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February 3, 2008 - February 9, 2008


Yahoo Board Escapes MS Bear Hug: Yahoo Jitsu!

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The Yahoo board of directors will formally reject Microsoft's $31 bid, according to a report today in the WSJ. The Microsoft letter (i-banker parlance, a bear hug) sent to the Yahoo board.

The Jiu Jitsu move that Yahoo used to slip out of Microsoft's arms? The board stated the 62 percent preimum "massively undervalues" Yahoo and doesn't cover the risk that regulators here and abroad might body slam the deal.

Rumors are rife that Yahoo may tag out in search, tapping its former tag team partner, Google, to crush Microsoft. Google, combined with Yahoo's share of searches, would become the de facto search engine on the Internet, achieving Eric Schmidt's stated goal:

In martial arts and grappling, the bear hug is a dominant position, allowing great control of an opponent. The more brutal world of corporate M&A offers many escape routes.

The Yahoo board concluded Microsoft was trying to"steal" the company in its current weakened position. So the MMA match between the two Web 1.0 titans promises to go several more rounds. Yahoo's has popped posion pills, designed to prevent a hostile takeover. A poison pill is the corporate M&A equivalent of steroids, making Yahoo a tougher opponent to take down.

Of course, the rejection of Microsoft's bid is no surprise to Search Engine Watch readers, who saw the Yahoo News report undervaluing Microsoft's offer.

In any case, we're in for a bloodbath: Yahoo "begs" (Google, save us!), Microsoft borrows (to buy Yahoo) and Google "steals" search from their #2 competitor? Or it may just be an inverse bear hug by the Yahoo board, designed to squeeze more money out of Microsoft.

For industry experts on the Microhoo deal, check out Kevin Newcomb's roundup of industry experts who manage the largest global paid search campaigns and organic search strategies here, here, and here.

Posted by Kevin Heisler on February 9, 2008, 1:48 PM | Permalink


Search Headlines & Links: February 8, 2008

Want a snapshot of the day's search marketing news? Here we've collected today's top news stories posted to the Search Engine Watch Blog, along with search-related headlines from around the Web:

From the SEW Blog:

Headlines & News from Elsewhere:

Posted by Kevin Newcomb on February 8, 2008, 5:29 PM | Permalink


Google Map Business Categories, Unraveling the Black Box

google-maps-10-box.jpg Nearly all things "search" blend known algorithmic ranking attributes with mysterious black box elements. Much like the Federal reserve, even a stray comment from the kingmakers sends legions of search marketing minions scurrying for cover.

Best-practices surrounding Google Map business category optimization, are amongst the most annoying partially unknowns. The local SEO answer to "how the heck do we optimize for that" has always been "gee, we just don't really know for sure."

Landing your business in the appropriate Google Maps business category has always been something of a mystery for SEM professionals and small business owner alike.. Most marketing professionals have asked the question in annoyance: "Why can't I be in the same category as my competitor?"

Respected local search guru Mike Blumenthal in his blog, "Understanding Google Maps & Yahoo Local Search," has been researching the map category matter for a couple of years. In previous articles, which deserve attention in themselves, research indicates that "Google is pulling categories from SuperPages.The categories are not available in Local Business Center and small business owners are frustrated to see only their competitors shown in hotly contested niches.

Now, in what could be a gem of functional street wisdom, Blumenthal has published research which seems to offer a solution to help garner placement in coveted Google Maps business categories.

The recommended strategy is to remove all category information from your Google LBC listing and optimize the business title and description to include SuperPage categories. It can take 6-8 weeks for Google to plow through and update your record. Findings strongly support the theory that, that by following this method, your business listing will display for the desired category in applicable searches.

Posted by Marty Weintraub on February 8, 2008, 3:15 PM | Permalink


Yahoo News Reports Microsoft Bid Change

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This just in: Yahoo! News (AP on Yahoo News) scooped the world on the most amazing number ever reported for MicroHoo. Since all wait with linkbaited breath for the latest Microsoft-Yahoo bid, here 'tis:

$45 MILLION dollars!

Microsoft agreed to pay how much for Yahoo? Would the Yahoo board of directors accept this low-ball offer from Microsoft?

O who will save Yahoo from Microsoft? We need a white knight. Our suggestion, Sir Spamalot orSir Robin the Not-Quite-So-Brave-as-Sir Lancelot Maybe several bidders led by Leader of The Knights who say NI! And now for something completely different, a Black Knight.

Who caught this typo last week? Eagle-eyed Incisive Media creative manager, Drew Eastmead, creative genius behind SES Magazine - official publication of Search Engine Strategies shows noticed someone didn't get the copy right.

As Yahoo News warns us all:

"The information contained in the AP News report may not be published, broadcast, rewritten or redistributed without the prior written authority of The Associated Press."

"Copyright © 2008 The Associated Press."
"Copyright © 2008 Yahoo! Inc. All rights reserved."

And now we know why they want express written consent.

Posted by Kevin Heisler on February 8, 2008, 1:40 PM | Permalink


Decision Time for Yahoo?

According to Michael Arrington at TechCrunch, today's the day Yahoo's board will make a decision on how to proceed with Microsoft's takeover bid:

"There are only two options left. Accept the offer in principal, and try to increase the price with no negotiating leverage at all, or do a deal with Google to outsource search advertising and, likely, search itself.

The board, we've heard, is basically being told by outside advisors to take the Microsoft deal. But we've also heard that a contingent of senior executives at Yahoo, who are willing to do literally anything to thwart a Microsoft takeover, are pushing for the Google deal and will present their case at the meeting."

One concern of Yahoos may be losing the company's identity and being assimilated by Microsoft. In an effort to assuage those fears, Microsoft CEO Steve Ballmer gave empty reassurances in an interview with Business Week. "Yahoo, the brand, will live," Ballmer said. He didn't elaborate on that, of course, so it could be anything from Microsoft's premier online brand to a token start page (think Netscape).

Yahoo's Panama platform will not likely be as lucky, if Tarek Najm, adCenter's general manager, has anything to say about it. He told Business Week there was nothing he liked about Panama that he would want in adCenter: "We're the leaders in technology," Najm says. "Ours is better."

Posted by Kevin Newcomb on February 8, 2008, 8:49 AM | Permalink


Y! Live is Dead! Long Live Yahoo! Live

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Live from Yahoo! It's Y! Live Night! Or not. Yahoo! Live, the experimental live video service, debuted and crashed and crashed, resulting in a public apology and mea culpa from the 6 engineers who launched the service. The web service is boldly (and entirely coincidentally) named Y! Live in the grand tradition of MSN Live, Live Windows, and Windows Live triumphant product releases.

"Yes, Yahoo! Live is alive! Yahoo! Live is an experiment in personal live video broadcasting, brought to you by our Advanced Products team," wrote Eric Fixler, the aptly-named Y! Live engineer on the Yahoo Developer Network's launch of Yahoo! Live Web Services.

We have only one question: Y?

"Maintenance. Yahoo! Live is an experimental release. We've experienced heavy traffic and are taking a breather to tune things up a bit." according to the message posted on the Yahoo site that can't be seen.

No word on whether Y! Live will be back up in time to live stream the Yahoo Board of Directors decision on Microsoft's hostile bid.

Here's why we should forgive Yahoo's decision not to dedicate more resources to making the launch a success during the most important week in the company's storied history:

"One thing to keep in mind is that although this product comes from Yahoo! (a big company), the team working on Y! Live is only six people deep. We're a really tiny incubation group which is tasked with building innovative new products and get them out there ASAP. Our mantra is to iterate and build with the community, as opposed to unveiling The Next Big Thing on Day One. We hope you collaborate with us as we shape Y! Live into a game-changing product."

