Google's general counsel Kent Walker (pictured) feels it's a competitive deal, with the company arguing that Google's better contextual ad placement algorithms make both users and advertisers happy and that other competitors share and license technology amongst themselves. Not cited, but mentioned in passing? Microsoft, party to one of the largest anti-trust investigations in recent memory and currently desperate to get a sizable share of the search advertising business.

Google will put AdSense against almost any content. Watching Google make its billions, rival ad networks decided they should too, flooding the market with inventory sold at ever-dropping rates. The problem with Google search, in which ads only show up when customers literally ask to see them, is that now all ad-supported Web companies and ad networks think they can create technology that will target advertising equally as well — even though Google search-ad targeting is just a crude keyword match, constantly improved by click-through data.

While they're happy to encourage clients to spend as much as possible — even, perhaps, when they don't need to — agencies' own marketers know that Google search is plenty good enough to put a brand's website at the top of its search results in most every case. Why buy the AdWords cow when you can milk Google for traffic for free?

Almost a year later, the MacFarlane-Google deal — if it actually happens this time — is more an explanation as to why so many bright entrepreneurs are fleeing the company. At today's supersized, ultracorporate Google, good ideas can take so long to see the light of day, sometimes they need to be announced twice.

The company's founder, Seth Goldstein, is obviously bullish, telling Inside Facebook that "social banners tend to perform at approximately 2-4x the rate of traditional banners, depending on the social content within them." Borrowing language from Google, Goldstein credits the performance to an alogorithm he calls "FriendRank."

If two of your friends recommended a movie to you, one of the two recommendations is going to have a higher psychological impact. FriendRank determines which of these two people should be presented to you in order to maximize the effectiveness of the ad for the advertiser, and the relevancy of the ad for the user. People have, on average, 150 friends. It’s not enough to just stick some of them in ads. You have to know who the right friends are, and that’s what FriendRank determines

It all sounds like what Facebook and Mark Zuckerberg should have done with Beacon, right? It's what we thought Facebook's SocialAds were going to be before Facebook launched them. But an executive at one of the more popular widgetmakers preaches caution: "[We're] not persuaded yet. Seth is good at spin, less accomplished at shipping real products that customers desire."

Asked to characterize the development as worrisome or welcome, an agency COO said "welcome." He said clients make their buying decisions on more than just the kind of raw data AdPlanner provides and that agencies are better at choosing good content brands will want to be seen as supporting than ad targeting technology is a making that content not matter. Another agency exec also said "welcome," because he's tired of metrics firms Nielsen and ComScore running the show.

[AdPlanner] Democratizes data and research to those smaller than us that couldn’t afford the $100K/year subscriptions, but doesn’t offer anything that hasn’t been done yet….

(Photo by Padraic)

Peer39 Launches World’s Most Advanced
Semantic Advertising Platform



Former TACODA SVP Matthew S. Goldstein Joins
as Chief Operating Officer



NEW YORK (June 30, 2008) Peer39 today announced the launch of SemanticMatch™, the world’s most advanced semantic advertising platform. Based on natural language processing and machine learning, Peer39’s patented algorithms understand content meaning and sentiment, enabling precision targeting down to the page level so that display ads appear on pages most relevant to their message. SemanticMatch™ gives brands the necessary protection to target any page, including inside social media, and opens entire new targeting capabilities to online brand and performance advertisers.



Matthew S. Goldstein, who has been Senior Vice President, Revenue Operations for TACODA since June 2006, has joined Peer39 as the company’s Chief Operating Officer. He will report to Amiad Solomon, CEO, and be based in New York.



“Matthew was an integral part of the success that TACODA enjoyed as it was purchased by AOL, and with MTV Networks’ online operations,” says Mr. Solomon. “We are pleased to have someone with his depth of experience joining us in establishing Peer39 as the market leader in semantic advertising solutions.”



“Semantic targeting is widely seen to be the next stage of advertising technology, beyond contextual or behavioral. What makes Peer39 different is that ads are targeted to the meaning of pages rather than to pre-selected keywords. The problem with keywords, as is well-known, is that they can be highly irrelevant to the actual page and conversation happening,” says Mr. Solomon. “We eliminate the errors that can plague keyword targeting and unlike other forms of online targeting, Peer39’s SemanticMatch™ does not set cookies or track user behavior.”



“When I studied the next generation of ad targeting technology, it was clear immediately that Peer39 has taken granular targeting to its deepest level by understanding page meaning and sentiment,” says Mr. Goldstein.



