Digital Marketing and Technological Insight

As many of you have probably read already, Google has signed a deal with “Family Guy” creator Seth McFarlane to distribute a series of original videos. Starting this September, MacFarlane will launch a new animation project called “Seth MacFarlane’s Cavalcade of Cartoon Comedy” that will be shown exclusively on the Internet. The Google twist is that the new animation series will be syndicated through AdSense, Google’s advertising platform, to targeted websites. To break it down – when visiting your favorite blog or website instead of the standard text or graphic based ads you will see the “Cavalcade” videos. The videos will be 2 minutes long and are described by MacFarlane as “animated versions of the one-frame cartoons you might see in The New Yorker, only edgier.” Each of the 50 episodes MacFarlane will be developing will be different, but according to a NY Times article a typical example will be the 28 second long “Mad Cow Disease” episode.

How does this make money? Advertisements in various forms will be embedded into the video experience - the type of ads displayed can range from pre-roll, ad breaks or ads wrapped around the video - all options are on the table in terms of monetization. MacFarlane will also be involved in creating animated commercials that will run with his content. In return for his efforts MacFarlane will get a percentage of all revenue generated by his episodes.

Now, I do agree that this is a very bold move by both Google and content creators, a move that will be watched closely. The distribution of content, especially when it is professionally produced, is a huge challenge. However, AdSense ads are never put in prime locations - that is reserved for content. AdSense ads, and therefore MacFarlane’s videos will be regulated to the sidebar, bottom of an article or maybe if it lucky embedded into the actual content. On top of that, the whole power of AdSense has been the ability to target ads based on relevancy of the site. You have a blog about gum, you get gum ads. The videos will lose this specific targeting ability and be targeted to a broad demographic (e.g. young men) and not specific to the content.

So what is my problem? As an owner of numerous content websites, including many focused on videos, why would I want another video taking my visitor’s attention away from my content? Yes, I understand I will get paid if someone clicks on the ad but that is not the point. For many websites the main draw is not just to get someone to click on an ad and get a few pennies, the goal of most websites is to get those visitors to engage in the site, not engage in the ad. Also, let’s look at it from the content creators’ side. Online ad space has always been looked at as a “hate it but I can live with it” part of the Internet. You don’t mind the ads because the content is free…is this how you really want your professional videos to be seen?

To me the addition of professional video in ad spots is the same as all of the other types of intrusive ad formats out there. So, again – no thanks Google. I will pass.

Google has posted the audio, decks and Q&A transcript for the Webmaster Live chat that took place last Thursday.  For those that missed it, the live chat basically brought together all of the important people who work at Google to answer any and all search related questions. Even though a great deal of the information presented was very basic, it was still very informative. Below I have pulled out some of the highlights from the live Q&A session that I found to be the most interesting and useful.

Here is the full Google Q&A transcript and the complete Google Webmaster Central blog recap.

Q: I’ve got a question about internationalization: I have a multinational site with country-coded subdirectories and I’ve registered these as such in Webmasters’ tools, will this be exempt from duplicate content rules for a site spanning uk/us/aus ?
A (John Mueller): That’s generally ok. I would still make sure that the pages are obviously well-targeted for those audiences. It wouldn’t make sense to send users from specific areas to one general page. In that case, I would use a single page without geotargeting.

Q: can Google crawl Flash sites/
A (John Mueller): Somewhat — we can extract some information from the Flash files, but it’s generally not the same as with HTML sites/pages.

Q: I’ve got a question about internationalization: I have a multinational site with country-coded subdirectories and I’ve registered these as such in Webmasters’ tools, will this be exempt from duplicate content rules for a site spanning uk/us/aus?
A (Susan Moskwa): Geographic targeting doesn’t affect the fact that we only want to show one version of a piece of content in search results; we will still try to filter out duplicates when we serve search results.

Q: Hi John, I wanted to know more about Google webmaster tools stats.. How can we automate it? Why are there special characters like “[” when we download excel file
A (John Mueller): Hi Ankit, I have a python script on my site at http://johnmu.com/ that will convert those files into more readable ones.

Q: does Google ‘value’ a website incorporating a relevant blog and forum
A (Matt Dougherty): Hi Paul, I would say that an organic blog or forum definitely adds value to your website by creating a community effect.

