News

Yahoo, Google make ad deal; Yang could go

The melodrama continues, with the fate of search advertising, the Internet and the entire free world seemingly in the balance... Microsoft once again left the negotiating table with Yahoo empty-handed, this time trying to work out a deal just for search. Then Yahoo signed a 10-year non-exclusive deal to outsource some search advertising to Google, while both companies prepared for antitrust scrutiny from Capitol Hill. In a scathing attack on Yahoo, TechCrunch's Michael Arrington wrote: "We needed a competitive market in search to ensure the health of the Internet. Now, it's nearly impossible to see how that can happen." Henry Blodget at Silicon Alley Insider told naysayers to put a sock in it, and called the Google deal good for Yahoo, bringing in $250 million to $450 million in cash flow in the first year. "Yahoo can now focus almost all of its efforts on revitalizing its properties and display business, which is where its future lies," he wrote.

Meanwhile the departure of Yahoo execs turned into a full-blown exodus. The Flickr founders left, along with Brad "Peanut Butter Manifesto" Garlinghouse, Jeff Weiner, Jeremy Zawodny, Qi Lu, and Vish Makhijani (the latter two being in search). No word on whether the exclamation point in the company name will head out the door as well. But speculation quickly turned to CEO and co-founder Jerry Yang, with the New York Times' Joe Nocera writing a scolding open letter to Yang: "Since Yahoo went public, it has always been your job to look out for Yahoo's shareholders. But we sure wouldn't know that from the way you've acted these past months." AllThingsD's Kara Swisher speculated on Yang's successor, listing Susan Decker, Meg Whitman, Peter Chernin and even Mark Cuban as possibilities. As Carl Icahn and dissident shareholders plan their next moves for the shareholder meeting August 1, this soap opera can only get better.

Video Roundup: YouTube changes; ABC rethinks webcast

In the online video world, YouTube rules in viewership but can't find the revenues to pay for serving all those piano-playing cat videos. Google CEO Eric Schmidt recently promised the division would roll out new advertising plans for the site, and noted that they have the audience and the patience to make it work. In order to shake things up, YouTube announced it would allow video partners to sell their own advertising around videos, sharing a cut with the site. Plus, YouTube recently announced the addition of long-form indie films, which could bring in more ads spliced into professional, ad-friendly content. That might help it stave off the popularity of Big Media-funded Hulu, which Mark Cuban wrote is "kicking YouTube's ass" by bringing in more revenue per video and per user. Cuban fails to mention that that revenue is also shared in large part with the content owners.

Meanwhile, cable Internet providers such as Time Warner and Comcast might put a crimp in the popularity of web video by capping and charging for heavy usage. "Internet metering is a throwback to the days of dial-up service, but at a time when video and interactive games are becoming popular, the experiments could have huge implications for the future of the web," wrote the New York Times' Brian Stelter. Netflix and other movie downloads, along with Skype and Vonage usage could put people over their limits, but Time Warner said 95% of customers use less than the 40GB cap. In other video news, ABC News said it was rethinking its 15-minute "World News" webcast, possibly breaking it into shorter segments throughout the day. "I have no interest in abandoning this," ABC honcho David Westin told the Wall Street Journal. "I want to look at it and say, 'What have we learned from it?' 'How can we reconfigure it?'"

AP causes blog storm after take-down notice

Every day, publishers send out legal take-down notices to bloggers and other websites that are stealing their stories and re-posting them without permission. At the same time, millions of blogs and websites legally excerpt and link to stories every day. The Associated Press legal team mixed that up, and got into a heap of trouble, sending take-down notices to the user-generated Drudge Retort (a liberal take on the Drudge Report) after its users posted excerpts from AP stories. The site's owner, Rogers Cadenhead, explained what happened on his blog, leading to the wrath of high-profile bloggers such as Jeff Jarvis ("for shame, AP") and Michael Arrington ("our new policy on AP stories: they don't exist"). Legal expert David Ardia noted that Drudge Retort was likely protected because of the "fair use" exception in copyright law. The AP backed down somewhat and was planning to work on blogger guidelines for use of its material with the Media Bloggers Association.