For publishers, including portals, news sites, ad networks, social media, blogs, and forums, Peer39's technology effectively monetizes a wide range of online content and increases the value of content pages that grow revenue and ROI. Using SemanticMatch™, advertisers simply decide where they seek to reach users in the marketing sales funnel – anywhere from awareness (“autos”) to consideration (“SUV”) to preference (“hybrid”) to purchase and retention – and the system automatically targets their ads to relevant pages, without the need for keyword targeting or setting cookies.



In addition, the company announced that it had closed $8 million in Series B financing with Canaan Partners as the lead investor and with participation from existing investors, Dawntreader Ventures and JP Morgan. “Advertisers and publishers continue to seek better, more effective ways to reach and market to consumers online,” says Warren Lee, principal at Canaan Partners. “With past investments in innovative online advertising companies such as DoubleClick and Tremor Media, we here at Canaan are excited to be working with the Peer39 team to further develop its unique technologies and to scale its business.”



Finally, Peer39 announced its advisory board consisting of Eytan Elbaz (co-founder of Applied Semantics, inventor of AdSense), Daniel Jaye (former President of TACODA), and Daniel T. Ciporin (former Chairman and CEO of Shopping.com-eBay).



Peer39 (www.peer39.com) is the global leader in semantic advertising solutions. Based on natural language processing and machine learning, Peer39’s patented algorithms understand page meaning and sentiment, and deliver the most relevant and effective brand safe online advertising. Headquartered in New York City, Peer39 maintains a research and development center in Israel. Peer39 Labs conducts primary research in semantic web technologies resulting in a number of patents covering its technology and business practices.

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.

Bostock and Yang just want you to express your mutual affection by replying with your white card in the proxy vote dating game. The profession of sweet love in full after the jump.

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

It's a way for the buy side to match what's happening on the sell side. The sell side is consolidating in these big platforms and Publicis thinks it needs to organize its buying to hook into these platforms so Google doesn't have all the data. Clients have lots of data. Their agencies need to be able to organize that data to better run campaigns.

Very informative, no? We asked Morrissey if anybody's ever told him he should write about the ad industry for a living. "If Twitter doesn't work out, totally looking into it."

An enormous, highly visible brand may not want to risk seeing its ad wind up on a page such as that run by the actual Facebook group "I've Had Sex with Someone on Facebook," which at press time had 59,353 members. Or consider the MySpace profile (turned up after about two minutes on the site) of 18-year-old "Nikki AKA Death Angel!," which is adorned with the motto "Don't fuckin fuck with ninjette bitch we'll cut ur fuckin head off an give it to ur momma."

When spending the majority of their time browsing content like this (or, more likely, content like this slightly more relevant to their friends), what are users thinking about? Checking out an ex's profile, we're more likely to remember the photos of the new sweetie, and not the "Last Minute Cabo Deals!" enticement next to it. If anything, that's salt in the wound. This new argument goes, if advertisers could sell based on users' messy passions, we users will stop playing Scrabulous — or dreaming of getting back together — and pay up. Sex does still sell.

An auto-refresh page which loads the video over and over.

Every 15 seconds this page will automatically refresh adding 1 view to Girlfriend's YouTube total each time it does. Keep this page open while you browse the internet, study for exams, or even sleep. For extra viewing power, open up two or more browser windows at this page!

It's the kind of view-gaming that advertisers would normally consider fraud — that is, if what fans were doing wasn't better the best advertising Lavigne and her label RCA could buy.

Of course, it was mere allegations of view-gaming that eventually caused YouTube to pull the previous pretender to the "Most viewed" throne, Clarus Bartel's Cansei der Sexy (Music is my hot, hot sex). But I have a feeling YouTube won't be pulling Lavigne's video any time soon. Once at the top, the views will simply snowball from there. And YouTube will be in the happy position of selling advertising against a pop star's music video that is, itself, advertising.

While the view gaming of the Girlfriend video might have juiced the stats, what's amazing is that it achieved its place with off-site embedding turned off. YouTube, a cross-site video pioneer that has now become a black hole where embeds go to die thanks to the DMCA and copy-protection filters, can't mind — because rather than running against ads on a third-party site, every Lavigne view is in on the company's site and in the company's salable partner program inventory.