Q: If a website’s Robots.txt file is goign to a 404 error will it be removed from the index? What if it is missing altogether?
A (Michael Wyszomierski): If there is no robots.txt file Google will assume that there are not any crawling restrictions, as long as there are no other robots directives via meta tags or the x-robots HTTP header directive.

Q: In regards to the Flash files, I believe it is possible to create Flash movies with extra accessible content, correct?
A (evan t): We encourage building Flash sites with html accessibility for googlebot to crawl. For more information check out our blog post on flash: http://googlewebmastercentral.blogspot.com/2007/07/best-uses-of-flash.html

Q: Does Google differentiate between searches in lower case and searches with proper capitalization?
A (John Mueller): We may take this into account if we can recognize that it is relevant to the query.

Q: Our pages are using mod_rewrite to strip “.html”– Will Google think of “process” and “process.html” as separate pages?
A (Susan Moskwa): If both URLs serve content, we will interpret them as two separate URLs. If the one redirects to the other (e.g. with a 301 redirect), this will let us know that one is the preferred/permanent URL.

Q: is an empty robots.txt bad?
A (Reid Yokoyama): Hi ralf - an empty robots.txt by default will allow all Internet spiders to crawl through all the pages on your site. If that is not something you want, then consider modifying your robots.txt file to set permissions.

Q: Does Google take anything from links taged nofollow, for example does it read the anchor text and credit that to the destination?
A (Susan Moskwa): No, it basically drops that link from our link graph (it ignores it).

Q: Is there any limit on the number of redirections 301, a Web site?. In a large site, if you change the URL structure, is the optimum time to do it with 301? or is best done gradually
A (Matt Cutts): There’s no per-page limit on the number of 301s you can do, so you could move 100K pages to 100K new location. However, if we see a really long chain of redirects, eventually we will decide to stop following the chain.

Q: Do 301 redirects send PR to its destination? I have several domains that 301 to 1 domain, and a couple have PR. Will it now send that PR to the 1 domain now that it is 301 redirected? Thank you.
A (Susan Moskwa): 301 redirects are the best way to let us know that you’d like a particular URL to get “credit” for factors from another URL; we’ll pass those signals across a 301 redirect as appropriate.

Q: if the site is designed with css, does the crawler throw out the .css and look only at the HTML?
A (Matt Cutts): Typically we wouldn’t crawl CSS, Kien, but in a few limited circumstances we can (e.g. if we’re checking for hidden text).

Q: Matt, can you comment on the number of links leading to interior content/category pages, that appear on the index of a site - and the impact of having many internal links on the index or not having that..
A (Maile Ohye): Hi Jeff, by index do you mean Sitemap or index.html type page. In general, if it’s index.html (not a Sitemap) then keep is user-friendly and navigatable. We usually say 100 links or fewer. http://www.google.com/support/webmasters/bin/answer.py?hl=en&answer

Q: I’m worried that we’ll miss new visitors because personalized search will drive them to their frequently visited sites instead of those based on organic search relevance. Should I be concerned about this?
A (John Mueller): No :) — we try to show variety in the search results and additionally smaller sites are generally quicker in adopting to new trends, allowing new sites to rank for new terms faster.

Q: Hi Matt, Are there any guidelines available on keyword density we have pages that are about 1 single subject and the keyword density is quite high
A (Matt Cutts): Antony, you may not believe this, but we tend not to think much about KW density here at Google, b/c our algorithms handle it pretty well. My advice is to pull in an innocent/non-search friend and have them read the text. If they raise their eyebrow, …

Q: If I click a PPC listing, will that visit influence organic, personalized search results?
A (John Mueller): I believe this is tracked only if you have the Toolbar, are logged in and have web history enabled.

Q: there is a general view that having a lot of backlinks is a strong influence on PageRank. Does Google have a response to this theory?
A (Matt Cutts): It’s more about the quality of the links than just the raw number of links.

Q: WHAT ARE THE 3 MOST INPORTANT THINGS TO DO TO EARN A GOOD PAGERANK?
A (Mariya Moeva): Content, content and content (:

Yahoo sent a letter to its shareholders explaining its recent decisions, with a focus on why they let the Microsoft deal slip away and the rational behind signing with Google. However, the obvious underlying motive of the letter is to garner support at the upcoming shareholders meeting and keep Carl Icahn and his agenda away.

