Google and the Microsoft Yahoo Merger

The Microsoft Yahoo merger is again receiving interest. A nice article Can Yahoo save Microsoft? in the Los Angeles Times describes how Bill Gates “finds himself facing a network effect more powerful than his own — Google. Google is changing the way people buy, use and pay for software in ways as revolutionary as Gates did a generation ago — and Microsoft has been caught flat-footed”.

As Google makes available software like Gmail and Google Apps all for free, Microsoft feels a cool breeze. Especially since Google make their profits from the online advertising business, an area where Microsoft have struggled with only a loss to show for their efforts.

Some of the top Hi-tech CEOs offer Yahoo, Microsoft merger advice as if the Microsoft Yahoo merger is so simple, it’s not. There is enormous risk for both companies, who individually have been losing market share of the online advertising business to Google. Advertisers are interested in reaching the biggest audience; neither Microsoft nor Yahoo can match Google.

Company’s using PPC (Price Per Click) do not want to maintain advertising across three different platforms. Running a PPC campaign is very time consuming and needs constant analysis to preserve position and keep up with the competition. In running Excalibur’s PPC campaigns, I concentrate all my efforts on Google Adwords.

I just came across this article by Joseph Pratt while reading “The Ultimate Guide to Search Engine Marketing”. The article is free for republishing - Source: http://www.articlealley.com/article_64157_7.html

The article is dated 16th June 2006 and makes interesting reading in light of the current uncertainty after the deadline set by Microsoft for the merger with Yahoo has passed in silence. Microsoft’s AdCenter is running in third place behind Google and Yahoo with little more than 10% if the US market. Microsoft have the money, but seem to lack ability to play the PPC and search game.

Let’s welcome Microsoft’s AdCenter to the PPC advertising field. A quick question, though, why is AdCenter here? Microsoft, the juggernaut, sat on the sidelines for quite awhile and watched as first Overture (later bought by Yahoo) and then Google took online advertising to the level which we see it today.

This business, hardly fully grown, yet quite developed, is still dominated by Yahoo and, in particular, Google. AdCenter is not an entry into the ground floor of a new field of business, but a giant undertaking in a field that, frankly, Microsoft will likely not be able to shove people around in. I suppose Microsoft could get in the microchip processing business, too, I mean they’ve got the money - the point is businesses don’t just enter new enterprises because they can. Inexperience taking on experience is rarely a winning proposition. Yet in this case, apparently, Microsoft is taking on Google just because they can - there is enough dough.

Microsoft has deep pockets, deeper than Google - no matter what Google’s stock price is, because they have the years of profitability. What kind of deep pockets, you may ask? In Nov. ‘04 Microsoft issued a special dividend and paid $3 per share to stockholders. Microsoft has over ten billion shares outstanding. So, in effect, they dispersed $30 billion dollars from their coffers to their shareholders. Too much money lying around - not a bad problem for a company to have, eh? If you check out Google Finance and look at Microsoft’s balance sheet, you’ll see that they have money enough to do anything still - and that includes dueling Google with AdCenter.

The basic aim of Microsoft’s AdCenter is to increase advertising revenue and directly compete with Google in the industry share of advertising dollars. Is it green pastures of profit or the lust of competition that’s brought Microsoft into this game? It’s tougher to sell the profit motive, honestly. Conventionally speaking Microsoft’s scenario today would have been unthinkable only four or five years ago - that Microsoft would try and become a major provider of online media.
Perhaps Microsoft is entering into an opportunity, partially by luck, where they can exploit Google. Google has made some quantifiable mistakes and created weaknesses that competition could exploit, possibly. I believe that one key to knocking Google off the top of the heap is to go after the advertising base.

I’ve observed AdCenter, advised new users, and even signed up for it myself. The AdCenter console is sleeker than Google and the reporting (and this is important for advertisers - possibly lost on Google) is better. Primarily, they offer a Cost Estimator for advertisers, to help keep within budget while providing rank, traffic and cost estimates per keyword. AdCenter, on the surface at least, seems intent on ceding information over to the advertiser.

