IAC PLANS TO TAKE ITS DATING BUSINESSES MATCH.COM AND TINDER PUBLIC

Original Story: latimes.com

The parent company that owns dating brands Tinder, Match.com and OKCupid wants to play the field.

IAC/InterActiveCorp said Thursday it’s planning an initial public offering for its online dating business, The Match Group.

FOR THE RECORD

An earlier version of this post carried an incorrect headline that said IAC was spinning off its dating business. A San Francisco M&A attorney represents clients in company mergers.

IAC expects to issue less than 20% of its common stock in the offering, which could be completed during the fourth quarter of this year, IAC said in a release.

The Match Group consists of 50 brands and grew 11% last year to reach revenues of $897 million. The company as a whole grew 3% during the same period.

“With the transaction, [The Match Group] will be able to unlock value, a topic that has been in the forefront with the dating business for the last 2-3 years,” John Blackledge, an analyst at Cowen and Co., wrote in a note to clients. “Match is a market leader in a growing category and should have solid currency with investors.”

Greg Blatt, chairman of The Match Group, said the marriage of established brands with up-and-coming ones would help the company expand. Organic search engine optimization acts as an endorsement of your company, products, and services and also helps alter the mindset of keyword searchers making them more inquisitive as to the content on your website.

“The Match Group is poised for substantial growth in the coming years,” Blatt said. “The dating industry has come a long way since its inception, but the category remains underpenetrated. We believe the combination of our more established businesses such as Match, Meetic and OurTime, and earlier stage businesses such as Tinder and OKCupid, creates an attractive combination of significant cash flow generation, strong margins and meaningful growth potential.”

Among the hottest companies in the group is West Hollywood’s Tinder, a hook-up app that recently hit 8 billion matches, according to company founder Sean Rad.

The company launched a premium service in March in hopes of converting millions of users into paid subscribers. Known as Tinder Plus, the feature allows users to “rewind” if they accidentally reject a potential date.

The New York-based IAC is run by media mogul Barry Diller. The company also owns Internet brands such as Vimeo, College Humor and About.com. A Los Angeles M&A lawyer is following this story closely.

IAC also announced Thursday that Chief Financial Officer Jeff Kip was resigning to spend more time with his family and pursue other interests.

JUDGE REJECTS SETTLEMENT IN APPLE, GOOGLE HIRING CASE

Original Story:  USAToday.com

SAN FRANCISCO -- A federal judge tossed a $324.5 million class action settlement in a lawsuit filed by technology workers who allege major Silicon Valley companies including Apple and Google kept a lid on wages and limited their job mobility by agreeing not to poach each other's employees.

In her ruling, U.S. District Judge Lucy Koh said the proposed settlement "falls below the range of reasonableness."

Two other companies, Intel and Adobe, were also part of the settlement.

It is the latest twist in the high-profile lawsuit filed in 2011 that plaintiffs allege affected tens of thousands of technology workers. An Organic SEO that uses Google for moving keyword rankings is watching closely to see if this will affect any Google updates.

The plaintiffs in the case alleged that the companies violated antitrust laws by engaging in a "conspiracy" between 2005 and 2009 to limit compensation and job movement.

Lawyers representing the plaintiffs said they planned to ask for about $3 billion in damages at trial. That could have tripled to $9 billion under antitrust law.

Some of the tech workers in the case told the court they objected to the settlement.

The case drew headlines because it brought to light emails in which Apple's late co-founder Steve Jobs and former Google CEO Eric Schmidt detailed agreements not to steal each other's employees.

The lawsuit followed a similar probe from the U.S. Justice Department that the companies settled in 2010.

That investigation alleged the companies colluded to suppress wages by agreeing not to recruit employees from one another.

As part of the settlement, the companies agreed not to enter into such agreements.

Ask.com – Do they have the answer for a strong comeback?

Story first appeared on USA Today.com

Doug Leeds wants the folks who work for him to get "really silly."

The CEO of dot-com pioneer Ask.com, he's quietly helped bring the company back from the brink by focusing on its original intention — answering questions — and allowing his employees to throw out crazy ideas during weekly improv sessions.

"One of the things that inhibited innovation was that folks wanted everything to be perfect first," he says. "We just want to get people to talk, to get every idea out, to get really silly."

One nutty idea was paying $300 million for a company that was dragging down the New York Times Co.'s earnings — About.com. About was purchased by Ask parent IAC, and is a separate unit.

Leeds believed About — which offers a place for in-depth information on everything from parenting and baby tips to how to change oil on a car — could be integrated with Ask's questions-and-answer format.

"Ask is a place to ask questions," Leeds says. "Think of it like a library. About is a great set of books the librarian shows you for more information. It's the best source of reference material on the Web, and it wasn't being utilized fully by the New York Times."

That it dragged down the Times company doesn't matter. About on Ask is the "right place for the right user mindset," he says.

