Here is the press release announcing a half cash / half stock offer.

Microsoft Corp. today announced that it has made a proposal to the Yahoo! Inc. Board of Directors to acquire all the outstanding shares of Yahoo! common stock for per share consideration of $31 representing a total equity value of approximately $44.6 billion.

Juicy bits from the press release, which contained a letter to the board of Yahoo!

In February 2007, I received a letter from your Chairman indicating the view of the Yahoo! Board that “now is not the right time from the perspective of our shareholders to enter into discussions regarding an acquisition transaction.” According to that letter, the principal reason for this view was the Yahoo! Board’s confidence in the “potential upside” if management successfully executed on a reformulated strategy based on certain operational initiatives, such as Project Panama, and a significant organizational realignment. A year has gone by, and the competitive situation has not improved.

and why Microsoft feels the deal makes sense

While online advertising growth continues, there are significant benefits of scale in advertising platform economics, in capital costs for search index build-out, and in research and development, making this a time of industry consolidation and convergence. Today, the market is increasingly dominated by one player who is consolidating its dominance through acquisition. Together, Microsoft and Yahoo! can offer a credible alternative for consumers, advertisers, and publishers. Synergies of this combination fall into four areas:

• Scale economics: This combination enables synergies related to scale economics of the advertising platform where today there is only one competitor at scale. This includes synergies across both search and non-search related advertising that will strengthen the value proposition to both advertisers and publishers. Additionally, the combination allows us to consolidate capital spending.
• Expanded R&D capacity: The combined talent of our engineering resources can be focused on R&D priorities such as a single search index and single advertising platform. Together we can unleash new levels of innovation, delivering enhanced user experiences, breakthroughs in search, and new advertising platform capabilities. Many of these breakthroughs are a function of an engineering scale that today neither of our companies has on its own.
• Operational efficiencies: Eliminating redundant infrastructure and duplicative operating costs will improve the financial performance of the combined entity.
• Emerging user experiences: Our combined ability to focus engineering resources that drive innovation in emerging scenarios such as video, mobile services, online commerce, social media, and social platforms is greatly enhanced.

I’m busy working on client stuff for the next 7-10 days so you might get one post out me before then if I find the time. Otherwise here’s some cool stuff to read.
If you read only one post on building links this year check out the interviews Sugarrae did for link development.
More proof Aaron is […]

Because social media is new it is easy to hype, marketers do. While I too have hyped the interactive nature of blogs and the web, I find that connecting directly with the end targets and their interests is typically more predictable and more profitable than running strategies through sites like Digg. With that thought in mind, I asked if social media traffic is worth a cent.

Google slightly missed their Q4 whisper numbers, by a wider margin than some appreciate, due to gains associated with weak US dollar value. Paul Kedrosky stated that Google’s quarter over quarter gain due to exchange rates was $93 million, and year over year was $200 million.

Why were Google revenues soft? Perhaps analysts were expecting too much. Perhaps the pending recession. Who knows, but the one thing that Google did state as a big weakness was social networking inventory. On the call George Reyes, CFO of Google, said

We have found that social network inventory is not monetizing as well as expected.

Social media has little to no value to advertisers. There is little to no implied intent. It is the exact opposite of focused marketing like search marketing, direct navigation domain names, and targeted affiliate sites. You simply can’t put a value on a social media connection like you can on search.

Typically each day or each week some roughly average number of people search for a specific keyword phrase or group of phrases. Some seasonal terms may have well known seasonal spikes, but typically when spikes occur because of news the quality and value of the associated search goes down. Sure more people are searching, but the people who are searching because something is in vogue have less implied intent than those who searched out a specific product even when it is not in the news.

With the Federal Reserve announcing 2 large rate cuts in a week, that topic carried over into the mainstream news, which drove a lot of search volume for related queries

At the same time, the 4x spike in search traffic drives home how anomalous last week was, and how much pressure people are demonstrably feeling. And it also reinforces that rising rates in mortgage markets, despite the Fed cuts, aren’t doing anything to relieve the mortgage pressure out there.