6? 6. 6! people. Who needs a Do No Evil motto when you have the Y! Live 6?

Good news: Yahoo! Live ships with API goodness.

Yahoo! your ship didn't come in. It set sail without you.

"First night - killer good times, now making some tweaks." Blog on, Yahoo!

Note to Yahoo Board, (aka Generation "Gap"): the term "killer" is the Gen Y way of saying "peachy keen" and has nothing at all to do with dead web services.

No doubt Yahoo execs will get back to writing a new peanut butter manifesto in a Jiffy.

Write your own peanut butter manifesto here.

Posted by Kevin Heisler on February 8, 2008, 8:04 AM | Permalink


SEW Experts: How To Market Your Search Engine Agency

You'd think that being in the marketing business would mean you were an expert at marketing your own business. In reality, it can be a struggle to keep a regular pipeline of sales leads. In today's Business of Search column, "How To Market Your Search Engine Agency - Part 1," Fionn Downhill shows you how to reach your target market and get those leads, which are so important when developing and growing your business.

Posted by Kevin Newcomb on February 8, 2008, 12:00 AM | Permalink


SEW Experts: Tracking and Analytics 101

The lack of uniform analytics definitions creates problems for marketers. In today's SEM Crossfire column, "Tracking and Analytics 101," Frank Watson offers some basic definitions to get started on a conversation about using Web analytics for your search campaigns.

Posted by Kevin Newcomb on February 8, 2008, 12:00 AM | Permalink


SEW Experts: The 411 on Local Search Data for Business

When incorrect listing information for your company finds its way into the local listing database of some data provider, it can start spreading like wildfire from local search site to local search site. In today's Vertical Challenge column, "The 411 on Local Search Data for Business," local search expert Gregg Stewart tells you how to keep your business' data accurate, and prevent your local search sales leads from going out the window.

Posted by Kevin Newcomb on February 8, 2008, 12:00 AM | Permalink


SEOs of the World, Unite!

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January was a bad month for SEO reputation. Will February be SEO Groundhog Day?

Just when we thought it couldn't get any worse, along comes "SEO Expert" the world's most evil cartoon character.

We don't know whether we should sue, or just let him do battle with Cartoon Barry. Danny calls these attacks "SEOs are scumbags" incidents. He says, "I find myself with little energy to push back against them with yet another defense of the industry."

So SEOs of the World, Unite!

Posted by Kevin Heisler on February 7, 2008, 7:40 PM | Permalink


Search Headlines & Links: February 7, 2008

Want a snapshot of the day's search marketing news? Here we've collected today's top news stories posted to the Search Engine Watch Blog, along with search-related headlines from around the Web:

From the SEW Blog:

Headlines & News from Elsewhere:

Posted by Kevin Newcomb on February 7, 2008, 6:36 PM | Permalink


Courts Need Consensus on Trademark Law and Search

Adding more confusion to the case law surrounding trademark issues and search advertising, a Sixth Circuit federal court in Kentucky found that keyword advertising is a "trademark use in commerce" under the Lanham Act. Actually, what they decided was that there was not enough case law to prove it wasn't, so a motion to dismiss the case based on that argument could not be granted.

While the decision was not an overwhelming one, and should not affect future cases, it showcases the confusion in the courts surrounding keyword advertising, and overall search engine marketing issues. In most Circuit Courts – other than the Second Circuit courts in New York, Vermont and Connecticut – the findings have been that keyword advertising is a trademark use in commerce, as Eric Goldman, an Internet law professor at Santa Clara University School of Law, outlines on his Technology & Marketing Law Blog.

"This case reinforces the pattern that Second Circuit-controlled courts aren't finding trademark use in commerce from keyword triggering and all other courts are," he writes.

If buying an ad triggered by a trademarked keyword is eventually found to be a trademark use in commerce, that would essentially prevent advertisers from doing so legally. Goldman has written quite extensively about online trademark law, and he agrees with the Second Circuit courts.

The Lanham Act defines "use in commerce" as using a trademark on physical packaging or displays, or "in the sale and advertising of services," an ambiguous definition when it comes to the Internet and search engine marketing, says Goldman. He expects the matter to remain unresolved until Congress passes a new law or the Supreme Court makes a ruling.

Google's current trademark policy allows advertisers in the U.S. and Canada to trigger an ad from another party's trademarked keyword, but not to use the trademarked term in the ad text. In all other countries, advertisers are not allowed to do either.

Yahoo's trademark policy "requires advertisers to agree that their search terms, their listing titles and descriptions, and the content of their Web sites do not violate the trademark rights of others."

Microsoft's trademark policy is similar to Yahoo's (and Google's non-North American policy). It "requires all advertisers to agree that they will not bid on keywords, or use in the text of their advertisements, any word whose use would infringe the trademark of any third party or would otherwise be unlawful or in violation of the rights of any third party."

Posted by Kevin Newcomb on February 7, 2008, 5:50 PM | Permalink


What Do Users Get on Google News Local Search? Zip.

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Google News now slices and dices local news by zip code.

Before passing judgment on the new Google News feature -- launched on the Google News blog under "All News Is Local" - Google asks users to provide feedback. As usual, Google calls the launch an experiment.

The results? As you can see from a news search for "90210" the SERP (search engine results page) the Google News search algorithm ranks the zip code high. The deceased "90210" TV show ranks first. The keyword 90210 is in the title tag. Plus,

The Google News experiment may present a challenge for search engine optimization professionals who specialize in SEO PR. It's more likely, though, that Marketwire's new Social Media 2.0 press release product will have more of an impact on the way corporations - including newspapers - disseminate news and information.

At this early stage, geotargeting news by typing in a city name Typing in "Beverly Hills" in Google News doesn't deliver better results, favor local news sources, or aggregate local news.

This Google experiment? Google Local News search may not be canceled like the 90210 TV series but it's not ready for primetime.

Posted by Kevin Heisler on February 7, 2008, 9:16 AM | Permalink


Aches & Pains Map Shows Where It Hurts: Yahoo-Microsoft and Google

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The list of search engines is shrinking. Yahoo-Microsoft? The hottest topic.

Search engine market share? The fulcrum of the hostile MS-Yahoo bid -- and one of the most popular searches in Google, Yahoo, MSN, and Ask.

On Super Tuesday, we found a way to watch Presidential primaries on a search engine: a mashup of Google Earth and twitter / twittervision, with a Google Gadget and iGoogle thrown in for good measure. Still, keyword Meta Tag, meta tags, and meta keywords remain our stock in trade here at Search Engine Watch.

So when Gary Price, Ask.com director of Online Information Resources and editor, ResourceShelf and DocuTicker, pinged us with a Weather Channel-MSN Virtual Earth mashup, we couldn't resist providing a fresh angle on the Microsoft-Yahoo hostile bid.

The Aches and Pains Map on weather.com shows Google feeling no pain from the MicroHoo hoo-hah.

Yahoo investors and employees -- in the yellow area - don't appear to be suffering in Silicon Valley.

In contrast, Microsoft - rebuffed by Yahoo - seems to suffering from high levels of aches and pains. The Microsoft Virtual Earth map of aches and pains (a Google Earth competitor) shows Redmond virtually in the red zone.