Ask began in 1996 as Ask Jeeves, a different form of search engine that responded to questions. The company dropped the Jeeves part of the name in 2005. The question and answers also got ditched, but returned in 2010.

Ask is now consistently a top 10 website, according to ComScore Media Metrix. It averaged 104 million visitors in December, and was the eighth most visited site. It began 2012 with 95.7 million visitors.

Financials are growing, too. It is a part of IAC's search division, which reported revenue of $370 million in the third quarter. That's up from $258.9 million in the year-ago quarter. The search unit also includes Dictionary.com. IAC also owns Match.com, Vimeo and The Daily Beast.

Ask's share of search is a small 3%, according to ComScore, compared with 66% for market leader Google.

However, even at 3%, the search market is so large "that even a sliver is a significant business," says Greg Sterling, a senior analyst with Opus Research. "Search is still 50% of all online advertising."

Ask has thrived by sticking around. "They have a loyal core following," Sterling says. "Ask also benefits from being used as a secondary search engine."

Interviewed at Ask's towering Oakland headquarters, which dominates the skyline here, Leeds says Ask's original mission was derailed by Google, which became really popular, really fast. Ask decided to shift gears to search, too. But after some lean years, it found that consumers still preferred the question-and-answer format from Ask.

"So we went back to the basics, and it's been very successful," Leeds says.

Questions are answered by tapping into sites such as Wikipedia and Dictionary.com, internally via its own staff, and asking users to chime in and answer as well. "We're using every method the Internet has."

It's also looking to showcase more content from About.com. A question about this year's crop of American Idol judges, for instance, pops up articles about next week's premiere from People and the New York Daily News, an About.com backgrounder on all the judges from the last 11 seasons of the show, and links to other Idol related questions.

For 2013, Leeds wants to see more use of About on Ask, as well as another new acquisition, nRelate, a company that offers suggested links to queries.

"Our users want to go deeper," Leeds says. "Right now, they ask a question, we answer it, and we move on to the next question. We want to have them explore their interests further. It's about content discovery."

Simple Tools Help Owners Sift Data for Eager Customers

originally appeared in The New York Times:

Velvet Palate sells artisanal wines that are made in small quantities around the world and typically not stocked in stores. Selling online, according to the co-founder, has allowed the company to zero in on a niche of geographically diverse customers.

Before helping to start Velvet Palate in New York in January, the owner worked for an online media company that analyzed how effectively subscription offers and other marketing tools attracted new customers.

We could see which Web sites people were coming from when they arrived on our Web pages, what they clicked, where they abandoned the process, she said. And that allowed us to constantly tweak and improve what we were offering and how we were communicating.

In her new venture, Velvet Palate's co-founder said her goal had been to use online data collection and Web analytics to cater to customers’ tastes.

There is nothing new, of course, about paying attention to customer needs and desires, but there is now far more data available — far less expensively — through Web analytics and customer-loyalty programs. Using basic e-commerce software along with free tools like Google Analytics and Bing Webmaster Tools, small businesses can perform sophisticated data collection and analysis that can help them compete with companies that have far greater resources.

Based on the experiences of business owners, this guide offers suggestions on how both Web-based businesses and traditional retailers can use data.


CAPTURE PREFERENCES
Velvet Palate offers highly rated wines along with information about how the wines are made and what foods they might best be paired with. Ms. Kooren asks customers who register with the site to fill out a questionnaire that helps her direct them to the right types of wines.

We can only offer a limited number of wines, she said. So we offer choices that are geared toward their preferences.

Velvet Palate’s e-commerce software, Magento Enterprise, tracks sales, but it also identifies tiers of customers, including those who have bought repeatedly, those who have bought once but not returned, and those who have visited the Web site but not made any purchases. This allows the co-founder to target each group in different ways.

To entice one-time buyers to come back, for example, she might offer free shipping for a limited time.  I try different ideas and see what kind of response I get, she said.

This kind of analysis can increase sales, according to a professor of marketing at the University of Pennsylvania’s Wharton School and author of “Customer Centricity,” because it allows companies to adjust their offerings and even to design products to meet the needs of their customers. Businesses can more accurately predict which customers will visit again, what products will interest them and which special offers will appeal to them.

RESPOND QUICKLY
The founder of SimplySoles in Washington, sells women’s shoes both online and through a catalog. Like many retailers, she has found that some customers routinely go through the steps of browsing her site and putting an item in a virtual shopping cart — but then leave before completing the purchase. They may have gotten distracted, or they weren’t sure about buying the shoes, she said.

Those shoppers, she said, are more likely to make a purchase than a visitor who spends time on the site without selecting a product. To try to encourage them to complete a purchase, she has set up a proprietary system — created for her by a Web development company, the Richard Group — that automatically asks the customers by e-mail if they would like to complete the purchases they started. About 15 percent of them do so.

