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Gmail generating more controversy

Google claims that anyone accusing it's Gmail service of privacy violations simply misunderstands its methodology.

And now, the Mountain View, Calif.-based company has responded with a dedicated Web page addressing the issue: "Gmail and Privacy," which can be accessed from the Gmail home page.

Gmail, Google's new email service, has come under considerable scrutiny since the company announced its intention to enter the email market in late March.

Because of its controversial ad model, in which an automated program scans user's emails in order to deliver contextually relevant text ads, Gmail has drawn the ire of consumer activists, privacy advocates, and even federal regulators nationwide.

"Some of the present dialogue," it says, "has been inaccurate, especially with regard to privacy concerns surrounding Gmail. Gmail does not represent a compromise or invasion of anyone's privacy," the company states.

Google created Gmail with the idea of turning the folder-based model of most email services into a searchable database/archive model. Currently still in beta-test mode, Gmail will be free to users, and will offer them virtually unlimited storage space, at 1 gigabyte per user.

The tradeoff for a free service with unlimited space, of course, is advertising--but these will be the less noticeable text ads that Google already displays on content sites across the Web.

Privacy advocates and certain government officials are wary that the program that scans user's messages to display context ads is in violation of the privacy of both the sender and the receiver.

However, despite these protests, many of Gmail's beta-testers, which include industry analysts and journalists, have dismissed privacy concerns as being wrong-headed. They say that those vetting concerns over the service have most likely not used it yet. The text ads, they say, have a benign, unobtrusive presence on the page.

According to Washington Post Columnist Leslie Walker: "I have been testing Gmail for weeks and find the value it delivers--including innovative sorting features and a gigabyte of free storage--outweighs any worries I have over Google's computers scanning my mail for such key words as 'flowers' or 'cameras,' then displaying ads alongside messages. I view it as an important experiment in the Internet's drive to make advertising more relevant," she says.

New York Times columnist David Pogue notes that Yahoo! and MSN Hotmail already bombard users with ads on their respective services. He says that Gmail's text ads are far less intrusive. "The ads are so subtle, so easily ignored, that it's hard to imagine anyone preferring the big, blinking slow-loading graphic ads that appear every time you check for messages at the Hotmail and Yahoo! Mail sites."

MSN's Slate magazine writer Paul Boutin writes: "Gmail isn't an invasion of privacy, and its ads are preferable to the giant blinking banners for diets and dating services that are splashed across my other Web mail accounts." He also adds that many Gmail critics fail to recognize that automated programs like Firewalls, antispam, and antivirus programs already scan the contents of incoming email messages.

Nevertheless, the privacy outcry over Gmail continues. According to a Washington Post report, dozens of privacy advocacy groups were undersigned in an open letter to Google urging it to reconsider its contextual advertising plans. The same report says that an international privacy group has also filed complaints against Gmail with governments in Europe and elsewhere. In the United States, California Senator Liz Figueroa (D-Fremont) last month introduced a bill that would impinge upon Gmail's ability to scan messages.

However, late Tuesday, Figueroa revised the bill, hoping that the measure would be brought to a full vote before the Senate Legislature recesses on Friday. Among her revisions is a clause that would no longer require the consent of senders in order to serve text ads--a good thing for Google, as it was widely believed that establishing sender consent would be an obstacle to the deployment of Gmail in the state of California.

In addition, the bill allows email and instant messaging programs to scan messages--as long as providers do not retain the data for any reason, sell to third-parties, or show any employee or other "natural person." Also, if requested, it says providers must permanently delete advertising messages.

"This will be the first law in the nation to ensure this type of technology is never used to create files on consumers," Figueroa said in an interview.

Source: Mediapost

Google and search engine strategies

Search engine companies seem to be embroiled in a fight, trying to outdo each other, while at the same time trying to come up with a better mouse trap.

Microsoft said it is planning to extend its new Web search technology to include search for information contained on personal computers, e-mails and databases.

Google is reportedly working on a similar feature to allow searches on local hard drives on PCs, while it is already locked in competition with Yahoo in the local search segment.

Yahoo will use its community of users to deliver more customized search results, something that rivals such as Google and Microsoft will have a harder time doing, Chief Executive Terry Semel said on Thursday.

The comments come as Microsoft, Yahoo and Google position themselves for major upgrades over the next year as they try to attract more users and advertising revenue by enhancing their search services.

Terry Semel, a former Hollywood studio head credited with leading Yahoo back to a healthy Web property, reiterated that the online advertising market was poised for rapid growth as advertisers begin to follow media audiences to the Internet from television and other traditional sources.

"When ... you talk about local search, you're opening up a whole other arena of advertising," Semel, monitored by Webcast, told investors at the Goldman Sachs Investment Conference in Las Vegas.

Customized search is considered the next step in improving the relevancy and accuracy of search results. If search engines knew more about the interests and habits of Web searchers, experts say that search engines would be able to deliver much more precise results.

Semel also said that his goal was to enhance Yahoo's features, which include Web search, personals, shopping, and Web-based e-mail, so that visitors would spend more time at Yahoo's Web properties, increasing their exposure to advertising and the chance that they would spend more money.

Yusuf Mehdi, the executive at Microsoft's Internet unit MSN leading the charge on search, said that Microsoft had already started to discuss plans to integrate its new search technology with Longhorn, the code name for the next version of Windows due out in 2006.

"We will do an MSN search starting shortly with a beta and well before Longhorn ships, everything across local PC search, e-mail search, Web search, deep database search," Mehdi said at the same conference on Wednesday, referring to the test version of Microsoft's search technology due out later this year.

Mehdi said that search technology for the PC would appear well before the launch of the next version of Windows, although the details had yet to be worked out.

Ironically, Microsoft offers the ability to search for files within Windows, but Mehdi admitted that it could be done much faster and efficiently.

"Why does it take so much time to search the PC when you can index the whole Web and find it in milliseconds," Mehdi said.

Google is also aiming at offering its services on the desktop with a new search tool, code-named Puffin, to exploit the lack of fast search capabilities in Windows.

Source: Yahoo Finance

Factiva brings together information

Although the Internet has given the person on the street access to more information than ever before, business users need even more.

So argues Clare Hart, boss of search firm Factiva which was formed in 1999 from Dow Jones Interactive and Reuters Business Briefing.

Factiva brings together information from more than 9,000 sources including newspapers, newswires, transcripts of news programmes from the BBC and other broadcasters, plus historical stock market data.

It is a program for desktop machines that lets customers search for information among this pool of sources.

In its pre-Factiva incarnation, it was used by librarians and other information professionals whose job it was to find and supply facts to other people.

The growth of the web as a vast corpus of data threw that role into question. "In 2000 and 2001 so many times we had customers saying to us that most of this is available for free on the web," said Ms Hart.

But, she said, 60% of what Factiva offers is not online for free. And, said Ms Hart, even if all the sources were available online she is sure that Factiva would still have a role to play.

The reason for this is because, as Google and others are starting to realise, the sheer number of results a search system can serve up are not enough.

"When you do a search you're not interested in quantity," said Ms Hart, "you want relevant research and quick access to relevant results."

"I think people get very frustrated by Google results," she said. "The lack of quality results and the fact that they have to register with more and more websites."

As a business tool, Factiva knows that if you search for Orange you will be looking for the phone firm rather than the county or fruit.

What is important to Factiva users is the fact that they know the sources it uses have a history and legitimacy that many on the web do not yet possess.

Also information tends to make it on to the wires long before it gets on to the web.

But, said Ms Hart, many firms use both Google and Factiva side by side. And the growth of the web and the success of search sites has forced firms like Factiva to react, said Ms Hart.

Factiva, like Google and many other search engines, can be queried via a toolbar and the service has been reworked to reflect users' growing familiarity with the net and the tools it is creating.

Now, for instance, news feeds that come out of Factiva are in web formats allowing them to be put into documents and pages to provide up to data information.

"The web has turned everything upside down and has made it so much easier to get access to information," she said. "Everyone has become a searcher."

Source: BBC News

Google's relevancy no better than its competitors

A report by Vividence (a market research firm in San Mateo, CA) found that Yahoo, MSN, Ask Jeeves and Lycos were all about as successful in finding information for specific queries.

Despite its stellar reputation, Google's search engine performed no better than its online competitors in returning relevant results in a key category, according to a study released Tuesday. However, Google outperformed its competitors in the overall rankings of the survey by a wide margin.

The study's results are based on surveys of 2,000 Internet search users. They were asked to conduct a variety of queries that were intended to show how individual search engines performed and which of them generated the most user satisfaction.

The results among the five Web sites for so-called complex searches were virtually indistinguishable. In this category, users had to find the answer to four questions, including the leading cause of death in the United States for people in the age group of 25 to 34.

Google users found the correct answers 55 percent of the time. MSN and Lycos users came in at 54 percent, followed by Ask Jeeves at 53 percent and Yahoo at 52 percent.

However, Google trounced the others in terms of customer satisfaction for the category: 68 percent of its users were satisfied, compared with 59 percent for Yahoo, 56 percent for Ask Jeeves, 54 percent for Lycos and MSN, and 53 percent for Ask Jeeves.

"Google is getting a brand halo in terms of satisfaction," said Liz Edison, who oversaw the study for Vividence. "When there is actually a correct answer, no one is better or worse than the other."

The study comes as Google, based in Mountain View, awaits an initial public offering. The company's search engine is the most popular, with a 35.9 percent market share in March, followed by Yahoo at 30 percent and Microsoft at 15.7 percent, according to ComScore QSearch, a market research firm.

Gary Stein, a senior analyst for JupiterResearch said the study findings show that Google's lead position in search isn't assured. He said Google has the advantage of a strong brand.

However, he added, the company faces stiff competition now that the search industry has become one of the most lucrative on the Internet through the sale of targeted advertising.

"Less we forget, five years ago, no one had heard about this little company Google," Stein said. "I wouldn't call the game over."

According to the study, 3 out of 4 Internet users say they have a primary search engine. However, half said they use another Web site if they don't find what they want.

Google performed better in categories other than complex search. It beat all comers handily when users could pick their own search topic, looked for local information such as a nearby French restaurant and tried to track down product information, including the manufacturer's suggested retail price for a Ford Mustang coupe.

Among the reasons users for Google's high marks were the Web site's stripped-down graphics and clearly delineated advertising, according to the study. That pushed Google to the top in the overall ranking for customer experience. Yahoo was No. 2, followed by Ask Jeeves, Lycos and Microsoft's MSN.

Gary Price, a librarian and editor of ResourceShelf.com, an online guide for finding information, said the survey's results illustrate what he has been saying for a long time. Some search engines are better than others for different kinds of queries, he said.

"Google is wonderful, and it does a lot of wonderful things," Price said. "But it is not the end all and be all of Web search. Others do a good job."

Source: SF Gate.com

More on Microsoft's new search technology

Microsoft's new search system will give consumers a new method for searching across any data type, said Yusuf Mehdi, head of Microsoft's MSN division. His remarks were broadcast online.

The technology is designed as a major search improvement for users trying to grapple with an increasing amount of digital information, offering a single hunting system instead of several different search engines, file management systems or other tools.

Microsoft's Windows operating system, which is on 90 percent of personal computers, provides tools for file management on PCs. But Mehdi conceded it doesn't have a quick system for searching.

"I think it's fair to say that we will tackle all of the things that you expect, including PC search, as part of the MSN effort," Mehdi said.

Microsoft plans to release an early version of the technology soon, as part of the software giant's push to compete with Internet search leader Google Inc. A final version is expected in the next 12 months, he said.

He added that the new technology would be available long before the next version of Windows, which isn't expected until 2006. Microsoft has previously said that improving PC search will be a key component of that system, code-named Longhorn.

Joe Wilcox, an analyst with Jupiter Research, said the end-to-end search technology illustrates how concerned Microsoft is with besting rivals including Google, the current Internet search favorite. He expects Google to also release technology soon for searching the desktop.

The concern is that Google and others will increasingly encroach on Microsoft's control over desktop computing.

"Microsoft is scrambling to protect its turf," Wilcox said, noting that rival Apple Computer Inc. also has a more advanced system for searching both the Internet and Apple computers.

Microsoft chief executive Steve Ballmer has previously conceded that one of the Redmond, Wash., company's big missteps was that it didn't initially invest in building its own Internet search technology, relying instead on a vendor to provide MSN's search results.