The Aches and Pains Index map graphically depicts areas of higher or lower levels of weather-related pain. Locations in the orange regions can expect above normal levels of aches and pains. Areas shaded in yellow will have normal levels, and gray regions will be below normal.

So if you don't like the weather, wait until tomorrow. It'll change, just like Google's share of searches - and there's still nothing you can do about it.

Posted by Kevin Heisler on February 7, 2008, 1:01 AM | Permalink


SEW Experts: Coffee, Tea, or Link Love?

Developing links for a business-to-business (B2B) site can be a challenge. In today's Link Love column, "Coffee, Tea, or Link Love?," Justilien Gaspard outlines some best practices for a link-building campaign for a site in the restaurant and coffee equipment industry.

Posted by Kevin Newcomb on February 7, 2008, 12:00 AM | Permalink


SEW Experts: Why Search is Still Prehistoric - Part 2

Many search marketers were disappointed with the Yahoo Panama release, finding it to be more of a catch-up to Google than a leap forward. In today's Brand Equity column, "Why Search is Still Prehistoric - Part 2," Eric Qualman explains that the cause of that disappointment may result from Yahoo trying to please advertisers, instead of searchers, with Panama.

Posted by Kevin Newcomb on February 7, 2008, 12:00 AM | Permalink


Search Headlines & Links: February 6, 2008

Want a snapshot of the day's search marketing news? Here we've collected today's top news stories posted to the Search Engine Watch Blog, along with search-related headlines from around the Web:

From the SEW Blog:

Headlines & News from Elsewhere:

Posted by Kevin Newcomb on February 6, 2008, 8:53 PM | Permalink


Search Headlines & Links: February 6, 2008

Want a snapshot of the day's search marketing news? Here we've collected today's top news stories posted to the Search Engine Watch Blog, along with search-related headlines from around the Web:

From the SEW Blog:

Headlines & News from Elsewhere:

Posted by Kevin Newcomb on February 6, 2008, 8:53 PM | Permalink


Social Media Could Thrive In a Recession Says Forrester Research

Marketing and PR people hate to hear talk of a recession or a depression. Our budgets are always the first to get cut, A report from Forrester out today says this time will be different -online and social media marketing could escape that fate.

Strategies For Interactive Marketing In A Recession says companies will continue to invest online

Online display ads won't be hit too hard -brand advertisers seeking cheaper media could turn from TV and print to online video and flash ads.
Money will flow toward search - Google and other search-based firms could actually see prices increase as marketing dollars cut from mass brand advertising begin to flow into performance-based search
Email marketing will increase -existing customers are far more likely to listen to your messages in a recession than new prospects
Social Applications Could Thrive - social programs leverage the voice of the customer to get messages carried further than ad impressions, they're chepa and they motivate consumers in the middle of the funnel.

The report is free and open for public access. It does have a fairly long registration process. The link to register is on the top right of the page.

Posted by on February 6, 2008, 8:49 PM | Permalink


Super Bowl Advertisers Fumble on SEO

The advertisers who spent millions on TV airtime during Super Bowl 42 should have spent a little more of their budget on SEO, it seems. While many showed a marked improvement in SEO strategy over last year, there is still much room for improvement. In today's SearchDay, "Rating the Super Bowl Advertisers' SEO Record," Chris Boggs examines the search engine placement of many of this year's TV advertisers, and finds most to come up lacking. Yesterday, in "Super Bowl XLII Ads – Where's the URL?," Chris found that many of the ads didn't even show the company's URL well. Weigh in with your thoughts on this year's ads in the SEW Forums.

Posted by Kevin Newcomb on February 6, 2008, 4:59 PM | Permalink


Yahoo Desperately Seeking Suitor

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With limited options, Yahoo board members face increased pressure to accept Microsoft's hostile bid. Yahoo has resisted Microsoft's advances in the past, convincing shareholders a turnaround was just around the corner.

So how much money did Yahoo leave on the table by declining the earlier offer? Microsoft won't publicly reveal the bid. Yahoo CEO Jerry Yang would be loath to share the offer from the company the Valley loves to loathe.

Here's the rumored Microsoft bid made last year: $40 plus per share. That's the number Oppenheimer analyst Sandeep Aggarwal cited in a note to clients, suggesting a potential 26-40 percent upside for investors from the current offer of $31 per share - if Yahoo can negotiate a better deal for its shareholders or find a more suitable suitor.

So who's willing - besides Google - to play white knight to Yahoo's digital damsel in distress?

The knights hardly comprise a round table. Only five companies have been widely reported as possible suitors: AT&T, Comcast, News Corp, Time Warner, and Verizon Communications. None has stepped up to enter the fray. Rupert Murcoch of News Corp publicly stated he didn't plan to prepare a competitive bid.

The Wall St. Journal (subscription) reported this morning that Yahoo's hoping against hope that a rival bidder or a business tie-up with Google would save the day. Google desperately wants to derail the deal, even though their share of searches continue to erode Yahoo's market share.

Mike Arrington of TechCrunch expects shareholders to approve the deal soon.

A Google-Yahoo partnership, though, isn't an ideal solution for Yahoo either. It's not as if Google could sign a noncompete agreement with Yahoo in lines of business Yahoo has strength in: local mobile, e-mail, display advertising, or e-mail.

How much revenue Google would be willing to forego by partnering with Yahoo in search also remains in question. In its quest to index the world's information, Google has become a victim of its own success.

A grizzly bear hug (not even a teddy bear hug) from Ballmer may have squeezed the life from Silcon Valley's once and future king.

Now it seems Google's mouth-to-mouth resuscitation of Yahoo's search business will be the only hope for Yahoo's survival.

Posted by Kevin Heisler on February 6, 2008, 8:07 AM | Permalink


SEW Experts: How to Engage Customers in Search Marketing

Relationships between businesses and customers are changing. Search marketing can no longer operate in a vacuum, but is just a part of the bigger marketing picture. In today's By the Numbers column, "How to Engage Customers in Search Marketing," Eric Enge shows you how to turn these new types of customer relationships into a weapon for your business.

Posted by Kevin Newcomb on February 6, 2008, 12:00 AM | Permalink


SEW Experts: 2008: Google, Yahoo and MSN Join Together

This just in: Microsoft, Google and Yahoo have agreed to combine forces to create MicroGooHoo, a universally accessible platform to provide clearly unbiased information access points for all humanity. Or maybe not. In today's Searching for Meaning column, "2008: Google, Yahoo and MSN Join Together," Kevin Ryan delves into the details of the coming battle between Google, Yahoo, and Microsoft over search and platform restrictive productivity enhancements.

Posted by Kevin Newcomb on February 6, 2008, 12:00 AM | Permalink


Google is the Bomb! Obama, McC, Mitt, Hill, Huck, Paul on Super Tuesday

Google is the bomb on Super Tuesday for election results. Check out the new Google News Elections coverage section and Google Maps. No X-Ray vision superheroes but "primaries.XML?" Google's got it. No man of steel with X-Ray vision, but Google's got "rikanu" in Boston/Cambridge, MA who's "gone voting."

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You won't find Obama in 'Bama or Clinton on Capitol Hill but you can watch them on the new Google mashup on "Twittervision." (YouTube is so last year.)

Don't worry old media, Googlers are still tweeting about CNN plasma touch screens and who's got the best big box election coverage.

On Google, though, you can watch your Google Gadget fill in the returns for McC, Mitt, Obama, Hill, Paul, and the rest of the Super Tuesday superheroes.

If all the twittervision tweets on Obama watch parties correlate with exit polls, lots of states will rock with Barack. Looks like he's the Ba-Rocket.