Microsoft’s AdCenter can further drive a wedge between Google and its advertising base by raising the click fraud issue. Aside from being notoriously difficult to communicate with, for advertisers with concerns, Google has been secretive, almost sneaky, about their click fraud settlement - contacting advertisers to opt-out of the class action settlement with a harmless looking email, some say that resembles spam. Google may be creating an environment of mistrust that could, ironically given Microsoft bullying reputation, drive advertisers to Microsoft’s AdCenter.

I think that if Microsoft wants to step up their Search Engine Marketing platform, above what’s available they have a number of duties:

1) Bring more meaningful web conversion data for advertisers - and that’s exactly what they seem to be trying to do with their reporting interface options for advertisers.

2) Seek out partnerships here, there, and everywhere. The Yahoo and eBay announcement had thunderous effects on the search arena - a real blow, perhaps, to Google’s pride. Has success, as it’s known to do in human nature, bred contempt?

3) The toughest trick of all, and one where Google is only getting stronger - increase gross user search. This is the one factor that could make AdCenter’s whole existence futile. Google is doing a bang-up job of increasing an already dominant share of search. Just this week Google recorded 43.1% of searches conducted by US residents in April. This is up from 36.5% in April, 2005. Google has been taking all comers lately with charges of click fraud, secrecy, being hypocrites, even the protectors of child porn - charges don’t come much more scurrilous in the corporate world. But Google’s growing share of search is a magic bullet, impossible for competitors, short-sellers, or even run-of-the-mill ill-wishers to ignore. It confirms that they are the top banana in the world of Internet marketing. Simply put, when people want to find things on the Internet, they’re going to Google first. The inference is clear, Google’s search is best. While Google grows the competition claws to keep market share, competition that includes Yahoo, a company that only exists right now to slowly bleed search share to Google, a percentage point at a time, despite an impressive track record and performance in the field. And this is promising to Microsoft?

Good Luck.

The “End” of Yahoo and the Beginning of the “End” for Microsoft?

The Times Online reports on the latest steps in the Microsoft (MSFT) bid for Yahoo (YHOO). The proposed deal has become more interesting with Google GOOG, Time Warner (TWX) and News Corp (NWS) paying attention to Yahoo’s 137 million visitors a month from the American market.

Google founder Larry Page has said that Microsoft is a “convicted monopolist and has a history of not playing fair”. No question, if Microsoft could dominate the search market they would do everything to squash the competition.

Microsoft will succeed in acquiring Yahoo in the next few weeks, but will they be successful in integrating the two companies into one entity capable of completing with Google? Microsoft is expecting to continue making huge profits from their desktop and operating system software, but these profits will in all probability be reduced as Google lures users away from the desktop. Both Yahoo and Microsoft have failed to beat Google in search, why will a combination of the two companies be any better?

Google

A very good report from the Economist discussing Google’s missing clicks after a survey from Comscore showed a 7% sequential decline vs. December ‘07, in paid clicks for Google. Many see a warning of a weak first quarter for Google and sign of a slowdown in the U.S. economy affecting the online advertising market. However, Comscore reports on their blog Why Google’s surprising paid click data are less surprising. The change “is primarily a result of Google’s own quality initiatives that result in a reduction in the number of paid listings and, therefore, the opportunity for paid clicks to occur”.

A very interesting development reported by CNET and Marketwatch is Yahoo will be testing Google (GOOG) AdSense program. “Yahoo will be testing Google’s AdSense for Search service, which will deliver relevant ads alongside Yahoo’s own natural search results. This is only a limited test, and does not necessarily mean that Yahoo will join the AdSense program,” Google spokesman Daniel Rubin said.

Of course Microsoft (MSFT) quickly called the move anticompetitive. This indicates Yahoo (YHOO) chief executive Jerry Yang is prepared to fight off the Microsoft bid, especially after Microsoft Chief Executive Steve Ballmer set a three week deadline to accept Microsoft’s offer.