But as Google, Yahoo! and other Internet search options have exploded in popularity, Microsoft has turned massive resources toward its own search technology. The effort extends across many of Microsoft's business units, but the most high-profile moves are in its MSN division.

Mehdi told the analysts that personalization is going to be an important part of Microsoft's search efforts.

The company hopes to soon have on its MSN Web site a system similar to Amazon.com's technology that will recognize a user even if that person hasn't expressly signed on to the Web site, he said. It also is working on a system that will track a user's movements over the Internet and use that data to build a more personalized Web page based on the person's surfing habits.

Mehdi conceded that such efforts create thorny privacy issues.

"We're going to make a very big investment in personalization, but it's very clear that privacy and consumer trust is really a key thing in getting your arms around personalization," he said.

Mehdi added that "some companies have just not done it right," and lost costumers as a result. In an apparent jab at Google, he said Microsoft sees a big opportunity inserting advertising into e-mails, but thinks any such effort has to be done right.

Privacy advocates have criticized Google's Gmail e-mail service because of plans to scan e-mails for keywords and insert ads based on what the user appears to be writing about.

Analysts also have noted that Microsoft has had its own troubles building consumer trust. Some say that could be a barrier to Microsoft's success in winning users over to its personalized search technology.

Source: WJLA.com and ABC 7 News

A football and soccer search engine

Football and soccer fans now can find the latest football and soccer news and sports websites, with the launch of a new search engine dedicated specifically to these games.

Megasoccer Search, which claims to be the world's first search engine devoted to football, has an index of over 6,000 soccer websites.

The engine only searches footy content that has been reviewed to provide users with “the most relevant, up-to-date results for all queries”. Using the Advanced Search page, you can set strict rules on language, search terms and the numbers of results.

Mike Flynn, chief executive of Fast Web Media (the company behind the engine), said:

"The technology which has been applied to Megasoccer Search enables users to get the information they want on soccer without trawling through pages of unrelated sites, setting Megasoccer Search apart from other generic search engines."

Megasoccer Search has tied up a partnership deal with Premier League site 4thegame.com and search boxes and buttons will also be distributed to other global soccer sites.

Source: Web User.co.uk

Yahoo revamps Messenger 6.0

Yahoo's Messenger 6.0 release has the makings of an aggressive leap ahead for Yahoo's real time communication technology and comes on the heels of product refreshes from rivals America Online, ICQ and MSN.

With the upgrade, Yahoo! has graduated Yahoo! Messenger to version 6.0 – the client's first major jump in digits since October 2001. A beta of the client puts entertainment features on par with the competition.

Customers can now tune into LAUNCHcast Radio and occupy themselves with two-player games such as Chess, Checkers, Dominoes, Pearl Hunter, and Word Race.

In addition, gamers will have the ability to compete for high scores in single-player games, which are recorded in Messenger's new games tab. Games are launched from directly within the IM window.

Like the competition, Yahoo! has brought self expression to the forefront of the user experience. Yahoo! Messenger 6.0 includes build-your-own avatars, more Yahoo! IMVironments, new emoticons, and verbal animations that express attitude and emotion called "audibles."

The release taps deeply into Yahoo!'s wealth of Web properties. The most obvious add-on is a Yahoo! Search field embedded into the client's interface. Yahoo! recently ditched Google in favor of its own homegrown algorithmic search engine technology. Tight integration with Yahoo! Mail remains a key feature of the client, although much improved in version 6.0.

Mirroring Microsoft's MSN Messenger 6.2, Yahoo's installer provides users with the option of installing a browser toolbar and assigning themselves to the Yahoo! Internet homepage. Yahoo! has also borrowed a page from the AOL playbook with a new pop-up window.

Other noteworthy features include Yahoo!'s new "Stealth Mode" and address book. Stealth Mode allows users to manage contacts so that they can now either appear to be on or offline to a specific friend or group of friends. The Yahoo! AddressBook searches, sorts and communicates with contacts all from within the client.

Commenting on the release, Lisa Pollock Mann, senior director of messaging products at Yahoo! said, "With this newest version of Yahoo! Messenger, we are changing the instant messaging landscape by introducing new ways for people to express, share, and manage, making instant messaging more essential to their lives.

By integrating unique features with compelling services from across our network, Yahoo! Messenger continues to enable powerful interactions between friends and family."

Source: Beta News.com

Online ad sales up almost 40 percent

The first-quarter estimate significantly outpaced online ad sales for the same period in 2003, when they accounted for $1.6 billion, a nearly 40 percent increase, the Interactive Advertising Bureau said.

Furthermore, the first-quarter returns were higher than those recorded for the fourth quarter of 2003, when the market reached $2.2 billion.

The fourth quarter is typically the most successful period for ad sales across all communications and publishing mediums.

The IAB said Monday that online ad sales reached almost $2.3 billion in the first quarter of 2004, the highest three-month total since the group began tracking the sector in 1996.

Greg Stuart, president of IAB, said he was "surprised" by the strength of the sector's performance and cited research from New York-based eMarketer that indicated Internet penetration will overtake cable TV market numbers this year and that the online ad sector is ready to bloom anew.

"You have more users, better advertising platforms and fewer ads that make more sense, which is a nice environment," Stuart said. "If you combine those factors with some of the other Internet statistics we're seeing, such as broadband access overtaking dial-up in the next year or so, it gives you an idea of the market's potential."

Many researchers have already predicted strong years ahead for the Web ad space. eMarketer expects U.S. online ad sales to reach $8.4 billion for 2004, an increase of more than 15 percent from last year, and higher than the 2000 peak of $8.1 billion.

Search engines are expected to provide a significant chunk of that revenue. Search advertising more than doubled to $2.3 billion in 2003. Banner ads and other types of traditional Internet advertising dropped slightly last year, to $4.9 billion.

Stuart credited the recent upswing to momentum gained over the last three years, as opposed to short-term market factors. While the executive remained bullish on innovative advertising strategies used by market leaders such as Google, he said the most effective catalyst for growth has been consistency.

"Can you look at the market from one year ago and say things are really different in a lot of ways? I'd say no," he said. "The fact is that there is a lot of wind at our backs because the message has been consistent for at least three years that the Web offers advertisers the most cost-effective alternative."

Stuart highlighted the significance of the quarter-to-quarter growth versus the final period of 2003. He said he has never seen advertising media "override seasonality." The first quarter is often the toughest across the industry. He is now expecting annual growth of 30 percent or more for the sector, an amount that exceeds predictions by many financial analysts, ranging from 15 percent to 24 percent.

Looking forward, Stuart said he expects more companies to begin fighting for the increasing number of dollars at stake in the sector. He also predicted that some companies will return to business models from the golden era of the Internet, or roughly five years ago.

"I think you'll see some people dust off older business models and bring back some ideas we heard about a few years back," he said. "It should be pretty entertaining."

Stuart said the local advertising segment, which has become a major focus for some of the Web's largest companies including Google, should continue to see success.

IAB's research is conducted by the New Media Group of PricewaterhouseCoopers, which compiles data supplied by companies that sell advertising on the Internet.

IAB's first- and third-quarter revenue reports are estimates. The actual figures are released along with second- and fourth-quarter data.

Source: C-Net News

Google looking at expanding its technology

Industry insiders say Google is considering entering into a kind of intimate technological relationship with its users.

Google needs to expand its technology offerings into other areas if it's going to thrive, say many experts.

In particular, the company needs to defend itself from Microsoft. The Redmond, Wash., software giant plans to unleash the next generation of its Windows software, code-named Longhorn, sometime in 2006.

Many experts expect that Microsoft will seek to suffocate Google with a built-in function that can scour the Web or search any of a user's computer files, including e-mails and Word documents, all with a simple click of the mouse on a key word or phrase.

"It's clear to me that search is going to become more deeply embedded in the operating system. It's where the value is," said Michael Robertson, chief executive of Lindows, a San Diego company that competes with Microsoft by selling a version of the Linux (news - web sites) operating system.

Jeffrey Ullman, a Stanford University computer science professor who advised Google co-founder Sergey Brin, said the company has no choice but to fight Microsoft on its home turf. "If Microsoft controls the desktop, they'll probably strangle Google," he said.

Google refuses to discuss its plans, and the company is now in a quiet period surrounding its initial public offering. Microsoft also declined to discuss its search plans.

But Google hasn't been dawdling. It has talked with a number of industry players, including Lindows, about integrating its technology into operating systems, the core layer of software that runs a computer.

Lindows technology Ullman said he has looked at Lindows and believes it could be a good fit for Google. He has passed on his views to Google but does not know how Google will proceed.

Google is reportedly considering a half-step: an add-on desktop tool that will allow computer users to search their own files as well as the Web.

But some experts say that such a search capability would be inferior to one that is embedded in the operating system.

An operating system that incorporated Google technology would allow users to conduct Web or file searches from inside e-mails or documents with a single mouse click. More important, such an arrangement would allow Google to own all the search capabilities on a computer, driving traffic to its ad-supported search results.

Google's best chance to integrate itself into an operating system may be to work with one or more vendors of Linux, an increasingly popular operating system that works on open-source principles, which allow outside programmers to freely modify it or build new programs. Linux's main advantage is that it is cheaper and simpler in design than Microsoft's Windows.

But Microsoft software runs more than 90 percent of the world's personal computers. A Google-Linux partnership might not make much of a dent.

"That sounds to me like people fishing around for the next big thing, the big battle between Google and Microsoft," said David Thede, president of dtSearch, whose technology helps power a search tool from HotBot, a Google competitor.

Google could avoid a pitched battle at the individual computer level and instead seek to establish itself as a collection of Internet services, much like Yahoo is doing.

Google has been building one of the world's largest supercomputers, a network of as many as 100,000 low-cost servers scattered around the globe. Google could layer any number of products on top of that network, such as online document storage or a hosting service that would allow businesses or individuals to access applications from anywhere in the world.

Already, Google is experimenting with Gmail, an Internet e-mail service with lots of storage and the ability to search e-mails and the Web. It is also offering a shopping search function, social networking tools, online discussion groups and localized searches.

Experts believe Google could potentially turn its network into a full-fledged "online operating system" that manages everything, effectively allowing the user to bypass Windows. Users would simply go online for all their needs.

"That seems perfectly real and plausible to me," said Brad Templeton, a longtime technology entrepreneur and chairman of the board of directors of the Electronic Frontier Foundation. "There are many technically appealing things about centralization."

Rich Skrenta, co-founder of the search tool Topix.net, said Google appears to have a major advantage over its competitors in that its computing network appears to have been built using inexpensive hardware. If true, Google can quickly and inexpensively expand Z whenever it develops a new product that requires a lot of processing.

Centralization online However, some observers are skeptical that Google could persuade users to manage their personal and business lives online.

"This has been tried before, and it doesn't work," said Eric Raymond, president of the Open Source Initiative. "People don't like not having physical control of their bits and bytes. You put your data on someone else's servers and it's fundamentally out of your control."

Besides, Raymond said, Microsoft has yet to emerge as a viable threat that would threaten Google's dominance. "I don't see enough there for Google to be erecting a business strategy against," he said.

Thede of dtSearch said Google has yet another option: try to succeed where Netscape Communications failed. "What about a Google browser?" he said.

Source: Yahoo News

ValueClick Media launches ChannelSearch

ValueClick Media launches ChannelSearch, a solution that enables advertisers to leverage the power of contextually-targeted ads and search.

ChannelSearch simplifies the online media buying and management process, while providing advertisers with access to two online marketing channels. Based on a flat-rate cost-per-click (CPC) pricing structure, ChannelSearch delivers targeted visitors through a combination of distribution methods, including:

Standard Graphical Ads
Strategic placement of web-based display ad units across the most contextually-relevant of 17 targeted content channels on the ValueClick Media network, which reaches 66 million unique users in the U.S. and 120 million worldwide.

Keyword Listings
Premium placement of text listings based on 17 predefined categories of keywords within ValueClick's Search123 pay-per-click search network.

SimpliContent Ads
SimpliContent is a new rich media ad unit that combines standard graphical ads with search listings, by dynamically displaying a marketer's text listing, logo and product image within banner ads appearing on contextually-relevant content sites throughout the ValueClick Media network.

The SimpliContent ad unit dynamically pulls an advertiser's Search123 listing into a category-based banner ad, and targets the ad across contextually-relevant sites. The rich media ad also includes the option to display the advertiser's logo and one additional product image.