Newspaper sites get social, court moms

Newspapers are losing ad sales more than any other medium, so it's not surprising they are bending over backwards to get online visitors to stick around longer. The best way to do that is to build niche online communities and social networking features, both of which are being tried by newspaper giant Gannett. The company recently bought a minority stake in Cozi Group, which creates social networks for families; Gannett has also created a string of local sites for moms, building on the success of IndyMoms. The company told the Wall Street Journal that its longer-running mom sites have had 25% traffic growth year-over-year, and that half the audience returns each week. The Journal notes that mom sites, including new ones by the Boston Globe, Milwaukee Journal Sentinel and Dayton Daily News, have stiff competition from mommy blogs and established sites such as BabyCenter and iVillage.

Meanwhile, the New York Times unveiled a new TimesPeople mini-application for the Firefox browser that lets people share recommendations with other readers. "The idea of claiming people as 'My People' whether or not you even know them is a little off-putting," wrote PaidContent's Staci Kramer. "Still, it's another sign of the willingness to experiment." And they'll need to continue experimenting as new entrants into the local markets continue to pop up. The Huffington Post recently announced it would create local editions of its site, with the first one aimed at Chicago. The local site will aggregate news, sports, crime, arts and business news from various local sources, along with original blog reports, Arianna Huffington told the Guardian. "We are aspiring to be a newspaper in that we want to be covering all news, not just the political blogging the way we began," she said.

Research

Online advertising growth slows in first quarter

Is it a bump, a dip or the start of a downward trend? That's the question as almost all research pointed to a slowing of growth in online ad sales in the first quarter. The IAB, in particular, said that online ads actually were down 1.7% sequentially from the fourth quarter, dropping from a record $5.9 billion to $5.8 billion. The year-over-year growth was 18.2%, not bad in economically challenged times, but that's down from the 26% growth in Q1 '07. A similar story of slowing growth came from TNS Media Intelligence, which found that online display ad revenues grew 8.5% in the quarter, compared to 15.9% growth in the year-ago quarter. Part of the problem might be in the weakening financial services sector, which lowered its search ad spending by 15% and display ads by 13% in the quarter, according to Nielsen Monitor-Plus. The only bullish report came from IDC, which said Net advertising was up nearly 24% in the quarter, with 15% to 20% growth predicted for the remaining three quarters of the year.

NAA: Newspaper sites fail to make up lost print ads

While overall online ad revenues are seeing slower growth, newspaper sites are having an even tougher time with the slowdown. As noted above, newspapers are experiencing sharp drops in print ad revenues, and sorely need online ads to make up that loss. Instead, online advertising is not growing fast enough. The Newspaper Association of America reported that newspapers' online ad revenues hit $804 million in the first quarter, up 7.2% -- but that's much less growth than the 22% boost in the year-ago quarter. ClickZ pointed out that the 7.2% growth is also below that of overall search and display ad growth (15%) tracked by Nielsen. The NAA itself has hit a troubling patch, canceling its summer conference and saying it would "move away" from releasing quarterly ad reports, according to ClickZ.

Of Note

They [Google] do keep me awake at night. They have two thirds of the revenues and their market cap is almost four times bigger than the top four advertising [agencies]. The market is saying something about our relative strengths. -- WPP Group CEO Martin Sorrell Number-cruncher rebuff doesn't add up for ad man (Guardian)

FEATURED INDUSTRY JOBS
Jun 13, 2008	Research Analyst	msnbc.com	Redmond, WA	Marketing & Sales
Jun 6, 2008	Senior Web Analytics Manager	The New York Times	New York, NY	Marketing & Sales
Apr 28, 2008	Ad Operations Client Manager, Publisher Solutions (NY)	Collective Media	New York, NY	Marketing & Sales