Posts filed under ‘online advertising’

Can Google score with in-game ads?

As Google expands its lucrative ad network to new markets, industry watchers increasingly believe the search giant will buy its way into the nascent market for advertising inside video games.

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Google has reportedly looked at acquiring AdScape Media, a small company, founded in Ontario and now based in San Francisco, that specializes in so-called in-game ads. Google did not return calls seeking comment, and an AdScape spokeswoman declined to comment on the talks.

Though an industry insider who asked to remain anonymous said negotiations had stalled, such an acquisition would allow Google to take on old foe Microsoft, which last year acquired a similar but larger company called Massive. In-game ads, however, are one place where Microsoft would have a rare advertising advantage over Google thanks to thriving sales of its Xbox 360 gaming console and a long list of gaming titles.

“Google would be playing catch-up against some significant entrenched providers,” said Michael Goodman, a program manager at research firm Yankee Group Research. “The biggest challenge for them is they might see themselves closed out of the Xbox as a platform to serve ads to.”

In-game ads may sound like a niche, but it’s a growing one that reaches a choice demographic for advertisers. A recent Nielsen Entertainment study found that men aged 18 to 34 are spending more time playing video games (12.5 hours on average per week) and less time watching television (9.8 hours per week). About 6 million U.S. households have at least one “power gamer,” someone who spends as much as 20 hours per week and $50 per month on games, and there are more than 15 million active players of casual games, which are free ad-supported games such as Tetris or cards, said Michael Cai, director of broadband and gaming for Parks Associates.

“It’s not a pimply faced teenage kid playing video games in the basement anymore. It’s people with a lot of disposable income,” said Jeff Berg, content editor at the Interpublic Emerging Media Lab think tank. “It’s a natural space for Google to move into if they can do it effectively.”

The dollar value of this market isn’t nearly as small as many people would think. Parks Associates predicts that game advertising revenue will grow from $120 million in 2006 to $200 million this year and $300 million in 2008. Yankee Group forecasts in-game ad revenue to reach $732 million by 2010. Buying AdScape wouldn’t get Google a lot of new customers, but it would get the company technology, Goodman said. “Google already has significant relationships with advertisers, but they would have to build up relationships with game publishers,” he said.

“Google is the king of search ads, but they aren’t that dominant in brand advertising.”

–Michael Cai, director, Parks Associates

Over the last 18 months, the search giant has been rapidly moving into new ad markets such as print and radio, using its automated online ad-delivery system to provide a way for advertisers to reach new customers via offline mediums. Google purchased radio advertising provider dMarc Broadcasting for just over $100 million a year ago and has been conducting radio ad delivery tests.

While it’s hard to imagine virtual world games like World of Warcraft being a great advertising vehicle for Coke or Pepsi, plenty of games could be ideal, such as sporting titles.

“For example, we take Nike’s (ads) they’ve used for print or television and implement that straight into the games across our sports titles,” said Justin Townsend, chief executive of in-game advertising firm IGA Worldwide. The ad is delivered over the Internet and can be changed depending on which advertiser has purchased the ad rights, he said. The ads are targeted geographically, so players in Germany, for example, will see a German version of the ad. Because Google’s greatest success has been in contextually targeted ads rather than display ads, it might be better suited serving ads that appear alongside casual games, which are sold over the Web, Cai said.

“The question is whether Google is interested in getting into a new media form–gaming, and whether they are looking beyond search and trying to address a new ad business–display advertising,” he said. “Google is the king of search ads, but they aren’t that dominant in brand advertising.” But is the gaming industry ready for Google’s automated kind of advertising?

“It’s not clear,” said Jonathan Epstein, chief executive of Double Fusion, a competitor to AdScape, IGA and Massive. “It doesn’t mean it can’t get there, but when you look at how markets evolve it’s always the specialists that drive innovation and focus in the market.” Eva Woo, vice president of marketing at AdScape, said her company has a technology that allows advertisers to interact with consumers without interrupting the game, something that could appeal to Google. If a gamer opts in, AdScape’s Real World Virtual World Gateway will deliver messages via SMS or e-mail from the advertiser, Woo said.

