the case and said that the site shouldn't have been included in any of its ad-network buys. A spokeswoman says the bus line is working to "safeguard against fraudulent activity moving forward."

AOL Spinning Out of Time Warner Control
By Associated Press

When AOL flashed $147 billion in stock puffed up by the dot-com boom, Time Warner, one of the world's biggest media companies, fell into its arms in 2001. They swooned over their combination of Internet access and traditional media.

But before long, reality intruded. Among other problems, AOL's dial-up Internet access business was fading, diminishing whatever benefits there might be in having AOL spread Time Warner content online.

Finally, Time Warner filed for the corporate world's version of a divorce Thursday. It said it will spin out AOL as a separate company and get on with its life as a movie, TV and publishing conglomerate.

Now AOL will try to bounce back with the help of its online advertising business, a challenge that falls to former Google Inc. advertising executive Tim Armstrong, 38, who was hired as AOL CEO in March.

Time Warner owns 95 percent of AOL and will buy out Google's 5 percent stake during the third quarter for an undisclosed amount. From there, AOL and its 7,000 employees will be spun off into a separate publicly traded company around the end of the year.

"For AOL, becoming a standalone company will give it more focus and strategic flexibility," Time Warner's chief executive, Jeff Bewkes, said at Time Warner's annual shareholder meeting Thursday in New York.

Meanwhile, Time Warner will focus on movies, cable TV networks such as HBO and CNN, and publishing magazines such as Time, People and Sports Illustrated.

Originally known as America Online, AOL once defined the Web for millions of people. But much of its original revenue came from providing dial-up access, a business that peaked for AOL in 2002 at 26.7 million subscribers, back when the company stuffed free trial CDs in magazines and mailboxes. The march of broadband ate away at the business, and AOL had just 6.3 million dial-up subscribers at the end of the last quarter.

The decline undercut the premise that the content created by Time Warner's media empire would become even more valuable as AOL plumbed it to expand its Internet audience.

Even after AOL broadened its reach by giving away content and running free, ad-supported sites, that didn't create many new opportunities for Time Warner. Bewkes acknowledged last month that AOL helped promote material such as Warner Bros. movies or TNT television shows, but didn't bring in new revenue for the content. That function can be served just as well by Web portals the company doesn't own, like Yahoo or MSN.

It's no wonder that AOL Time Warner quickly disintegrated into one of the worst combinations in history. In 2002 and 2003, Time Warner absorbed nearly $100 billion in charges to account for the rapidly diminishing value of the combined company. Time Warner even dropped AOL from its corporate name. Today, the combined value of AOL, Time Warner and Time Warner's recently spun off cable business totals around $40 billion.

At AOL in particular, the falloff has been stark. When Google agreed to pay $1 billion for its 5 percent stake in late 2005, the investment pegged AOL's market value at $20 billion. This past January, Google estimated its investment had plunged by more than 70 percent, leaving AOL with a market value of about $5.5 billion.

Today AOL gives away most of its services, like e-mail, to drive traffic to its ad-supported Web sites. But after a few strong quarters, ad growth slowed and then began declining. AOL also has Platform-A, a business that places ads on sites all over the Web, not just ones run by AOL. Yet that reach hasn't mattered enough: Both Yahoo Inc. and Google mine bigger profits from their ad businesses.

Although AOL's operations make money, its operating profit of $150 million in the first quarter marked a 47 percent drop from the same period in 2008.

Meanwhile, AOL's Web sites, which include celebrity gossip site TMZ and tech blog Engadget, averaged 106 million unique U.S. visitors each month during the first quarter, according to comScore Media Metrix - a drop from 110 million visitors in the first three months of 2008. The top three Web companies all posted gains in traffic in that same period: Google, Yahoo and Microsoft Corp.

Time Warner shares rose 55 cents, or 2.4 percent, to close at $23.55 on Thursday.

Frederick Moran, an analyst at The Benchmark Co., said investors and Time Warner shareholders will be pleased by the spinoff news because AOL has acted "almost like an anchor" on Time Warner's stock over the last few years.

Time Warner also recently spun out Time Warner Cable, which provides cable TV and broadband Internet access. Since then, Time Warner Cable's stock has risen 26 percent - but Time Warner shares have been essentially flat.