For the Repubs, looks like Mac is back. Mitt? This is it. Paul? That's all, folks.

For complete elections coverage, stay tuned to your favorite Internet channel.

Posted by Kevin Heisler on February 5, 2008, 7:23 PM | Permalink


Search Headlines & Links: February 5, 2008

Want a snapshot of the day's search marketing news? Here we've collected today's top news stories posted to the Search Engine Watch Blog, along with search-related headlines from around the Web:

From the SEW Blog:

Headlines & News from Elsewhere:

Posted by Kevin Newcomb on February 5, 2008, 6:00 PM | Permalink


Yahoo! Acquires FoxyTunes

While all eyes are still focused on Microsoft's proposed purchase of Yahoo!, Yahoo! has already made its first (real) acquisition of 2008 by picking up Israeli-based FoxyTunes, a Firefox plugin that allows you to control a variety of music players from your browser. This was a great purchase for Yahoo!; as I said yesterday, the new search engine battle is going to be for nearly everything but search itself—and music certainly falls into that category.

Yahoo! has a checkered history with music, despite music.yahoo.com drawing in a whopping 25 million uniques a month. Lovers of MusicMatch still can't forgive Yahoo! for what they did when they acquired the formerly-great player. Yahoo! seems to have since learned its lesson—as evidenced by their hands-off policy with Flickr—and I expect FoxyTunes to remain a great product and even improve under Yahoo! (especially if they add support for FineTune and Deezer). On a whole, especially with this acquisition, Yahoo! dominates the online music space, which makes them an even more attractive target for Microsoft.

On a side note, congratulations to the team behind FoxyTunes, many of whom I've met around Israel.

Posted by on February 5, 2008, 4:29 PM | Permalink


Boost Organic Results. Link Build with Social Media

In this evolutionary algorithmic age every search marketer charged with boosting rankings on the organic SERPs knows, with fearful certainty, that building inbound links is essential. Utilizing social media communities to do so is a front-and-center tactic for many.

Sure, we're all aware of mainstream players like Facebook, MySpace, YouTube, LinkedIn, StumbleUpon, Del.icio.us, Reddit, Propeller, etc...

However, there are hundreds of social communities other than the biggies. These niche' player-communities can be terrific venues to engage readers of similar ilk, make friends, drive focused micro-busts of traffic, and build links. Some communities are junk. This post offers niche' social site examples and provides links to lists which index and profile dozens of useful ones.

Dofollow and Nofollow
A quick word about Do/No follow. Most blogs (and many communities) these days attempt to discourage spam by removing "link-juice" passed on links dropped in discussion threads. That's called "Nofollow." (Wikipedia is a classic example of Nofollow.) Nofollow links deliver traffic but there's no SEO benefit. If you view the source code of this page, you'll see that some of the social site links are Nofollow and therefore do not pass energy.

When evaluating the potential benefit of social community participation, it's best practice to understand the objective and potential gain. Whenever a site, with decent Pagerank, "forgets" to turn off Dofollow, it's an opportunity of sorts to build links of varying strength and value. The most important caveat is that gratuitous link dropping, without offering true value to the community, is spam and will likely be treated as such.

Every search marketing professional knows that garnering good quality, relevant, and "natural" inbound links to your site or blog is critical to drive your SEO ranking efforts. Honest participation in niche' social communities, relevant to your product & services, is the tactic that many savvy SEMs reach for to build their site's inbound link-profile. In addition to the community site links themselves, "hot" posts can result in feed subscriptions, increased readership, and links from other relevant and valuable sites.

Fark is a social news site in which moderators approve user link-submissions and post them to the homepage. The links are Nofollow but can drive noticeable traffic.

Slashdot is a community where techno-heads hang out and geek-jam. However, users submit stories about entertainment, politics, and other fun stuff. If editors approve a submission and it's promoted the homepage, measurable traffic can result. Also, links in the body of each post are Dofollow and pass juice.

Metafilter is a moderated community, both by site administers and users, in which participants share interesting web content. Links are Dofollow.

Mixx is widely regarded as an up-and-comer in the social news world. A potentially mainstream Digg replacement site, many SEM folks had early-adopter Mixx profiles for fun and future marketing bang. Oh yes, they forget to turn off Dofollow so the links pass juice.

Hugg is a smaller community engaged in dialog surrounding environmental issues. There's social exchanges about technology, politics, and science as well. Links are Dofollow.

Sk*rt is a Dofollow PR 5 fashion, food, and technology community, primarily comprised of females.

Stirr'dup is a smaller NoFollow social news site which categorizes news as technology, entertainment, news and politics.

Linkinn is a PR5 site specializing in offbeat video and pictures. Links are DoFollow and pass juice.

Lists of Useful Social Media Sites:
48 Social News Websites: A List of General and Niche Social Media Communities
Tropical SEO: Top 38 Niche Social Media Sites (That Actually Send Traffic)

Respected blogger Sugarrae has posted a serious interview with industry leading link-building experts and is a must-read. Interviews include:
Eric Ward, the Link Moses behind URL Wire
Rand Fishkin from SEOMoz
Roger Montti, the founder and owner of martinibuster.com
Todd Malicoat of Stuntdubl and Clientside
Justilien Gaspard, Link Columnist for SearchEngineWatch.com, his link building blog and course author SEMPO Institute
Aaron Wall of SEO Book and Clientside SEM
Debra Mastaler of Alliance Link and the The Link Spiel
Michael Gray of the Graywolf SEO Blog
Andy Hagans, the lazy SEO of the Tropical SEO Blog
Jim Boykin of We Build Pages and Internet Marketing Ninjas
Rae Hoffman, CEO of Sugarrae and MFE Interactive

Posted by Marty Weintraub on February 5, 2008, 11:27 AM | Permalink


Microsoft-Yahoo: No Mention of Publisher Deals

With all the news about Microhoo, no one's mentioned how current content deals with publishers might change -- for better or worse. Yet these licensed resources drive substantial portal traffic and ad dollars today.

As an example, let's take a quick look at news licensed by all three players:

* Yahoo licenses many well-known news sources.
* Microsoft offers MSNBC-branded news content.
* Google doesn't license; it scours thousands of sources.

At the SIIA (Software & Information Industry Association) conference last week, major publishers seemed more interested in driving traffic to their destinations than in licensing their online content to the portals. Even the most hide-bound publishers have delivered some content openly, and many have made their archives available online as well. In addition, they understand that engineering prowess will matter as much as editorial strength.

With these shifting priorities, do the large publishers win, lose or draw from Microhoo? It's a draw, assuming steady portal traffic and no change in news providers. Fat chance. I'm betting that most licensing deals aren't assignable -- which means anything goes with a merger.

Microhoo might play smarter, however, if they coordinate services to increase revenue for publisher sites along with their portals. They have an array of services that appeal to print and broadcast suppliers, who haven't made all their content completely crawlable yet.

Otherwise the publishers will be drawn, by default, to Google to meet their traffic and ad revenue goals. As Google's David Eun told publishers at the SIIA confab, Google will continue to provide services which help publishers become “more ubiquitous online."

Posted by on February 5, 2008, 10:15 AM | Permalink


Breaking News: New Leadership at Efficient Frontier

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Search engine marketing firm Efficient Frontier today appointed Ellen Siminoff chairman of the board and named president James Beriker as the new CEO and director.

In her four years as CEO, Siminoff grew Efficient Frontier from a team of eight to a leading search marketing technology and professional services company with 170 employees managing $450 million in annual search spend for 250 advertisers worldwide. As chairman, Siminoff will continue to guide and participate in the growth initiatives and the company's strategic direction.

