Yahoo! Buys Tumblr for US$1.1 Billion

During May, Yahoo! acquired one of the leading blogging services – Tumblr – for US$1.1bn. This is a notable deal, made by Yahoo’s chief executive Marissa Mayer who was appointed in July last year, and she has called the move a “unique opportunity”. However, it could also be a huge risk for Yahoo!, which now has to generate revenue from the deal without alienating the Tumblr user base.

The plans for the acquisition are for Tumblr to continue operating under its own brand and independently of the new owner, with co-founder David Karp continuing as Chief Executive. Tumblr combines elements of blogging with social networking, and its simple design has attracted millions of users since its launch. According to the site, it now hosts 108 million blogs, with over 50 billion posts. Crucially, it also has a significant presence on mobile devices.

Observers says that the move is partly an attempt by Yahoo! to regain favour with the younger ‘hip’ market, where Tumblr has proved a great success. Yahoo! has lost favour in recent years, both in terms of search and also as a social site, although the initial reaction from Tumblr users to the takeover has been mostly negative – which would be expected.

However, Yahoo! is hoping that its purchase of Tumblr will boost traffic to its other properties, such as the photo sharing site Flickr, which is being relaunched with new features to compete against Instagram. But the question is really whether the US$1.1bn fee will also help to boost revenue?

Analysts suggest that Yahoo! has significantly overpaid for the deal – Tumblr’s 2012 revenue was just $13m, according to a recent report by Forbes magazine, and despite its fast-growing user base, it has struggled to make money and has traditionally resisted advertising. Yahoo! says they will be working with Tumblr to create ads that “are seamless and enhance the user experience”. However, there is a danger of alienating users with more advertising – a challenge that faces most social media sites, including Facebook and Twitter.

Yahoo! has struggled in recent years, with a lack of direction and innovation, which is the reason why Marissa Mayer was brought in from Google. Despite this, Yahoo! remains a major online property, with around 700 million visitors to its website every month and the majority of its revenues comes from advertising. However, it has limited mobile reach and lags behind Google in the search engine rankings. It also shed more than 1,000 jobs during 2012 and has long been divided over whether it should focus on media content or on tools and technologies.

If you’d like to know more about this deal and the role of Yahoo!, please contact us for details.

In an interesting legal case in Australia recently, a jury in the supreme court of Victoria ruled that Google is liable for defamation because its search results connected the plaintiff, 62-year-old Milorad Trkulja, to phrases such as “Melbourne crime” and showed his photo near images of suspected members of Melbourne’s organised crime scene. The ruling can have wider consequences for the role of search engines and the results they display.

The plaintiff had used Google’s search quality form to have content from other websites removed from its search index, but failed to provide the URL of the content to which he was objecting. Due to that, the Victorian jury ruled Google was not liable for its web search results, but guilty of defamation because of its image search results, which remained unchanged after the plaintiff’s request. The jury found that Google should have removed those results when it received Trkulja’s complaint.

It’s a complicated and unusual case that resulted in Google being ordered to pay the equivalent of US$208,000. Trkulja had previously won a similar case against Yahoo, which was ordered to pay about US$225,000 in damages.

Google is examining the original jury verdict and may file an appeal as it disagrees with the Judge’s comparison to it as an online publisher. A Google spokesperson said: “Google’s search results are a reflection of the content and information that is available on the web. The sites in Google’s search results are controlled by those sites’ webmasters, not by Google” .

Whether or not an appeal is filed and Google prevails with a favourable outcome remains to be seen. However, the potential ramifications of this ruling place more emphasis on Google and other search engines to police their search results, or at least to have a policy to respond to complaints about the way search results are displayed.

If you’d like to know more about how the search or image results on Google can affect you, or your business, contact us now for more information.

Google recently released an inside look into its data centres for the first time. Up until then they have kept their sites under close guard, which according to them, is in the interests of protecting the security and privacy of “your” data that they hold.

Other opinions indicate that the primary reason for this is that Google still views its data centre empire as one of its most important advantages over the online competition, and it’s determined to keep the latest technology hidden from rivals. So, not surprisingly, the peek that they provide of “where the Internet lives” gives no technical details away.

You can take a streetview walk through a Google data centre in North Carolina here, or watch a video of the streetview here.

These data centres (also known as Googlenet) are widely regarded as the most advanced operation on the web, but there’s still much that isn’t disclosed, including exactly how many servers it operates worldwide. It owns six in the U.S. and three in Europe, and four more are under construction (three in Asia and one in South America). But the company declines to say how many other “colocation” data centres it uses, sharing data centre space with other outfits.

Also, it tends to keep its latest technology to itself. Especially, the networking tech used inside its worldwide data centre empire, as Google infrastructure boss Urs Hölzle explains: “we try to be as open as possible — without giving up our competitive advantage… we will communicate the idea, but not the implementation.”

