Apple Axing Advertising

Adblockers-640x409

Apple is waging a battle on advertising, as they have made ad-blocking software available on the iPhone with the new operating system iOS9. This likely undermines their arch-rival Google, which dominates the $120 billion online ad market.

For the first time, third-party software strip out marketing messages such as banner and video ads when people surf the web via the Safari browser. But Apple’s new approach will not affect advertising inside applications such as Facebook, casual games, or even Apple’s own applications. In effect, Apple is nudging companies to shift spending to apps, rather than traditional online ads where Google leads. 200 million people have used ad blockers last year, up 40% from a year earlier, resulting in $22 billion in lost advertising revenue.

Incidentally, Apple has launched their own news app, which will allow media companies to bypass blockers to serve their own ads or let Apple sell ads and share the revenue. It will be interesting to see how these moves made by Apple will affect its own interests, and if it will loosen Google’s hold on the mobile ad market.

Situation Normal… Google Hegemony Continues

The revelation that Google continues to be the top search engine is up there with the Pope being catholic or the toiletry habits of bears. Yes of course, Google is king with a little over two thirds of explicit search going to Google sites… mostly Google.com. What’s more interesting, perhaps, is that the race for second is getting less frantic. There was a time when Yahoo really seemed to care about search… sadly those days seem to be behind us. In a weird statistical fluke Yahoo passed Google in sheer page views last month, but before anyone pops too many corks over at Yahoo bear in mind that news or email page views are worth a tiny fraction compared to search page views… so, simply having more of them really doesn’t get you that much… Google’s revenue outstrip Yahoo’s by a factor of ten.

According to the latest Comscore data, Yahoo maintained its modest 11% market share as Microsoft (Bing) picked up a point. It is a little sad that Yahoo no longer seems to care as much, and doesn’t even include search as a strategic target. Bing is at least pretending to care and doesn’t seem satisfied with a touch under 18% market shares. The “also ran” category in search continues to be a race to oblivion between AOL and ASK, both of whom slipped a little in July. If I’m honest, I don’t honestly remember the last time I knowingly used either product other than to check that they are still alive and kicking. Weirdly, search is so valuable that even having one whole percent (like AOL) is still worth a ton of money, so hanging for grim death to an apparently meaningless market share is still worth doing. Meantime, the Google parade continues as they maintain a firm market lead with no meaningful competition in site… as always, it’s good to be Google.

Keeping up with Google

As an avid Google watcher it’s been almost a full time job just trying to keep up with the guys. There are probably a good dozen Google related stories moving and shaking as we speak. In broad terms you can classify these developments as falling into several themes.

The PR Battle

Google used to be cute, now it’s a monster which eats it’s own and grinds the face of its critics into the dirt… a perfectly logical progression in business, but it’s clear Google themselves have a problem being seen as the ogre they are rather than the cool kids they think they should be. Putting aside the fact that the German authorities just hate Google and all things Google, the German regulators have just handed down the largest fine they were able to for the reckless collection of non-map data as they built the German street view component a few years back. Although Google claimed it was a problem caused by over enthusiastic geeks; the Germans weren’t having any of it. Indeed, they made it clear in their ruling that had they had a larger book to throw at them, they would have been happy to oblige. At almost the same time, Eric Schmidt continued to defend Google’s legal but creative way of reducing taxes as much as they can. The BBC chewed him up and spat him out, and other media rushed in to pile on. The Brits love paying taxes, so for them to see Google gleefully avoid paying taxes they can legally avoid, it makes them see red.

Focus, Focus and Focus

Google used to throw off pet and or goofy projects with gay abandon… now not so much. Indeed they are thinning the herd. They let their digital children persist of kill them off depending on revenue and potential, and or the phase of the moon. Recently they have been killing products at a faster clip than usual. They killed off their very popular RSS reader, and last week they axed the Google Affiliate Network… to the consternation of many who have scratched out a living in this industry. The affiliate network wasn’t a huge contribute, but it’s interesting that they axed the product which was (presumably) profitable. The logical successor to the late and not very lamented GAN, is the shopping search they introduced last year as a paying service. That’s an enormous opportunity which will likely eclipse the rather clunky GAN…indeed it’s probably already done that.