There are many ways to arbitrage these opportunities. Off the top of my head…

• if your site sells ads at a high CPM and you have an excuse for inflating traffic stats, sending StumbleUpon traffic to your site can easily pay for itself
• if ad budgets dry up you can become a more aggressive ad buyer
• if you are in Google news or other trusted editorial positions you can get a lot of mindshare through covering the topic and being featured due to Google’s promotion of universal search

There is also a hidden cost to testing or tweaking your monetization strategy during rapid changes in search volume. Unless you split test you don’t know if the results are positive or negative because both lead volume and lead quality have changed drastically.

A recurring theme in the 2008 link development panel was hand checks and the editorial nature of search, especially from Roger. Great article well worth a read. Thanks Rae!

I’m sure this has to do with the way things are published, like the times are different, but it’s still annoying to have to mark things read I’ve read already, only to see them appear later on

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Related […]

Duncan J Watts recently published a study debunking the role of influencers in synthetic virtual worlds, then debunking them again by showing how ads spread through the online world. I think the problems with the thesis are

• machines do not have emotions
• most of the people spreading the ideas in his studies did not have a large potential gain as a potential outcome of sharing the idea
• we live in a time of such an abundance of information that information / knowledge workers need to trust filters
• some filters have publicly available stats showing 10,000’s of people trust and follow them
• the easiest way to target influencers is not through ads, but through content which gets exposure in some of those trusted filters…if your idea starts in an ad box you already tuned out many influencers

The Fast Company article covering the research goes on to state the following

As Watts points out, viral thinkers analyze trends after they’ve broken out. “They start with an existing trend, like Hush Puppies, and they go backward until they’ve identified the people who did it first, and then they go, ‘Okay, these are the Influentials!’” But who’s to say those aren’t just Watts’s accidental Influentials, random smokers who walked, unwittingly, into a dry forest?

In some cases that might be true, but online you can learn communities and individuals well enough to create content targeted around their needs / wants / passions / biases / identities. You can even predict many future with some degree of accuracy. And there is so much data to study that virtually anyone can pick up the patterns and start spreading ideas within a few months.

I have changed a few words in a blog post to change the angle of it to target certain individuals. My success rate with getting a mention from the specific personality or person I was targeting is much too high to be an anomaly. Not only have I taken past ideas from other markets and applied it to my market, but I have taken some fundamental social and psychological principals and value related ideas, applied them to markets I know almost nothing about (and have no influence in), and still over half of those linkbait ideas go viral.

And once you give an idea exposure on a leading channel or two (not as an ad but as editorial) you display social proof of value and start the cumulative advantage process.

I am not trying to toot my own horn. Just trying to write from experience rather than theory. Some people, like Andy Hagans, are way better at launching linkbait than I am. The reason that linkbait is so powerful is that it can be so targeted, and it targets the foundation of the web’s value system, which typically does not look like an ad - the link.

Corporate SEO

Recently a couple great videos from Gord Hotchkiss and Marshall Simmonds highlighted the corporate SEO field. Corporate SEO is about

• ensuring everyone creating or managing content has at least a base level knowledge of SEO and keyword strategy
• setting up general templates that are useful and optimized
• clearing away technological issues and limitations
• smart structuring of information architecture and internal linking strategies (alternate paths for bots, and blocking lots of duplicate content issues, and sometimes even creating automated internal linking strategies)
• charging a high enough rate that the clients will take you seriously
• presenting your recommendations in a professional looking document and following up with any questions they have about implementation

Corporate SEO is largely about trimming away the fats and fully leveraging the assets you already have.

Ranking Affiliate Sites

Rather than focusing on cleaning out fats, independent affiliate webmastering is more focused on building value and getting the most value out of everything you can. An affiliate has to focus on…

• finding under-served markets (and hiding them under a rock to everyone except prospects in the buying cycle, unless you aim to be the most authoritative webmaster in that space)
• finding loopholes to make a quick buck (see this Shoemoney post about leveraging Google.com’s quality score)
• seeing future trends in the web early, and getting out in front of them (see Roger on video content here)
• making sure your site looks as credible as you possibly can (get a good site design, a good domain name, and publicise your publicity)
• setting up a site structure that is well aligned with your keyword pyramid
• creating a wide array of keyword pages focused on brand related queries (that are thus late in the buying cycle)
• creating comparison and contrast pages that answer common questions and authoritatively guide people to a high paying solution to their problem
• getting on page SEO as good as you possibly can for each important page
• changing your site structure based on analytics data and conversion data
• creating a second page or a second site for some of your top performers that have limited competition
• keeping your network hidden from Google engineers
• adding some high value content to your site such that Google engineers hopefully will not want to kill your site
• writing sales copy that often does not appear as sales copy, tweaking landing pages for conversion, while testing conversion rates over and over and over again
• scheming for links to build site authority…often creating content built around linking opportunities
• mercenary promotion (del.icio.us bookmark begging and link begging to friends, emails to related bloggers, getting to know everyone in your field, writing guest articles for authoritative websites, link buying, link renting, joining non-profits and trade groups, other promotional ideas, etc.)
• making your affiliate site something that some people care about and follow