What we do know is that because Google designs its own networking equipment and servers, it’s driving a massive shift in the worldwide hardware market. It’s believed that Google is now Intel’s fifth largest server chip customer (a clear sign that it’s now one of the world’s largest hardware makers), but it contracts with outside manufacturers when it comes time to actually build its machines. It’s thought that the company is using a contract manufacturer located in Canada or Mexico, or perhaps South America.

It’s also at the forefront of green cooling system development for data centres, which it’s designing from the ground up. (Images of this can be seen on Google’s Green Blog). According to Joe Kava, Senior Director, Data Centre Operations “by providing this view into our data centre operations, we hope to inspire other companies to rethink their approaches to data centre cooling. Building our own cooling systems means we can keep our data centres cool using a fraction of the energy used by a typical data centre chiller and that translates to reliable, carbon neutral services you can use for free”.

So although Google is still being understandably discreet about the details of its technology, it’s apparent that the techniques employed during the development of these data centres are at the cutting-edge of technology.

If you would like to know more about these Data Centres, contact us now.

Did you buy Facebook shares in May? Last month saw the long awaited Facebook IPO (Initial Public Offering) on Nasdaq, which was launched with much fanfare and anticipation that also made founder Mark Zuckerberg a multi-billionaire. However, the outcome was not so expected, with a fall in the share price on the first day which has since continued. The fallout from this has generated much comment and finger-pointing, leaving Facebook and their advisors looking embarrassed. So what went wrong?

Facebook launched with a share price of $38, but despite a short initial gain, this price has since dropped to a current price of below $30, which is nearly a 25% reduction in value within the first few weeks. For investors, this is not a good start, particularly compared to Google’s launch in 2004 and the more recent IPO for LinkedIn. Although they should be looking at long term value, it appears that the share price was overvalued based on the business model and current revenue levels.

The main issue revolves around their advertising revenue and future business strategy to increase this. With access to a massive user base around the world, Facebook has an attractive, captive market for many advertisers. However, there are questions about the model. Just prior to the IPO, General Motors decided to pull its $10 million ad campaign from Facebook because they were getting a poor return compared to other ads such as on Google. Many have seen the move as a sign that Facebook’s ad offering may not be as robust as the company would like it to be.

Facebook’s advertising offering is essential to grow their revenue, yet the basic model is very different to Google’s highly successful AdWords system. Advertising works differently on Facebook because users are not searching for something, as with Google, but interacting with friends and online content. Therefore ads need to be distracting and engaging, plus they may work better for branding rather than immediate response. For advertisers, who may well be comparing the cost per click and ROI against Google, Facebook’s results will not compare favourably and therefore it’s not going to be the ‘must-have’ network to use.

In addition to this, there are concerns about how the advertising model will work on mobiles and this is one of the key issues from the IPO process, and many investors say that a key report was not made public before the sale. As more and more people access the web, and Facebook, through their phones, the advertising opportunities are reduced since Facebook’s current model does not transfer well to phones. These concerns have impacted the share price and it’s something Facebook needs to address – only this week, they announced plans to launch their own branded mobile phone in response to this.

Market analysts also say that one of Facebook’s big problems is that its advertising technology, although powerful, is far too complicated for most marketers to figure out. Firms that can’t afford the ad software have been turning to specialized ad agencies to update their ads and run multivariate tests. The Return on Investment (ROI) of these ads is also poor for many companies so that although Facebook can attract large audiences, the question is whether the advertising system is effective and sustainable in the long term.

For the time being, the share price is languishing well below the launch price. Facebook now needs to start performing ahead of expectation, to satisfy investors and to develop systems and strategies that drive new and higher revenues. Being a public company, there will also be more scrutiny and the start of a new challenging period for the leading social network.

If you’d like more information about the Facebook IPO or their advertising options, please contact us for details.

During May, Microsoft announced that their Microsoft Advertising brand is to renamed as Bing to bring it in line with the main search engine brand. However, there remains inconsistency and confusion as the search advertising service merges with Yahoo.

Small and Medium Businesses (SMBs) have become the core market for search engines and social media advertising. Small businesses are a particularly important audience for Microsoft, given the strength of Google Adwords among smaller advertisers, and so Microsoft has rebranded its Microsoft Advertising brand as ‘Bing’, although the PPC service remains known as Microsoft adCenter, at least for the time being.

Microsoft are hoping this rebranding will boost sales by giving advertisers a clue that they are buying traffic on Microsoft’s search engine, and Microsoft also believe that making things easier to understand will lower some of the existing barriers. When customers now access Microsoft adCenter they will see a page that looks like Microsoft’s Bing search engine, thus making the experience for customers more intuitive path through the Microsoft search experience.