Efficient Frontier was the first search marketing firm to apply portfolio management theory (Wall St. equity trading algorithms) to the optimization of paid search listings. Efficient Frontier's algorithms use historical data to model all possible bid combinations across a portfolio of keywords to allocate budget optiimally. The best possible return on investment? The so-called “efficient frontier.”

In a statement, Siminoff said Efficient Frontier has reshaped the SEM industry by applying advanced technology keyword optimization. Efficient Frontier pioneered the management of millions of keywords in Google's invisible bid landscape, bringing predictive modeling to opaque search marketplaces.

The next generation of Efficient Frontier's platform will enable clients to apply algorithms to emerging media auction marketplaces, including display and social search engines, as well as optimize advertising spend across multiple channels.

As CEO, Beriker will be responsible for the overall management of the business. His charge? Drive growth, product innovation and global expansion.

Prior to Efficient Frontier, Beriker held vice president, senior vice president and GM positions at online marketing services firm ValueClick and the ValueClick Media, Mediaplex, Commission Junction and PriceRunner brands.

Beriker was also the founder and CEO of Search123, a paid search engine that launched in October 2000 and was acquired by ValueClick in May 2003. Prior to Search123, Beriker practiced corporate law, representing early and mid-stage technology companies and entrepreneurs.

I had lunch with Jim a couple weeks ago when he was in New York. He outlined his vision to make Efficient Frontier the dominant worldwide optimization platform for all digital advertising. When he says EF is well on its way to achieving this goal, he's giving notice that the digital advertising platform race won't be Google-DoubleClick vs. Microsoft/Aquantive -- with or without Yahoo, the company where Siminoff made her reputation as a dealmaker.

Part of the founding executive team of Yahoo!, Ellen Siminoff led business development, corporate development, and the small business and entertainment business units. Ellen has served on the board of directors for online ticket broker, StubHub, and is currently on the boards of US AutoParts, BuildDirect, 4Info, and Journal Communications. Ellen graduated Stanford's Graduate School of Business with an MBA and has a bachelor's degree in Economics from Princeton University.

Geoff Yang, Efficient Frontier director and founding partner of Redpoint Ventures noted Siminoff's skills as a dealmaker and innovator. He praised her leadership in building the largest independent SEM provider in the world.

"Efficient Frontier's success is a testament to Ellen's unquestionable dedication and leadership talents, and cements her standing in the Silicon Valley as a company builder and thought leader,” said Yang in a statement.

Look for more discussion in Techmeme.

Posted by Kevin Heisler on February 5, 2008, 1:25 AM | Permalink


SEW Experts: Don't Waste Money on a So-Called SEO Specialist?

A publication sent to American Express small business cardholders suggests that SEO is a waste of money. In today's au Natural column, "Don't Waste Money on a So-Called SEO Specialist," Mark Jackson once again comes to SEO's defense.

Posted by Kevin Newcomb on February 5, 2008, 12:00 AM | Permalink


SEW Experts: 4 Ways Google AdWords Can Increase Small Business Profits

Sometimes AdWords accounts are set up with the best of intentions, only to languish or be turned off because they're not meeting expectations. In today's Little Biz column, "4 Ways Google AdWords Can Increase Small Business Profits," Carrie Hill outlines four key areas most new-to-PPC marketers overlook that cost them money.

Posted by Kevin Newcomb on February 5, 2008, 12:00 AM | Permalink


Search Headlines & Links: February 4, 2008

Want a snapshot of the day's search marketing news? Here we've collected today's top news stories posted to the Search Engine Watch Blog, along with search-related headlines from around the Web:

From the SEW Blog:

Headlines & News from Elsewhere:

Posted by Kevin Newcomb on February 4, 2008, 6:30 PM | Permalink


Social Media 2.0 - Witness for the Defence

Social Media press releases have been the subject of many blog posts over the last year. IN November Greg Jarboe and Brian Solis held a mock trial for this format.

What can't be denied is the fact that the web has changed the way we access information and people have discovered the power of voice. News is no longer a one-way, static inflow of information. We want to have our say. We want to comment and contribute. We want to shape and influence the news.

Should a press release be a part of this social web, you might ask. Google thinks we have the right to comment on news stories, albeit only if we are a participant in that story.

And now that press releases find their way into news search engines and blogs they've evolved from a corporate announcement intended only for reporters to information that reaches the public directly. So it makes sense that companies would want this information to be found on social sites and to encourage people to comment on this news, save it and share it.

I spent a few hours going through a demo of the new Marketwire product Social Media 2.0 for press releases today. I did like some of what I saw. And I, too, will trst, test anf test agsin before I make a judgement..

What I liked
1. In-release performance statistics on search engine cataloging.
2. They're getting your content out to places other than the Marketwire site - they upload the video to YouTube, images to Photobucket. That's a plus for non-techie PR folk..
3. The ability to comment. However, you can only have this feature if you also use their hosted newsroom. I'd advise my clients to have a newsroom on their own website. And to create an RSS Feed of their news content on their own domain name. It's better branding and better for SEO.

Things I am not sure of:
1. Adding the content of press releases in a Twitter feed. All press releases in one feed into Twitter? That's not why I go to Twitter. But Twitter does get good Google visbility, We'll see what kind of response this gets from Twitter users.
2. The value of a podcast in iTunes of headlines from many press releases from diverse companies.

So the jury is still out. I am part of a research project for the Society for New Communication Research (SNCR) on the use of press releases in new media. We will be testing this new service along with other wire services and alternative methods of getting your release out into the social media sphere today.

I am also going to test it myself for a few clients who already use Marketwire.

Stay tuned.

Posted by on February 4, 2008, 6:25 PM | Permalink


Just the First Shot

Unless you've been living in a cave this past week—or at least not reading this blog—you've heard about Microsoft's offer to buy up Yahoo! for $31 a share, for a total of $44.6 billion. John Markoff, of the New York Times, called the moved the “firing the final shot of yesterday's war”—the war in question being one we all know well: the battle for search advertising.

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Nothing could be further from the truth. Buying Yahoo is firing the first futuristic shot in tomorrow's war; Yahoo! is just the beginning for Microsoft. And the war is not for search advertising space alone; even a combined 34.6% for Microsoft/Yahoo! (assuming no one drops off during the merger) doesn't compete with Google's 61% (including its major partners). This deal is about much more.

For one, it is about mobile, one of the last frontiers in which Google's dominance is still tenuous. Google has spent time and made waves developing the Android mobile operating system, but its mobile offerings are relics compared with the new Yahoo! Go 3.0 and Microsoft's recently-acquired TellMe service. It's about emerging ad space, like Facebook—of which Microsoft owns a piece and has a 10-year exclusive advertising deal, beating out a Google bid—and advertising exchanges like Right Media, which was acquired by Yahoo!

Google may have video covered online, as it owns most video streams via its acquisition of YouTube and most video searches via its new integrated search bar and rumors of true frame-by-frame video search being developed. Photos, however, are still fair game, with Yahoo! holding on to more than 2 billion photos via its acquisition of Flickr. Blogging is worth fighting for as well. Blogger.com has been given over to spammers, but Windows Live Spaces and Yahoo! 360 both do well, with 45 million users between the two of them.

Microsoft wants Yahoo! for search, but it recognizes the need to lead in every other emerging online market where advertising dollars can be spent. And that means more acquisitions. And lots more shots fired.