Ted Leonsis, an executive who retired from AOL in late 2006, said the decision to spin off AOL emphasizes a shift from seeking size and scale - two attributes that were in vogue 10 years ago - to a focus on being nimble and innovative.

"I'm thrilled for the employees and I don't see any other plan, so while it's a great decision it was an inevitable decision," he said.

Former Time Warner CEO Gerald Levin, who was instrumental in AOL's takeover, recently declined to comment about the looming breakup. Levin now works as director of a rehabilitation center in Southern California.

AOL co-founder Steve Case, the other main architect of the 2001 deal and the founder and CEO of investment company Revolution LLC, wrote Thursday on the short-messaging site Twitter that he is glad to see AOL set loose. He said it "has been a long, tortuous journey" and now is "time to open a new chapter."

Gap Widens in Online Advertising

Rivals Struggle to Catch Up to Google As Buyers Favor Search Ads Over Display


Spending on Internet advertising is climbing at a healthy clip -- rising 20% in the U.S. in the second quarter -- and growth forecasts are strong despite the weak economy. But that growth isn't being enjoyed by everyone.

The gap is widening between spending on simple search ads, Google Inc.'s core turf, and spending on flashier display ads, which companies such as Yahoo Inc. and Microsoft Corp. had hoped to use to gain ground on Google.

Faced with a slowing economy, advertisers are sticking to what they view as the safest way to reach online customers directly: the plain text ads that appear on search-result pages. Search-ad spending is on track to reach $10.4 billion this year, double what will be spent on display ads, according to research firm eMarketer.

That divergence of fortunes may be bad news for companies counting on a comeback for display ads, which ruled the Web in its early days. Though Yahoo and others say they have seen demand for these ads as they introduce technologies that better target the ads, they have been slow to regain favor.

CreditCards.com is typical. Jody Farmer, vice president of strategic marketing for the credit-card portal, says he has experimented with buying display ads. But as the economy tightens, the site, which spent $30 million on online marketing last year, is focusing on search ads. "We have to be a little more thoughtful about how we spend our money," he says.

The trend comes as Google rivals Yahoo, Microsoft and Time Warner Inc.'s AOL have invested billions of dollars in building and buying new display-ad technology to deliver more relevant and engaging ads to users on their sites and on the sites of other Web publishers. They hope to win back advertisers who have poured money into search ads.

Mark Scholz, global search manager for Hewlett-Packard Co.'s printer division, says that while his budget is relatively flat, he is spending more on search ads by pooling together funds from product groups eager for the extra lift they are accustomed to from search campaigns. "In the event there are budget cuts, I am one of the last ones they go after," he says.

Google, with more than 70% of the U.S. search-ad market, has much to gain from the trend. But the Mountain View, Calif., company also has made some big bets on the display business. Google is trying to tap brand advertisers to buy display ads on Google-owned properties such as YouTube and on other sites. Tighter display-ad budgets could hamper that expansion, which it fueled with its acquisition of DoubleClick last year for more than $3 billion.

The gap between Google and its rivals could widen as search grows faster than display. Search ads are forecast to represent 42% of overall U.S. online ad spending in 2008, according to eMarketer, up from 40% in 2007. Display is expected to stay flat, at about 21% of overall spending.

Google's rivals caution that there is a wide mix of display-advertising types and that some are performing well in the current environment. Spending on display ads is forecast to reach $5.2 billion this year, up from $4.5 billion in 2007.

Brad Goldberg, Microsoft's general manager of search, said the company has a number of advertising products for which the tough economic environment is a boon, including a new cash-back shopping search service.

Lynda Clarizio, executive vice president of AOL, says the company has the mix of ads that marketers are looking for in a downturn, even though it doesn't have a traditional search business.

A Yahoo spokesman says investments in new display technologies helped the company meet its financial goals in its most recent quarter, despite the tough economic environment. And he notes that Yahoo's U.S. search businesses is growing briskly as well.

There are signs that search may eventually take a hit too. John Aiken, managing director of research firm Majestic Research, says some smaller businesses have begun cutting back the number of keywords they are buying in recent months, although large marketers continue to spend freely. He says Google is "potentially stretching for dollars," noting that it has begun displaying more ads for some keywords.

Nick Fox, director of business product management at Google, says more ads may be showing up for some keywords because, as advertisers spend more on search, Google has more relevant ads to show. "We are not making any short-term trade-offs," Mr. Fox says.