Many site owners have great difficulty in getting the search engines to rank their sites. This is not easy for new sites, especially if the domain name is also new. There are many reasons for low ranking, here are a few:

• Age
• Content
• Linking Building and Link Baiting
• Google Sandbox
• Competition

Age

The search engines are suspicious of new sites and need to be convinced the site is not merely a spam site. Google will quickly block a site, if the site pulls in traffic from AdWords for an advertisement for something completely different. This is very common with adult sites. They setup sites with common keywords like mortgage or insurance and highjack your web surfing and lure you to an adult site. They often used misspelled words of well know web sites to “capture” traffic. There are many spam schemes designed to persuade surfers to visit their sites. When the site has been around for a while and ads for the site match the content, the search engines start trusting the site.

Content

Having good quality, interesting content is vital to generate repeat visitors and customers. However, the traffic has to flow into the site first. Updating the site a least once a week will help get your site noticed in the search engines. Here are a few tips:-

• Regularly update News & Events
• Add new products
• Comparison reviews showing advantage of your products over the competition
• Boost about new sales
• Link to your customers sites
• Write interesting articles about your industry.
• Publish in online magazines AND on your site.

Linking

The most important factor in ranking sites is linking. Both incoming and outgoing links are a very important. Having a great site with good content is only part of the battle. Without good links a site has little chance of achieving high ratings.

Before Google (GOOG) came along in 1998 getting your site listed was simple, just register your site with the search engines and build a nice interesting site. Fine with the early search engines, which were directory based and consisted of a list of sites indexed by different categories, the concept of linking was unknown. Google changed the world of search with the introduction of PageRank™. This is how Google describes PageRank™.

“The heart of our software is PageRank™, a system for ranking web pages developed by our founders Larry Page and Sergey Brin at Stanford University. And while we have dozens of engineers working to improve every aspect of Google on a daily basis, PageRank continues to play a central role in many of our web search tools”.

Google is very interested to know who thinks you are friend (inbound links) and who are your friends, (outbound links). Inbound links with high PageRank™ with good authority are worth more than links from lower ranking sites.

Google Sandbox

The Google sandbox effect, where new sites are placed in quarantine for a period of time can be very frustrating for new sites who have invested a lot of time and money in building a site with great content. As explained above age of a site is one of the factors used in the search engine equation. Therefore if you are building a new site, either buy an existing domain name or decide on a new domain name and put up a skeleton home page up on as soon as possible. Then continue to building the rest of the site.

Competition

Unless you are introducing a complete new product or service with little or no competition, there will be many companies who already have established web sites and have good ratings with the search engines. You need a lot of patience and time. It will take at least several months before the site begins to show and maybe a year before your reach the first page!

Yahoo shares rose 2% last Tuesday as reports on expected higher Microsoft bid. Yet Search Engine Land reports maybe the US Justice Department will step against the takeover bid, helping Yahoo fight off the bid.

A interesting report by Seeking Aalpha discussing whether Yahoo!, Microsoft: Edging Closer to a Deal?. A report by Reuters says “Twenty-seven of 28 financial analysts responding to poll expect Microsoft will succeed in buying Yahoo”.

The current opinion is Microsoft’s bid will happen as expected. How Microsoft (MSFT) will handle their new toy, remains to be seen. Many developers are leaving Yahoo (YHOO), partly because of fear and suspicion of Microsoft’s way of doing business. Microsoft have shown no indication they understand the web, in particular the world of search dominated by Google (GOOG). Both Yahoo and Microsoft search engines have been losing market share to Google, combining the two companies with very different technology may result in Google capturing a larger slice of the search and advertising market. There is also the added risk to both Yahoo and Microsoft the merger will actually damage both companies.

Many home users now use web based applications like Google Docs, this trend will almost certainly spread to business users as the web based applications involve and become more sophisticated. Microsoft make very large profits from their many applications a move towards web based applications may create a significant threat to their hold on this market. Yahoo face the additional threat the merge will destroy the company.

