Disruption Tour --- Run To Survive

Yahoo “Refunds” Disappointed Search Advertiser $9 Billion. Now, That’s Customer Service!

Posted: 23 Apr 2008 04:45 PM CDT

Despite the decent first quarter earnings it announced yesterday and all the progress it claims to be making in closing the search marketing gap with Google, Yahoo still has plenty of advertisers unsatisfied with the return Yahoo gives them on their search marketing dollars. One of them (name redacted) sent us the correspondence below from Yahoo Search Marketing, which he received after closing an account and requesting a refund of the remaining $375 balance.

Imagine his surprise when a Yahoo customer service rep informed him that a refund of nearly $9 billion was waiting for him! Luckily for Yahoo shareholders, he only found a credit for the original $375 when he checked his account.

And this is the same company advertisers are supposed to trust to be able to calculate what their minimum bids on search ads are going to be.

From: Yahoo! Search Marketing

Date: Thu, Apr 17, 2008 at 9:36 AM
Subject: Re: Case #1604XXXXX
To: XXXXX@gmail.com

Apr 17 2008 09:36 PT

Hello AXXXX,

As you requested, we have completed refunding $8962385800 to your VISA ending in 7134. Depending on your bank, you should find this refund reflected on your next credit card statement.

This transaction is also reflected in the Billing Transaction Detail Report, available in the Reports section of your account. You can find this report by doing the following:

1. Log into your account at the following link: https://login12.marketingsolutions.yahoo.com/adui/signinXXXXXX.
2. Click the Reports tab.
3. In the Financial Reports area, click Billing Transaction Detail.

Sincerely,

XXXXX Smith
Customer Solutions
Yahoo! Search Marketing

Google: March Paid-Click Growth Awful (Again)

Google's US paid-click growth in March was as bad as in February--up only 2.7%--rounding out a violent deceleration in Q1, says Comscore. In all of Q1, Google's US paid clicks rose only 2% year-over-year versus 25% in Q4 and 48% in Q3. Consensus estimates for Google's Q1 have been cut significantly since the first Comscore bomb in January. We believe the current consensus revenue estimates could be met with US growth of 25% in Q1, down from 40% in Q4, which would allow for significant deceleration in the quarter. This 25% growth estimate obviously assumes that Google has seen a strong increase in price-per-click: If it hasn't, and the Comscore data is accurate, US revenue will miss by a mile and Google's overall revenue will come in well below consensus.

Microsoft's Alternative: Buy AOL and MySpace

seekingalpha.com

by: Eric Savitz

Charles DiBona, an analyst at Bernstein Research, has an idea on that. He thinks the company could change the game, make a cash offer for AOL to Time Warner (TWX) - interrupting a reported deal for Yahoo to buy AOL - and then cut a deal to buy MySpace and other online assets from News Corp. (NWS). For one thing, he says, Time Warner is likely to be more inclined to take cash from Microsoft than stock from Yahoo. For another, he writes, Microsoft “could comfortably walk away from YHOO, secure that YHOO could not consolidate its way into a better competitive position.” The uncertainly attached to a regulatory review of a Yahoo deal to outsource search to Google, he adds, “could significantly impair Yahoo’s business in the interim regardless of the ultimate outcome.”

While the prevailing wisdom has been that the company has no alternatives to buying Yahoo (YHOO) if it wants to be competitive with Google (GOOG) in the online advertising market, it is certainly possible that they could spend their $40 billion or so someplace else.

And meanwhile, he says, MSFT would have assembled a relatively substantial Internet presence with significant traffic at a much lower cost than the Yahoo deal. “This would give MSFT a better platform with which to compete with YHOO and try to beat rather than buy them,” he writes. DiBona says it would have the added of advantage of “including a poke at GOOG,” since AOL’s outsourcing deal to Google includes a change of control provision that would allow MSFT to capture that business.

DiBona laid out this scenario as one of four choices he sees for Microsoft. The others:

• Stay the course, give Yahoo the stated three weeks to respond, and then decide whether to launch a proxy fight, and if so at what price. He says this approach is not likely to lead to a near-term agreement, and instead results either in a proxy fight or MSFT walking away.
• Sweeten the bid, and offer a few bucks more a share. DiBona says the math on the deal works up to about $35 a share.
• Walk away. That approach would leave MSFT where it was, a distant third in the search business, while a combined Yahoo and AOL would strengthen its stance in display ads. “Strategically, that could be troublesome and it’s not even clear what tactical advantage MSFT would gain from simply walking at this point,” he writes.”

If I were a betting man, I would think a higher bid seems like the most likely scenario; DiBona’s alternative plan has appeal, but doesn’t get at the root issue of Microsoft’s weak share in search and search advertising. But you never know.