The SimplySoles founder, who has an agreement to sell her business this week, also uses a Google Analytics dashboard that reports Web traffic information, like where her visitors come from. Even before the social networking site Pinterest became popular, she saw that many of her customers were coming from the pinboard site. That data told us we needed to have a presence on Pinterest and start to monitor it, she said.

There are other tools that help small businesses generate and manage customer data.

Using Bing Webmaster search engine optimization tools, the SimplySoles founder gets advice on how to improve her ranking in search results, such as adding a descriptive image tag to an untagged photo. She can also watch what is happening live on her site by using an app called Chartbeat. When she noticed visitors viewing a Web page that described a wine that had recently sold out, she bought more.

The founder of Blogilates, which includes the oGorgeous shopping site and the Blogilates blog, offers exercise videos, healthy menus and advice. She also designs and sells a line of workout clothes and accessories. When the founder e-mails a newsletter to her 70,000 subscribers, she tracks how many click on links to view new offerings and products on sale.

Because fashion moves quickly, she said, getting immediate feedback helps keep her site fresh. The dashboard of her e-commerce software, Highwire, shows how many purchases have been made of, say, a recently offered neon hoodie and how many she has left in inventory.

Colors are very important, she said, and if we see one is selling very quickly, we can adapt right away and put in an additional order with our supplier.

LISTEN TO THE CHATTER
Customer opinions that used to require formal market research to discern are now readily available through feedback forms and discussion forums. When a frequent customer posted a note to other Velvet Palate members that Spanish Rose was a great summer wine for entertaining, SimplySoles' founder used that idea in a marketing message.

Services like Sentiment Metrics or Radian6 can help a company track how it is being discussed online. SimplySoles' founder uses Sentiment Metrics and is alerted when Velvet Palate or any of her specified search terms are mentioned. She can view totals or drill down to individual mentions to see how influential a poster might be, as judged, for example, by how many Twitter followers the person has.

BUILD RELATIONSHIPS
Even brick-and-mortar stores can use new data collection technology. The retailer who opened the Ben Franklin craft store 37 years ago in Monroe, Wash., added a customer-loyalty program to his point-of-sale software last year after an employee suggested that it was in keeping with the spirit of a country store that wanted to get to know its customers.

Store employees have signed up more than 20,000 customers since the BLoyal tracking and rewards system was installed. At first, the store owner used it to see which products and hobbies were popular, so he could adjust his orders. Then he started to reward frequent customers by e-mailing them sneak peeks at new merchandise, sales events and free classes. His tracking and rewards system identifies the store’s most valuable shoppers.

All types of businesses can benefit from utilizing a Google Analytics Consultant who can provide actionable information to help improve their online presence.

We used to have an idea who our best customers were because we’d see them often in the store, he said. But using BLoyal, we can identify people we may not have noticed and can make sure someone recognizes them when they visit to say thank you and point out new items they might be interested in.

In the past, combing through sales records and categorizing customers would have taken too much time, according to the owner, but now he cannot imagine doing business without that information.

Facebook Can Wait For IPO After Large Russian Investment

Bloomberg

Facebook Inc., the most popular social-networking Web site, can take more time to decide on an initial public offering after Russia’s Digital Sky Technologies bought a stake, the head of the investment group said.

“Any IPO should be business driven and not liquidity driven as the latter can be done through the private market,” Chief Executive Officer Yuri Milner said in a Bloomberg Television interview in Moscow today. “That’s what we do, so founders and management can focus on business execution.”

Facebook CEO Mark Zuckerberg, who started Facebook as a Harvard University student in 2004, said in May he expects the company to have an IPO, though he wasn’t focused on it. Facebook is privately owned with a dual-class stock structure designed to allow current shareholders to hold on to voting control. Milner said today it’s up to Facebook’s board and management and not DST whether the social-networking Web site should hold an IPO.

Facebook SEO may attract the same level of attention as Google Inc.’s share sale in 2004, Adam Oliveri, managing director at New York-based SecondMarket, an exchange for private companies, said last month. Google sold 19.6 million shares for $1.67 billion in August 2004, giving the company a market value of $23 billion.

Kommersant Report

Paul Bard, an analyst at Renaissance Capital LLC, which has specialized in IPO research since 1991, also said last month that Facebook may sell stock through an IPO within 12 to 18 months. Zuckerberg said in May that an IPO is “something we’ll do when we’re ready for it” and “it’s something we don’t see on the immediate horizon.”

DST, which has offices in Moscow and London, in May paid $200 million for less than 2 percent of Palo Alto, California- based Facebook. The Russian investment company has since raised its stake to 5 percent and spent at least $400 million on its Facebook investment, Kommersant reported yesterday, citing an unidentified person at an investment fund close to Facebook.

Milner today declined to comment on the report, adding that DST doesn’t need to disclose details on its holdings as it is a private company.