MicroHoo – The Microsoft Yahoo Takeover Offer

The general consensus is Microsoft’s bid for Yahoo will eventually go through. There is a very interesting take on the Microsoft Yahoo deal at Marketplace while CIO has a good overview titled Microsoft’s Bid for Yahoo. A report in the Financial Times suggests Advertisers welcome prospect of Google rival, by encouraging price competition and improvements in technology. The article points out Google controls search, but in display Yahoo leads. However, Google’s acquisition of DoubleClick will boost display advertising revenues likely to eat into Yahoo’s market share. A Reasonable Valuation For Google from Seekingalpha shows how Google are well positioned to maintain online advertising growth

Google

A new service from Google called Ad manager will be of interest and help advertisers manage their online sales.

iPhone

The excitement Apple created with the release of the SDK is fading with news Apple To Ban SDK Developers From Accessing iPhone Music Features?

Before analyzing the process of how to build links, here are a few tips and ideas which will help drive traffic to your site.

1) Add a couple of interesting sites or blogs to your blogroll. The search engines like sites that have good friends. If your friends have high ratings and are willing to link back to you, even better. Don’t forget to link to sites relevant to your business or interest. Google does not like links which are not relevant and yes they do check if the content is compatible. This is a very effective way of networking and should result in increasing your leads and contacts.

2) Read the high ranking blogs in your field and leave comments frequently,

3) Review books you read at sites like Amazon, make sure there is a link back to you site. Select the name of the link with care as the name used will be the same keyword used by the search engines. Do I want to use Shia Leigh or Shwebby. The same review should also be placed on your site. Just be aware that some sites might claim ownership of your review. I suggest writing a short review for Amazon and a full review on your site with a link to the review on Amazon where the visitor can buy the book.

4) Conferences, presentations and trade shows you attend should all be reviewed on your site with a link to the conference or event. Talk about the companies you spoke to, with a link to their web site.

5) Customers and Sales. Many companies do not like to discuss their sales and customers on-line for fear the competition will learn the company’s secrets. However, the more information you can reveal will build confidence and encourage potential customers to “buy” from you. Creating an on-line reputation for quality and integrity is a very important step in step in establishing an on-line business. Do not be afraid to be personal and name employees, particularly when they have done something good like “Bill Jones has developed the greatest idea since sliced bread”.

6) Add photos or video clips they attract more interest than plain text.

7) Contribute top online forums will help attract attention and increase your visibility.

These ideas will help establish your online presence and help you gain a reputation as an expert in your field.

Microsoft Yahoo Merger

Google wins approval for buying DoubleClick by convincing the European Commission that its planned merger would not give it a dominant position.

Making Google’s own antitrust arguments against the Microsoft Yahoo merger, less convincing. A voice in favor of the merger comes from Larry Ellison, CEO of Oracle who is reported to by the NY Times as saying “It’s bizarre that there’s a stigma to buying something rather than building it yourself.”

Internet Activity

I suggest reading a disturbing article in the Seattle Times about how “Web companies are learning more than ever before the gritty details of what people search for and do on the Internet”.

iPhone

The latest country to have access to the iPhone is Ireland as reported by iPhone World. Has Apple really unlocked the iPhone with the release of Apple iPhone SDK, or as reported by the Telegraph, will applications still be controlled very tightly. As I have mentioned before the biggest mistake Apple made with the Apple II and Mac was to retain control and not open up the PC’s to the outside world.

This is the first of a study of methods to obtain good rankings in Google, Yahoo and Microsoft search engines.

There are really only four ways of getting good rankings, five if you include the most important ingredient of all patience. Staying at the top is an ongoing process, like top athletes if you stop your ratings will start to fall.

Here’s the list:

1. Good Product
2. Content
3. Linking
4. SEO
5. Patience

Content and First Impressions
First you have to get the traffic to pass your window. Once upon a time the way to do this was position, the location of your shop in the high street and how good your display window looked. The idea was to attract attention and draw the potential customer into your shop. There same principle applies to stores particularly in shopping malls. A good position will bring in a lot of traffic without any advertising, which is why the price of prime locations can be very high.

In today’s internet marketing world a home page or landing is your shop window. You have between 1 to 3 seconds to pull in the visitor before she moves on. You have to get the sales message across very quickly and be very clear and decisive.

1. What are you selling?
2. The benefit over your competition.
3. Why should the visitor buy from you?

The landing page does not have to be the most eloquent design, remember Google’s site is very plain.