When the game detects that a player has reached a certain level in the game or that a player is having problems getting beyond an obstacle in the game, for example, the advertiser could offer hints, rewards or coupons. “We’ve been developing this (advertising) technology for five years,” she said. “We have one patent issued and 15 patents pending.”

A risk for Google, of course, is getting shut out of Microsoft’s growing Xbox market, and the question remains whether gamers will rebel against publishers who allow advertisers into their gaming worlds.

“Male gamers playing core games don’t mind ads if they help make the gaming experience more realistic rather than disrupting their gaming activity,” Cai said.

Copyright ©1995-2007 CNET Networks, Inc. All rights reserved.By Elinor Mills Staff Writer, CNET


February 10, 2007 at 2:30 am 11 comments

A Long-Delayed Ad System Has Yahoo Crossing Its Fingers


Starting around 3 p.m. Pacific time on Monday, a group of Yahoo executives will begin shuttling among three “war rooms” at the company’s search marketing unit here.

Members of the Project Panama team

They will be scrutinizing an array of moving charts and graphs projected on walls and checking with a team of 30 to 40 engineers for any signs of trouble as Yahoo flips the switch on a new search advertising system. “It’ll be a good event if it is a nonevent,” said Brian Acton, senior director of engineering at Yahoo Search Marketing. Yahoo’s investors and advertisers, on the other hand, will be looking for something eventful to start happening, if not on Monday, then in the weeks and months after.

The much-delayed ad system, known as Project Panama, is Yahoo’s effort to close the wide gap with Google in the race for search advertising dollars, a fast-growing and incredibly lucrative business that Google dominates. As such, Panama is the most important new product for Yahoo in years. “You are talking about something that could potentially affect the single largest and most profitable business segment that Yahoo has,” said Mark Mahaney, an analyst at Citigroup. Among those who will be keeping close tabs on Panama is Yahoo’s chief executive, Terry S. Semel. “I think we will be watching this closely for many Mondays,” he said. “It has been and continues to be our No. 1 company priority.”

That is no surprise. Some analysts who follow Yahoo say the delay of Panama is the biggest reason Yahoo shares dropped from a high of more than $35 early last year to just over $22 in October. They have since regained some ground, closing Friday at $28.77. In its simplest terms, Panama is Yahoo’s attempt to place ads in front of users that are more likely to be clicked on. Until now, Yahoo gave top billing to the advertisers who were willing to bid the most to have their ads listed alongside a particular search result. Google has a different formula, which Yahoo is trying to emulate. It ranks ads on a mix of bid prices and relevancy to the user. That leads users to click on ads more frequently, and since advertisers pay only when a user clicks on their ad, Google, on average, makes more money on every search than Yahoo does.

And since Google is better at matching ads with users, the system is more efficient for advertisers, too, creating a sort of virtuous circle that gives Google a powerful edge. “I spend a majority of my dollars on Google,” said Amy Wong, global online marketing manager for the software security firm Trend Micro. “I’m glad to see that Yahoo is trying to get their act together.” Ms. Wong said she would like to distribute her ad dollars more evenly among Google, Yahoo and Microsoft, the third major player in search advertising. Mr. Mahaney estimated that in 2006, Google made 4.5 cents to 5 cents on every search, while Yahoo generated only 2.5 cents to 3 cents a search. The difference adds up to billions every year.

As critical as the success of Panama is for Yahoo, it is not the only challenge facing the company. As Google’s share of all searches has grown steadily over the last year, Yahoo’s has remained largely flat. The company also faces increasing competition in its display advertising business. In addition, while Yahoo is going through a reorganization aimed at making it more nimble and more accountable, crucial posts remain unfilled, and some investors are waiting for the company to lay out a clear strategy. “Panama is very important to Yahoo, but it is not the only thing they need to focus on,” said Ellen Siminoff, a former Yahoo executive who is now chief executive at Efficient Frontier, a search marketing firm. For now, however, all eyes are on Panama.