Posted by on February 4, 2008, 4:57 PM | Permalink


Microsoft Research Lab in Cambridge Isn't Ivory Tower

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The New York Times, CNET, InformationWeek, and 52 other Google News sources missed the significance of Microsoft's new Research Lab in Cambridge, Mass., headed by Jennifer Chayes and her husband, Christian Borgs. The Times implied that Chayes and Borgs work in an ivory tower where basic research doesn't have a business imperative.

Nothing could be further from the truth in the online world.

Jennifer Tour Chayes, PhD in mathematical physics, led the highly esteemed Theory Group specializing in theoretical computer science. She's the co-author of almost 100 scientific papers and co-inventor of more than 20 patents. The New York Times only mentions her work in developing simple models of liquids and solids and the development of some exceedingly fast networking algorithms. Hunh?

Their groundbreaking work in search engine algorithms and social search may be the foundation of a successful Microsoft-Yahoo merger.

Chayes is one of the world's experts in the modeling and analysis of random, dynamically growing graphs (social graph, social search, Facebook, MySpace) – which are used to model the Internet, the World Wide Web and social networks.

One of the papers the couple co-authored, "Bid optimization in online advertisement auctions", details the ways paid search campaigns can be optimized by advertisers and search engines. "Multi-unit auctions with budget-constrained bidders", written by Borgs, Chayes, Nicole Immorlica (MIT), Mohammad Mahdian, and Amin Saberi (published in June 2005), discusses ways to optimize revenue for search engines given the fixed budgets of search marketers.

Their recent work provides a tutorial on search engine optimization and PageRank, before delving deep into algorithms few search marketers (myself included) understand.

Search engine optimization lives and dies by PageRank. Here's what you need to know about their research into PageRank.

Borgs and Chayes go beyond where a Web page ranks and explore the pages or sets of pages that contribute most to its rank. That's the foundation of link building. With the exception of link farms, link building has largely been a manual effort, somewhat arcane, but vital to SEO. PageRank contributions have been used for link spam detection and in the classification of web pages.

Chayes and Borg note that a set of pages contributing significantly to the PageRank of a page is often called a "contribution set" or "supporting set" of the page. Their work goes a long way toward solving the mysteries of Google PageRank -- and fighting the spam that threatens to degrade the relevancy of all search engine results pages.

Link spam can be detected in many ways besides the SpamRank-type algorithms: applying machine learning to link-based features, the analysis of page content, TrustRank, and Anti-TrustRank, and statistical analysis of various page features. Chayes, Borgs and their research associates use the local algorithm developed here to design several locally computable page features for link spam detection, and evaluate these features experimentally.

Chayes' contributions to Microsoft technologies include the development of methods to analyze network structure and behavior, auction algorithm design (i.e. paid search auctions), and online business model design and analysis.

She's famous for her work on phase transitions in problems in discrete mathematics and theoretical computer science. The result? The rise of some of the fastest known algorithms for fundamental problems in combinatorial optimization, the intersection of artificial intelligence, mathematics and software engineering. That would be search engine algorithms, paid search auctions and search engine revenue optimization.

Algorithms fuel search engines, spam filters, online advertising engines, social networks, machine translation and most of the online world. Social sciences - economics, psychology and sociology - analyze how and why people value things and study how people interact with each other. That's why, for example, Hal Varian, plays a key role in Google's success as the company's chief economist.

That's why Google's Marissa Mayer says social search is the future of Google.

That's the core of Search Engine WarGames.

Posted by Kevin Heisler on February 4, 2008, 3:32 PM | Permalink


Microsoft Won't Beg or Steal; Will Borrow to Buy Yahoo

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Microsoft CFO Chris Liddell told Wall St. analysts the company would likely borrow to pay for the cash portion of its Yahoo bid. That's a first in the company's history. The half-cash, half-stock offer is $31 per share.

Microsoft has a huge war chest, approximately $21 billion at year end.

It's not as if Microsoft couldn't fund the cash portion without borrowing any money. The cash-rich company definitely won't have to beg for the loan.

So what's the exact amount Microsoft will borrow? It's anybody's guess.

The need for capital, though, won't subside if or when the bid is accepted. As Kevin Johnson, Microsoft President, Platform and Services, noted in the initial conference call, "There are a few key dynamics in the online advertising industry that I think are worth noting. First, this is a business that has scale economics in a few key areas; scale economics in search and ad serving and scale economics and the capital needed to support these areas, CapEx for data centers, servers and infrastructure."

Who ever said Web 2.0 has low barriers to entry? Not the search engine CEOs who claim competition is just one click away.

Posted by Kevin Heisler on February 4, 2008, 1:31 PM | Permalink


Does Social Media 2.0 deserve a second life?

Okay, okay, so I've already weighed in on the question, “Is the Social Media Press Release a Meatball Sundae?” Last November, I provided four pieces of empirical evidence that demonstrated that social media press releases are the unfortunate result of mixing two good ideas.

Now, I've been asked to take a look at today's announcement by Marketwire of Social Media 2.0, or what the newswire calls, “the industry's most authentic and comprehensive social media newswire product.”

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The Marketwire Tower in Second Life

According to Marketwire, “Social Media 2.0 advances today's press release format, offers public relations professionals a multitude of content options, and distributes news in a variety of mediums to distribution channels beyond traditional media distribution networks.”

Now, you might think I've pre-judged Social Media 2.0. But, I haven't.

As I wrote way back in May 2003, “Failure is an option.” SEO-PR's initial efforts to create optimized press releases didn't produce instant success. But, as I wrote almost five years ago, “It was our approach to PR measurement, which tracked precisely what worked and what didn't work, (that) enabled all of us to discover the formula for long-term success.”

So, my initial take on Social Media 2.0 will be to test it, test it, and test it again. Believe it or not, I agree with Bob Geller, an SVP at Fusion Public Relations, who wrote in Flack's Revenge, “At the end of the day, the %#@!!&& things either work or they don't.”

Amen, brother.

So, here are some of the “exclusive features” of Social Media 2.0 that have caught my attention:
• Distribution to more than 1,200 in-network geographically targeted websites.
• Distribution to YouTube, iTunes, Second Life, Pheedo, Photobucket and Twitter.
• In-release performance statistics on search engine cataloging.
• Trackbacks for easy monitoring of online performance.
• Search engine, Technorati and Digg results.

In other words, there's a nice mix of new distribution options and PR measurement tools. This will enable me to tell if “Social Media 2.0 offers increased social network visibility to a prospective audience of more than 200 million Internet users.” If it does, that would be very cool.

On the other hand, I'm still skeptical that “Social Media 2.0 transforms a press release into an authentic social media tool by enabling two-way conversation via an in-release comment box that feeds directly into a client-monitored online newsroom.”

Blogs do this exceptionally well. But most press releases – even many of ones that use the social media format – are written like essays, not interviews; broadcasts, not conversations; lectures, not discussions. So, while adding social media elements to blogs generally works, adding them to press releases typically haven't up to now.

This, of course, can change.

As Kevin Dill, social and multimedia product manager, Marketwire, says in today's announcement, “The social media release is an invitation for dialogue based on social media elements. Marketwire's Social Media 2.0 expands upon that idea, taking that dialogue to the next level by allowing conversation to be initiated at the press release level.”

And, as Todd Defren, principal, SHIFT Communications, adds, “The democratization of news is the singular principle behind the Social Media News Release. By allowing anyone to access, re-purpose and engage directly with a newsmaker's content, the SMNR empowers conversations between a company and its diverse user communities.”