"ChannelSearch delivers highly targeted visitors by blending two of the most powerful forms of online direct marketing -- search and contextual ad placement," said David Yovanno, general manager, ValueClick Media.

"ChannelSearch allows our clients to benefit further from our core competencies in search and contextual advertising through a simple, unique package, and builds upon ValueClick's reputation as an innovator in performance-based online marketing."

Source: Value Click

Internet advertising revenues rising to new records

Internet advertising revenues have risen to the highest quarterly total since the Interactive Advertising Bureau (IAB) and PricewaterhouseCoopers (PwC) began tracking revenues in 1996, marking a pronounced recovery from the dot-com doldrums.

The previous record was set in the fourth quarter of 2003. Before that, interactive ad revenues hadn't seen such heights since 2000.

First quarter estimates represent a 3.9 percent increase over the fourth quarter of 2003, an especially significant jump due to the holiday spending typically associated with the fourth quarter.

The first quarter estimates also showed a 39.8 percent increase over the $1.6 billion brought in during the first quarter of 2003.

"All through 2003 we published positive revenue results for Internet advertising and the trend continued through the first quarter of 2004," said Tom Hyland, partner and chair of the New Media Group at PricewaterhouseCoopers.

The researchers estimated the revenue figures by surveying the top 15 online ad sellers and extrapolating to calculate the total industry revenue figure.

The IAB and PwC typically release estimated top-line figures in the first and third quarters. They then provide actual figures with additional detail in the second and fourth quarters. Actual first quarter revenues are expected to be released in July, 2004.

Source: Click Z

Google offering guidelines to software developers

Google's guidelines say software should follow common-sense rules of politeness: It should admit what it's doing, permit itself to be disabled and not do sneaky things like leak personal information.

In an attempt to cut down on misbehaving adware and spyware, Google has released a set of suggested principles for software makers to follow when writing programs that embed themselves on Internet users' PCs.

Google's software principles come as interest is growing at the state and federal level in regulating and perhaps even banning adware and spyware. Utah has already enacted such a law, and the U.S. House of Representatives and the Federal Trade Commission have convened hearings on the issue in the last few weeks.

In a sense, Google's move is a defensive, self-regulatory measure aimed at encouraging the mainstream software industry to find a way to make spyware and adware acceptable.

Google makes products for Windows, like the Google Toolbar and Google Deskbar, that transmit some information about Internet behavior back to its Mountain View, Calif., headquarters, and these tools could be regulated by some of the broader laws being proposed. Among its other new ventures, Google appears to be making a sizeable bet on providing an ad-supported desktop search tool, as reported Wednesday in The New York Times.

Google's principles also are designed to focus criticism on pop-up adware applications like those created by WhenU and Claria (formerly Gator).

Those pose two problems for the search engine giant, which recently filed for an initial public offering: First, they may launch annoying pop-up ads when an Internet user is doing searches on Google's Web site, and second, their pop-up ads may not be blocked by the Google Toolbar.

If that happens, "you may have intentionally or inadvertently installed programs such as the Gator Ads Network or Kazaa on your system," Google advises its Toolbar users.

"Our goal is to encourage industry discussion," said David Krane, Google's director of corporate communications. "We're asking our partners to do the same and have asked for their feedback on these proposed principles."

Google's move follows an earlier attempt by the Center for Democracy and Technology, a Washington, D.C.-based nonprofit group, to define good and bad software practices. The group's guidelines say programs should allow themselves to be shut down and should not engage in "surreptitious surveillance."

Source: C-Net News

Overture to expand services with large advertisers

David Karnstedt, general manager of direct business at Overture, said the paid search provider's focus is not on rising competition from Google but following its parent company's lead and luring money from traditional direct marketers.

After building its advertiser base with small businesses, Yahoo's Overture Services sees its biggest growth opportunity from large, traditional direct response advertisers.

"Our real challenge is not necessarily the other people that participating in the search space but shifting dollars from other direct response advertisers, like direct mail and yellow pages," he said at yesterday's Piper Jaffray Technology Conference in New York.

Search advertising drew $2.5 billion in 2003 compared to $48.6 billion for direct mail and $14 billion for yellow pages.

Yahoo's chief sales officer Wenda Harris Millard trumpeted the turnaround of the portal's brand advertising unit to its focus on industry verticals and the largest advertisers in those sectors.

"We're really focused on those top echelon advertisers," Karnstedt said. "Those are the type of people who help us drive our key economics."

To appeal to larger advertisers, Karnstedt said Overture would offer a portfolio of direct response vehicles. He said Overture would introduce its local search product this quarter and expand its performance-based product line to include its keyword search advertising, contextual listings, and paid inclusion.

The wide array of products, he said, would appeal to traditional direct response advertisers just getting fully involved in search marketing.

"What we're seeing amongst our most sophisticated marketers is less of a focus on the unit price, or price per click, and more of a focus on the overall return," he said.

Source: DM News

70% of businesses will have an online presence

Yahoo released the results of a survey today which reveals that seventy percent of small businesses either have or will have an online presence by the end of 2004. The Yahoo Small Business survey was by Harris Interactive.

By comparison, in October 2002, only 35 percent of small businesses had developed their own web site, according to a Small Business Administration report.

The Yahoo Small Business survey, released today in conjunction with National Small Business Week, provides results of a national survey of more than 1,000 U.S. small-business owners and measured business-growth trends faced by owners of businesses with less than 100 employees.

The survey found that 35 percent of small business owners feel that having a web site is key to expanding their business, compared to 19 percent of owners who believe hiring additional employees is important for growth.

Additionally, most respondents (94%) feel that small businesses have a “moderate” to “very large” impact on the country’s economic growth.

Source: Search Engine Journal

Google to offer new desktop search tool

Google is expected to introduce a new desktop search tool soon and is the clearest indication to date that Google hopes to extend its search business to compete directly with Microsoft's control of desktop computing.

Improved technology for searching information stored on a personal computer, the daily said, will also be a crucial feature of Microsoft's long-delayed version of its Windows operating system called Longhorn.

That version, not expected before 2006 at the earliest, will have a redesigned file system, making it possible to track and retrieve information in ways not currently possible with Windows software.

Google's move, the daily said, is in part a defensive one, because the company is concerned about Microsoft's ability to make searching on the Web as well as on a PC a central part of its operating system.

By integrating more search functions into Windows, Microsoft could conceivably challenge Google the way it threatened, and destroyed, an earlier rival, Netscape, by incorporating web browsing into the Windows 98 operating system, the paper said.

A Google spokesman declined to comment about the new search tool. Although Google's core business rests on huge farms of server computers that permit fast searching on the Internet, the company has already taken several steps to move beyond that business.

Last year, Google began testing a free programme called the Google Deskbar that makes it possible to search the Web by entering words and phrases in a small dialog box placed in the Windows desktop taskbar at the bottom of the computer screen.

Google also sells a computer search system designed to index and retrieve information created and stored by a single organisation.

Source: Sify.com

Criminal faces 5 years jail over Google share fraud

In 2003, as speculation grew that the internet search engine company would go public, Shamoon Rafiq began meeting investors in New York and telling them he was a venture capitalist and a college friend of Google's founders, prosecutors said.

A Dutchman who pleaded guilty to swindling wealthy New Yorkers by promising an inside track to Google stock and then blowing $350,000 (£198,000) of their money in a three-month spending spree on hotels, restaurants and gambling, could face more than five years in prison, it emerged today.

Mr Rafiq, who was working as a business development manager for British Telecom in the city, offered the lure of "preferred stock", available to the founders' friends and families at the pre-flotation price of $12 a share.

At least five investors, including a lawyer for a European telecommunications company, an investment banker, a senior brokerage executive and the chairman of a global telecommunications firm, wired $500,000 to his bank accounts.

Mr Rafiq could be sentenced to more than five years in prison for wire fraud under the terms of his agreement with prosecutors. The sentence would be two years less than he might have faced had he lost at trial.

Prosecutors are opposing Mr Rafiq's request to serve his sentence in the Netherlands under the terms of an international treaty governing Dutch citizens convicted in the US.

The scam began to unravel when the investment banker became suspicious and demanded his money back. The FBI arrested Mr Rafiq in New York in March.

Authorities said Mr Rafiq had spent the funds on a lavish lifestyle, including New York nightclubs, strippers, $100 tips for restaurant and hotel employees, and expensive watches for his friends.

Google filed its long-awaited plans for an initial public offering last month, aiming to raise $2.7bn with an offering that is expected to give it a market value of at least $20bn.

Source: Guardian.co.uk

Google and Overture sued by Geico

Geico, a subsidiary of Berkshire Hathaway, filed suit against Google and Yahoo-owned Overture on May 4, in federal court in Alexandria, Va.

Auto insurance company Geico has sued Google and Overture Services for allegedly violating its trademarks in search-related advertisements, in the latest legal salvo against the Internet companies.

The insurer charged the two companies with infringing on its trademarks when they sold them as keywords to Geico's rivals, so that the protected terms could appear in sponsored search results. According to the suit, that practice causes consumer confusion, in violation of the Lanham Act, the primary federal law covering trademark registration and protection.

"This practice deliberately misleads consumers and allows Geico's competitors and these defendants to illegally exploit for their own commercial purposes Geico's investment of hundreds of millions of dollars in its brand," company spokeswoman Janice Minshall wrote in an e-mail.

The insurer is seeking damages and an injunction against Google's and Overture's use of its service marks in their advertising programs.

Geico, the largest direct marketer of auto insurance in the United States, is the most high-profile American company to have filed a complaint against Google and Overture over their ad-selling practices. It launched its lawsuit only weeks after Google announced plans to limit concessions made to trademark owners regarding their rights to keywords sold in its popular ad program.

The suit also comes only weeks after Google filed to raise $2.7 billion in an initial public offering. In its S-1 filing, the company highlighted the financial risks it would face if it were forced to limit sales of keyword ads to generic words. Roughly 95 percent of Google's $1 billion in annual revenue comes from search-related advertising, according to its filing.

Complaints abound about misuse of trademarks in search engine ads. Google and Overture have built billion-dollar businesses by marrying text ads with search results; the technique has been effective because Web searching is such a common method for people to find products and services. Consequently, more companies have sought control over their brand names and trademarked terms in paid search. Businesses including American Blind and Wallpaper Factory have filed trademark complaints against search engines.

Still, U.S. law is unclear about how far search engines must go to make sure trademarks aren't infringed upon.

Google did not immediately respond to requests for comment. In the past, representatives from the company have said that trademark law allows for the use of registered marks, as long as there is no likelihood of consumer confusion.

An Overture representative said the company cannot comment on pending litigation. But Overture employs a fair-use policy for evaluating requests from trademark owners.

"In cases in which an advertiser has bid on a term that may be the trademark of another, Overture allows the bids only if the advertiser presents content on its Web site that (a) refers to the trademark...without creating a likelihood of consumer confusion...or (b) uses the term in a generic or merely descriptive manner," according to a notice posted on the company's Web site.

In contrast, Google has adopted a more hands-off approach, opting to review fewer trademark complaints. In April, the search company began allowing U.S. and Canadian advertisers to bid on any keyword, including trademarked terms, in its sponsored listings service.

Previously, Google had granted requests from advertisers, including 1-800 Contacts and eBay, to bar competitors from bidding on their trademarked names. Google will now only review trademark complaints that relate to text appearing in sponsored listings on its Web site and those of its partners.

According to Geico's complaint, the insurer considered Google's policy change before pursuing legal action: "Google's recent change in trademark policy constitutes a deliberate decision to use the registered trademarks of other companies, including Geico, for the financial benefit of Google and to the detriment of (others)."

Google faces a number of lawsuits similar to Geico's. Louis Vuitton sued Google and its French subsidiary for similar alleged trademark infringement, and a French court ordered Google to cease the practice and pay a fine. In January, American Blind and Wallpaper Factory filed suit against Google in a New York federal court, alleging trademark infringement.

In an effort to preempt American Blind's suit, Google late last year asked a U.S. District Court judge in San Jose, Calif., for a declaratory judgment in the dispute. American Blind still insists, though, that Google stop selling keyword phrases that the company claims violate its trademarks.

Overture faces two pending U.S. trademark suits, one filed by JR Cigar and another by Pets Warehouse.