Colonizing the Future

Google won the search war by doing one thing supremely well, and “borrow” anything else they may need.  They pretty much invented the search category and have benefited enormously from that initial win. The classic example of this strategy is the ad product, which they built on their first empire. That platform is powered by an auction bid platform, which they simply stole from Overture (then Yahoo). They spent good parts of the next year or so in court settling with Yahoo. That legal process allowed them enough room to solidify their market share so that even though they were paid fortunes when they settled, Yahoo lost. The odd thing is that although they innovate like crazy, they rarely get it right in house and have to use their checkbook to play catch-up. They missed video (and bought YouTube), they missed social media with the awful Google Buzz and have foisted Google Plus on a reluctant world. Apple beat them to the punch on phones, and Android is a good copy – albeit under legal attack.  ITunes rules paid downloaded content; Google play is a distant second place.  They missed local reviews and couldn’t buy Yelp. They missed classified to Craigslist, and the quilter market to Pintrest. The list goes on. The list is complicated by the sea changes underway in both how we experience all things digital (mobile, iPads, etc), and the places we go to search (Amazon represents a huge threat to commercial search).

All this puts them under what I have to imagine is intense pressure to second-guess the future to consolidate their hegemony. Google Now is interesting as a potential digital assistant, which will follow you around and be your constant digital helper. Google Glass represents a new category… and maybe their first, truly new category, useful digital overlay. Some are skeptical but I’m already a believer (after a fashion). My new car has a rather cool Heads Up Display feature; where it projects basic travel data and directions in the screen so that you can gauge your speed etc. without ever taking your eyes off the road. After only a week or two of using it I’m hooked. As long as Google Glass comes in my prescription, I’m going to be an early adopter.

Is Yahoo Loosing it?

I was at the Adtech show last week, meeting with the great and the good of the online advertising world, and it was to say the very least a very interesting few days. The largest single topic of discussion could be broadly characterized as “what’s up with Yahoo?” The current excitement comes from the changes we have all seen since their new fearless leader took charge. For the longest time, Yahoo and Google have pursued quite different search growth strategies. Google has focused on growing the Google.com brand, driving as much traffic to the mother ship whilst offering only the breadcrumbs of revenue represented by AdSense to the wider world. It is theoretically possible to get hold of a real Google search feed to offer to end users, but you have a stronger chance of being elected the next Pope after this new one than getting hold of one.

At the same time, Yahoo built a syndication network; where at one point, pretty much any site or tool with a pulse could offer Yahoo powered results to online searchers.  The results of the strategies speak for themselves… Google search giant… Yahoo not so much. Obviously that’s not the only thing that made the difference, but it was a factor. Yahoo, having taken the syndication route, did a pretty good job of doing that and in so doing spawned an entire industry of folk dedicated to offering Yahoo results to all comers getting chubby at the Yahoo buffet… then came regime change.

Marissa Mayer is a very smart cookie, and as an original Googler is no doubt used to the Google way. She shocked pundits early in her rein by down playing the importance of search in the future plans of Yahoo (search …smerch…who needs it!?), and supposedly spurred on by the denizens at Bing (who power Yahoo search), she has “set her cap” (I’m watching a lot of Game of Thrones right now so tend to lapse into old English on occasion) against syndication. High quality search traffic which used to score 8 all day long now scores 5 one day, then 7 the next, then 4.5, then nine. Clicks jump from 30 cents to 3, and back for no obvious reason. It’s not just us seeing this… all over AdTech sharp young men with shaved heads, and intense women with power purses were hurling themselves out of high windows or could be seen sobbing into their third Martini at lunch.

The net result of all this weirdness has to be that syndication revenues are cratering at Yahoo. That wouldn’t matter if they already had 68% of the market like Google has, but for a relatively distant third place which has relied on syndication for so many years, this change in strategy is a lot like the Republicans deciding that they don’t need the Old White Guy vote in favor of a rainbow TuTu… it’s cute… but the other guys already have that model and who is going to pay the bills? The hope in the conference was that someone would get bored or freaked out and things would return to normal… but if the new normal is this, the next AdTech San Fran may well be five guys outside the Starbucks at the Moscone center.

Meet the New Boss…Same as the Old Boss

Search at Yahoo has languished somewhat since Bing took over their search back in 2008 after a failed bid by Microsoft to buy Yahoo. There has always been an antitrust concern about the search on Yahoo being powered by Google…so I was interested but not that surprised to read today that Google contextual ads will now start showing up on Yahoo properties and more importantly Yahoo mobile traffic. To be clear this isn’t the same as main search on Yahoo being taken over by Google, rather these are contextual AdSense ads displayed on billions of Yahoo web and mobile pages…which will presumably represent a significant revenue opportunity for Yahoo.  It makes perfect sense as Google’s ads are generally more valuable than Yahoos and they have a larger stack of advertisers to play with. At the core of the deal is the dramatic growth of mobile. Millions of people use Yahoo mobile content to keep them up to date with news, celebrity, finance sports and email. Google has a much stronger mobile platform so adding Google mobile ads to the enormous Yahoo mobile inventory. Google doesn’t (yet) have the kind of vertical interest Yahoo boasts so that’s likely to be an upside for them both.