Microsoft, Yahoo Face In-Depth Review of Search-Engine Accord

Sept. 11 (Bloomberg) -- Microsoft Corp. and Yahoo! Inc. have been asked by the U.S. Justice Department for more details on a proposed Internet-search partnership, expanding the agency’s review of the agreement.

The request means regulators will do a more extensive examination, rather than approve the deal immediately. Microsoft predicted an in-depth review when the accord was announced in July, said company spokesman Jack Evans. He declined to comment on the contents of the request.

Over the course of the review, the companies expect to be asked about their search-engine investments, ad pricing and product plans, a person familiar with the matter said.

The outcome will shape the future of the market for Internet search ads, where Google has triple the U.S. sales of its two rivals. The companies may face more difficulty proving the deal won’t hurt competition as regulators step up oversight of the technology industry, said Michael Katz, a former chief economist in the Justice Department’s antitrust unit.

“The antitrust agencies are pretty skeptical of the argument that you need to be bigger to compete,” said Katz, now a professor at the University of California at Berkeley. “The Justice Department will respond, ‘Why can’t you get bigger by competing?’”

Under the partnership, signed in July, Yahoo will use Microsoft’s Bing search engine on its Web sites. Yahoo will sell ads that appear next to Web-search results, with the companies splitting the revenue.

Bing Investment

Even though the antitrust agency will scrutinize the deal closely, the companies probably can get it done as long as they do enough to persuade the Justice Department that the agreement doesn’t hurt competition, Katz said.

During the Justice Department’s review, Redmond, Washington-based Microsoft expects to be asked to disclose its spending on Bing to ensure the company made enough investments to create a viable product, the person familiar with the matter said. Both companies also anticipate regulators will ask for their individual search-engine product plans so it can assess whether there’s an incentive to compete more or less vigorously as a result of the deal.

“Those plans will help the DOJ understand what the competitive impacts of the merger might be,” said Greg Neppl, an antitrust lawyer at Foley & Lardner LLP in Washington. If the department were to find the accord hinders innovation, it could seek to block the deal.

Ad Pricing

The government will also seek information on how the companies’ online-ad auctions operate and what might happen to prices as a result of the combination, the person said. While regulators will investigate pricing, it’s unlikely that they will dictate what prices will be, the person said.

The requests will help the agency determine whether to impose conditions to foster competition, or block the deal. Mountain View, California-based Google scrapped plans to team up with Yahoo last year after the Justice Department threatened to sue, saying the proposal would have helped them “become collaborators rather than competitors.”

“Google was dominant a year ago and is dominant today,” said Brad Smith, Microsoft’s general counsel. “Even if this is approved, Google organic seo will be dominant a year from now -- but if this agreement is approved, at least there is a chance for a more credible No. 2 to emerge.”

Laura Sweeney, a spokeswoman for the Justice Department, said the agency is aware of the proposed Microsoft-Yahoo partnership, and declined to comment further.

Fully Cooperating

“Yahoo and Microsoft are cooperating fully with the Justice Department and firmly believe that the information they will be providing will confirm that this deal is not only good for both companies, but it is also good for advertisers, good for publishers and good for consumers,” Adam Grossberg, a Yahoo spokesman, said in an e-mail.

The companies are now responding to the latest request, which they received earlier this week, Microsoft’s Evans said yesterday. They still expect the deal to close on schedule.

Microsoft rose 22 cents to $25 yesterday in Nasdaq Stock Market trading. Sunnyvale, California-based Yahoo added 67 cents to $15.45, while Google advanced $6.97 to $470.94. Microsoft has risen 29 percent this year, compared with a 27 percent gain at Yahoo and a 53 percent jump for Google.

“There has traditionally been a lot of competition online, and our experience is that competition brings about great things for users,” Google spokesman Adam Kovacevich said in an e-mailed statement. “We’re interested to learn more about the deal.”

Of the three largest search engines, Google had 75 percent of search-ad spending in the U.S. last quarter, with the rest going to Microsoft and Yahoo, according to data from search-ad firm Efficient Frontier Inc. in Sunnyvale, California. The market should expand to $12 billion this year, according to New York researcher EMarketer Inc.

European Commission

In Europe, Microsoft is also likely to notify the European Commission about the agreement, said Neil Macehiter, a partner at Cambridge, England-based technology consultant Macehiter Ward-Dutton. If the commission gets involved, it will conduct an initial 25 working-day review, which can be extended by 90 days if the regulator has “serious doubts” about competition issues.

Last week, the Brussels-based commission put on hold Oracle Corp.’s $7.4 billion acquisition of Sun Microsystems Inc., saying its initial probe suggested the deal may reduce competition and lead to higher prices.

“I’d bet on Microsoft-Yahoo prevailing because it would be difficult for Microsoft to leverage its position,” Macehiter said.