Microsoft has also recently completed the transition of the Yahoo Search Marketing service into the Microsoft adCenter system in the UK, but Australia remains one of the last countries still using the Yahoo PPC tool to buy paid ads on Yahoo and Bing / NineMSN.

The latest figures from Hitwise show that around 6% of search activity goes through Bing or Yahoo sites in Australia, compared to over 85% of searches through Google. This is in contrast to the US market, where Bing / Yahoo have a bigger share of search, with 20% of all activity compared to Google’s 67% share.

For more information about search marketing on Bing, please contact us.

Google “doodles” have long been part of Google’s history and are the drawings that are often designed on, around and through Google’s logo on its home page. These doodles have attained cult status and are a combination of technology and art, created by a passionate in-house team. They illustrate the creative and innovative personality of Google and like the company, use advances in technology to demonstrate their capabilities.

The Google doodles are used to celebrate famous birthdays, anniversaries, worldwide events or holidays, specific to particular countries. There are competitions held for the best designs and some examples of these are imaginative ones designed for Albert Einstein’s birthday; and Valentine’s Day.

The idea for doodles originated in 1998, when the Google founders Larry Page and Sergey Brin played with the corporate logo to indicate they were “out of office”. A stick figure drawing was placed behind the 2nd “o” in the word ‘Google’ and the revised logo was intended as a comical message to Google users. While the first doodle was relatively simple, the idea of decorating the company logo to celebrate notable events was well received by its users.

More recently, interactive versions such as the highly popular and humorous global one created for Jim Henson’s 75th birthday, have been created with Sprite Image technology and javascripts. Examples of how this was created can be found here or here.

There have been over 300 doodles created by the doodle team for Google.com in the United States and over 700 have been designed internationally. It’s possible to see all the doodles that have been designedhere.

If you’d like more information about Google Doodles, please contact us now.

At the start of February there was extensive news coverage and online discussion following Google’s accusation that Microsoft had been “cheating”, by taking search results from Google to use on their Bing search engine. This debate is likely to run for some time as the two search giants exchange claims and counter-claims about each of their search engine practices.

The story was first broken on Search Engine Land, and stated that Google ran a “sting” operation against Microsoft, catching them using some unique search data that had been set up by Google to check their suspicion that Bing was taking people’s search activity from Google and using that data to improve their own search engine’s listings.

Bing doesn’t deny this and say that they use ‘multiple signals and approaches’, which seems to include tracking search activity through the Internet Explorer browser and the Bing toolbar. They counter that accusation by stating that this was just a stunt by Google to take focus away from the event that Microsoft was simultaneously holding to discuss the “Future of Search”.

The author of the article subsequently stated that both companies approached him to discuss the issue, but remains convinced that the timing of Google’s accusation was purely coincidental. He says that undoubtedly, “both Google and Bing play the PR game” and “what’s happening right now is that there’s a perfect storm of various developments all coming together at the same time”.

He concluded by saying that he sympathises with Google’s opinion that Bing is “doing something it shouldn’t” and that Bing should be truly independent and not use Google as “a tuning fork”. He also states that as a result of Bing’s alleged data mining of Google’s searches, its name now, jokingly, stands for “Bing Is Now Google”.

If you’d like to know more about this story and how it might affect your search engine rankings, please contact us for details.

The prominent US retailer, JC Penney received a large amount of unwelcome publicity last month following press coverage about how the store’s website came to dominate many searches for product items that they sell, even though they might not be the ‘best fit’ for the searcher. This led to the accusation of the store utilising “black hat” SEO techniques and a subsequent reduction in search rankings on Google.

“Black hat” optimisation is the term given to the range of techniques that could be described as ‘spamming’ or methods that contravene Google’s standards when targeting search engine rankings. These techniques were described as “the most ambitious attempt to game Google’s search results that I have ever seen” by an independent online marketing consultant who investigated the JC Penny issue.

JC Penney’s SEO agency were accused of using a “link farm” to give the company a benefit from thousands of links placed on hundreds of sites scattered around the web, all of which lead directly to JCPenney.com. A “link farm” is a website or combination of websites containing many hyperlinks, especially designed to increase the index ranking of other websites to search engines and contravene Google’s guidelines on ethical SEO practices.

Google’s Matt Cutts confirmed that the “link farm” techniques being used violated Google’s guidelines and that “corrective action” was being taken. He stated that even as recently as last November, Google had been aware of JC Penney’s violations of its guidelines but they hadn’t followed up to ensure this was no longer happening.

A JC Penney spokeswoman is quoted as saying: “JC Penney did not authorize, and we were not involved with or aware of, the posting of the links, as it is against our natural search policies. We are working to have the links taken down.” They have also fired their search engine consulting firm, SearchDex.