Paid search is one of the fastest-growing and most closely watched segments of the online advertising business. According to Jupiter Research, paid search will grow from $1.6 billion in sales in 2003 to $2.1 billion this year, and it will continue to grow at a compound annual rate of 20 percent through 2008.

At least some of that growth could be jeopardized if legal rulings bar Google and other search engines from selling off well-known terms such as "Wells Fargo" in their ad programs, legal experts have said.

Research shows that many inquiries at search engines are for brand names or trademarked terms. Within the finance category, for example, more than half the total searches are for branded keywords such as Wells Fargo, according to ComScore Networks, a market research company.

"This is yet another reminder we have to question the core revenue-generating practices of Google and Overture and whether it's sustainable as a legal proposition," said Eric Goldman, an assistant professor of law at Marquette University Law School.

Source: ZD NET and C-Net News

Newspapers to become dinosaurs?

Well-funded competitors like Yahoo and Google are only starting to target the local market, so local media still have time to respond.

However, newspapers still face long-term damage to their business from online local-search products, far greater than the damage done to classified advertising revenue by competitors like Monster.com and HotJobs.com, a new study, “The Geo-Google Threat: Search Engines Target Local Advertising,” reported today.

The study, by The Neil Budde Group and the Advanced Interactive Media Group, reports some newspapers may be forced to drop from daily to less frequent publication and that print margins are likely to erode as advertising migrates online and advertisers opt for pay-for-performance and self-service ad models.

In addition, it states, yellow pages may become more immediate competitors to newspapers, noting that in two countries the leading yellow-page publishers have purchased large classified-advertising publications for integration into online search services.

“For local publishers, which have already been fighting the ‘new monsters’ eating away at their classified advertising, this may be a far greater challenge than the first Internet wave,” said Neil F. Budde, one of the report’s lead authors.

The 59-page report, prepared with data compiled by eMarketer, reviews the threat from yellow pages, international dot-coms like Google and Yahoo’s Overture, and direct, targeted ad placement online by key local advertisers like car-care shops, plumbers and restaurants.

It includes a four-page “action plan” to help newspapers and other local media meet the competitive challenge and even grow their market share of ad spending.

“The ability to directly target advertising at consumers, and to determine exactly what the response to those ads has been, gives local advertisers more power than ever before to focus their spending where it works,” said Peter M. Zollman, the report’s other lead author.

“Few local publishers have realized yet how this will endanger their business, and even fewer have responded with effective local search tools for their advertisers.”

Source: Onrec.com

DoubleClick to acquire Performics

New York-based DoubleClick said it would pay $58 million in cash for search engine marketer Performics, plus additional payments of up to $7 million based on future earnings.

Performics helps clients automate and track the performance of paid placements in search listings on multiple search engines.

Performics clients include Time Warner Inc's (NYSE:TWX - news) Internet provider America Online, cellular phone maker Motorola (NYSE:MOT - news) and retailer Target Corp (NYSE:TGT - news) and expects to see revenues increase by 50 percent in 2004 from a year ago.

Once the acquisition closes, DoubleClick said it would combine Performics' search marketing technology with its DART system for tracking and analyzing online advertising including banner ads and more sophisticated rich media ads.

DoubleClick said it expected an additional $10 million in revenue over the second half of 2004, with search management revenue accounting for slightly less than half of that amount. Adding Performics' business would raise operating expenses and cost of revenue by nearly $9 million in the second half of this year.

DoubleClick said Performics would have 130 employees by the time the acquisition closed and that additional employees would be hired for that business by the end of the year. The acquisition is subject to approval by antitrust regulators.

DoubleClick shares traded 13 cents lower to $7.91 on the Nasdaq.

Source: Yahoo News

Google is court's favorite search engine

A few years ago, judges and lawyers used Yahoo and AltaVista in an effort to get more information on an individual or a specific court case. Since the last two or three years, people working closely in the legal system are now using Google as their favorite search engine.

As a good example of this, more than fifteen years after his trial, a convicted drug dealer in New York state belatedly got a chance to clear his name--thanks in part to an Internet search.

A federal judge last November threw out Manuel Rodriguez's conviction and granted him a new trial after discovering evidence of potential jury tampering in a review of court records and queries on Web search engine Google. U.S. Magistrate Judge Frank Maas said that his review of the 1988 court transcript, coupled with looking up jurors' names in Google, had revealed that the assistant district attorney had "improperly" removed Hispanics.

Internet search engines are having a profound influence on judicial research--a controversial trend that's so far garnered little attention outside legal circles.

Some judges call Web search a crucial research tool, but critics of the trend are warning that searches on Google and its rivals are no substitute for the painstaking process of evidence and testimony.

"A Google search that I conducted" suggested that a removed juror had "a Hispanic name," Maas wrote in the court decision overturning the conviction.

Rodriguez finished his sentence before his new trial could take place. But his case nevertheless offers a striking illustration of the growing clout of Internet search engines among the judiciary--a controversial trend that's so far garnered little attention outside legal circles.

In the United States and abroad, judges are turning to search engines such as Google to check facts, to look up information about companies embroiled in litigation, and to challenge statistics presented by attorneys in court. Dozens of judges have penned opinions describing Google as a valuable--and sometimes crucial--source of knowledge.

To be sure, Google has no monopoly in the legal system. Yahoo's search engine popped up in the landmark Napster copyright case four years ago, and Oregon police tried to track a criminal defendant accused of firearm violations through Yahoo searches. When AltaVista was in its heyday, it also was mentioned in a handful of cases.

But in the last few years, Google appears to have become the courts' favorite search engine. The Mountain View, Calif.-based company--which announced its plans for an initial public offering last month--accounts for 41 percent of U.S. search referrals, according to statistics compiled by research company WebSideStory.

In one case in Ohio, a judge who ordered a mother not to smoke near her 8-year-old daughter cited medical journals and a Google search that lists 60,000-plus links for "secondhand smoke" and 30,000-plus links for "secondhand smoke children." In addition, the California Supreme Court has Googled for evidence showing that stun belts, which jolt prisoners with 50,000-volt electric shocks, can be harmful and should not have been used in a criminal trial. And an enterprising federal judge in New York did his own Google search to demonstrate that a watch, jeans and handbag retailer named Alfredo Versace was infringing the trademarks of the famous Gianni Versace design house.

Some legal experts warn that Google searches are no substitute for the painstaking process of evidence and testimony. "If a judge is taking as proof facts that are reported in any public medium that pertain to individual actions by persons involved in a case, that is troubling," said George Fisher, a Stanford University law professor. "Those are the sorts of facts that are supposed to be proved in the courtroom under the rules of evidence."

What appears in Google's sprawling Web index can have a profound influence on legal proceedings. In the case of Rodriguez--accused of selling crack cocaine to an undercover police officer--Judge Maas supplemented his review of the trial transcript with Google research. Unfortunately for Rodriguez, though, the result was too late: He had already served his sentence in the Wallkill Correctional Facility in Wallkill, N.Y., and had been released.

After conducting a Web search, an Australian federal court last June denied a visa request from an unidentified man from Sri Lanka. The court said the man's claim to be a famous filmmaker worried about persecution at home was "exaggerated," after a query turned up a blank. "His name does not appear when put into a search engine such as Google," one member of the government tribunal wrote. "I would have expected--if he indeed has the notoriety and is as well-known as he claims--that his name would have appeared at least in some context."

Rules governing out-of-court research are ambiguous about the use of search engines and, in the United States, tend to vary by state. In general, though, appeals courts have leeway in the sources they use. "Often appellate arguments require going outside the record of a particular case, because a judge or a panel must weigh the ramifications. What does this mean down the road?" said Dick Carelli, a spokesman for the Administrative Office of the U.S. Courts (AOC). "Tradition dictates that anything is fair game in terms of the research a judge or a judge's staff can do online."

While the U.S. Supreme Court has not cited Google as a research tool so far, its justices and their clerks often venture beyond legal treatises when drafting opinions. In one famous 1972 opinion, Flood v. Kuhn, Justice Harry Blackmun inserted a brief history of baseball that included a recitation of the names of about 80 prominent players.

Trial judges are more constrained. Rule 201 of the Federal Rules of Evidence says trial judges may take notice of public information only when they "resort to sources whose accuracy cannot reasonably be questioned." Most of the cases reviewed by CNET News.com involved trial judges using Google.

The AOC has no specific guidelines about Internet research done by trial judges. "There's so much available to them for computerized research that's in-house, I would think the occasions (for Google searches) are rare," said AOC's Carelli.

"I'm not that comfortable with judges going off in their chambers and saying, 'Let's see what we come up with on Google,'" said David Post, who teaches technology law at Temple University. "The evidentiary requirements are very important. If a judge goes off in his chambers and does a Google search and issues an opinion, the parties have not had a chance to argue about what 40,000 hits means. That's an important safeguard."

The casual use of Google--instead of relying on more rigorous research techniques--has raised eyebrows inside the judiciary.

In a bitter August 2002 dissent, California Supreme Court Justice Janice Brown upbraided her colleagues for relying on Google when deciding that stun belts should not have been used in a trial. The majority opinion cited newspaper and magazine articles, as well as pieces written by law students, that reported accidental activations of the React stun belt.

"We could have waited for a case that raised these questions on an adequate record," Brown wrote. "Instead, the majority, rushing to judgment after conducting an embarrassing Google.com search for information outside the record, has tied the hands of the legislature, to the likely peril of judges, bailiffs and ordinary citizens called upon to do their civic duty."

Last month, a New York county judge took a swipe at out-of-court research. Judge Charles Markey said that when he had some questions about a U-Haul warranty issue, he did not use Google, MSN Search or their competitors "to fashion a factual argument to sandbag counsel."

In one court case involving Halloween costumes, Google was called upon as a kind of linguistic arbiter. Federal law says that imports of "fancy dress" clothing are not taxed, and the Bush administration decided that Halloween costumes should fall into that duty-free category.

The U.S. Court of International Trade disagreed. One of its judges, Evan Wallach, did a Google search of the term "fancy dress" and concluded: "The court found a Web page for the United States Power Squadrons in South Florida which described parties as 'fancy dress affairs with prizes for the best costumes...' Attached were photographs of participants in 'Roman' dress. The costumes were clearly home-made... There were numerous others examples in the United States showing similar usages of fancy dress for elementary school events and sale of cheap Halloween costume accessories."

Perhaps the most common type of case, though, that has lured courts to Google is the trademark dispute:

• One federal judge in Tennessee ruled that "Johnny's" was a generic word: "A search conducted on the two most popular search engines, Google and Yahoo, for the keyword 'johnny's' will retrieve a list of either 157,000 or 251,000 options of Web sites featuring everything from vegetable seeds to Irish pubs to military music lyrics. Even adding the additional keyword 'sauce' will result in a list of either 2,850 or 4,440 Web sites."

• A New York federal judge said a Google search had helped him decide that 24 Hour Fitness should not receive an injunction against a competitor that owned 24hourfitness.com. The judge said a search for "fitness industry" on the Internet revealed more than 1.6 million hits, mainly linking to sites related to physical training and conditioning.

• Google and other search engines helped a Maryland federal judge to reach the opposite conclusion. The court granted an injunction against a critic of mortgage lender Fairbanks Capital who had set up his own anti-Fairbanks Web site. But when the company's trademarked phrase was used in a keyword search in the Google search engine, approximately 349 matches were listed, the judge found. "The (critical) Web site is the first Web site listed. The Fairbanks Web site is not listed in the first 10 results on Google," the judge said.

• An Australian review panel decided that a private company could not trademark the color yellow when used for clutches and other vehicle parts. "There is nothing unusual about the colour claimed," the panel said. "A search of the Internet, Google.com: Accessed 12 November 2002, reveals that the colour yellow is commonly used in respect of containers or packaging for automotive parts."

The use of Google search in such trademark cases was applauded by Post, the Temple University professor. "There's a lot of talk in legal cases about what do words mean, what is their usage," he said. "This is a remarkable and more objective tool to find out how people use words...That opens up a world of wonderful possibilities. It's really exciting."

Source: C-Net News

Overture signs deal with CitySearch

Under the deal, Overture ads will appear in categories where CitySearch has available ad inventory, such as home services, professional services and medical specialists.

CitySearch said Thursday that it has signed a deal with Yahoo's Overture Services to run the latter's paid ads in its local search listings for select cities and categories. Financial terms of the deal were not disclosed.

Overture specializes in selling advertising links that accompany search results on sites such as Yahoo and MSN.