Google Partnership

Microsoft objected to a proposed partnership between Yahoo and Google last year, saying the accord would allow them to fix prices. Now the software maker is on the other side of the same argument, and will likely tell the agency the venture won’t raise prices, said Andre Barlow, a Washington-based lawyer who worked for the Justice Department’s antitrust division and is now a partner at Doyle Barlow & Mazard PLLC.

Advertisers probably will face questions on the deal too. Carl Fremont, executive vice president at Digitas, an online ad agency, said a Microsoft-Yahoo combination would force Google to keep on improving its search engine.

“From a product offering side, I believe it will be better over time,” said Fremont, whose firm is owned by Paris-based Publicis Groupe SA. “It creates new competition in the market.”

Microsoft-Yahoo Deal Draws Antitrust Scrutiny

By Information Week

Antitrust bodies in the U.S. and Europe are eyeing Microsoft (NSDQ: MSFT)'s search partnership with Internet portal Yahoo (NSDQ: YHOO) to ensure the deal doesn't run afoul of competition rules.

"As we said when the agreement was announced, we anticipated that this deal will be closely reviewed in the United States and EU, and discussions in both geographies continue," a Microsoft spokesman told the Reuters news agency Wednesday.

The spokesman said Microsoft remains confident that the deal will close sometime in 2010.

Microsoft and Yahoo struck a wide-ranging search partnership on July 29. Under the ten-year pact, Microsoft will place its Bing search engine on all Yahoo sites and, initially, keep 12% of the revenue from Yahoo-driven searches. Yahoo will handle sales and marketing for premium search ads for both its own properties and Microsoft's.

Microsoft is also committed to hire a minimum of 400 Yahoo employees on a full-time basis as it extends Bing to Yahoo's Web sites. It will also hire an additional 150 Yahoo workers to help with the transition.

Yahoo can terminate the arrangement if organic seo search traffic generated by the alliance falls below a specified percentage of Google's traffic. Yahoo also retains the right to expand the partnership by adding Microsoft's mapping and mobile search services to its Web properties.

Microsoft must submit to Yahoo copies of all data it collects from its sites while providing search services, according to an SEC filing.

Yahoo CEO Carol Bartz has said that, by in effect outsourcing search to Microsoft, her company can save $200 million in annual capital expenditures through reduced spending on search-related operations. The companies said it could take up to two years for them to fully implement their agreement.

How Will ReCAPTCHA Help Google?

By Channel Web

Those aggravating strings of nonsensical words you have to key into your computer when trying to send someone an e-mail or buy tickets online -- they're called CAPTCHAs -- are actually doing a job that Google (NSDQ:GOOG) finds pretty valuable. But in its zeal to teach computers to, in essence, "read," Google may be chipping away at the ability of CAPTCHAs to provide security.

Google will buy ReCAPTCHA, a company that provides CAPTCHAs to help protect more than 100,000 Web sites from spam and fraud. Financial terms were not disclosed.

CAPTCHAs (Completely Automated Public Turing Test To Tell Computers and Humans Apart) are often created from old pieces of text, including books and newspapers.

Computers, through programs called "spiders" or "robots," find it hard to recognize those words because the ink and paper have degraded over time. So far, CAPTCHA programs have been successful in deflecting robotic attacks because the spiders can't recognize the text.

But in addition, the technology can help Google in its large-scale -- and controversial -- text scanning projects such as Google Books and Google News Archive Search.

Google wants the technology because as users decipher the jumbled characters with CAPTCHAs, the software "learns" to interpret those words during organic seo searches.

The technology that Google now uses to scan documents, Optical Character Reader Recognition, stumbles over the translation of print that's faded and worn. ReCAPTCHA's Web site illustrates that accuracy problem.

Because ReCAPTCHA uses old text from old print publications and users then type them in as a CAPTCHA, users teach computers to read the scanned text. Having the text version of documents is beneficial because it facilitates searching and renders it easily on mobile devices. ReCAPTCHA's slogan, "Stop Spam. Read Books," seems to be a good fit with Google's plan.

Therein may lie the rub, however. As we teach computers to read, CAPTCHAs may lose their appeal as a security mechanism. Of course, as hackers' malicious software also becomes more sophisticated, the distorted character strategy would become threatened anyway. Google's next step may need to address that security concern.

Google's results show slowing growth as online advertisers cut back

MercuryNews.com

As the toll of the financial collapse mounts, add one more victim: Google's go-go growth.

On Thursday, the search giant announced second-quarter revenue was essentially flat compared with the first quarter.

Profit rose, but that's because the Mountain View company slashed spending on computer technology and the giant data centers that power its business. And the company continued shedding jobs, after years of adding hundreds or even thousands of new Googlers every quarter.

Google's report adds to a mixed picture about the health of the technology industry. Earlier this week, Dell forecast that weak demand from big corporate customers would keep pressuring its profit, while Intel delivered a bullish report that led to a market rally Wednesday. And late Thursday, IBM delivered an especially upbeat assessment about the rest of the year.

