AdViking

On the back of Google’s positive Q1 announcement, we had some good news from Yahoo! when they announced a much better than expected Q1.   Seeking Alpha has a good breakdown of both Google and Yahoo but interesting points are that Google’s International revenue (51%) was higher than US and that Yahoo! was bolstered (understatement for $401 million padding) by it’s stake in Alibaba.

Other news is that WSJ reports that the Google/Yahoo AdWords trial has gone well and could find Yahoo an additional $1 billion annually.  Though taking this kind of thinking to it’s logical comparison of what Google has done for AOL and it must be tempting to consider, but once upon a time AOL had 30% of the share market and is now below 5%!

Adviking notes that Google have turned the screw in terms of search-driven PPC. Not only do they have greater search share, but they also earn more per page view. Is this merely down to increased competition within the keywords? We don’t think so.

Think about this: Google offers time targeting, geo targeting, offline editing, publishing of phone numbers on ads, hands-off editorial process, wider range of payment options, tight control over keyword and a much more intuitive UI. Do they do this for the advertiser? Yes and no. Talk to any advertiser and they will tell you that targeting is crucial, they know their target cost per acquisition and Google comes out very favourably. All of the list mentioned either makes targeting easier (= more valuable, = higher spend), or the process of publishing quicker. Google ENABLE.

What about Yahoo! ? They launched their new Search Marketing product with much fanfare, but it pales when matched up to the above list. It sort of has geo-targeting… but that’s about it. Worse, it seems to hamper advertisers: the editorial process can be a real pain, ‘advanced match’ is rather arbitrary and they make odd decisions… For example you could have an offline editor, but access is restricted. Medium and low value campaigns are capped to just 20 ad groups (so clients who would spend more don’t). They could offer time-targeting, but don’t.

AdViking wonders whether the hook-up on ads between Google and Yahoo! is also because Google is so much better at extracting value because it understands advertisers, rather than DISABLING them, like Yahoo! does. Maybe they should take some notes…

Credit must go to MSN, they have tried to catch up with Google. AdCenter started off clunky, but has add good functionality and targeting, including profiling. It’s not quite there, but improving rapidly. However MSN has one giant challenge: low reach! By the time a business has set up Google for a trial, and then moved on to Yahoo!, they omit MSN - some still think that Yahoo! run MSN ads (they used to a couple of years ago). Not only that, but because of the low reach, geo targeting or profiling becomes pointless because it reduces even popular terms to the odd click through a day. So, the challenge for MSN is to ENGAGE - both the public who still don’t use their search much, as well as the advertiser who sees it as ancilliary to business.

It’s heating up to end game as there’s plenty of moves on the potential purchase of Yahoo! by Microsoft.

To AdViking the way Yahoo is going about it is a reminder of Wargames and at this point Jerry Yang is making sure that no-one will win, especially his shareholders which they can’t be happy about.

The big three moves are:

1. WSJ reports that Time Warner and Yahoo are close to making a deal for AOL (minus the access business) to join Yahoo
2. Yahoo have announced they are going to run a two week trial to run AdSense ads
3. New York Times reports that News Corp. may have flopped over to joining the Microsoft bid

AdViking thinks the last one as being the most interesting. If you have a combined Yahoo, News Corp and Microsoft then you have a truly viable alternative to Google in the digital ad space and this then creates opportunities through out the digital advertising ecosystem. e.g.: for technologies like OpenX; indy ad networks like adconion; or indy publisher networks like Federated Media.

OpenX, the company who are applying the RedHat model to an opensource ad server have announced some big company changes today. Including:

1. A new CEO in Tim Cadogan. Cadogan was previously at Yahoo!, where he set the global product strategy for all products in the Yahoo Ad Network and prior to Yahoo! He was also at GoTo/Overture
2. James Bilefield, will be leaving but will continue to be involved as a strategic adviser
3. They are re-locating to Los Angeles

In his blog post, Cadogan writes:

<start shameless recruiting plug :-> In particular, if you are a great, highly motivated technologist interested in working at the intersection of advertising technology, open-source and new advertising business models, we’d love to hear from you.

Does this also mean that Scott Switzer – Co-founder and the CTO will also be leaving soon?

See below for Scott’s comment that he’s at OpenX to stay.

Regardless, AdViking thinks these are some interesting moves and should really strengthen the OpenX proposition further. In particular, with hiring Tim Cadogan, it appears they have snagged an advertising top gun with a very important and strong advertising product legacy - in particular in Search advertising. Maybe an indication of some of the future product direction?

Post-script: With Adify being bought for $300 million, it looks like OpenX could be in the right place, right time to make the most of having made the move to the US.  They key will be to deliver quickly on some of the features that will enable Publishers to quickly maximise their revenue (e.g.:  self-service advertiser UI)

A couple of interesting items about the proposed deal by Microsoft to acquire Yahoo! came out over the last couple of days.

Analysts Give the Thumbs Up to the deal

Reuters provided details on a poll they ran against the Wall Street analysts who cover Microsoft and Yahoo! Some breakout of the numbers given:

• 28 of the 30 respondents say the deal will be done
• 1 of the nay, holds out hopes for AOL
• 1 of the nay, thinks it will be blocked by regulators
• 14 expect MSFT to close the deal at the initial offer
• 4 expect MSFT to convert the deal to all cash
• 12 expect MSFT to raise the price between 413.50 & $35 per share

The full story was in the iht on Sunday.

Exec Meet & Greet

WSJ and others have reported that on Monday, Senior Execs from Microsoft and Yahoo! met so that Microsoft could outline what the vision for what a post-merger entity would look like. The agenda for the meeting was similar to those that Yahoo! held with AOL and News Corp. What’s interesting is that this is the first time the companies have spent some face time together since the unsolicited bid was announced.

Is Yahoo! being tactical by playing nice before Ballmer gets hostile ahead of the Yahoo! board meeting or is Jerry Yang realising that in the face of a hardening economy, he should probably shake hands on this one before it’s too late.