The move comes little more than a year after CitySearch, which is owned by InterActiveCorp, introduced its own advertising service to compete with Overture on a local level.

The company unveiled a pay-per-click ad service, called Local Pay for Performance, which reflected the business model of Overture's national ad network. CitySearch sought to match up advertisers with consumers searching for local dining, entertainment and shopping services. Advertisers pay for the ads only when people click through.

Under terms of the deal, Overture ads will appear as "sponsored results" when a customer uses CitySearch for conducting a local search.

Local search has been the rage of late. Last month, Google launched what it called Google Local, a service that helps Web surfers find local businesses by typing in a search term and a city name.

The market for local advertising online is small, but analysts are predicting it will eventually take a larger chunk of the $12 billion overall market for local ads in the United States. CitySearch had been talking with Google about a partnership.

Source: C-Net News

Google visually engaging customers

Google is saying it's new ads will help advertisers visually engage their customers and be more relevant to Web site users.

In a key departure from its text-only advertising strategy, search engine leader Google said Wednesday that will it begin to accept the banner-like image ads that are common on other parts of the Internet.

The ads will appear on Web sites that carry Google advertising, not on the main Google search site itself.

"The idea is to help make advertising better and to make it more informational,'' said Tim Armstrong, Google's vice president of advertising sales.

Google's core business is selling ads on its own Web site alongside search results. But a sizable chunk of its revenue comes from selling ads that appear on other Web sites through a program called AdSense, where Google uses its technology to match the ads to the Web sites' content.

The AdSense ads typically appear grouped together inside boxes that run horizontally across the top or bottom of Web pages or vertically down the sides. About.com, IVillage and the New York Times are some of the larger Web sites that carry AdSense ads.

Some advertisers have viewed AdSense as less effective than placing ads on Google's main search site. Many advertisers have concluded that people using Google's search tool are more likely to be in a buying mode than someone perusing an online news story or reading a Weblog.

``The click-through rates were not as good,'' said Ron Belanger, vice president of search engine marketing for Carat Interactive, whose clients include Radio Shack and Hyatt Hotels. ``When the user is in that non-search mode, you need that extra oomph to grab them. My hunch is that this is going to put the AdSense product back in the game.''

Google said advertisers will be able to choose text or image ads, and Web-site owners can choose which type of ads to display.

Web-site visitors may not always see image ads, even if the Web-site owner has chosen to accept them. Google may alternate between the two types of advertising depending upon which kind receives the most clicks.

``We'll keep showing both until we determine which one performs better,'' said Salar Kamangar, a director of product management at Google.

Google's reputation has been nurtured in part by its repudiation of banner advertising, which many Internet users find annoying and intrusive. Indeed, at a time when the online advertising industry was suffering through a slump, Google demonstrated that small text ads that are relevant to search results or a Web site's content could appeal to both users and advertisers.

Although the new image advertising will not appear on Google's own Web site, the fact that the Mountain View company is now selling banner ads may alienate some users, observers said.

``It's kind of scary that Google is moving into a medium that they helped crush,'' said Andy Beal, vice president of search marketing for WebSourced. ``It's almost like they switched sides. They're saying they won't cave into the pressures of Wall Street. But I can't think of any other reason to do this other than to make money.''

Beal also questioned whether the image ads would be more effective than text ads.

``People got used to the fact that banner ads are a pain,'' said Beal. ``People have gotten used to tuning out banner ads. I don't know how Google thinks they can revive the perception of banner ads.''

But online advertising experts said Google likely realized that text advertising has its limits.

``The human mind gets quickly immune to things, and at some point they stop paying attention to text ads,'' said Roy de Souza, chief executive of Zedo, a San Francisco company that sells Internet advertising. ``But with graphical ads, there is variability as far as color and what not that you can do to appeal to people.''

Source: Kansas.com

Google's AdSense now to provide banner ads

Since yesterday, on Google's Web site, there is a description of it's modified AdSense program, which now allows advertisers to publish image, or banner ads on third-party Web sites that participate in this revenue-sharing program.

Google's AdSense program promises to place ads on Web pages that are relevant to a marketer's message, based on an analysis of the page's content.

Search giant Google plans for the first time to sell ads that include images, a surprise reversal for a company that has won regard for its pioneering use of text-only marketing pitches and for keeping its home page religiously free of banner advertising.

The posting noted that Google will not put image ads on its own site for now, but the company said it looks "forward to offering more image ad distribution options in the future."

The image ad program was launched late Wednesday in a beta, or test, version, said Tim Armstrong, Google's vice president of advertising sales. He said the decision to wade into banners came after nine months of interviews with Web surfers, publishers and advertisers, and was based on what he called Google's core mission.

"The noise in the advertising market is really going up over ROI (return on investment)," he said. "There was a pretty clear signal from advertisers that there is an opportunity to use Google's relevance technology for images as well as text. Over the last 14 months, we've been able to grow a network of content publishers (that use AdSense), and the message was to make it more useful."

In just a few years, Google has grown from a start-up to an Internet giant, thanks in large part to an advertising program modeled on the ground-breaking efforts of Yahoo's Overture Services division. Both companies auction search keywords to the highest bidder and ask customers to pay only when Web surfers click on advertisements.

So far, these pitches have steered clear of designs incorporating images, which have been deemed a distraction that would likely diminish the Web surfer's experience. Although it's not clear whether image ads will be coming to Google's own site any time soon, the company is poised to put them to its first test, potentially opening the door for wider use.

The move puts Google more firmly into the camp of Internet advertising network providers such as DoubleClick, a company that came to define intrusive Web advertising during the dot-com boom.

Using attention-grabbing methods could help make up for shortfalls in Google's relevance technology, which has not proved to be as clear a winner on ordinary Web pages as its has alongside lists of its search results. Google's Armstrong declined to discuss response rates for AdSense, saying that the company is continuing to innovate to improve relevance and return on investment for its advertisers.

In a list of frequently asked questions describing the new program, Google said it would offer four layouts of varying sizes: leaderboard, banner, skyscraper and medium rectangle. The image ads will be limited to 50KB--much larger than the typical 1KB to 2KB used by text-only ads. Nevertheless, Google said the limit will ensure that the images have a minimal effect on load time for most sites.

Armstrong added that Google will include a "user bar" along the bottom of its image ads displaying the addresses of the sites the ads link to, a feedback button to let people send messages about an ad directly to Google, and an "Ad by Google" label.

Google is looking to expand its advertising programs as it prepares for an initial public offering that could value the company at more than $25 billion.

The company has already gone well past its bread-and-butter AdWords search engine advertising program.

In recent weeks, Google has reversed a policy restricting the sale of trademarked terms to non-trademark holders and has begun testing a system for automatically matching ads to little-used keywords.

Sales from U.S. search engine marketing will reach $2.1 billion in 2004, up from $1.6 billion last year, according to Jupiter Research. By 2008, sales are expected to hit $4.3 billion.

According to a securities filing, Google generated $961.9 million in revenue in fiscal 2003 and posted $105.6 million in net profit. That marked the third consecutive year of profit for the Web's most popular search engine. During the most recent quarter, which ended March 31, Google collected $389.6 million in revenue and posted a $64 million profit.

Google's image ad program was noted Wednesday by Search Engine Journal, an online newsletter.

"There has been some questions about whether Google is getting away from (our) core business, and I feel that we're not," Armstrong said. "The thought from four years ago was to come up with a way to create better relevancy for ads. We've done that with text ads, and that's how we've come to this."

Source: C-Net News

Ask Jeeves receives Stevie business award

Ask Jeeves announced today that the Company received the Stevie award in the Best Business Turnaround category in The 2004 American Business Awards.

Ask Jeeves received the Stevie Award from among a number of finalists including Blue Cross and Blue Shield, Covad Communications, My Family.com and Aerco International. Past American Business Awards winners include UPS, Spirit Airlines, R.R Donnelly, IBM and Oracle.

The American Business Awards is the first national, all-encompassing business awards program honoring great performances in the workplace.

Nicknamed the Stevies for the Greek word “crowned,” the awards were presented during ceremonies at the Sheraton New York Hotel & Towers in New York City on Monday, May 10th.

More than 100 Stevies were presented in over 40 categories including Best Overall Company, Best Executive, Most Innovative Company, and Best New Product or Service. Over 800 nominations from companies of all sizes and in virtually every industry were submitted for consideration.

Steve Berkowitz, Ask Jeeves President and CEO, accepted the Stevie on behalf of Ask Jeeves, attributing the Company’s turnaround to the dedication, efforts and accomplishments of the entire Ask Jeeves staff, as well as the Company’s single-minded focus on providing leading user experiences in the burgeoning search space.

“We are honored to be recognized by the American Business Awards for turning the Company around,” said Steve Berkowitz during his acceptance speech Monday night.

“We are now the 7th largest property on the Web with more than 39 million users. This award is a testament to both Ask Jeeves’ achievement in the highly competitive and rapidly growing search engine market, and to our dedicated employees who are the reason for the turnaround. Congratulations to all of the nominees and winners.”

Source: Search Engine Journal

BlogPulse search engine launched by Intelliseek

BlogPulse is a new online search and tracking tool that measures and ranks “buzz” about key issues, people, phrases and links that occur daily in more than a million Internet blogs.

Blog is short for “weblog,” a type of self-published diary, journal or daily log that represents one of the fastest growing areas of published content on the Internet.

BlogPulse.com serves as a useful and entertaining research tool for Internet users, consumers, the media, observers, risk and reputation managers, pundits, politicians – anyone interested in tracking issues, personalities, trends and rumors that are circulating on the Internet, often before they hit mainstream media.

BlogPulse is built on Intelliseek technologies that specialize in Internet search, machine-learning and natural language processing, and the analysis of the types of unstructured data found in online word-of-mouth behavior, or consumer-generated media.

And with content updated and ranked daily, BlogPulse.com can be used by bloggers to determine which blogs attract and generate the most traffic and to gauge interest in their own blogs.

Intelliseek developed and launched BlogPulse as an outgrowth of the company’s expertise in locating and analyzing unstructured data and consumer-generated media for marketing and business intelligence.

“BlogPulse is Intelliseek’s contribution toward new sets of tools that identify and measure what’s happening in the public’s mind, society, the marketplace and on the Internet,” says Mahendra Vora, Intelliseek CEO.

“Bloggers are a progressive, influential and opinionated group, and their important insights can serve as harbingers of what’s on the minds of the public, consumers, voters – any individual or group that’s active on the Internet.”

The BlogPulse home page offers:

* Links to each day’s key trends, phrases, people and links – updated daily.

* A search engine to find specific information in blogs.

* A showcase search tool that graphically charts and compares key issues, trends, people and phrases over time.

* A BlogPulse blog that mixes editorial content and trend-mining tools toprovide interesting tidbits to site visitors.

BlogPulse joins the list of Blog Search Engines and Directories, which are redefining the way some search the Internet for trends and news items.

Source: Search Engine Journal

AOL buys some of Google's shares

Time Warner might be looking a bit more kindly upon its AOL subsidiary today.

Up until lately, Time Warner may have wondered if it did the right thing by acquiring America Online in January of 2000. Since that day, shares in AOL have consistently fallen and have been pretty much a thorne in Time Warner's financial results. Adding insult to injury, criticism from some of it's shareholders didn't help either.

With Google going public soon, Time Warner's luck could turn to the better. The company has just exercised its options to buy 7.4 million Google shares, or three per cent of the company, for $22 million.

The option to buy was part of a deal struck two years ago, whereby Google provided search and advertising for the AOL website. When Google finally launches its IPO, the shares will be converted to the Class B shares.

However, depending on which overheated analysis you look at, that stake may be worth around $1.3 billion when the search engine company floats later this year.

Source: PC Pro.co.uk

Gmail advertisers want lower rates

According to survey results released today by Mosaic Media, 57.1 percent of Google AdWords advertisers want their ads to appear contextually in Google’s Gmail.

Gmail is Google’s free e-mail service that is currently in beta testing and is expected to go into full release this summer.

Google intends to place contextual advertising in personal e-mails, so if someone is talking about taking a trip to Vermont, hotel ads may show up alongside the text. In Mosaic Media’s survey, only 19 percent of Google advertisers gave a flat no to the concept of their ads appearing in personal Gmail correspondence.

The survey revealed, however, that advertisers don’t want to pay as much for Gmail ads as they pay for ads that appear alongside search results.