CEO Eric Schmidt said Google's advertising business had stabilized. "We are not at the moment looking at the downward spiral we thought we might see six months ago," Schmidt told analysts in a conference call, noting that "a quarter ago, we had no idea where the bottom was."

But Schmidt could not identify signs of a recovery. The best news was that enough of Google's big advertisers have come back that the company was able to ring up $5.52 billion in revenue during the second quarter. That was $10 million better than the first quarter, when the company's revenue declined for the first time ever from the quarter before that and it looked like the economy was falling off a cliff. Advertisers, however, are spending less than they used to.

"For the first time, we saw a really big drop in revenue per search," said Jeffrey Lindsay of Bernstein Research. "We thought it wouldn't have deteriorated much for the first quarter, but obviously it has gotten worse." Revenue per search is a measure analysts watch. It goes down when advertisers pay less for ads or buy fewer ads.

The silver lining? The amount advertisers are willing to pay is "no longer declining now as a general rule across the board," said Jonathan Rosenberg, senior vice president for product management.

Google did manage to increase profit 18 percent as net income rose to $1.48 billion, or $4.66 a share, compared with $1.25 billion, or $3.92 a share, a year ago.

But that increase only came because of the cuts in hiring and technology spending, as well as an unusually low tax rate.

The number of employees at Google dropped by 378 to 19,786, marking a definitive end to a madcap hiring spree that characterized the company in the early years following its IPO.

Spending on capital projects plunged to $139 million. Two years ago, it was $575 million.

In an interview with the Mercury News, Chief Financial Officer Patrick Pichette praised employees for being frugal but said it would be wrong to assume that austerity had come to the Googleplex.

"We still have free food," he said. "We still have massages. There is still a doctor on site."

"It's mixed results," said Ron Gruia, an analyst with Frost & Sullivan who praised Google for its discipline. "It's the lowest growth rate since the company went public five years ago."

And if Google, one of the most profitable companies on the planet, is struggling, other smaller Internet companies are fighting for survival.

Schmidt and other executives described how Google has been pulling out the stops to turn YouTube into a profitable business and to begin selling meaningful amounts of display advertising — graphical ads that may soon increasingly replace the smaller, unobtrusive text ads that fueled Google's early growth.

"I think that is the next area where online advertising is going to shift and we are going to see tremendous growth," said Nikesh Arora, president of global sales. Arora said he was also pleased with the "trajectory of YouTube," which is selling more ads. "In the not long too distant future we see a profitable business," he said.

Google stock rose 1 percent to close at $442.60 in regular trading Thursday. But it fell as low as $427.67 in after-hours trading.

Google's Grab For Display Ad Market
Story from Business Week

The search king aims to unseat Yahoo and Microsoft with new, ultra-targeted banner ads. Will Web publishers and online ad agencies bite?

For all its success selling text ads alongside search results, Google (GOOG) can't seem to make a go of it anywhere else in the ad world. In January, it shut down a two-year-old operation that sold print ads in newspapers. A few weeks later it abandoned an effort to buy and sell radio spots. And a TV ad project has been slow-going. To make matters worse, the economy has hit Google's mainstay search ads: First-quarter revenue growth of 6%, though better than many companies in the recession, is far below its high double-digit gains of years past.

In its hunt for new growth, the search giant is redoubling efforts to grab a bigger piece of the largest online ad market it doesn't control: display ads, the pictorial banners and videos that account for more than a third of the $40 billion online ad market. "Google has won the search battle, so its whole future is display," says Jay Sears, executive vice-president for strategic products and business development with online ad firm ContextWeb.

Google faces a tough challenge. Yahoo! and Microsoft's MSN have a huge lead in display ads, largely because they can put ads on their own pages of content, like Yahoo Finance and MSN Money. Google hopes to place more display ads on its YouTube site as well as on thousands of partner sites, from small blogs to The New York Times.

MATCHING ADS TO BUYERS

But it aims to do more than simply help BMW, say, plaster brand ads on car videos or car sites. The fastest-growing kind of display ads, called performance ads, work more like search. They allow advertisers to use data analysis and user-tracking technologies to match ads more closely to likely buyers and measure mouse clicks and other actions so advertisers pay only when ads deliver. Google spies an opportunity to apply its mathematical wizardry to make those ads even more effective. The idea is to make display ads useful knowledge instead of visual clutter. "It's like search—matching people with information they want," says Sergey Brin, Google's co-founder and president of technology. "It just happens to be promotional."

This summer, Google will begin demonstrating what may be its most potent weapon in this emerging battle: an overhauled version of the advertising exchange that it picked up in the $3.2 billion acquisition of DoubleClick last year. Ad exchanges are sort of like stock exchanges for online ads. Web sites put ad space up for auction, and ad agencies, armed with demographic and behavioral data about the people who visit those sites, bid to place ads for their clients' campaigns. Yahoo, Microsoft, and others also run exchanges.