Which is Better?

I think of the two options, that the affiliate model pays better for most people who really get the web, but you have to be good at a lot of disciplines to make it pay (and it can pay quite poorly unless you are creative or a fast learner). Ranking a few spots higher or improving landing pages can triple your income as an affiliate. Doing both can increase your income 10 fold.

I put a Microsoft AdCenter affiliate ad in the sidebar of the blog.

I generally do not like putting too many ads on this site, but…

• their traffic converts well because it is such a clean source (no dirty clickfarm syndication partners)
• I recently fell in love with Microsoft’s Ad Intelligence tool. If you have not tried it yet I urge you to try it. This post and this video offer a review of some of the features
• $50 in free clicks is a great offer for search marketers who have yet to try Microsoft’s ad platform
• I think the web is healthier if Google has some competition, and Yahoo no longer attempts to compete

Are you against affiliate ads? Have you tried AdCenter or the Ad Intelligence tool yet?

When markets are healthy and growing that growth can hide major issues, but when the markets swing toward a loss the winners are separated from the losers. As the markets consolidate and the thin arbitrage opportunities fall away the market leaders own a much bigger piece of the market.

The above chart could just as easily be a finance chart comparing Google’s 5 year performance to Yahoo’s, or any other industry undergoing heavy consolidation. Google’s brand is search. Yahoo’s brand is ???

Many people view you how you view yourself and label you with the labels you attach to yourself. Something to consider when creating a new business in a saturated field.

If you are not considered the #1 site in your class / vertical then you need to change your brand, find ways to add value (like editorial content, unique data formats, syndication, or open APIs), build an organic advantage (using a strong domain name, a great site design, and through public relations) or do something else to change the rules.

Some people are saying that Google #6 issue was just a glitch and not a penalty or a filter. And sure, according to Google’s current classification, that change was a glitch.

But lots of glitches have commonalities amongst the sites that were hit. Like many of the sites that got hit by that #6 profile were in some ways stale. And perhaps stale was just a symptom of dated SEO strategy.

You can learn from glitches, because many times glitches show you where and how Google is trying to shape the web. Glitches are side effects of algorithms with a targeted intent, but with too many unintended consequences and/or casualties.

Look back a couple years, and at one point in time SEO Book was not ranking for SEO Book while Paypal was not ranking for Paypal. Add on a bit more market feedback from other sites that were hit and it seemed sites were getting filtered out for having their anchor text too well aligned. That glitch was fixed in a few days to a month (depending on how far over the line your site was and how important your brand was) but the underlying idea of whacking sites for having anchor text that was too focused was indeed a direction the algorithms moved.

Look back a few years more to the Florida update. Some people called pieces of it a glitch or thought that the whole thing needed to be undone. Sometimes lowering the keyword proximity of a page title that was not in the search results brought it back to ranking. And yes the update was too aggressive and they had to back off of it. But filtering out unnatural copy was indeed a direction the algorithm moved.

Glitches reveal engineer intent. And they do it early enough that you have time to change your strategy before your site is permanently filtered or banned. When you get to Google’s size, market share, and have that much data, glitches usually mean something.

VideoEgg announced $1.5 million in ad revenues over 5 months, which is not much when you consider that they have over 150 top widgets. You can use targeted widgets and gadgets to push things that are already valuable, successful, unique, or interesting outside of the social networks, but traditional advertising is no good.

Rarely will you see the relevancy line up this well unless the gadget was created custom to match the item being advertised. But gadgets need to be extensions of brands, I don’t think they can become destinations themselves. And if they do, the network can always change their policies or clone them.