“The events of recent weeks underscore the fact that your board of directors is far better qualified to represent your interests in the effort to maximize stockholder value than the slate put forward by Carl Icahn.” Sort of reeks of desperation doesn’t it?

The letter does a good job at explaining their rational behind the Google deal, however I was hoping they would have elaborated on a couple points. For example,  I would have loved to hear more about their “key strategic objectives”. What exactly is Jerry Yang’s vision for the future of Yahoo? What direction are they going in? How are they going to capture more search market share? What are they doing about the serious brain-drain going on? Yahoo will have to address these questions before the shareholder vote in order to build any sort of investor confidence….however, based on Jerry’s actions recently I wouldn’t be so sure.

Read the letter and make your own conclusions…

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Dear Fellow Stockholders:

We are writing to update you on the latest developments here at Yahoo!, including our recently announced commercial agreement with Google and the outcome of our discussions with Microsoft regarding a potential transaction.

On June 12, we announced a non-exclusive agreement with Google that we expect will generate approximately $250 to $450 million in incremental operating cash flow for Yahoo! in the first twelve months following implementation. This cash flow will enhance our profitability as well as help support achievement of our key strategic objectives. Combined with continuing advances in our own search capability, the agreement is an important step in our efforts to capitalize on the high-growth online advertising opportunities where we are best positioned to compete successfully and create more value.

Let us explain why we find this new agreement so exciting.

The Yahoo!-Google Agreement is Financially Attractive and Strikes the Right Strategic Balance.

Under the agreement with Google, Yahoo! will continue to provide algorithmic and sponsored search results, but now will also have the ability to run sponsored search ads supplied by Google alongside Yahoo!’s search results. Advertisers will pay Google directly for each click on Google paid search results appearing on Yahoo!. Google will then pay us a fee (in industry jargon, traffic acquisition cost) based on revenue realized from click-throughs on ads supplied to Yahoo! by Google.

This carefully structured agreement strikes the right strategic balance, enhancing our financial results while advancing our strategic objectives of being the “starting point” for the most users on the Internet and offering such compelling value that advertisers will see us as the “must buy” in online advertising.

One of our key strategies for achieving these objectives is to capitalize on the increasing convergence of search and display advertising, where we are especially well positioned to compete and succeed. We have already accelerated our efforts to strengthen our presence in display through a variety of initiatives and acquisitions in recent months. Our new commercial agreement with Google enhances our ability to pursue this strategy.

Another key strategy is to open our platform to other developers to optimize monetization for our advertisers and publishers and provide the best experience for our users. We see this agreement as a natural extension of the efforts we have already made toward an open marketplace.

The Google agreement is non-exclusive and provides strategic and operational flexibility for Yahoo!. It allows Yahoo! to use Google’s services in those areas where Google monetizes our inventory more effectively but also permits us to continue to use our own search technology in areas where we believe we are most competitive. The net result is that the agreement helps us accelerate one of our strategic aims–closing the monetization gap. At the same time, it allows Yahoo! to continue to compete aggressively in search and display advertising.

Importantly, the agreement does not prevent Yahoo! from pursuing other alternatives that could increase stockholder value. Because the agreement can be terminated by either party upon a change in control, it would not preclude a transaction with Microsoft or any other potential acquiror in the future.

The Yahoo!-Google Agreement Does More for Stockholder Value than Microsoft’s Search-Only Hybrid Proposal.

We also want to update you on the conclusion to our discussions with Microsoft regarding a potential transaction. As we explained in our last letter, our board and management held numerous meetings and conversations with Microsoft about its proposal to acquire Yahoo!, both before and after Microsoft withdrew that proposal on May 3. On June 8, our Chairman, Roy Bostock, other independent board members, and members of Yahoo!’s management team again met in person with Microsoft representatives. At that meeting, Microsoft stated unequivocally that it has no interest in acquiring all of Yahoo!, even at the price range Microsoft had previously suggested.

Microsoft did propose an alternative transaction. Rather than acquire our whole company as it had been proposing for months, Microsoft now proposed to acquire only our search business for $1 billion and a share of future search advertising revenue. This proposal also included an $8 billion investment in Yahoo! but required Yahoo! to commit to a 10-year exclusive arrangement that would have made us dependent on Microsoft for all of our search business. It would also have given Microsoft veto rights on certain future Yahoo! actions, including a sale of Yahoo!. Our board of directors and management made a great effort–and conducted in depth negotiations–to elicit a feasible proposal from Microsoft that made strategic and financial sense for Yahoo!, but without success.