Only 30 percent said they are willing to pay the same cost-per-click (CPC) as they pay for search-results ads.

A full 50 percent said no to idea of paying the same rate as search ads. But if the rates are lower for Gmail, advertisers like the idea. Sixty nine percent say they would try Gmail at a lower CPC. And like good direct marketers, 69 percent would design a separate campaign for Gmail.

Most of the respondents are active Google advertisers. A small percentage of respondents are not currently Google advertisers but plan to launch a Google campaign in the near future. The bulk of the respondents, 46.2 percent, sell goods or services to both consumers and businesses. Thirty one percent were business-to-consumer only, while 18 percent conduct business-to-business trade only.

Google announced the beta testing of Gmail on April 1. The announcement was followed by a storm of controversy about whether the placement of contextual ads in personal e-mails constitutes an intrusion on privacy.

Some claim that when you receive something for free, privacy violations don’t count. Some survey respondents were queasy about the privacy implications, with one advertiser saying, “The negative fallout from the invasiveness of this type of advertising is dangerous.”

Other respondents characterized Gmail as a misstep for Google. “It’s like ads on eggs. Who needs them?”

Most respondents expressed an interest in trying Gmail as long as the costs were not equal to search engine ad rates. “It sounds very targeted to me,” said one respondent.

Another noted that an ad that appears in search results is more valuable since the searcher is seeking results. “Gmail should be less expensive since it’s not like a search in which information is being requested.”

Source: Search Engine Journal

Yahoo and Google not counting revenue the same way

For guidance, many look at Yahoo, another Internet company with a business similar to Google's and which has been public since 1996.

But Yahoo and Google don't count revenue the same way, making it hard to compare many aspects of the two companies' finances. Google uses a more-conservative definition that has the effect of damping its revenue and increasing its profit margins.

Yahoo Inc. reported first-quarter revenue of $758 million. Looked at another way, Yahoo said revenue totaled $550 million. Rival Google Inc. said its first-quarter revenue totaled $390 million. Or maybe it was really $652 million.

Confused? Pity the investors trying to place a value on Google for its highly anticipated initial public stock offering.

The differences demonstrate that accounting standards may be "generally accepted," but they aren't always uniformly interpreted. And details about revenue-recognition policies buried in the fine print of financial statements can trip up less-than-seasoned investors.

In this case, the difference revolves around the way that Yahoo and Google treat revenue from small-text advertisements that they place on other companies' Web sites.

The two Internet companies effectively act as technological intermediaries and quasi-advertising agencies, bringing together Web publishers and advertisers. Yahoo and Google get paid each time an Internet user clicks on an ad, then give some of that money to the Web publisher on whose site the ad appeared. (Yahoo and Google also accept ads for their own sites, and both companies account for them in the same way.)

In accounting terms, however, that is where the similarities end. Yahoo counts as revenue the "gross" amount it is paid. It counts its payment to the publisher as an expense, labeled as a "traffic acquisition cost." Google, by contrast, counts as revenue only the "net" amount remaining, after it pays the Web publisher.

Here's how it works in practice: XYZ Corp. places ads on the sites of UVW Corp., through Yahoo, and RST Corp., through Google. Both ads generate $5 in revenue, with $3 going to the publishers. Yahoo would count $5 revenue and book a $3 expense. But Google would record only $2 in revenue.

In the case of Yahoo and Google, the proper accounting treatment depends on whether the company is merely an "agent" facilitating a deal, or a "principal" that stands to lose money, if, for example, an advertiser fails to pay.

A Yahoo spokeswoman says the company reports gross revenue "based on our interpretation of the accounting guidance and our contractual terms." In SEC filings, Yahoo says it must use gross revenue because it is "the primary obligor" to the publishers.

Google, by contrast, says in its SEC filing that it reports net revenue because "we are not the principal to transactions." Instead, Google says users view the ads on the Web sites of independent publishers, who determine what ads they accept. A Google spokeswoman declined to elaborate, citing the quiet period around the pending IPO.

"You have to know what all the mechanics are under the transaction to be able to say that is right or that's not right," says Jack Ciesielski, publisher of Analyst's Accounting Observer.

The accounting choices result in very different images for investors. For those who value companies based on revenue, or revenue growth, Yahoo's formal presentation makes its revenue appear to be larger, and growing faster. Yahoo's as-reported gross revenue grew 168 percent in the first quarter; net revenue grew a robust, but less-impressive 94 percent.

Likewise, Google's choice of net revenue slows its growth rate, because revenue from the ads Google places on other sites is increasing faster than total revenue. In the first quarter, Google's revenue grew 122 percent. On a gross basis, however, revenue grew 162 percent.

Source: Wall Street Journal and Contra Costa Times

Google to release new AdWords tools

According to news from Google, the company is to release new search engine marketing tools that could expand its lucrative PPC advertising business and increase growth as it embarks on a long-awaited IPO.

The technology aims to enable Google to examine the Web sites of large advertisers and to develop automated lists of keyword combinations that are likely to turn up in search queries, the sources said.

If successful, the system will match more searches to advertisements, and thus boost revenue.

An analysis of search-engine advertising suggests there is significant room for growth in this area. Only 40 percent to 45 percent of the 120 million Internet searches a day in the United States are currently linked to an ad, according to research firm ComScore Networks. But such a service could also create new risks for Google, which has stumbled in the past with automated advertising efforts.

Google, which is preparing for a $2.7 billion initial public offering later this year, would not comment on the project. But executives at companies working with Google said such a service is in the works.

"There is something like that on the horizon," said Kevin Lee, chief executive of Did-It.com, a prominent search-engine marketing company that works with advertisers to test Google products before they are released. "All the search engines are experimenting with what is the best way to allow large advertisers to get the right number of listings into their engines."

Over just a few years, search engines have seen enormous success selling keywords, giving the highest bidder for a queried word the right to display ads above and to the side of query results.

As much as 95 percent of Google's $991 million in revenue last year came from the sponsored listings that appear on its Web site and on those of its partners.

Meanwhile, sales from U.S. search-engine marketing will reach a total of $2.1 billion in 2004, up from $1.6 billion last year, according to Jupiter Research. By 2008, sales are expected to hit $4.3 billion.

But search-engine advertising has barely gotten off the ground, and there are still many legal and business questions to be answered. For example, a limited number of keywords will always command the greatest interest. That means search engine companies face the specter of a revenue ceiling--unless they can put an ever-widening circle of obscure terms and phrases to work.

But that, too, could create complications. In seeking cheap alternatives to popular terms, marketers might be forced to manage massive lists of keywords. They may well have to push constantly to dream up previously overlooked combinations of search strings that work well for their products and services.

External factors could also curtail growth projections. At least one trademark holder has sued Google, seeking to prevent the search company from selling its trademarked words to advertisers. Google has already taken steps to bypass such concerns in the United States. But if the courts deem that trademarks are off-limits to Google and other search engines, sales could suffer.

As a result, Google and other search engines are highly motivated to develop ways of expanding their inventories of keywords. One way to do this is to use technology to automate tasks for large marketers, for example, to help them choose keywords in order to place ads on a search engine.

Google and Yahoo-owned Overture Services already offer broad-matching and phrase-matching tools. These let marketers buy one keyword, or a set of keywords, that can appear in many search variations. For example, with broad matching, a marketer can bid for exposure on the term "running shoes," but also show up on a query for "shoes for running." With phrase matching, that marketer might also show up in results for "purple running shoes."

Most large, sophisticated marketers are taking advantage of these tools to leverage search. Ninety percent of marketers with an annual ad budget of more than $1 million are using ad-matching tools from Google or Overture, according to Jupiter Research. Advertisers that show a preference for Overture, however, tend to use such tools more, Jupiter has found.

Now, Google wants to take the technology even further. Its proposed service would allow marketers to pay to have a Web page examined more often for inclusion in sponsored listings, according to one source.

Instead of having to bid on thousands of keywords, a large advertiser--such as Amazon.com--could rely on Google's search technology to automatically create connections between its Web pages and related search queries. Amazon would pay Google to examine thousands of its pages and to serve an ad whenever the software deemed it appropriate. Amazon would pay an amount previously bid at auction for those pages, whenever people clicked on its listings.

In this scenario, a Web surfer who searched Google.com for "Stevie Wonder" might see a sponsored listing for "Stevie Wonder at Amazon.com," for example. Amazon may not have bid on those granular keywords, but Google's crawlers will have found CDs and books on the musician during the engine's indexing and will have automatically placed an ad based on that query.

By contrast, Overture takes a slightly more human approach to advertising. It employs slews of account managers who help marketers invent new keyword combinations to drive people to their stores, according to an Overture representative. It also offers technology that lets marketers measure the effectiveness of their search campaigns, as well as of campaigns via e-mail, Google or banner ads.

"We work with advertisers closely to make sure they're bidding on the most possible keywords," said the Overture representative.

Similar technology has been put to use by Yahoo and others in so-called paid-inclusion programs, which increase the chances that Web pages will appear in search results in exchange for a fee. Yahoo's service promises that participating Web pages will be indexed more frequently than those on other sites, thus increasing the chances that searchers will find the most recently updated pages, for example.

In the same way, Google's proposed service would accept data feeds from retail marketers, in order to index those pages more often. But unlike Yahoo's paid inclusion, Google would not allow commercial listings to appear in its general Web index.

Experts said search companies run the risk of trading off relevance for reach. More-obscure terms may turn out to serve ads to an audience that is less receptive to clicking on them.

"With sponsored listings, you don't get to target the end of the tail--that big stream of searches that happen rarely. Because who's thinking of all those queries?" said Danny Sullivan, publisher of newsletter Search Engine Watch. "With paid inclusion, your site speaks for you. So the two need to have an intersection, and that idea has been to use automated tools to populate both services...The downside is that if you're automating, the targeting may not be as good."

Google has faced criticism of its automated marketing tools in the past. In one case, it served up an advertisement for a suitcase maker in a news article about a murder investigation in which body parts were discovered in a travel case.

Nevertheless, ad-matching technology could become essential as search queries get more complex over time. And as Web surfers get more savvy, they tend to enter more search terms for better results, according to search experts.

"The limitations of search-engine marketing are the burdens on marketers. Managing keyword campaigns is a nightmare...and lots of keywords are left on the table," said James Lamberti, a research director at ComScore. "A move from a manual to a highly automated process will be the next big shift for the industry."

Source: ZD Net

Blogger.com refreshed by Google

The Blogger site now includes a new "cleaner" interface, shared comments, author profiles, and posting via email.

Google has today unveiled its newly designed Blogger website, the free self-publishing service for web users and online 'diarists'.

The relaunch is the first major overhaul of Blogger since Google bought its parent company, San Francisco-based Pyra Labs, in February 2003.

Launched in 1999, Blogger helps consumers publish on the web instantly without writing code or installing software, using publishing tools.

"Blogger is committed to bringing more voices and points of view to the web," said Evan Williams, Blogger program manager and founder of Pyra Labs. "These enhancements make web publishing as easy as possible, delivering the power of blogging into the hands of more people worldwide."

Creating a weblog, or a blog, using the new version of Blogger takes three steps and just a few minutes, Google claims. The improvements also mean users can now publish to their blogs instantly from any email-enabled device, including cellular phones and handheld devices (PDAs).

Google says the new service also provides more than 30 templates for blog layout.

Source: Net Imperative

Ask Jeeves closes it's acquisition of Interactive

Under the terms of the agreement, Ask Jeeves issued 9.3 million shares of common stock and options, and paid approximately $144 million in cash.

Ask Jeeves said it closed its $501 million purchase of Interactive Search Holdings, a move expected to double Ask Jeeves' share of the competitive Web search market.

The acquisition, first announced in March, included privately held Interactive Search Holdings' Web properties and businesses such as My Way, iWon, Excite, My Search, My Web Search and the MaxOnline advertising network.

"This acquisition doubles our market share and enhances our ability to compete in the fast-growing search market," Ask Jeeves Chief Executive, Steve Berkowitz said in a statement.

Google Incorporation, the current Web search leader, recently announced plans for an initial public offering. Its key rival, Yahoo Inc. last year spent $1 billion to boost its position.

Source: CIOL.com

Yahoo or MSN to buy AOL?

Wall Street sources said Parsons has been sending a message to prospective buyers from the investment world, who are itching to snap up AOL on the cheap.