So, if early versions of the social media press release were the unfortunate result of mixing two good ideas, let's give Social Media 2.0 the benefit of the doubt. It deserves a “second life.”

How will we discover if Social Media 2.0 provides us with increased Internet visibility and greater search engine performance for our news? As I wrote back in May 2003, the only way to find out is to “Measure, measure, measure and measure some more.”

Or, as Bob Geller put it so eloquently last November: “At the end of the day, the %#@!!&& things either work or they don't.”

Posted by Greg Jarboe on February 4, 2008, 12:33 PM | Permalink


SEW Experts: Search Marketing Trends That Matter

Search optimization and advertising is gaining its rightful place among marketers' tools. In today's Search Ads column, "Microsoft-Yahoo: Search Marketing Trends That Matter," Matt Spiegel shares eight trends that will change your company's search engine strategies.

Posted by Kevin Newcomb on February 4, 2008, 12:00 AM | Permalink


SEW Experts: How to Target Sites in AdSense

Last year, Google took another pioneering step and rolled out an AdWords feature that let advertisers place ads on specific sites. In today's Content Advertising column, "Contextual Advertising: How to Target Sites in AdSense," David Szetela shares tips for creating placement-targeted campaigns (originally called site-targeted campaigns).

Posted by Kevin Newcomb on February 4, 2008, 12:00 AM | Permalink


Microsoft Fires Back at Google: Who's Playing Monopoly?

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Microsoft General Counsel Brad Smith fired back at Google in a published press release late today, in essence promising to Do No Evil after acquiring Yahoo.

Microsoft stated, "Google is the dominant search engine and advertising company on the Web." John Battelle, in response to the Esq. vs Esq. war of words (started by Google dropping an antitrust bomb) dropped his own f-bomb, sounding almost Shakespearean in a "first kill all the lawyers" kind of way: "Someone tell the chief counsels to shut the f. up."

Microsoft said in effect - Google, monopolize this: "Google has amassed about 75 percent of paid search revenues worldwide." Google's share of searches - the key success metric for search engines - continues to grow. Microsoft pointed out Google has more than 65 percent U.S search query share; 85 percent plus in Europe.

In surprisingly humble terms, Microsoft stated its goal in acquiring Yahoo is merely to create a "compelling number two competitor" in search and online advertising.

After the jump: full text of the MSFT statement, including how Yahoo shareholders can get their very own proxy statement/prospectus (snail)mailed to them.

(Anyone still think e-mail is a deal driver?)

Statement from Brad Smith, General Counsel, Microsoft

REDMOND, Wash., Feb. 3, 2008 – The combination of Microsoft and Yahoo! will create a more competitive marketplace by establishing a compelling number two competitor for Internet search and online advertising. The alternative scenarios only lead to less competition on the Internet.

Today, Google is the dominant search engine and advertising company on the Web. Google has amassed about 75 percent of paid search revenues worldwide and its share continues to grow. According to published reports, Google currently has more than 65 percent search query share in the U.S. and more than 85 percent in Europe. Microsoft and Yahoo! on the other hand have roughly 30 percent combined in the U.S. and approximately 10 percent combined in Europe.

Microsoft is committed to openness, innovation, and the protection of privacy on the Internet. We believe that the combination of Microsoft and Yahoo! will advance these goals.

This communication does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval. In connection with the proposed transaction, Microsoft Corp. plans to file with the SEC a registration statement on Form S-4 containing a proxy statement/prospectus and other documents regarding the proposed transaction. The definitive proxy statement/prospectus will be mailed to shareholders of Yahoo! Inc. INVESTORS AND SECURITY HOLDERS OF YAHOO! INC. ARE URGED TO READ THE PROXY STATEMENT/PROSPECTUS AND OTHER DOCUMENTS FILED WITH THE SEC CAREFULLY IN THEIR ENTIRETY WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION.

Investors and security holders will be able to obtain free copies of the registration statement and the proxy statement/prospectus (when available) and other documents filed with the SEC by Microsoft Corp. through the Web site maintained by the SEC at http://www.sec.gov. Free copies of the registration statement and the proxy statement/prospectus (when available) and other documents filed with the SEC can also be obtained by directing a request to Investor Relations Department, Microsoft Corp., One Microsoft Way, Redmond, Wash. 98052-6399.

Microsoft Corp. and its directors and executive officers and other persons may be deemed to be participants in the solicitation of proxies in respect of the proposed transaction. Information regarding Microsoft Corp.'s directors and executive officers is available in its Annual Report on Form 10-K for the year ended June 30, 2007, which was filed with the SEC on Aug. 8, 2007, and its proxy statement for its 2007 annual meeting of shareholders, which was filed with the SEC on Sept. 29, 2007. Other information regarding the participants in the proxy solicitation and a description of their direct and indirect interests, by security holdings or otherwise, will be contained in the proxy statement/prospectus and other relevant materials to be filed with the SEC when they become available.

Statements in this release that are “forward-looking statements” are based on current expectations and assumptions that are subject to risks and uncertainties. Actual results could differ materially because of factors such as Microsoft Corp.'s ability to achieve the synergies and value creation contemplated by the proposed transaction, Microsoft Corp.'s ability to promptly and effectively integrate the businesses of Yahoo! Inc. and Microsoft Corp., the timing to consummate the proposed transaction and any necessary actions to obtain required regulatory approvals, and the diversion of management time on transaction-related issues. For further information regarding risks and uncertainties associated with Microsoft Corp.'s business, please refer to the “Management's Discussion and Analysis of Financial Condition and Results of Operations” and “Risk Factors” sections of Microsoft Corp.'s SEC filings, including, but not limited to, its annual report on Form 10-K and quarterly reports on Form 10-Q, copies of which may be obtained by contacting Microsoft Corp.'s Investor Relations department at (800) 285-7772 or at Microsoft Corp.'s Web site at http://www.microsoft.com/msft.

All information in this communication is as of Feb. 3, 2008. Microsoft Corp. undertakes no duty to update any forward-looking statement to conform the statement to actual results or changes in the company's expectations.

About Microsoft

Founded in 1975, Microsoft (Nasdaq "MSFT") is the worldwide leader in software, services and solutions that help people and businesses realize their full potential.

Microsoft is a registered trademark of Microsoft Corp. in the United States and/or other countries.

The names of actual companies and products mentioned herein may be the trademarks of their respective owners.

Posted by Kevin Heisler on February 3, 2008, 11:17 PM | Permalink


Microsoft-Yahoo A-Bombed by Google

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Google blasted the Microsoft bid for Yahoo on the official Google Blog this afternoon. SVP Corporate Development and Chief Legal Officer David Drummond, characterized Microsoft's proposed acquisition as a "hostile bid" that threatened the underlying principles of the Internet: "openness and innovation."

Google then went nuclear, dropping the "A-bomb" -- invoking anti-trust concerns and citing as evidence Microsoft's "unfair practices" and "legacy of serious legal and regulatorty offenses" in the Netscape browser wars.

Google also stated, "Microsoft plus Yahoo! equals an overwhelming share of instant messaging and web email accounts."

Google went on to note, "And between them, the two companies operate the two most heavily trafficked portals on the Internet."

Google's conclusion? A question all regulators and policymakers need to ask themselves:

"Could a combination of the two take advantage of a PC software monopoly to unfairly limit the ability of consumers to freely access competitors' email, IM, and web-based services?"

Last we heard, Google was pleased with the "App" strategy that would accelerate the transition of search from the desktop to mobile devices.