It is harsh doing business on someone else’s network. eBay, which has raised rates in the past, but never did much cleanup in over a decade, just announced their first quality score.

And if your offering is just basic data or something that is easy to replicate that is a zero sum game with those profits heading to Google, other market makers, or scammers arbitraging holes in the marketplace:

Data has this really weird quality. In economic terms data has an increasing marginal utility. Anyone who took Econ 101 knows that most physical objects have a decreasing marginal utility. When it is raining my first umbrella keeps me dry, a second may be handy if the first blows out, but a third is unlikely to be used. This is true of shirts, steaks, houses, of almost anything you can think of except data.

Data has the opposite characteristic. Each incremental point of data adds value to the ones you all ready have. It is easy to see this in the context of an advertising network. If the ad network knows that a user is female it can show more relevant ads. But, If the ad network knows that female’s age, it can do even better, and data about location, household income, and recent web sites visited all add value to the existing data points, making it possible to show more and more relevant ads.

Look at how Google expanded their local listings. How long until they own that category? By the time other aggregators want to opt out all of the data (and value) will have already been transferred to Google.

With all the value going to the aggregators who should sue who? Will that grow a broken business model?

The solution to market dilution is information pollution. Oops, wrong quote. What I meant to say was what Brian said here:

The replication process is quite intense and getting faster, which is why we need to focus on building trademark businesses (based on brand) instead of businesses dependent on copyright law.

eBay announced they are planning on launching something like a quality score:

John Donahoe will set out a plan to reward the company’s best sellers with sales incentives and priority ranking in search results for auction items.

“Sellers that describe items accurately, ship on time, and ship at a fair price will enjoy preferential pricing and discounts on eBay,” [John] Donahoe said in prepared remarks. “We’re serious about making eBay easier and safer to shop.”

On February 20 the changes will start taking place. Depending on how serious eBay is about this change, many eBay based businesses may die. But they also plan on lowering initial listing fees and trying to get more commission when items sell, which could lead to more junk listings as the opportunity cost is lower. If you are one of a few legit sellers in a market saturated with scams perhaps this helps increase margins, but eBay will have a hard time bring back buyers who got scammed in the past or sellers who were sick of years of rate increases.

It is remarkable that eBay has been around over a decade and are just finally getting around to making these kinds of changes. If they didn’t have a near monopoly there is no way they could have waited this long.

I understand why some people sell on eBay, but for anyone who has been doing it for a long time I wonder why they don’t create a site and sell direct. Being stuck in someone else’s network where quality scores can make you irrelevant is a risky way to make a living.

The old tagline a new chapter every day… was around for about 4 years and I figured a change was in order. The best I could come up with was Learn. Rank. Dominate.

Do you like or dislike the new tagline?

BTW, have been doing a bit of spring cleaning fixing what I can. The archives page was not updating, but I got that fixed. Still lots of small things I need to fix in the coming months.

And Matt Cutts confirmed that the #6 ranking was real for anyone who thought it was just speculation.

I recently published an article on Fast Company about how advertisers are using Wikipedia listings as a measuring stick for their advertising campaigns. The University of California, Irvine is even using their Wikipedia reference as the ad creative

You can sign up for a Fast Company account here.

Hey Yahoo Shortcuts Wordpress Plugin People, here’s a suggestion for improving your plugin, give me a checkbox to let me toggle the “Creative Commons” AND “OK to use commercially” settings.
For example if I was writing about my upcoming trip to say Hawaii and wanted to drop an affiliate link or two, while being perfectly legal, […]

You know there was a time I held out hope that Netscape/Propeller was a viable alternative to the lost boys club of Digg, however those days are long gone. Right now propeller is nothing more than a sham used to promote the most worthless spam and is completely infiltrated and overrun with manipulation. Case and […]

sigh ….

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Yesterday I came across a post from Dazzlin Donna entitled Matt Cutts, Why Am I Still Being Punished, there are several points in that post worth noting and discussing in more detail.

Ok if you didn’t read the post here’s a recap, Donna went through made some changes removing anything that may have been interpreted by […]

If you’re into comics please check out Urban Monsters written by one my friends, you can also check out his blog where he talks about storytelling and lore surrounding video games. He also was involved in writing for Bat Thumb.
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