Until now, Google's and DoubleClick's ad-placement systems used different software, so ad agencies had to cobble together programs to place, monitor, and measure ads. In the revamped exchange, they'll be able to use the two systems seamlessly, making ad buys simpler. At the same time, Google is pushing Web publishers, which have been wary of putting prime ad space on the exchange for fear of turning it into a low-value commodity, to pony up more space. In return, Google is expected to give Web publishers more control over pricing and who can bid on the space.

Google will also help advertisers and agencies buy ads more easily and quickly: When ad space with price and audience demographics matches those advertisers set for a particular ad, the spot runs instantly. "The exchange will allow Google to make a go of it in display," says Michael Hayes, executive vice-president and managing director of digital for ad agency Initiative. "It really turns the business model on its head."

The exchange is part of Google's overriding goal to make display ads, which can be expensive to create and complex to manage, so easy that even the smallest businesses can use them. "Google's vision is to grow the pie for everybody," says Neal Mohan, Google's director of display products. For instance, Google introduced a free Display Ad Builder last fall that lets anyone use simple building blocks to create an ad.

Some 80% of those using it had never bought a display ad before. Marc Loge, who handles online ads for the Wilshire Grand Hotel in Los Angeles, had run search ads exclusively and didn't want to bother with display. But at Google's urging he quickly created a bare-bones ad and ran it on Google's Web sites. "We've gotten great returns—even better than search," says Loge.

DEPARTING AD EXECS

At the same time, Google wants to bring onto the exchange more large Web sites, which control the bulk of display-ad revenues. DoubleClick's relationships with the biggest Web publishers may give it a leg up. "Google is very central to our strategy," says Curt Hecht, president of the tech development unit at VivaKi, ad agency Publicis Groupe's media and online operation.

Still, the exchange won't be an instant game-changer. Since exchanges require a new mindset at agencies and publishers, they may take time to catch on widely, says Mike Walrath, founder of Yahoo's Right Media exchange. And some think anything but search gets short shrift inside Google. "Display is still the redheaded stepchild of their ad initiatives," says Rob Leathern, CEO at CPM Advisors, which helps advertisers improve their online campaigns.

Insiders say that's partly why Google has seen a stream of departures of ad executives in the past two months who see more opportunities elsewhere. Most recently, David Rosenblatt, president of Google's display-ad efforts and former DoubleClick CEO, left in May. But Brin insists Google is serious. "Display is going to be a large business for us," he says. "It's not just an experiment."

Why Brick And Mortar Websites Aren't Doing The Job
Story from BizReport

In a recent study from Internet Engine, researchers found that ecommerce-only sites, such as Amazon.com, were out-performing brick-and-mortar store websites by a 3 to 1 margin. The study found that even manufacturers were better utilizing search marketing than retailers. Why? A big part of the problem is the message of brick-and-mortar websites.

According to the most recent internet marketing studies, online shopping hubs appeared in about 30% of keyword search queries.

Selling on the Internet is different than selling in-store," said the owner of Internet Engine. "If you look at the large brick-and-mortar websites, their brand is at the forefront of their online presence. But, they aren't putting the product brands at the forefront."

Brick-Mortar-Stores

To better engage consumers, many consultants suggest putting key product brands at the center of any online campaign. Offering in-store pickup is another way for brick-and-mortar stores to pick up some of the online shopping slack. The best way to garner consumers' attention, though, is through content.

First, the content has to be product centered. Give consumers - and search engines - the information needed to return the right search query results. Second, make the site easy to read for consumers and for search engines and finally, include the right links. Being part of the right online community is a huge step for retailers trying to reach a specific community - online moms, gamers, fishing dads, etc. Branding is important online and offline, but the content has to stand up to the pressure of search engine algorithms.

"We've found that brick-and-mortar stores can do well with paid listings. They know how to advertise or sponsor a keyword, they struggle with SEO copywriting and optimizing content for top organic keyword positions."

MSN Search Director to Leave Microsoft

Another Microsoft search executive is rumored to be leaving the company. The latest news broke in early March 2007 as Microsoft continues to struggle to compete with Google in Internet search.

According to Reuters news service, the Microsoft executive most responsible for closing the gap on Web search with Google is leaving MSN. Chris Payne, corporate vice president of the new Windows Live Search, is leaving Microsoft to start his own company in Seattle, said the source, who asked not to be identified. Microsoft representatives declined to comment.

The news comes at a time when Microsoft continues to struggle for share of the keyword search market against Google. Microsoft has overhauled MSN and related search products several times in the last two years with many new looks and features.

Google still handles over 3 billion keyword search queries monthly, while Microsoft averages just over 700 million searches a month according to the latest comScore numbers.

Microsoft has improved its share of the keyword search pie however the market share increases have only been marginal.