Google survived an  FTC investigation into monopolistic practices last year and is still under scrutiny in the EU, so making a move which further centralizes Google commercial control could be thought of as ballsy.. but in a race to grab as much real-estate as possible before the new Search at Facebook gets out of short pants it makes perfect sense.

Yahoo On the Mend?

Six months into her new job Marissa Mayer the new queen of Yahoo was able to tell some reasonably good news to investors in her Q4 results call yesterday. Yahoo saw their first uptick in revenue for a good while as Mayer shared the good news from the annual meeting of the great and good in Davos Switzerland last week. She pointed to two clear areas of focus for the newly invigorated Yahoo. Not surprisingly mobile is one of them. That makes a huge amount of sense as mobile is rapidly catching up with the desktop. For all its failing Yahoo has a ton of great content which million of people go to each day for their daily dose of sports, news gossip etc. Making that content mobile and personalized for their millions of users through apps and targeting ads around that offers a significant opportunity for revenue growth. However, the other focus Mayer pointed to is search….yes really search. I have been in the search business for about a million years and back in the day Yahoo powered its own search. Then they brought in the cuddly friendly guys at Google to power it for them (under a powered by Google brand) to run their search for them. Their assumption was that people would use Yahoo for everything including search. Back then before high speed connections users could either sit and wait for a yahoo results page encrusted with ugly ads to load or they could hop over to Google and have a fast clean ad free search result from Google. Weirdly I remember discussing this with several Yahooligans at the time and they honestly didn’t think it would be a threat. A decade or so later…they aren’t quite so sure.

Yahoo ceded search to Microsoft’s Bing a while back so for Yahoo to attempt to gain a stronger position in search without even owning the technology is incredibly ambitious. Doing search well is hard, doing it as well as Google does given the 30 trillion pages Google indexes is incredibly hard. Google has beaten off legal challenges for their rivals and the FTC and become both a noun and a verb…it’s tough to beat a competitor which has become the name for the activity. The mobile opportunity is probably more compelling. When I just checked there are about a dozen separate Yahoo apps out there. The question is can Yahoo weave those separate strands into a strong unique mobile user experience…before Facebook does? The jury is out on that. Certainly Yahoo has done a better job than Google whose mobile news app is just horrible. Their biggest problem is that Google has become the way that most of us navigate the chaos of the Internet and Facebook has become the way we share pics of our kids….all that’s left is mobile, and the clock is ticking on that too.

Google and Skype

OK, I’m confused. As part of keeping ahead of the game I check in with Google in other countries, Canada is often the test bed for US roll outs so it’s always worth checking in from time to time. When I was doing that the other day I noticed something which I haven’t seen before so I thought I’d share. It’s no secret that Google took along hard look at buying Skype last year. There was an internal political power struggle worthy of a movie which went all the way to the top. Eventually they dropped out and Microsoft picked up Skye for $8.5 Bn and they have subsequently announced that they will merge Skype into or replace Windows Messenger. So why, I wonder, when you search for a business on Google Canada do all the numbers light up as Skype dial numbers. If I click a number my Skype tells me I’m about to dial an international number, I assume if I’m in Canada I could make a free Skype call locally. It’s not obvious to me what’s in it for Google for them to promote a Microsoft product as prominently as they are in this Canadian results set, featuring Google Voice would make more sense. If they roll that out to the much larger US market, especially on mobile devices that would be a much more compelling move. Meantime Google had a great Q4 last year with revenues up substantially even though click prices continue to trend down, driven down by lower mobile click prices. On that topic, still no announcement from the Googleplex on their new mobile ad product…it’s coming for sure but no announcement yet.

Being Evil

I have been in search for what feels like a lifetime but is in reality a little over a decade. Way back in the day when Microsoft terrorized the tech world and earned the fear and loathing of most tech folk Google was cute as a puppy and dedicated to doing good…indeed “Don’t be evil” was their informal company motto. Back then there were many heinous things perpetrated by the mad and bad on us humble net citizens. We were subjected to browser capture and constant bombardment from pop ups and spam. Over the years much of this net thuggery has been eliminated in good part because the sources of income online have become centralized and in good part controlled by the major advertiser aggregators Google and Yahoo/Bing. So it was with some festive irony that I read the account of Google’s acolyte in the UK Sarah Hunter defending Google against attacks from British Parliamentarians recently. The line I like the most was “we are not the bogeyman of the Internet”…I don’t often LOL but I did then.