Much of the interest is coming from private equity firms, like Blackstone Group, KKR, and Thomas H. Lee - who have lots of cash to spend.

The rumor of a possible AOL sale to Yahoo or Microsoft is floating around again, after AOL posted a successful 1st Quarter, mostly based on advertising sales. The New York Daily News said Time Warner CEO Richard Parsons is expected to listen to bids from other online competitors such as Yahoo and MSN:

Parsons is said to be seeking $20 billion for AOL - more than double what he’s being offered by financial buyers.

“He’s being approached,” a source said. “He has no plans to do anything right now.”

But while financial buyers are being spurned, sources said they expect Parsons to listen to strategic buyers, such as Microsoft or Yahoo, who could merge their operations with AOL and slash costs.

However, it is also reported that the Time Warner chief is not entertaining bids, only considering them. “Indeed, with positive results being seen in both advertising sales and growth in AOL’s broadband service subscriptions, Parsons is said to be ‘brushing off suitors.’ And if a deal were to be done, a source told the News, Time Warner would ‘retain a significant stake’ in AOL.”

Time Warner’s America Online turned in a better than expected performance in the first quarter of 2003 with a little help from paid search and broadband. According to reports from analysts, paid search brought in revenues of $27 million in Q1 from an AOL partnership with Google. Google powers the AOL search engine along with AOL search engine advertising - which is actually Google AdWords.

AOL reported total operating income of US$277 million, compared to $194 million in the year-ago period on revenue that remained essentially flat at $2.2 billion.

Operating income before depreciation and amortization rose 21 percent, from $404 million in the first quarter of 2003 to $489 million in the most recent quarter.

Source: Search Engine Journal

Where will Google invest the proceeds of it's IPO?

Google's auction-style IPO, expected to fetch $2.7 billion this year, will be added to a war chest of $455 million in cash and short-term investments — almost as much as eBay had after its IPO.

With hype in overdrive over Google's imminent stock offering, the latest parlor game in Silicon Valley is guessing how the hottest Internet search engine on Earth will spend the billions raised by its IPO.

What Google does with its newfound loot — it has earmarked $250 million for capital spending, according to its IPO filing — might determine its fate amid increasing competition from Microsoft (MSFT) and Yahoo (YHOO).

Analysts say Google needs to improve and expand its services to maintain its lead in the market for paid search. The market is expected to swell to $4.8 billion in 2005 from $2 billion last year, says Deutsche Bank Securities.

The company could invest in:

New products
Google is expected to spend a higher percentage of its revenue on research and development. Last year, 9.5% of its revenue, or $91.2 million, went to R&D. Yahoo, by comparison, spent 13% of its 2003 revenue.

There is no dearth of ideas at Google Labs, the company's R&D arm. Executives keep a Top 100 priorities list, which today includes more than 240 items. So far, it has produced Gmail, a free service that makes it easier for users to organize and find e-mail; Froogle, a comparison shopping service; and Orkut, a social-networking site.

Google could go in many directions to build on its expertise in online search, says Scott Lundstrom, chief technology officer at AMR Research.

If Gmail is a success, he says, a Google version of instant messager could follow. It could delve into multimedia searches, allowing users to look for video images and sound bites.

Google might also explore fee-based services for businesses to find market research. Such endeavors require heavy investments in powerful Internet servers to keep Google's performance swift.

Or, it could invest in:

Products under development
The company might plow more money into Web Alerts, which deliver e-mail messages daily or weekly on specific content to PCs and cell phones, and Personalized Web Search, where users create a personal profile for results tailored to their interests. Getting those services to market is especially important because Yahoo has already gathered 141 million customer profiles to deliver customized content.

Like eBay, Google might expand abroad with mergers. In its filing, Google says bulking up internationally is crucial to its long-term success. Almost a third of its first-quarter sales came from outside the USA, compared with 26% a year ago.

Another possibility: The investment in or purchase of a Linux desktop company so Google can extend searches to information stored on a PC. Microsoft's pending version of its Windows operating system, code-named Longhorn, would let consumers search Web pages, e-mail and Word documents on their PC hard drive.

"Google might take it further and allow searches over a company's computer network," says analyst Martin Pyykkonen of Janco Partners.

Google had no comment on its spending plans, and its phone-book-thick prospectus is sketchy about business strategy. Google co-founder Larry Page, however, offers platitudes on the evils of Wall Street's preoccupation with short-term profit at the expense of long-term health.

Industry watchers say Google must move quickly to stay ahead of the competition. "Google needs to build on its edge as a search engine," says James Lamberti, vice president of industry solutions at market researcher ComScore Networks. "If it doesn't, Yahoo and Microsoft will swoop in for the kill."

Source: USA Today

Eric Schmidt no longer chairman at Google

Analysts said that the decision to split the chairman and chief executive positions is probably a response to the broader trend in favor of better corporate governance.

Little noticed in Google Inc.'s filing to go public last week is the fact that Eric Schmidt, the Internet search company's chief executive, no longer holds the title of chairman.

The change leaves that position unfilled and raises the questions of not only who will be Schmidt's replacement, but also what exactly happened.

Separating the powers is intended to make boards more responsive to shareholders rather than a rubber stamp for management decisions.

"The point of having a separate CEO and chairman on the board is to create a balance of power," said Paul Hodgson, a senior research associate with Corporate Library, a private research firm in Maine focused on corporate governance issues.

Hodgson said that Google, which is based in Mountain View, appears to be preparing to bring in an outsider as chairman. If so, he said it would be "in line with best corporate practices."

Google's move follows the lead of several other companies that have split the chief executive and chairman jobs, including such technology firms as Siebel Systems and Dell.

In both cases, the chairmen are former chief executives. Hodgson complained that such chairmen are still allied with management and therefore not truly independent.

In fact, Hodgson said only 25 companies in the Standard & Poor's 500 actually have chairmen from outside the company.

They include such Bay Area companies as JDS Uniphase, the networking firm; Clorox, the consumer products-maker; and Solectron, the computer parts contractor.

"It's an increasing trend," Hodgson said, "but there's a lot of entrenched CEOs out there who don't want to give up power."

Whether Schmidt gave up the chairman's role willingly is not clear. Google's bylaws allow an employee to become chairman as long as the individual has the support of two-thirds of the board of directors, according to the company's filing for an initial public offering last week.

Analysts mentioned that Google bylaws may expressly give leeway for the chief executive to return as chairman if the effort to split the leadership roles does not work out.

Schmidt, the former chief executive of the software company Novell, was hired as Google's chairman in March 2001.

He relinquished the title last month, according to Google's filing, but remains a director and leads the executive committee. He continues as chief executive, a position he took in July 2001.

Google is already under fire over its management structure, which gives insiders overwhelming control.

The company has adopted a controversial corporate governance structure in which executives and directors hold stock carrying 10 votes per share, while retail investors will get shares that count for only one vote.

"Some of the expected backlash because of ownership and corporate governance could have swayed them to divide the chairmanship and the CEO," said Mark May, an analyst for Kaufman Bros., an investment bank.

Analysts were divided over who will replace Schmidt. They agreed that his replacement will probably be named before the company's shares begin trading publicly, which is expected in a few months.

Martin Pyykkonen, an Internet analyst for Janco Partners, an investment research firm, expects the chairman's job to attract a lot of interest, given Google's high profile.

And given the company's growth, the job will be time consuming, grappling with such issues as future acquisitions, new online features and an expanded computer infrastructure, Pyykkonen said.

Likely candidates will come from such industries as software or advertising, Google's main source of revenue, according to Pyykkonen.

Another analyst, Mark Argento, of ThinkEquity Partners, said that Google may have enough Silicon Valley types and may look elsewhere.

Serving on a company's board can be the first step toward becoming chairman. The directors on Google's board from outside the company, excluding the venture capitalists, include Ram Shriram, a former Amazon.com executive; Arthur Levinson, chief executive of Genentech; John Hennessy, president of Stanford University; and Paul Otellini, president of Intel.

Whatever the case, the analysts said that a new chairman will have to deal with Google's unusual management structure.

In the filing last week, Larry Page and Sergey Brin, founders and co- presidents, said they shared decision making with Schmidt, as a triumvirate.

"You will have to reconfigure the boardroom table so you can get them all at the end," said Argento, the analyst. He added that even at Google, which prides itself on being unconventional, "they can't have a lame duck chairman. It's not good business."

Source: SF Gate.com

UK investors barred from buying Google shares

In a filing to the US Securities and Exchange Commission, Google said only US residents would be able to participate in the forthcoming IPO auction.

The company, whose mantra is to "make the world a better place" said: "We have not undertaken any efforts to qualify this offering in offers to individual investors outside the US".

THE UK Shareholders Association, the largest organisation of private investors in the UK, last night expressed its dismay that the millions of UK devotees of search engine Google are to be barred from investing in the US-based company when it floats later this year.

Therefore, individual investors located outside the US should not expect to be eligible to participate in this offering.

David Blundell, chairman of UKSA, told Scotland on Sunday: "Google publicly states that it is a global company. Why then should only US private shareholders be able to take advantage of its forthcoming flotation? A great many potential UK shareholders will be extremely disappointed."

In the US, financial intuitions are wary of a set of rules Google has laid down for its much-anticipated initial public offering, which fly in the face of accepted Wall-Street wisdom.

In the wake of numerous investigations into investment banks that doled out coveted IPO shares in the 1990s to favoured clients in exchange for future business, Google has decided to hold a Dutch auction, designed in part to shut out Wall Street firms from profiting from conflicts of interest.

Under the prevalent Wall Street system, a company going public fixes the amount of shares it wants to float and the underwriting investment banks set the price in advance - normally well below what the market will bear.

Shares are distributed beforehand, mostly to big institutional investors who often do business with the investment banks. Once the shares start trading they typically soar in price, so the original holders of the IPO certificates quickly cash them in for hefty profits.

Peter Thiel, founder of the hedge fund Clarium Capital, said: "Surprise, surprise, the shares go up a lot and the banks get a commission. And the only people who lose are the retail investors and the company, which doesn’t get as much money as it otherwise would.

"It’s high time that a company with the stature of Google does something like this because what it means is that the shares go to the people willing to pay the most."

Larry Page and Sergey Brin, maverick computer scientists who founded Google in 1995, will refuse to make quarterly earnings predictions and vow not to make management decisions as a quick fix for the share price.

Page and Brin are critical of what they clearly perceive as Wall Street’s old boy network. The word on Wall Street is that Goldman Sachs so disliked the auction idea that Google may have bypassed it to be the lead underwriter.

But with stated profits last year of $346.7m (£194.2m) on a 62% margin derived almost entirely from advertising, Google’s shares are expected to be so sought after that the underwriting banks, led by Morgan Stanley and Credit Suisse First Boston, still stand to profit even if they are cut out of shares allocation process.

Google hopes to raise $2.7bn with its offering. Such a large IPO has never been sold through an auction before in the US. Page and Brin said: "Our goal is to have an efficient market price - a rational price set by informed buyers and sellers - for our shares at the IPO and afterward.

"Our goal is to achieve a relatively stable price in the days following the IPO and that buyers and sellers receive a fair price at the IPO.

"Many companies have suffered from unreasonable speculation, small initial share float, and boom-bust cycles that hurt them and their investors in the long run. We believe that an auction-based IPO will minimise these problems."

Google intends to issue two classes of shares in order to keep management decisions firmly in the hands of the founders and their managers, who will receive super-voting shares.

Source: Business Scotsman

A new 3-D graphics search engine

In hopes of offering more information, computing researchers have developed a new search engine that can mine catalogs of three-dimensional objects, like airplane parts or architectural features.

All the users have to do is sketch what they're thinking of, and the search engines can produce comparable objects.

"The idea of information and knowledge, and retrieval of knowledge, has been something I've been intrigued with for a long time. This gives it a more solidified meaning," said Karthik Ramani, a Purdue University professor who created a system that can find computer-designed industrial parts.

Ramani expects his search engine will serve huge industrial companies whose engineers often waste time and energy designing a specialized part when someone else has already created, used or rejected something similar.

Rick Jeffs, senior engineering specialist at a Caterpillar Inc. engine center in Lafayette, Ind., believes Ramani's technology could help the company simplify its inventory. Jeffs' center alone has tens of thousands of different parts.