Why Yahoo is in Trouble

seekingalpha.com

by: Gary Lucido posted on:  

Here is a phenomenal business model. Spend lots of money developing rich content to attract advertisers then make it really difficult for them to give you their money. If you would like to invest in this business, get in line behind Microsoft (MSFT). Or is it Google (GOOG), or maybe AOL (TWX)?

This is exactly the model that Yahoo (YHOO) seems to be following. Of course, I'm sure that if you are a major corporation looking to spend millions, Yahoo! will beat down your door. However, if you are not a major player, but are looking to spend more than $3000, good luck getting their attention. And I didn't just make up the $3000 number. It's the cutoff listed on their site for getting their attention. Try the following experiment. Go to one of the verticals on the Yahoo! site and see if you can figure out how to give them your money to advertise there.

I actually wanted to advertise a business of mine in one of their verticals and this is what happened:

1. No link within the vertical for advertising.
2. I poke around the site and find links to at least 2 different forms that have something to do with advertising. I fill in the forms and wait for the pesky sales person to call me. No call after 2 weeks. Maybe they're all busy updating their resumes.
3. I poke around the site a bit more looking for a phone number. It's at least 3 clicks deep, cleverly disguised so that you can't find it if you are looking to actually talk to a human. Obviously, the humans can't be bothered with people trying to give them money.
4. I call the phone number, which they reiterate is the advertising number, and listen to 3 options that have nothing to do with advertising before being given the 4th option for advertising.
   • Option 1: Call corporate
   • Option 2: Find out how Yahoo! comes up with their search results
   • Option 3: For Yahoo! free services (wanting something for free places you ahead of wanting to pay for something)
   • Option 4: Advertising
5. It's a little after 4 PM Central time, so they've gone home for the day. They only operate until 5PM Eastern time because if you are in the 2/3 of the country that wants to give them money until 5 PM where YOU live then you need to call back when it's more convenient for them.
6. I call back the next day at 3 PM Central time but get a recording telling me that all their employees are in a meeting - probably meeting about how they shouldn't worry about losing their jobs when they get bought out. The recording continues to play until 4 PM when it changes to the message that they are only open until 5 PM Eastern.

With an operation like this, who wouldn't want to own this stock?

Search Engines Warned Over Data

Click here for more from the BBC

Search engines should delete personal data held about their users within six months, a European Commission advisory body on data protection has said.

The recommendation is likely to be accepted by the European Commission and could lead to a clash with search giants like Google, Yahoo and MSN.

Google and MSN anonymise user data after 18 months, while Yahoo does the same after 13 months.

The body said search companies were not clear enough on data protection.

Google said its privacy policy "strikes the right balance" between privacy, security and innovation.

Peter Fleischer, Google's global privacy counsel, said in a statement: "Google takes privacy incredibly seriously; protecting our users' privacy is at the heart of all our products.

Yahoo: Will merge for food

http://www.mathewingram.com/work/2008/04/09/yahoo-will-merge-for-food/

What’s that old saying about history repeating itself — the first time as tragedy, the second time as farce? (I think it was Karl Marx). I couldn’t help thinking of that when I saw the news (via Twitter, of course, my current news delivery mechanism of choice) that Yahoo and AOL are supposedly in talks on a combination that would foil Microbeast’s takeover ambitions. AOL and Time Warner was the tragedy (about $100-billion worth) and this current plan is most certainly the farce.

My friend Paul Kedrosky said that it was like tying two rocks together to see if they could fly better than one, to which I responded that to compare AOL with a rock was unfair to rocks. But another friend — Stuart MacDonald of Tripharbor.com — probably said it most succinctly: Yahoo + AOL = FAIL. I realize that Jerry Yang and the board of directors have to “pursue all available alternatives,” or whatever it says in the fiduciary duty documents, but this is ridiculous. The next thing we’ll hear is that Yahoo is talking with my Aunt Edna’s bridge club about a counter-offer.

Does Time Warner want to somehow get rid of AOL, preferably without losing an even bigger pantload of money than it has already flushed away? Sure it does. And on the surface, merging with Yahoo probably seems like a super idea for TW. But what exactly does it buy Yahoo? Some cash to do a share buyback, apparently, according to the Wall Street Journal. Whoop-de-doo. If shareholders of Yahoo vote for a shotgun marriage like that, they deserve whatever they get.

An industry wake-up call

imediaconnection.com

By Terri Seligman

 

for more of the article...

With legislators once again raising consumers' fears about their online privacy, the industry needs to prepare for possible fall out.

For several years, websites, ad servers and marketing companies have been tracking the online activity of millions of internet users. These companies compile and analyze this information, and then use it to help advertisers deliver ads to those most likely to be interested in their product or service. Most consumers may not have been aware that their online activities were being monitored and analyzed -- until now.