Former Netscape exec and Google CEO Eric Schmidt said on the Jan 31 Q407 earnings call, "The App strategy, which we announced earlier in the year, now fully visible -- more innovation, data portability, all the apps now either in place or coming and mobile, which we are very excited with Android, the My Location service as part of Maps and many other new features that are both out and coming. So we are optimistic about 2008. We have growing revenue streams across a broad range of verticals and markets."

So was the Google celebration of "cloud computing" an illusion?

Or is Google just dropping a smartbomb on the Microsoft-Yahoo combo?

Welcome, to the new "slash and burn" take no prisoners politics of Google lobbying.

Full text of Google's response after the jump.

Yahoo! and the future of the Internet

2/03/2008 11:45:00 AM
Posted by David Drummond, Senior Vice President, Corporate Development and Chief Legal Officer

The openness of the Internet is what made Google -- and Yahoo! -- possible. A good idea that users find useful spreads quickly. Businesses can be created around the idea. Users benefit from constant innovation. It's what makes the Internet such an exciting place.

So Microsoft's hostile bid for Yahoo! raises troubling questions. This is about more than simply a financial transaction, one company taking over another. It's about preserving the underlying principles of the Internet: openness and innovation.

Could Microsoft now attempt to exert the same sort of inappropriate and illegal influence over the Internet that it did with the PC? While the Internet rewards competitive innovation, Microsoft has frequently sought to establish proprietary monopolies -- and then leverage its dominance into new, adjacent markets.

Could the acquisition of Yahoo! allow Microsoft -- despite its legacy of serious legal and regulatory offenses -- to extend unfair practices from browsers and operating systems to the Internet? In addition, Microsoft plus Yahoo! equals an overwhelming share of instant messaging and web email accounts. And between them, the two companies operate the two most heavily trafficked portals on the Internet. Could a combination of the two take advantage of a PC software monopoly to unfairly limit the ability of consumers to freely access competitors' email, IM, and web-based services? Policymakers around the world need to ask these questions -- and consumers deserve satisfying answers.

This hostile bid was announced on Friday, so there is plenty of time for these questions to be thoroughly addressed. We take Internet openness, choice and innovation seriously. They are the core of our culture. We believe that the interests of Internet users come first -- and should come first -- as the merits of this proposed acquisition are examined and alternatives explored.

Posted by Kevin Heisler on February 3, 2008, 6:05 PM | Permalink


Google Weighs In On Microhoo: It May Be Evil

David Drummond, Google SVP corporate development and chief legal officer, issued the company's official response to Microsoft's proposed acquisition of Yahoo this afternoon. Essentially, Google's position is combining its two main competitors could be bad for the Internet...even border on evil.

Drummond says in the official Google statement:

"It's about preserving the underlying principles of the Internet: openness and innovation.

"Could Microsoft now attempt to exert the same sort of inappropriate and illegal influence over the Internet that it did with the PC? While the Internet rewards competitive innovation, Microsoft has frequently sought to establish proprietary monopolies -- and then leverage its dominance into new, adjacent markets.

"Could the acquisition of Yahoo! allow Microsoft -- despite its legacy of serious legal and regulatory offenses -- to extend unfair practices from browsers and operating systems to the Internet? In addition, Microsoft plus Yahoo! equals an overwhelming share of instant messaging and web email accounts. And between them, the two companies operate the two most heavily trafficked portals on the Internet. Could a combination of the two take advantage of a PC software monopoly to unfairly limit the ability of consumers to freely access competitors' email, IM, and web-based services? Policymakers around the world need to ask these questions -- and consumers deserve satisfying answers.

"This hostile bid was announced on Friday so there is plenty of time for these questions to be thoroughly addressed. We take Internet openness, choice and innovation seriously. They are the core of our culture. We believe that the interests of Internet users come first -- and should come first -- as the merits of this proposed acquisition are examined and alternatives explored."

Posted by Rebecca Lieb on February 3, 2008, 5:18 PM | Permalink


Microsoft-Yahoo: All About Search, Not E-mail Assets

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Tim O'Reilly views Microsoft-Yahoo as a Web 2.0 play with the combined company dominating free (Web 1.0) online e-mail services. In a great post generating lots of buzz, he cites Hitwise data showing Yahoo Mail / Yahoo! Address Book at 58 percent of market share (#1) and Windows Live Mail (#2) at 25.5 percent share (not including AOL).

Tim argues the combined personal and private data from e-mail applications would clear the way for developers to create more powerful Web 2.0 apps and an Open ID system. True. Data assets built on networks can be monetized.

Web 2.0, though, has largely been sustained by next-gen "made-for-adsense" online ad-supported business models, developer sweat equity, and the promise of a Google/Yahoo/Microsoft acquisition exit strategy.

O'Reilly thinks Microsoft would be making a "fatal mistake" to take the battle to Google on its own ground. "That's the very mistake that companies like Netscape made in competing with Microsoft," he notes. I disagree that lessons from the early browser search engine wargames apply in the age of cloud computing.

The primary problem with a pre-Bubble 1.0 Netscape world view: in online advertising, Yahoo properties successfully compete with Google. Hitwise and comScore data show a combined Microhoo entity far more popular than Google's network of sites.

Google's still trying to find ways to compete with the Yahoo/MSN vertical search engines (Finance, News, Sports, Travel, Auto). Fortune 500 brands love them for search-informed display / video ad campaigns. Only YouTube "branded channels" are starting to make significant inroads for Google in strategic digital marketing campaigns.

In O'Reilly Radar blog comments, the often profane but always brilliant Dave McClure of 500 Hats fame notes Google could then jump in to take AOL off the hands of the company formerly known as AOL Time Warner.

McClure also notes the other problem with the e-mail-centric view of the deal: social search engines like Facebook and LinkedIn already have built-in (crude) e-mail systems. Their online e-mail share isn't counted in the Hitwise data, as O'Reilly notes.

What O'Reilly and McClure omit: Facebook and LinkedIn already have better user data with extensive demographic profiles of their members who've given full opt-in permission and share their IDs openly. That's the fatal flaw in the e-mail as strategic asset argument.

The Microsoft-Yahoo deal is driven by search, not e-mail assets or their Web 2.0 potential. Ceding the search market to Google creates a GoogleNet that would supplant the Internet as an open marketplace.

If e-mail had such huge strategic value, Microsoft would have bid on Facebook at perhaps one-third the price: the much-scoffed at and oft-times scorned $15 billion valuation based on Microsoft's current stake in Facebook.


A more accurate way to evaluate the e-mail strategic assets: the success of contextual (content) advertising in Yahoo! Mail and Windows Live / Hotmail. Yahoo and MSN don't break out those numbers. My hunch: they're immaterial to paid search revenue even in the small MSN adCenter / Yahoo Search Marketing numbers that pale in comparison to Google. If antitrust concerns forced a spinoff of e-mail properties, the revenue from email contextual advertising wouldn't even be a rounding error in Google AdSense and the Google Content Advertising Network.

The social graph is radically changing search, driving personalization and more relevant results. E-mail plays a small part in the search equation.

Neither Yahoo nor Microsoft has been successful in building a social network around their online e-mail properties or Yahoo/MSN Groups. It's doubtful they'd succeed by mashing disparate and heterogeneous groups together.

Stay tuned to Techmeme for continuing coverage of the most historic M&A deal in what McClure calls the Internet Revolution, Act II.

Posted by Kevin Heisler on February 3, 2008, 10:34 AM | Permalink

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