Mr. Payne, who rejoined Microsoft in 2001 after a three-year stint at Amazon.com, played a key role in persuading the company to develop its own search engine instead of relying on Yahoo to power MSN search results. Prior to Amazon, Payne spent eight years at Microsoft.

Microsoft's failure to recognize the keyword search medium and late start in the search medium has kept MSN at a huge disadvantage versus Google and Yahoo. Those companies made billions selling advertising tied to keyword search results while Microsoft scrambled to build a search business model of its own.

Payne could become the second executive from Microsoft's Internet arm in the past week planning to leave the company. Blake Irving, a Microsoft vice president who oversees the new MSN AdCenter that sells ads next to search results, also plans to retire from Microsoft.

"SEO Friendly Content Management Systems" ... Don't Believe the Hype !

In recent weeks many of our clients and associates have been receiving an onslaught of emails, offers, and unsolicited marketing messages boasting of the search engine friendliness of new CMS Tools.

In reviewing these new CMS Tools and working with several of the most popular CMS Tools on a regular basis, we have yet to find a truly "SEO Friendly" CMS Tool. The marketing claims and "PR Hype" touting the SEO capabilities of CMS Tools is most deceiving and spinning out of control of late.

If you are considering moving a website to a new CMS Tool understand that despite all of the sales rhetoric from CMS developers, a vast majority of CMS tools lack core SEO principles in their design structure and thus still require the highly specialized dynamic-database SEO skills sets of a proven search engine optimization firm. If you plan on moving your website to a new CMS platform, also plan on engaging a skilled organic SEO company to fully optimize the dynamic website and CMS powered page templates and url renderings in order to achieve and maintain keyword ranking success in the search engines.

The list of qualified dynamic, database-driven search engine optimization specialists is actually quite small. Only a very tight circle of less than (10) established seo firms have the technical skill sets required to execute and provide the complex database optimization skill sets required to "open-up" the content(s) of CMS powered websites to the major search engine spiders.

Here are just a couple of topline SEO requirements, proven SEO principles and SEO Best Practices that many CMS Tools have overlooked and fail to accomodate:

SEO Shortcomings of Many Content Management Systems - CMS Tools.

URL Naming Conventions: many CMS Tools produce URLs that are either query-laiden or meaningless. Why even publish a page containing: ID=, Session IDs, or using generic URL names like department8.xml ? The URLs naming convention should at least attempt to indicate the content theme of the page whenever possible. Many CMS Tools populate pages with meaningless url names. If the only difference in your URL names is a number you are in for a long, steady, uphill climb, and roller-coaster results in the search engines.

W3C HTML Code Compliance and Validation: although many web and CMS developers beg to differ, it is essential that code validation principles and standards be adhered to for favorable Search Engine Placement. Invalid HTML page code is a contributing factor and can be directly tied to both securing and maintaining strong natural keyword placement. Many CMS tools publish error-filled page code that chokes spiders and potentially interrupts full page delivery.

"Loose" Content Management Systems: that refresh often can create tremendous confusion with search engines, resulting in "Content Trust" and site/URL fluctuation factors that prevent websites from attaining top keyword placement. Loose CMS Tools that "refresh" often can miminize search exposure and reduce reach on qualified, in-market users searching on keywords that define the company and brands. CMS powered websites programmed to dynamically update and change regularly are 'Red Flags' to the search engine spiders. Loose CMS Tools often leave "backdoor links" that conflict and compete with many "front-door" links on the same site.

Heavy JavaScript & Cascading Style Sheets (CSS) Issues: many CMS Tools use layer after layer of repetitive Javascript code that turns off spiders and weighs down pages making them very heavy and difficult to index. Search engine spiders have to perform olympic feats plowing their way through the redundant Javacript calls and heavy CMS produced page code. The endless JavaScript errors make content location more diificult for spiders, inflate the size of the pages making the rendered page far larger than necessary and any foundational code errors, are being be multiplied by the sum total of pages, and as spiders struggle to crawl and dig deeper (as programmed) they encounter multiple levels of unoptimized, CMS-powered, error-plagued code. Many CMS Tools fail to properly define styles and guidelines in a single reference point thus eliminating redundant page attribute definitions that prevent spiders from quickly locating, crawling, and storing Relevant Content.

These are only a limited number of the topline site design elements that often keep CMS powered websites from performing well in the search engines on in-market keyword search phrases that drive new business. Conducting a comprehensive keyword analysis with (real search data from Google) PRIOR to converting to a new content management system or CMS Tools is also a great idea.

Marketing Managers, IT Directors, Webmasters, and Internet Publishers must consider proven Search Engine Optimization principles and SEO Best Practices before making any moves to convert to Content Management Systems and CMS Tools.

If you plan on moving your website to a new CMS powered dynamic platform, also plan on engaging a proven dynamic database-powered site optimization firm to fully optimize the CMS-powered website in odrer to secure and maintain premium keyword positions on popular keywords that best define your industry.