With the purdue search engine, designers could sketch the part they need and instantly see dozens in inventory that might fit the bill. If an item seems close, but not quite right, designers can see a "skeleton" of the part and manipulate it on their computer screens -- make it longer or shorter or curved, for example -- and then query the database again. Mainstream search engines, meanwhile, are still trying to master 2-D images.

For example, Google Inc.'s picture search program delivers pretty good results but can't actually examine the images it serves up. It mines the text surrounding the photos, and hopes for success. However, 3-D search engines have begun to emerge as improvements in computing power and interactive modeling software have deepened the pool of designs available to query - not only in industrial settings but also in highly detailed online virtual worlds.

Princeton University professor Thomas Funkhouser and colleagues have put a 3-D search engine on the Web that lets anyone sketch an object using a computer mouse, add a textual description, then search for similar models in design databases. The results can be startling. Draw a big potato, and the system responds with a bunch of, well, potato-looking objects -- and a few urns.

Those seem wrong until you rotate your potato, orienting it vertically instead of horizontally, and see your sketch actually does resemble an urn, narrow on top and bottom and bulging in the middle. Certainly this makes old-fashioned keyword searches seem a blunt instrument.

Source: Manorama Online

Survey: Users find generic search results most relevant

More than 60% of Google, Yahoo, MSN and AOL users selected a natural search result over paid search advertisements as the most relevant on a sample query.

iProspect today announced more results from its recent Search Engine User Attitudes Survey that indicate:

60.5 percent of Google, Yahoo!, MSN and AOL users selected a natural search result over paid search advertisements as the most relevant on a sample query.

60.8 percent of Yahoo! and 72.3 percent of Google search engine users chose a natural search result as the most relevant.

71.2 percent of MSN users clicked on a paid search advertisement as the most relevant to their search.

AOL users identified both natural search results and paid search advertisements equally as often as the most relevant.

Looking specifically at the two largest search engines, according to market share, it is vital for online marketers to ensure that their Web pages are found in the natural search results of Google and Yahoo.

More than 60 percent of Yahoo! users and over 72 percent of Google users clicked on a natural search result when looking for the most relevant listing for their query.

“These findings clearly indicate that in both search engines there is a wide gap between natural search preference and paid advertisement preference.

This means marketers who fail to optimize for natural search or human-edited paid inclusion neglect a large percentage of user clicks and the relevant traffic,” stated iProspect CEO, Fredrick Marckini.

“This could bode well for Yahoo!’s revenue picture because, like Google, they receive the majority of their clicks in the natural results and unlike Google, Yahoo! has a way to monetize the actual search results through their Site Match Xchange program” said Robert Murray, President of iProspect.

“What is interesting is that the Google IPO filing document stated that 95% of Google’s revenues come from their paid search ads – while the results of the iProspect survey indicates that less than 30% of their visitors click on those ads. Imagine the impact on Google’s revenues if they could find a way to get more people to click on their paid advertisements.”

During the survey, respondents were first asked if they use one search engine more than any other. Those who answered “yes” were asked which search engine they use most often.

Those answering Google, Yahoo!, MSN or AOL were provided with a sample search result screen from their preferred search engine, displaying the results of a search for “used cars” and were asked to click on the result, on that page, which they found to be most relevant had they been in the market for a used car.

According to iProspect Director of Business Analytics, Dr. Naga Krothapalli, “this methodology ensured that these users were allowed to select a search result from the search engine with which they were most familiar.

It ensured the greatest degree of accuracy by guaranteeing that a Yahoo! user was not asked to select a search result from AOL search results or a Google user was not asked to select a search result from an MSN search. In theory, each searcher who indicated a ‘preferred’ search engine, would be familiar with the layout of the search results from their engine of choice.”

The survey shows the opposite preference among users of MSN’s search engine. Over 71 percent of MSN users identified a paid search advertisement listing as being the most qualified result returned for their query.

“This could be attributed to how pay per click (PPC) ads are identified within MSN’s returned results. Users who may shy away from paid search listings when they see them may have difficulty distinguishing between the two types of results.

Despite this potential case of mistaken identity, the survey shows it is important to have a strong paid search advertisement presence in this specific search engine, “Marckini added.

“It will be important for search engine marketers to track these metrics going forward as Microsoft scraps their existing search service and replaces it with their new and improved search engine anticipated in the forth quarter. Because MSN’s new search service is rumored to be similar in look and feel to Google, it could change everything later this year.”

The survey also shows that users who listed AOL as their search engine of choice were evenly split on a preference for natural search results or paid advertisements as the best result to answer their query.

Reasons for this split could range from the balance AOL employs between algorithms ranking organic search results and human-edited paid search advertisements, to paid advertisements being more clearly identified as such on AOL than on some engines.

Nonetheless, this result shows online marketers who focus solely on one type of result will miss 50 percent of potential interest and traffic from Internet users. Focus within this search engine needs to be divided equally between the two types to have optimal results.

Search engine marketing firms that offer both natural search engine optimization and paid media management services can ensure their clients web pages are consistently found in both types of results in Google and Yahoo!, which leads to a more positive return on investment.

According to Marckini, “taking a detailed look into how a particular search engine distinguishes between natural search results and paid search advertisements will allow online marketers to maximize visibility and increase traffic by tailoring their efforts to meet the users’ ‘preference’ of each engine.”

Source: iProspect and eMediaWire

Google IPO: Goldman Sachs may lose $100m

Goldman Sachs appears to have angered Google founders Sergey Brin and Larry Page by breaking strict rules laid out to investment banks pitching to lead the flotation.

Goldman Sachs, the Wall Street goliath that prides itself on its close relations with the world's leading businesses, has had a damaging row with Google that may have cost it $100m in fees.

The internet firm that last week announced plans for a $2.7billion flotation shocked many in the investment world when it excluded Goldman as a lead manager for the deal.

In keeping with its aim to be a new kind of company that strives to both make money and be a force for good, Google wanted a float that bypassed the usual backroom deals that favour large investors over the general public.

Goldman chief executive Hank Paulson is understood to have approached Kleiner Perkins, one of Google's biggest investors, to discuss share allocations.

According to US magazine Newsweek, Google was angered that Goldman appeared to be relying on old-style relationship banking, when it wanted innovation. Google chose Morgan Stanley and Credit Suisse First Boston to lead the float, which was seen on Wall Street as a snub to Goldman.

The fees for the deal, one of the biggest technology offerings ever, are put at between $80m to $100m by rival banks.

Goldman declined to comment, though insiders were sanguine about the loss. Sources confirmed that Mr Paulson had placed calls to the search engine's backers through intermediaries but denied this was against rules laid down by Google.

"What the hell is the chief executive supposed to do but make calls?" said one insider. "If that upset the two fruitcakes who run Google, so be it. Maybe they don't like Hank because he's bald."

Goldman has been hinting that it was uncomfortable with Google's desire to hold an internet auction for the shares, a process aimed at forming a company that is owned directly by the public rather than institutions.

The bank is also understood to have questioned whether the computer systems necessary to make the auction run smoothly will work. Rivals dismissed this as carping. "They were gagging to do it," said one banker yesterday.

Google is looking to raise $2.7billion from a float that is likely to value the business at $30billion. This will leave the 15pc stake held by Mr Brin and Mr Page worth about $4billion each.

The two friends famously founded Google in a Silicon Valley garage in 1998. It was devised as a company that would be different to normal corporations, with a more relaxed, less hierarchical atmosphere. It remains somewhat secretive, declining to reveal how many people use its search engine or how its technology works.

"We will not unnecessarily disclose all of our strengths, strategies and intentions," read the filing to the Securities & Exchange Commission outlining plans for the public offering.

Google's first spat with Wall Street came when it made clear it intended to pay the big banks far less for their advice than is usual.

Fees for leading a float typically run to 7pc of the proceeds. In this case the banks are expected to reap around 3pc.

Google has yet to decide where its shares will be listed. The New York Stock Exchange and Nasdaq are likely to fight hard to secure what it likely to be the biggest internet listing.

Source: Business Telegraph.co.uk

Google and it's competitors in search

Google is growing rapidly and early projections of certain financial analysts attribute its profitability on par with that of its biggest competitors, most notably Yahoo.

Now that the once-secretive Google has taken the wraps off its financial data, how does it stack up against its rivals?

In a securities filing Thursday announcing plans for its $2.7 billion initial public offering, Google reported revenue of $961 million in 2003--up 176 percent compared with the previous year--and $105 million in net income.

Profit margins, excluding charges from interest, taxes, amortization and stock options, reached 64 percent, double Yahoo's for the same period, according to American Technology Research. However, Yahoo's 2003 margin did not include a full year of revenue from its Overture Services subsidiary.

The quarter ending March 31 showed Google with 59 percent margins, outpacing Yahoo's 48 percent--all this from a company that lost $6 million on $220,000 in revenue in 1999.

"These margins are extremely high for such an early-stage company," said Mark Mahaney, equity analyst at American Technology Research.

Using Yahoo's richly valued shares as a starting point, Google might be worth a breathtaking $51 billion. That's assuming investors would be willing to pay as much as 60 times Google's projected earnings for 2005 to snap up shares in its IPO.

More conservative comparisons with e-commerce giant eBay would set Google's market value at around $38 billion, or as much as $98 a share. That's richer than General Motors--not bad for a company that started up six years ago in a garage.

Such back-of-the-envelope calculations are premature, of course. Google did not set the number of shares it plans to offer or the price in Thursday's filing. Those details will be determined later, following an unusual auction in which individual investors will get a chance to bid on shares.

Nearly all of Google's money--95 percent--comes from advertising, which is witnessing a revival after suffering for years after the dot-com bust. Central to the advertising resurgence is paid search, a business dominated by Google and a competitor, Overture. The companies sell keywords to advertisers and then charge them a fee every time a user clicks on the link.

Google also has deals with other companies, such as America Online, to host keyword search results, offering them a revenue cut for every link clicked.

Last quarter, Google gained $370 million in advertising alone. Yahoo, on the other hand, made $635 million (including a one-time gain) on its mix of display advertising and paid search from Overture. AOL raked in $214 million on advertising last quarter, $74 million of which came from Google.

Microsoft did not break out its advertising revenue from its MSN division, but said paid search helped grow advertising by 43 percent from the same period last year. Microsoft uses Overture as its paid search partner but has begun to target Google's algorithmic search business.

While Google's success has prompted its competitors to follow suit, its trail of high-margin profits and surging revenue may not continue at it current pace, the company and analysts warned.

"Our net revenue growth rate has declined, and we expect that it will continue to decline as a result of anticipated changes to our advertising program revenue mix, increasing competition and the inevitable decline in growth rates as our net revenues increase to higher levels," the company stated in its public filing to the Securities and Exchange Commission.

Google's reliance on paid search means its fortunes will fluctuate with the industry's highs and lows. To draw a comparison, Yahoo watched its full-year revenue plummet from $1.1 billion in 2000 to $717.4 million in 2001 because of the sudden collapse in online advertising dollars.

This drop sparked the exit of its former CEO, Tim Koogle, a complete revamping of its business, and the gutting of its freewheeling culture.

Although 83 percent of its revenue comes from advertising, Yahoo still counts 11 percent, or $88 million, from subscription revenue. Google does not charge subscriptions for any of its services.

In short, things at Google have been great. But the real test has only begun.

"You've got with Yahoo an execution record," said American Technology Research's Mahaney. "The numbers are great for Google, but you've got an unproven team. Let's see if they can deliver as well as Yahoo has as a public company."

Source: C-Net News

Google dumps Goldman Sachs out of its IPO

When Google learned Goldman Sachs' chairman and chief executive Henry Paulson had contacted one of the search engine's big investors, Kleiner Perkins, it deemed this as breaking the rules and bumped them from contention.

Google Inc. excluded Goldman Sachs Group Inc., one of the world's largest underwriters, as a lead manager for its planned $2.7 billion initial public offering because it was angry with the investment bank, Newsweek magazine said on Sunday.

Google asked investment banks pitching for the business, worth it said an estimated $100 million in fees, to come up with new ideas to conduct the underwriting rather than rely on old relationship banking habits, the magazine said.

It did not identify a source but quoted an unnamed executive at another Wall Street firm. Google officials were not immediately available and a Goldman Sachs spokeswoman declined to comment on the article.

Google on Thursday named rival investment banks Morgan Stanley and Credit Suisse First Boston as lead underwriters for the offering.

Source: CNNfn and Newsweek magazine.