Mr. Semel acknowledges that Yahoo was late in starting the project. He said that happened partly because Yahoo’s search advertising system, which the company acquired through its takeover of Overture Services for $1.6 billion in 2003, was performing well, and it took time for executives to realize just how much better Google’s system was. But once Yahoo assembled the Panama team in mid-2005, “things did come together quite quickly,” Mr. Semel said. Those who worked on the project described the effort as a huge undertaking. They compared it to rebuilding an airplane in midflight, as engineers had to keep the old advertising system running while they put the new one together.

The first phase of the project, which went into operation in mid-October, two months later than planned, includes a completely new system for advertisers. It provides them with a digital dashboard where they can manage their marketing campaigns, aim ads geographically and test their effectiveness. It includes interactive tools that suggest to advertisers what to bid based on their budget and the number of users they want to attract. Most of those features are already available from Google and Microsoft.

Yahoo engineers say Panama has some unique features, like a “quality index” that gives advertisers a sense of how the system will rank an ad, and sophisticated analytical tools that give advertisers insights on why certain campaigns are effective. Yahoo says the system can be upgraded without disrupting it. It is intended to be flexible enough eventually to handle video and audio ads and to distribute ads to mobile devices. And while Yahoo gives few specifics, it says Panama will some day play a role beyond search advertising. “Panama is a foundation for us to start sewing together all our advertising assets,” said Tim Cadogan, vice president of Yahoo Search Marketing.

Yahoo has been moving advertisers to the new system gradually and expects to complete the task in the United States in March. And while some advertisers have run into problems, the new system has generally been well received. “In terms of ease of use, Google is still the leader, but Yahoo and Microsoft have made great strides in coming up to par,” said Matthew Greitzer, director of search marketing at Avenue A Razorfish, an online ad agency. But the part that matters most to Yahoo’s bottom line will come Monday, when the new ad-ranking algorithm begins its work.

Last Thursday, the company ran a test in which searches originating on the West Coast ran the new ad ranking system. The team started at 3 a.m., and by lunchtime, the engineers gathered in the war rooms, many with bags under their eyes, and appeared satisfied things were running smoothly. “Our tests today went beautifully,” said Mark Morrissey, vice president for product at Yahoo Search Marketing. Just about everyone inside and outside Yahoo expects the system to generate more revenue for the company, but no one knows exactly how much more. Last month, Yahoo cautioned investors not to expect the financial impact of Panama to show up until the second half of the year.

That is in part because as the system is introduced, some advertisers will end up paying less and some more for each click, as ads vary in how likely they are to attract a click from a searcher. Search marketing experts say that in general, the well-known brands will get better placement for their ads at lower bids, because people are more likely to click on them. The reverse will be true for lesser-known brands. But those dynamics may vary depending on keywords and how carefully advertisers aim their pitches. Yahoo says a customer service team has been working with advertisers to help them understand how to make ads more relevant. Regardless, it will take time for the marketplace to adapt to the new system and for Yahoo to fine-tune it. Whatever Yahoo’s gains turn out to be, they will not necessarily come at the expense of Google. “If this is successful, advertisers will not shift from Google or MSN, but rather from other mediums, such as e-mail, display advertising and offline budgets,” said Stuart Larkins, vice president for search at Performics, a division of online advertising firm Doubleclick.

No matter how good Panama may be, it is unlikely to catch up with Google’s system in the near term. Google has been perfecting its ad-ranking software for years. And on Wednesday, Google’s chief executive, Eric E. Schmidt, said the company was placing fewer ads in front of users, yet receiving more clicks. That means not only that the ads are more relevant, but also that the experience of users is better. Even Yahoo executives acknowledged that the version of Panama they are introducing on Monday is only a first step. “I don’t think it gets us ahead,” Mr. Cadogan said. “It gets us to a place where we can compete more effectively.”

February 5, 2007 at 10:09 am 4 comments

Google fourth quarter profit nearly triples


By Elinor Mills

Google‘s fourth-quarter revenue rose 67 percent and profit nearly tripled on continued strength in its cash cow paid searc business.