By: Jessica Vascellaro
Wall Street Journal; September 4, 2008

CBS TV Stations Start Up An Online Ad Network

Television stations owned by CBS Corp. are launching an online advertising initiative with local bloggers and social media sites, the company announced. The ad network will involve CBS-owned TV stations generating online modules called “widgets” which individuals can easily add to their Web sites. The widgets will contain local news as well as advertising, which the CBS stations will sell. The online partners will receive a share of the revenue, but specific financial details weren’t disclosed.

- Associated Press

Online Advertising to Surpass Television as Number One Advertising Medium.

New Advertising and Media Forecasts predict that within five years online advertising will surpass the television industry as the largest and most popular advertising medium.

As the six major TV networks align their fall programming lineups and begin making their upfront sales pitches, the reception from large agencies has been frigid.

Insiders report that Internet is making a stronger impact and influence with buyers who plan on shifting more budget into online mediums away from Television, radio, print, billboards, and direct mail. Advertising allocations are being shifted to the Internet as marketers are requiring more immediate and personal contact with their target market. The web is becoming a more attractive advertising delivery system.

Internet advertising is projected to grow to 20% of all ad spending by 2010 as more marketing money is moving to the Web. Network TV advertising is considered less powerful as cable fragmentation, high-def programming, TiVo and media on demand vehicles are eroding television's viewing audience.

In short, TV is not being watched by as many consumers as in years past.
The couch potato is quickly being replaced by the web surfer.

The major search engines led by Google are launching Really Simple Syndication (RSS) feed vehicles that allow advertisers to display ads in appropriate content and feed vehicles, this is eliminating waste and increasing impact as advertising messages can be more aligned and targeted with in-market media programming.

Web advertising is the most relevant advertising medium.

Organic/Natural Search Engine Optimization the most effective and powerful foundational element within successful web advertising efforts.

Key Organic Search Engine Optimization Facts:

• Keyword search is the 2nd most popular online activity, rapidly approaching the popularity of email retrieval.
• 
  90% of all new website visitors are delivered by a major search engine and/or directory.
  
• 98% of all keyword search activity results are powered by the big 4 search engines: Google, Yahoo, MSN and AOL.
  
• Keyword search results on Google, Yahoo, MSN and AOL are all determined by a search engine spider and/or robot crawler.
  
• Recent internet marketing studies confirm that keyword searchers prefer the organic results at a 6 to 1 ratio vs. pay-per-click sponsored search advertising listings.

Also online advertising medium continues to evolve and grow. The next logical extension for online advertising is growth for advertisers within the blogging industry as blogs allow advertisers to tie their advertising messages into topic-centric blogs that are more content relevant than the often; bland, dated, and waste-filled programming and content of: TV, print, radio, etc.

Advertisiers also realize that media consumption is changing daily and broadcast mediums are not as popular or as effective in reaching huge pockets of consumers as they once were and the costs associated (cost per ratings point) have increased dramatically in recent years. These same television campaigns that are losing impact and reach with consumers are now more expensive as TV rates continue to rise.

Editor's Aside:

It is especially painful to watch the domestic automakers continue to pour millions into TV advertising campaigns as they lose billions per quarter. Here in Metro Detroit as thousands of our colleagues, relatives, neighbors, and friends lose their auto jobs, retirement benefits, pensions, healthcare coverage or all of the above, its becomes quite the bitter pill too swallow when the big three automakers continue to pour hundreds of millions of fresh dollars into redundant television advertising campaigns that are not driving product sales.

Can the executive teams at the big three ever seriously adjust to advertising market conditions? Do they truly understand that television viewing levels and newspaper readership levels are declining? Television is not having the impact it once did with prospective car and truck buyers. The vehicle buying public is no longer watching or responding to the redundant television advertising campaigns executed by the big three.

Once again the car makers are actively negotiating their upfront television buys seeking to pour billions more into the televsioins medium throughout this decade. Quite ironic to consider that the same executive decision making teams that have handed sales market share to foreign automakers and responsible for their corporate turnaround plans are the very same groups signing off on TV heavy ad campaigns.

The latest reports show that the automotive manufacturers continue to lead the charge into TV spending the most on the television medium. This is simply another indication that the executive teams at the big three are stuck in the past. The domestic automakers need to reeducate and adjust their marketing efforts rapidly and embrace the new global paradigm sooner rather than later.