While Microsoft’s search-only hybrid proposal may have been helpful to Microsoft, our board and management concluded it would have had a significant adverse impact on Yahoo! strategically, leaving the Company without the operational control of search assets and technology we view as critical to our objective of becoming a leader in the converging search and display advertising business. The board and its advisers also carefully studied the financial impact of Microsoft’s proposal and concluded that it would have provided no meaningful improvement to our operating cash flow. In short, this proposal would have generated substantially less value for Yahoo! stockholders than Microsoft has suggested.

Based on all the key factors–strengthening our competitiveness, protecting our strategic position, generating attractive financial returns–the Google agreement is far better than Microsoft’s search-only hybrid proposal. That’s why we moved forward with it.

Your Current Board of Directors Has the Knowledge, Experience and Commitment to Best Represent Your Interests and Maximize Stockholder Value.

The events of recent weeks underscore the fact that your board of directors is far better qualified to represent your interests in the effort to maximize stockholder value than the slate put forward by Carl Icahn.

Based on Mr. Icahn’s narrow agenda, it seems highly unlikely that either he or his slate would bring added value to Yahoo!. Consider the following:

– Mr. Icahn put forward his slate so as to sell Yahoo! to Microsoft, even though he had no knowledge of the sustained efforts made by your current board and management to determine whether Microsoft was willing to engage in a transaction that would provide appropriate value and certainty of achieving that value. On June 8, Microsoft once again made it perfectly clear that it is not currently interested in acquiring Yahoo!.
— Mr. Icahn publicly opposed any alternative form of transaction with Microsoft. Your board and management, after thorough and deliberate negotiations and evaluation, separately concluded on its own that the alternative hybrid deal proposed by Microsoft was, indeed, not in the best interests of the Company or its stockholders.
— Mr. Icahn urged, as an alternative to a Microsoft transaction, that Yahoo! find a way to partner with Google that would not preclude a transaction with Microsoft in the future. We have done exactly that through the commercial agreement with Google we announced on June 12.

Simply put, you can choose to vote for a slate of nominees with no articulated plan for the future of Yahoo!–and who now have essentially no alternative agenda to offer you–or you can choose to vote for your existing board of directors which has the independence, experience, knowledge and commitment to navigate the Company through the rapidly-changing Internet environment, execute on our strategic objectives and deliver value for Yahoo! and its stockholders.

It is time for Yahoo! to turn its undivided attention to implementing its key strategies, and we therefore urge you to reject Mr. Icahn’s slate and his ill-defined agenda.

We strongly urge you to vote your WHITE Proxy Card today for your current board of directors.

We look forward to sharing our progress with you as we move forward and we thank you for your support.

Sincerely,

Roy Bostock                     Jerry Yang
Chairman of the Board      Chief Executive Officer

TechCrunch posted an article today that talks about the “real” value of social networks. The article gives a great in-depth look at the real valuation of  Social Networks from a global perspective and ranks them accordingly. However, the article stops short from really getting into the burning question when talking about Social Networks - monetization.

It seems like over the past few weeks there has been a flurry of articles written that discuss how Social Networks can monetize their traffic in a more effective manner. The obvious path for most social networks lies in advertising, especially targeted / behavioral based advertising. Even though the monetization via advertising on sites like Facebook and  MySpace has been talked to death, as the recent redesign of the MySpace home page shows, monetization is and will always be a top priority. So what are they suppose to do? How else can they monetize the hoards of people visiting their websites on a daily basis? From my perspective, companies, regardless of what niche they are in,  should not rely on advertising alone – in fact, as it was discussed in this Silicon Alley Insider article – Social Networks should be looking at more creative ways of augmenting their revenue.

So what exactly would be my solution to this all important question? Social Networks need to think outside the box. Yes, that is easier said than done, however from what I see in regards to plummeting CPC rates and advertiser value, do Social Networks really have a choice? With that being said, here are some of my thoughts on how Social Networks can further monetize traffic. Yes, some are realistic, some are probably ludicrous - however, all are feasible. It is also important to point out that the growth of the big Social Network players has mainly been caused by the openness and free aspect that allowed for the viral message to get out. Obviously a social network needs to be careful when looking “outside of the box” for monetization so that they do not interfere with the overall user experience or flow.