Consumer and privacy groups are challenging online targeted advertising, usually claiming that websites and advertisers should not be able to track online activity without providing notice to consumers and getting consumers' consent. Privacy advocates are also worried about the possibility that companies will combine anonymous online data with personally identifiable data, which seems increasingly likely as more marketing and database companies merge. 

Yahoo, Google, AOL Strike a Pose for Microsoft

from gigom.com

Yahoo, Google, AOL Strike a Pose for Microsoft Posted: 10 Apr 2008 08:13 AM CDT Update: The Wall Street Journal reports that Yahoo and Google are going to work together on an experiment that might lead to big things. In other words, a two-week test that is limited to Yahoo’s U.S. traffic will carry Google ads. These ads will be limited to “no more than 3% of Yahoo’s Web search queries.” If all goes well, then a broader search outsourcing arrangement could be struck by the two companies. Loose translation: With its bid for Yahoo, Microsoft made a checkmate move. Yahoo is out of suitors. Its shareholders don’t give it a prayer of a chance, and further more, the company is still as listless as it was six months ago. So what does it do? It goes and sleeps with the enemy! Just a reminder of Yahoo’s cluelessness: In 2000, it outsourced its search queries to Google. It renewed the deal in 2002, and has become a minor player in the search business. Anyway, about this new-found friendship, I wonder if the U.S. government is going to let this one through. I mean, this is one instance in which antitrust concerns could actually hold some merit. Microsoft is pretty clear about its position. As Brad Smith, Microsoft’s General Counsel, told the WSJ: “Any definitive agreement between Yahoo! and Google would consolidate over 90% of the search advertising market in Google’s hands. This would make the market far less competitive, in sharp contrast to our own proposal to acquire Yahoo!” Either way, in this deal, heads or tails, Google comes away a winner. If Yahoo goes to Microsoft, the ensuing chaos is going to benefit Google. If Yahoo gives away its search ad business, Google is a winner. Update: The Wall Street Journal is reporting that Yahoo and Time Warner are planning on putting together a deal where Yahoo will get AOL which is being valued at $10 billion. In exchange Time Warner will get 20% of the combined company (Yahoo) and will make a cash investment. Google will be the search-ad-partner. Yahoo would spend the money it gets from Time Warner $10 billion buying back its own stock and beating down Microsoft. With Legg Mason, 7% owner of Yahoo opposing the Microsoft offer, the new plan could work. To make this plan come apart at seams unravel, Microsoft has to up the offer by a few dollars per share. I say this again, Yahoo has some serious problems. Buying AOL, already troubled in its own right, is only going to compound problems.

The EU Approves Google’s DoubleClick Deal. Yahoo Needs To Pick a Partner Fast.

The last barrier to Google’s year-long quest to buy DoubleClick has been removed. The European Union’s antitrust regulator has approved the $3.1 billion deal “without conditions.” Word of the impending approval got out last week.

Now Google can move seriously into the part of the online advertising business it doesn’t control: display ads. The vigorous objections of Google’s competitors Microsoft and Yahoo may have delayed the approval, but ultimately the European Commission didn’t buy the arguments.

Interestingly, the commission seemed to ignore the possibility of Microsoft buying Yahoo, or Yahoo merging with AOL. According to CNNMoney:

The commission said it found the merged entity would not have the ability to engage in strategies aimed at marginalising Google’s competitors, mainly because of the presence of credible ad serving alternatives to which customers can switch, in particular vertically integrated companies such as Microsoft Corp , Yahoo! Inc, and Time Warner’s AOL.

But what happens when those credible alternatives go through their own consolidation in reaction to the Google-DoubelClick combination? Whether Yahoo merges with Microsoft or AOL, there will soon be one less major competitor. It seems odd that the European Commission would not take that into consideration, even if any such deal remains uncertain.

Yahoo had better decide quickly what it wants to do with its future because its comfortable position as the leader in display advertising is about to come under some major pressure from Google.

Search Engines Must Comply with EU Privacy Rules, Regulators Say

Search engines must comply with European privacy regulations even if they aren’t based there, a group of regulators said last week.

In a statement issued after European data protection regulators met in Brussels last week, the so-called Article 29 Working Group said in part: "Search engines fall under the EU Data Protection Directive 95/46/EC if there are controllers collecting users’ IP addresses or search history information, and therefore have to comply with relevant provisions.

"These provisions also apply to such controllers who have their headquarters outside the EU, but only an establishment in one of the EU Member States, or who use automated equipment based in one of the Member States for the purposes of processing personal data."

As a result, apparently the only way U.S.-based search engines can avoid European law is if they have no hardware in any of the member states.

The EU group offered no details on how search engines will be expected to comply with European privacy law. It is expected to issue a full report in April.

Google issued a statement saying it looks forward to the report.