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Handily beating analysts estimates, net earnings for the quarter ended December 31 were $1.03 billion, or $3.29 a share, including one-time items such as stock-based compensation, compared with $372 million, or $1.22 a share, during the same quarter in 2005. Excluding those items, earnings were $997 million, or $3.18 a share. Total revenue for the quarter rose 67 percent to $3.2 billion, compared to $1.92 billion a year ago. Excluding traffic acquisition costs, or commission paid to content partners, revenue was $2.23 billion.

Analysts polled by Thomson Financial were expecting Google to post earnings per share of $2.92 excluding items, and revenue of $2.19 billion, excluding traffic acquisition costs. Paid search represents nearly all of Google’s revenue. The company is expanding its advertising platform beyond the Web into radio and print.

“We paid over $3 billion in 2006 to our partners and this is a figure that we expect is going to increase as we ramp up our video, radio and print programs,” founder Sergey Brin said in a conference call with analysts. Asked about whether the company plans to help companies advertise on television, Chief Executive Eric Schmidt said: “We have already said that we are experimenting with traditional television advertising…There are many reasons to believe that the targeting technology we have invented can apply well, that advertisers will pay much higher rates for ads that are targeted.”

As for YouTube, Google suspects content creators will take advantage of the direct link to fans that the video-sharing site provides, said Schmidt. “We can connect the copyright owner with the user,” he said. “We’re pushing for a model where the people who produce the content get some revenue back.” In addition, Google is working on audio and video fingerprinting technologies to protect copyright holders, he said.

When it comes to search, paid clicks on ads on Google’s network and its publisher partners’ Web sites grew more than 60 percent in the aggregate, according to Chief Financial Officer George Reyes. While things look rosy for Google, its largest search rival posted more modest fourth quarter results. Last week, Yahoo’s earnings were down more than 60 percent from a year ago.

Web traffic to Google grew 24 percent in the fourth quarter from the same period a year earlier and Google accounts for more than half of all Web searches, according to Nielsen/NetRatings. The company is expected to capture two-thirds of the search advertising revenue this year, according to eMarketer.

Google shares, which closed at $501.50, dropped as much as 2 percent in after-hours trading after the company failed to make so-called “whisper numbers” on the street that were slightly higher than the estimates that they beat. The stock has risen nearly 18 percent over the past year, about the same amount that Yahoo’s has fallen.


Copyright ©1995-2007 CNET Networks, Inc. All rights reserved.

February 1, 2007 at 12:56 am 1 comment

Right Media Launches RMX Direct – Free Ad Serving For Publishers

Originally posted here.

rmlogo_rm.gif Right Media (, creator of the Right Media Exchange, today launched RMX Direct, a simple solution for managing advertising that allows web publishers to make more money from their sites. During the system’s successful private beta period, 750 publishers set up accounts, and over 11 billion ad impressions were served.


RMX Direct is geared towards publishers who sell their advertising inventory primarily through ad networks. It allows those networks, as well as select ad networks in the Right Media Exchange, to compete for website inventory on a level playing field in real-time. The system allocates each impression to the highest-paying advertiser automatically, regardless of network affiliation.

“We’ve doubled our effective CPM and revenue within a month,” said Steve Jenkins, president of “It was drastic. We also manage Casale Media, Google Adsense, Tribal Fusion, ValueClick, and through this interface. It’s less work and helps us make much more money.”

“Having a system that can find the best fit for a given ad impression is great for us,” said Mehul Patel, president of “We’ve noticed great results in our eCPM. Now, we have far less wasted inventory as it all gets allocated to its best fit.”

RMX Direct also includes Media GuardTM, the Right Media Exchange’s ad classification system that protects web publishers and their users from potentially harmful ads.

January 29, 2007 at 2:43 pm 2 comments

A look ahead at Google Video and YouTube

googleyoutubelogo.jpg  In November, we officially closed our acquisition of YouTube, and since then we’ve received a number of questions about what will happen next. The summary is that Google Video and YouTube will continue to play to their respective strengths. But here’s a bit more detail:

Google’s strength — and its history — is grounded in search and in innovating technologies to make more information more available and accessible. YouTube, meanwhile, excels at being a leading content destination with a dynamic community of users who create, watch and share videos worldwide.