• Add-Ons: Like I said above, a Social Network needs to be careful with what they charge for when most people are used to getting things for free. However, there are a few add-ons that many people would not mind paying for. These add-ons, like small profile enhancements,  would be minor in the grand scheme of things – they would have to be very cheap to buy (e.g. $0.99) and easy to obtain. The key with add-ons is creating the “cool factor”. Once something achieves a level of cool, especially with the teen demographic, it becomes a must have for everyone. Add-ons can be big like exclusive profile control / designs or minor like a custom media player - regardless of what they are, the cost to make would be minor but the impact would be huge.

• Premium accounts: Social Networks can go the Ning route and allow users to create their own personalized Social Networking experience based off of the Social Networks existing platform. Using MySpace as an example, a “premium user” would be able to create a fully customizable Social Network living off of the MySpace domain – for example the URL example.com/Kieran would be for standard users and the URL Kieran.example.com would be reserved for premium users. Allowing for premium accounts can be billed in just about any method possible…monthly, yearly, one-time – you can also allow for add-on services that cost extra…for example, no ads (like Ning offers), more storage space, premium features, etc. With very little effort a Social Network can leverage its platform in a whole new way. Premium users might not bring in as much as display advertising, but when billed on a regular basis, these users can be a nice guaranteed cash flow.

• Virtual Worlds: Virtual worlds do not get the press they they used to and it is possible they will only be a niche area and never truly go mainstream, but I still think Virtual Worlds will play a big part in how large groups of people participate and interact with others online. So what about adding a “Second Life” type environment to a Social Network that users have to pay to use? Think about it for a second…take all that time people (especially the younger demographic) spend on MySpace and now make it so they can “virtually” interact with their friends - imagine instead of your own island or city your place in the virtual world is your profile and the changes you make on the web and in the game are transferable between each. Putting a virtual world into play opens up numerous revenue streams: membership fees, upgrades, in-game sponsorships…the list is endless. Plus, by creating a virtual social network you will be generating extreme brand loyalty as users would be less likely to tire and move on to another service.

There you have it, my ramblings of how a Social Network can leverage its brand and traffic to generate other revenue streams. I am sure as time goes on I will think of more crazy ideas…when I do, I will be sure to add them to the list. One last thing, when writing this post it occurred to me that taking away the ability to display ads might cannibalize the advertising business - however, since I predicted and mentioned in previous posts, advertisers are not necessarily looking for just bulk traffic, the highest CPM’s go to targeted traffic - quality over quantity.

When looking at monetization of a website, also check out my previous post on the monetization of micro-blogging start up Twitter.

Just came across the funniest website I have a seen in a long time. Yahoorezinr.com is a do-it-yourself Yahoo! resignation letter…yup all you have to do is pick who you want to send it to, what you want to say and sign your name. Then you just have to click send and it will be forwarded to Jerry Yang himself. The form gives you the option to me nice, mean or brutally honest…all depends on your experience working at Yahoo.

Here is an actual example of the letter that is sent out…

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To: JerryYang@Yahoo.com

Subject: Get bent, asshat

Dear Mr. Yang

It is with great glee that I ask you to accept this letter as my official resignation from Yahoo. My last day here will be tomorrow after which time I shall be taking a position with Google. As you know for some time now I have been desiring more time with my family and thus I feel the time has finally arrived for me to move on and of course I would not be forthright if I failed to mention how much it distressed me to see some of the moves management has made in recent weeks.

For example I found the recent advertising agreement reached with Google to be unwise. Furthermore as I have watched management squander once-valuable properties such as Flickr I have come to realize that management does not seem to fully understand social media. Thus, I am tendering my resignation as of today. If you would like me to sign a non-compete clause I will be glad to do so seeing as my new position is in a different market segment.

Sincerely

John Q. Yahoo

——————–

I actually choose some of the “nicer” and less vulgar options when it came to putting together the letter. Sadly, considering the moves Yahoo has made in recent weeks many people might feel some of the more risque options are completely valid. Plus, with all of the senior Yahoo people leaving recently this Yahoo resignation letter could come in handy.

Of course the big question is still where does Yahoo go from here?