There are arms full of accusations being brought to the stake to which Ms. Hunter has been shackled and several honorable members would clearly like to see her and her fellow Googlers burnt alive. Something which especially annoyed the Brits (who love to pay taxes of all kinds) was the elegant way Google perfectly legally avoided paying over $300 million in taxes. The fact that Eric Schmidt defended that as both legal and praiseworthy “Capitalism” really annoyed some of the left tier members. The Brits fundamentally don’t like red in tooth and claw Capitalism…it’s thought of as rather lower class and worse awfully American to try to make lots filthy lucre. I disagree which is a good part of why I’m writing this from SoCal not South London. Add to that the accusations that Google is skewing their results in favor of their own listings and is over all monopolistic and all around beastly, it’s been a tough week for Google in the UK.

Sticks and stones may indeed break bones but serious fines can hurt, so whilst the name calling for being a little evil around the edges may be smart there is a danger that if Google doesn’t get right with the EU (much worse than just the Brits as there are angry Germans involved and you know how that can go) and come to some kind of rapprochement to settle the two years of investigation by stinking foreigners which Google has recently been enjoying things could turn nasty. If the EU goes after them and wins the standard fine is 10% of revenue off the top…a mere $4Bn. That may sound a bit farfetched but it’s the same threat Microsoft faced back when they were public enemy #1 and they settled with the cheese and sausage eaters. It appears the price of evil has gone up.

Why Search is Done by Geeks Not Authors

I love search…in all its forms. I love the fact that even as data explodes we have a way to navigate and in some meager way comprehend the complexity and scale of knowledge. So I was excited to try out a new search which I came across recently called smalldemons.com. This is our guide to the “storyverse” (get it?) it’s a search platform which purports to offer insights and connections on books, authors, places and characters along the lines of “drinks found in James Bond novels” or “places in War and Peace”. It also has a neat Pintrest like feature which allows you to assemble a story board linking items, people and places from and around books.

My first reaction was ‘how cool’…no idea how the ex Yahoo and Facebook guys behind the site will make money but I love the idea. Then (being the annoying search guy I am) I started some cursory testing.

Place search: “Krishnapur” the city at the center of the fabulous indeed award winning”Siege of Krishnapur” no results.

Character Search: “Samuel Vimes” hero of many of the enormously successful Discworld novels. Lots of Samuel but no “Samuel Vimes”…at least not on the first pages.
Item search:  “Victory Gin” the gut rot drink for George Orwell’s 1984.… lots of “Victory” no “Victory Gin”

Shakespeare Search: “Damned Spot” from Macbeth…actually this is a funny result. First result a recent novel called “Damned” second result “Where’s Spot” the kid’s book.
Great but somewhat older novel search: “Memoirs of a Fox Hunting Man” nothing relevant

Movie Quote Search: “You played if for her you can play it for me” from Casablanca….nothing close to relevant.

I promise those were my first eight searches at random from the rat’s nest of literary pocket litter which passes for my brain. I was somewhat saddened, especially when Google and Wikipedia (except for Wiki which missed the last one) both easily nailed every search. I actually love the idea of a search which does the cool kind of conceptual thinking and linking this site sets out to do. However, if they don’t even have phrase match search figured out let alone conceptual stemming then they have a ways to go. I was thinking I might make my first story board one called “People, places, books, references and things” which you can’t find easily using smalldemons.com…..but that would be unkind no?

Too Large To Sue?

The clock is counting down on the FTCs two year investigation of Google. The government has spent a hefty chunk of our tax dollars to see whether Google is a monopoly which acts against the interests of the market. A horde of heavily biased search ‘also ran’ companies has lobbied to have Google either sued (probably the largest action since Microsoft in the 90’s) or reach a deal with Google which would in their minds level the playing field. Word is that most of the FTC favors moving ahead against Google….but I wander if that really would do any good.

It’s a tricky situation. Google is undoubtedly a monopoly, but if you didn’t have search life would go on…no babies in incubators would die. However they are the fulcrum of a huge amount of the new economy so to have them favor their own projects and harm the competition could be a problem. What I found rather distasteful was the spectacle of Silicon Valley Congress people writing to the FTC suggesting that they back their tanks off Google lawn lest their actions harm the economy….really? Google is now too big to sue?

Google is a monopoly in terms of overall search traffic and especially in terms of the crucial commercial search market. They are aggressive and unwavering in their pursuit of their interests….but this is America they are allowed to be. I long since gave up trying to keep up with the endless parade of “next Googles” in search. The short answer is the next Google might be Facebook…or Apple.   Remember when Microsoft was an evil Monopoly…before browsers took so much of the desktop over…before Apple surged back and Google cornered search, before Microsoft got fat and lazy? There are serious threats to Google in the search world. If Facebook cuts a deal with Yahoo, Siri continues to grow, Amazon continues to establish mastery of shopping search and we continue our dash to mobile there will be ample opportunity for Google to step up or others to step in.

I suggest the FTC strike a deal to the effect that Google will clearly label all advertising from any source and will undertake not to unfairly promote their own products above others….then let the market vote with its feet.