Lavigne is still officially in second place, less than a million views off the leader's pace. In Laipply's video, the use of licensed music falls under fair use territory, but it's enough of a gray area that he isn't even in the partner program, and therefore can't generate a single advertising impression. Still, considering the controversy over retaking the top spot stirred by a lone Italian with video editing software and possibly some scripting tricks, I wouldn't be surprised if the situation wasn't being monitored manually with YouTube admins freezing view counts until the company can come to some agreement with RCA. It's the music business, after all, where a little extortion between friends is standard operating procedure.

those who researched expensive restaurants on Citysearch, declared incomes of $100,000-plus on Match.com, bought tickets to the symphony via Ticketmaster, browsed $700,000 homes on RealEstate.com or searched for luxury products on Gifts.com.

Web companies are obsessed with this kind of demographic slicing and dicing in an effort to convince advertisers that it doesn't matter what kind of content they put their ads against, so long as the audience looking at that content is the one they want to reach. Some might say that after precision accountability, demographic-based targeting is the Internet's greatest promise. So far, advertisers seem to prefer putting their ads against quality content.

The most important application for the foreseeable future is search. It’s where you start things. It’s where you express intent. It is important. I don’t think we can say, okay, well, we’re going to be in the ad platform business, and we’re going to do it just on the strength of non-search based assets. We have to be in the ad business, and we’ve got to have a good chunk of the search market

We disagree. Google owns Web search and search advertising and its not giving it back. Rather than chase Google in a race it can't win, Microsoft should acquire Facebook and see if it can make something real out of what Zuckerberg and company tried to do with Beacon ads.

That's going to be a tough one for Yang, because, well, the whole point of doing the Google deal is that Google is better at charging advertisers more — we've heard about 25 percent more — than Yahoo used to for the same search ads. And then there's the fact that Yang knows next to nothing about online advertising, or economics, or running a multinational corporation, or antitrust law, or politics. Or anything, really, besides "bleeding purple."

[Microsoft] upgraded from last year’s more modest Wally B to drop at least $300,000 for Parsifal III, a 158-foot sailing yacht that sleeps 12 in five staterooms bigger than my apartment. There’s also a jacuzzi. The owner is a Danish coffee-maker magnate who owes his success to the Scanomat machine that can brew coffee and froth milk from the same appliance. Useful.

Not to be left out, Yahoo's partying on the Riveria tonight, too.

It's right now holding a party in its swank penthouse with Lindsay Lohan's girlfriend [Samantha Ronson] DJing. Sadly, I'm missing it. Technically the party is tribal ddb's, but it's at the yahoo penthouse. Funny enough, it overlooks the water where Microsoft's huge yacht is front and center.

(Photo by Steve Peters)

They're doing what everyone else is doing, throwing their inventory into a big pile and asking someone else to do the work in return for a large cut of the revenues. Jon Cohen and Rob Stone, principals of New York-based Cornerstone Promotion, have created an ad network for the very purpose. We're not surprised many follow this path. It's easy and allows publishers to focus on creating content — which is probably more fun than selling ads. We would be surprised if RCRD LBL's Rojas joins up. His blogfather, Weblogs Inc. founder Jason Calacanis, is a known proponent of going with internal ad sales teams over ad networks, which he describes as "short term and very damaging." Indeed, Fortune reports Rojas is rumored to be going the smart way: releasing a major artist's latest album, sponsored by a single advertiser.

First, ABC wants to keep broadcast inventory for this season open, not waste it on ads purchased at last year's upfronts, and also preserves the higher online ad rate while luring customers with a price break. Second, it floods ABC online video inventory with actual ads, giving their data larger sample sizes with which to set rates and measure performance. One anonymous media executive quoted by MediaPost remained skeptical: "How can this beat full-screen television? We don't even know if they can measure the Internet properly, let alone giving us a demographic breakdown."

"Clients often buy both, but paid search and display are often managed very separately, sometimes through different groups or agencies," one interactive-agency COO told us. Another source, a senior partner at an agency, adds, "Typically search and display existed separately, either with separate budgets, sales contacts and teams, or sometimes account management teams."

The ability to purchase search and display at the same time isn't important to agencies because "there's no logical link between them," the COO said. Display advertising and advertising serve different purposes. Display advertising is supposed to make you want to eat Fritos; search advertising points you to a website where you can buy the snacks by the case.