Google search results already include links to content that’s hosted on YouTube. Starting today, YouTube video results will appear in the Google Video search index: when you click on YouTube thumbnails, you will be taken to to experience the videos. Over time, Google Video will become even more comprehensive as it evolves into a service where you can search for the world’s online video content, irrespective of where it may be hosted.

This is part of Google’s overall goal to give you the highest quality search results possible. For example, some users who do a Google search for Martin Luther King, Jr. may want to find websites about him. Others may want to see images of him. And others may want to watch video footage…

YouTube, as we’ve stated previously, will remain an independent subsidiary of Google, and will continue to operate separately. Google will support YouTube by providing access to search and monetization platforms and, when/where YouTube launches internationally, to international resources. YouTube co-founders Chad Hurley and Steve Chen and the rest of the YouTube team will continue to innovate exciting new ways for people to “broadcast themselves.”

Earlier this week, we announced one example of innovation in monetization and distribution with a new AdSense video test. We’ll be working with a wide set of content providers, grouping together high quality video content from providers with high quality ads and offering them as playlists which publishers can select from and display on their AdSense sites. (There’s more about the test on the AdSense blog.)

Today represents just the first step in our plan to bring you a comprehensive video search and content platform. We’ll provide ongoing updates as they unfold.

January 25, 2007 at 10:25 am 16 comments

Profit Down, Outlook Up at Yahoo

Originally posted by SAUL HANSELL at The New York Times.

y31.gif Yahoo closed the books on a tough year yesterday, reporting that its sales rebounded in the fourth quarter from an especially sluggish third quarter and promising investors that it would soon turn on technology that it hoped would close the widening gap with Google.

Its fourth-quarter profits were down from a year ago when it had investment gains, however, and it predicted only modest improvements for this year, suggesting that Yahoo would continue to struggle to keep up with Google, its Silicon Valley rival.

Yahoo executives were upbeat enough, however, that Yahoo’s shares rose by 5.8 percent, or $1.57, in after-hours trading, to $28.53. The price had fallen 46 cents, to $26.96 in regular trading.

Of most significance to investors, Yahoo said it would begin the second phase of its long-delayed search advertising system, called Project Panama, on Feb. 5. On that day, it will start displaying advertising on search pages in the order in which its computers estimate it will make the most money.

Search advertisers bid the price they are willing to pay each time a user clicks to visit their Web sites. Yahoo now shows the highest bid first, a method that analysts say earned it only 60 percent as much on each search as Google’s more sophisticated formula. Terry S. Semel, Yahoo’s chief executive, said the company would reap the rewards of the new system — but slowly.

“The first time we see any benefit will be at the end of the second quarter,” he said in an interview yesterday. “Every quarter thereafter we will start to get better.”

Mr. Semel said Yahoo would not see the full impact until 2008, when the system will be expanded to international markets.

In the fourth quarter, Yahoo earned $268.7 million, or 19 cents a share, down from $683.2 million, or 46 cents a share, in the period a year earlier. In the fourth quarter of 2005, Yahoo’s earnings were buoyed by $408 million in accounting adjustments relating to the sale of its Chinese unit and some tax changes. Excluding those adjustments and some expenses related to stock-based compensation, Yahoo’s fourth-quarter income in 2006 was $296.5 million, up 15 percent from the prior year.

Yahoo predicted another slow year of growth. The company’s revenue, after deducting payments it makes to Web sites that display the ads it sells, was $4.56 billion for 2006, an increase of 23 percent over 2005. (The growth was slower than the company had predicted at this time last year.) For next year, it predicts net revenue of $4.95 billion to $5.45 billion, an increase of 8.6 percent to 20 percent.

It also expects the growth rate in operating cash flow, a measure of profitability, to slow as well.

By contrast, Google is expected to announce next week that its 2006 net revenue was up 85 percent, to $7.45 billion. And analysts expect its net revenue to increase 48 percent this year.

For the fourth quarter, Yahoo reported revenue, excluding payments to other sites, of $1.23 billion, up 15 percent. Yahoo’s revenue was slightly higher than analysts’ expectations of $1.22 billion. Its per-share earning of 19 cents in the quarter was well ahead of the 13 cents expected by Wall Street.