This is yet another high profile case of a major company falling foul of unscrupulous SEO techniques, which although might have gained them some advantage in the short-term, have proven to be a bad investment as a long-term search engine ranking solution.

If you’d like to know more about this story, or how your website can benefit from legitimate SEO practices, please contact us for details.

In a surprise announcement at Google’s 4th quarter earnings review, Larry Page is to take over as CEO at Google in place of Eric Schmidt. Co-founder Page will take over the role in April and Schmidt – who has been in the job for a decade – will become executive chairman with a focus on “deals, partnerships, customers and broader business relationships”. The news has led to much speculation about the reasons for the change and the intentions for Google’s future development.

Page is the co-founder of Google with Sergey Brin. When they first established the company in the late 1990′s they served as co-presidents until 2001, when Schmidt was brought in to bring some business experience and guidance to the growing company. As a veteran CEO, Schmidt created a ‘triumvirate’ with Page and Brin to lead the company and to drive the massive growth of the business that has been seen over the past decade.

This new change retains the triumvirate, as Schmidt remains as Executive Chairman with Google, but Page would appear to have a power shift towards him, which has surprised many who see him as the ‘quiet’ partner in the team. He will also lead product development and technology strategy, which will include Google’s aim to become more involved in social media. It’s not clear from the announcement whether any disagreements internally prompted the change, but Schmidt says Page is ready to run the company, while Brin will continue focusing on new product ideas, with the title of Co-Founder.

Schmidt said the management changes were part of a plan to “streamline” decision-making and create clearer lines of responsibility and accountability. Not surprisingly, the news has generated an enormous amount of comment and speculation on the change, with some commentators feeling that Google has become too corporate and the change is an attempt to regain the vibrancy and innovation that drove the business in the early years.

The news upstaged the earnings report, which showed that Google had a strong rise in net profits in the last three months of 2010, at US$2.54bn on revenues of US$8.44bn. The profit figure also compares well to the $1.97bn made in the same quarter the year before. Although there will be much speculation about the change in leadership, it appears that Google timed the potentially unstabling news to come out at the same time as the positive financial figures.

To find out more about these changes at Google, please contact us now.

At the start of January, Yahoo7 in Australia announced that it would now be displaying search results from Microsoft’s Bing search engine. The change happened soon after, so that the variety of search engines has been further diminished and the Australian market is now largely dependent on search listings from Google and Bing, with the former still being used by around 90% of the total search market.

This merger between Yahoo7 and Bing’s search results (which are used by NineMSN) was not unexpected following the long-running merger between the two US search giants. In the US the change had already taken place at the end of 2010 and the roll out is expected to be completed globally over the next few months, with the UK and other European search engines to follow soon. However, it was expected that the Australian merger may take longer to implement due to the unusual partnerships between the search services and the Seven and Nine TV networks, although this is more of an issue with the advertising channels.

Yahoo7 sent an email out to companies to prepare for the changes. It suggested they compare their organic search rankings on Yahoo!7 Search and Bing to help determine any potential impact to traffic and sales, although for most companies this is such a small share of their overall search referrals! What it does mean, however, is that businesses should review their listings on Bing’s webmaster tools and optimise their website for the Bing crawler, to ensure that their site is indexed and prominently listed in both Yahoo!7 and Bing’s organic search results.

Yahoo originally developed as a web directory in the 1990′s and became one of the leading resources for the slowly emerging list of websites that were starting up. However, as the size of the web grew rapidly in the 2000′s, Yahoo’s human-edited directory couldn’t keep pace with the growth and Yahoo purchased a number of established search engines to integrate with their search service. Pioneering search engines such as Inktomi, AltaVista and FAST were acquired by Yahoo but the experience and technology behind these tools didn’t help Yahoo grow as a search engine in the face of Google’s dominance.

Now Microsoft has taken another step in their challenge with Google for market share, through their Bing search engine. In the US the market share of Yahoo and MSN is larger than in Australia and many other countries, and so the merger or ‘alliance’ between Bing and Yahoo has given Microsoft a stronger position to develop their search service and to compete for users. For Yahoo, it’s another stage in an apparent downward spiral from the once dominant site, which is now essentially a partner for the Bing network of search results. For users in Australia, and worldwide, it’s another stage in the growing monopoly of available search results with a limited range of options now available to find information online.

As a footnote to the recent merger, the transition of the Yahoo paid search services (PPC) to Microsoft technology is scheduled to take place in the second half of 2011. Outwardly this will show little change, since Yahoo currently supplies the paid listings to Yahoo7 and NineMSN, but for the advertiser it is hoped that the new platform will be more user-friendly than the existing Yahoo! one, and that it will help to give advertisers a more effective alternative to just focusing on Google Ads (AdWords).

If you’d like to know more about the merger between Yahoo and Bing’s search results, and how it might impact your search engine marketing strategy, please contact us now.