Surely Yahoo is just as able to speak to customers as we are. So why haven't they heard all this themselves? Answer: They're marketing the company to Wall Street, not Madison Avenue. For years, Yahoo search hasn't been able to compete with Google search, so Yahoo has been talking up its ability to sell display plus search as a differentiator. But agencies don't buy Yahoo's sales pitch. Said one agency vice president, "It just further goes to show that Yahoo doesn't have their act together."
(Photo by midweekpost)

While the Google deal is not the same as an offer of $34.375 per share for Yahoo, I am continuing to study it, and it might have some merit. I continue to be extremely disappointed with the Yahoo management, but the Google deal might have some merit and seems to be better then the alternative deal proposed by Microsoft

To us, Icahn sounds like a defeated man. That's probably because he is. Once up over $120 million, thanks to his Yahoo adventures, Icahn watched as last week's stock drop took most of that back. (Photo by AP)

Anti-trust officials need to step in to protect the nascent but prospering online market from the ravages of a Robber Baron like monopoly.

The American Corn Growers Association has also been actively lobbying against network neutrality. Coincidence? The NBCC, founded by CEO Harry Alford (pictured here wearing a festive $100 bill tie), took the position that the Justice Department didn't go far enough in punishing Microsoft for antitrust violations. However, it has sided with AT&T and Comcast against network neutrality, a cause favored by Google, in the past. Why would a major corporation ask ACGA, NBCC or latino IT workers to lobby on its behalf? Because then you can accuse opponents of hating farmers, black business owners and hispanic techies, respectively. Full release after the jump.

National Black Chamber of Commerce questions Google-Yahoo partnership

Washington, DC – In response to reports that Google will merge operations with Yahoo!, Harry Alford, President and CEO of the National Black Chamber of Commerce, issued the following press statement:

"There is no denying that the proposed partnership between Google and Yahoo! would create a de facto online gatekeeper, raising prices for small businesses seeking to grab a piece of the growing online marketplace. The companies have argued that they don't "set" ad prices, but when all would-be advertisers are forced to participate in the same auction prices will skyrocket and smaller players can be more easily shut out. As minority businesses make quantum leaps within the uniquely egalitarian online market, this alliance represents a painful step backwards, towards monopoly and away from diversity. Anti-trust officials need to step in to protect the nascent but prospering online market from the ravages of a Robber Baron like monopoly."

NBCC is dedicated to economically empowering and sustaining African American communities through entrepreneurship and capitalistic activity within the United States and via interaction with the Black Diaspora. NBCC represents 95,000 Black owned businesses and provides an advocacy that reaches all 1 million Black owned businesses.

That Google may just have landed more search traffic — but that those queries are made by searchers who spend less money online and aren't worth as much to advertisers. You know, people who set their browser homepages back in 1997 and consider Google newfangled — the ever-diminishing crew of hardcore Yahoo searchers.

I think its very interesting that Google thought the Yahoo partnership with Microsoft would stifle the market place, yet somehow they don't see the same thing happening in search. Anytime you don't have a true number two it stifles innovation. Right when Yahoo announced Panama we saw Google react when they hadn't in a while. I don't think we'll see the same level of innovation anymore

Well, despite the spin, running a business isn't always about what's best for the customers. It's about pleasing the company owners, shareholders. Too bad they aren't saying nice things either. One of them, a major Yahoo investor, emailed Kara Swisher just after the news broke: “The Board and Jerry are idiots.”

Eek. What about employees? Surely the wage earners are happy to see the bosses bringing in another $800 million. Nope. Here's how one reacted to the end of Microsoft merger talks and the Google deal: “Out of the frying pan, into the fire. At least, the frying pan was a slower death.”

Yahoo has admitted defeat, under the guise of openness. The company will start letting Google sell ads on Yahoo search results, generating as much as $800 million a year for Yahoo; the increase comes from Google's superior efficiency at matching ads to search queries and milking money from advertisers. Intriguingly, the reason Yahoo gave for ending talks with Microsoft was that Web search was integral to its business. Search may be, but not the ads that run alongside search?

The inconsistency seems foolish. Yahoo plans to "blend" Google ads with its search results, as well as its own search ads — suggesting it will keep its Panama search-advertising platform alive, for now. Yet outsourcing the bulk of its ads to Google, as Yahoo must do to realize its hoped-for revenues, will starve Panama of the volume of data it needs to continuously refine its ad-placement algorithms. One wonders if this has anything to do with Usama Fayyad's departure. As Yahoo's chief data officer, he must have understood better than everyone the devil's bargain Yahoo made in this Google pact.

(Illustration by dannysullivan)