As Yahoo has fallen further behind Google, there has been increasing criticism of Mr. Semel’s leadership as slow, indecisive and unfocused. In response, last month Mr. Semel fired Yahoo’s chief operating officer, Daniel L. Rosensweig, and reorganized the company’s management, placing responsibility for advertising sales and some other business under Susan L. Decker, formerly the company’s chief financial officer.

In a conference call with investors, Ms. Decker said that Yahoo planned to rebuild its business of selling advertising for other sites, both text ads related to Web searches and graphic banner ads. In recent years, Yahoo has lost its early lead in the search ad business to Google. And while it is still the largest seller of display advertising on its own site, AOL’s unit has become the largest network selling graphical display advertising for other sites.

Mr. Semel said the Panama system would allow advertisers to buy both graphic and search advertising at one time, something that Yahoo had not allowed until now.

“Large advertisers want to talk about display advertising and search at the same time in the same meeting,” he said.

Mr. Semel said that Yahoo was buying advertising space on other sites on behalf of its large customers, using an advertising marketplace run by Right Media.

Yahoo is looking to sell ads on other sites in part because the growth of its own user base is slowing. Yahoo increased its user base in 2006 by 16 percent, to 423 million people worldwide, but the growth rate of users in 2005 was 22 percent. Yahoo’s users are looking at more pages than they did a year ago, but the company’s advertising revenue for each page displayed declined, it said, mainly because of its lagging search ad technology.

In the United States, Yahoo’s revenue grew to $1.15 billion in the fourth quarter of 2006, an increase of 8 percent from the quarter a year ago. By contrast, the company’s strong business in Asia helped its international revenue grow at a 25 percent pace, to $558 million.

January 24, 2007 at 6:38 pm 1 comment

Corporate Profile – Mochila

Company: Mochila, Inc.

Company logo:

Location: Headquartered in New York, NY

Launch Date:  Founded in 2001

In the company’s own words, what is it?  Founded in 2001 as a publishing automation software company, today Mochila is an online content marketplace for publishers, editors, creators and advertisers. Designed to be first to market, Mochila leverages the power of the Internet to facilitate the acquisition and sale of high quality content that includes articles, photography and soon video and audio.

Mochila‘s executive team and advisors are distinguished media and technology veterans who have observed a shift in the publishing landscape, including huge growth in certain sectors. Last year approximately 16.8 billion words and 1.8 billion photos and graphics were sold over wire services such as the Associated Press, Bloomberg, and Reuters. Combine those numbers with audio and video sales, and the world spent just under $2 billion on syndicated news content last year. This market is expected to grow to $3 billion by 2008. Additionally, niche publications will spend nearly $3 billion on outsourced content. The explosion of blogs, web sites, and online newsletters promises to further fuel market growth.

Responding to the evolution of publishing, Mochila provides a resource for selling and acquiring content in ways that can greatly enhance efficiency and revenue. Founded on principles of trust and integrity, Mochila builds value, protects licensing rights and offers safe access and convenience to all who join.

Mochila is a technological breakthrough for the publishing world, combining rock solid data and license management capabilities with advanced search engine and e-commerce technologies. Created to be first to market, Mochila allows content to be an asset that can be monetized with greatly expanded revenue potential for everyone who participates in the new media marketplace.

Outside quote about company:  “Quigo’s Adsonar platform offers unparalleled control and transparency for pay per click advertisers and content publishers, so it truly is the right fit for Mochila’s transparent content-syndication marketplace,” says Henry Vogel, Quigo’s Chief Revenue Officer.

* first global online media marketplace for print, audio, video, and photo content
* offers simple but powerful tools for content sellers to set licensing rules
* offers Mochila AdMatch

Screen Shots:


Keith McAllister, Chief Executive Officer
Benjamin Chen, Chairman and Chief Technology Officer
Carolyn Bekkedahl, VP Business Development
Jason Oliver, VP Marketing
Tushar Patel, VP of Engineering and Technical Operations
Bill Lindsey, VP Architecture

Relevant Links:

January 24, 2007 at 1:52 pm Leave a comment

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