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Friday, September 19, 2003

Pre-Post-Merger Hangover for FindWhat-Espotting

Espotting's financials weren't what they seemed on the surface, say FindWhat officials, forcing them to restate earnings guidance for this fiscal year and causing them to reopen negotations around the merger, which has yet to be finalized.

As of this writing FindWhat (FWHT) shares are down about 20% at $21.75. Putting this in perspective, the shares traded at $10 as recently as early May, so the prospect of a potential unravelling of the merger is by no means catastrophic.

Espotting didn't look like a company that would be easy or quick to integrate with FindWhat, so it stands to reason that much of the decision to merge, and the valuation placed on Espotting, had to be related to the latter's ability to add incremental revenue and profit to the picture regardless of near-term synergies. In light of FindWhat management's claim that Espotting is not, in fact, profitable, it is entirely possible that the merger will be nixed and that FindWhat will carry on on its own.

At the very least, FindWhat management will renegotiate the valuation placed on Espotting. One would expect very little cash and less equity going to Espotting's principals in the new deal, if there is a deal at all.

Either way, FindWhat should carry on relatively unscathed. All indications are that advertisers continue to discover the service, likely pushing average costs-per-click prices up. Some believe that Google and Overture are enjoying faster price-per-click inflation, but nonetheless, if FindWhat can hold onto its #3 position, it's still in a solid uptrend.

Posted by Andrew
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Thursday, September 18, 2003

Erasing a Bad Memory: Time Warner Drops AOL from Name

The decision is final: reflecting internal power struggles at the world's largest media company, AOL Time Warner is changing its name to Time Warner, and its ticker symbol to TWX.

This sets the table nicely should they decide to merge with another overvalued Internet company. Yahoo! Time! Warner!, anybody? It's not so far-fetched. Yahoo's market capitalization, at $24 billion, is fully one-third of Time Warner's. A couple of good quarters for Yahoo, and a couple of bad quarters for TW, and they'll meet in the middle at $50 million. Just think of the synergies.

Posted by Andrew
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Dear Schmuck: This Stuff Writes Itself

Corey Rudl sent me another exercise-in-self-parody email today. An excerpt in case you didn't have your daily belly laugh yet:

Hi Albert,

I don't know if I am writing this e-mail out of frustration or relief... I mean, search engines are still the most effective online marketing tools that are free.

But trying to decipher all of the BS information that the so-called search engine "experts" are peddling was driving me crazy (Though my girlfriend, Tracy, insists that I was crazy way before this :-).

I'm sure you know the “so-called experts” I'm referring to… we all get spammed by them.

And I have looked everywhere for a piece of software that could actually deliver what it promised and get my customers (and me!) ranked well in the search engines... not just the top five, but in the top 150 engines.

Tracy, I hope for your sake you're enjoying Corey's company and living for the moment with lots of fun rides in a fancy convertible. But trust us, he's not crazy. That would be a nice excuse, but alas! No, he's so sane, he just blew my mind! Luckily, his email was addressed to a guy named Albert, so I chose not to buy the crap he's peddling.

Posted by Andrew
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More Insight into Microsoft's Web Search Decisions

According to this Reuters piece, via Yahoo News, analysts believe Microsoft decided to build, rather than to buy, its own algorithmic search engine for a few reasons.

First, they think the only way to beat Google is to build a new search engine from scratch. Apparently, they don't believe any other existing engine has the goods to trump Google. Fair, enough.

Secondly, Microsoft plans to integrate this neo-search tech into the Windows operating system:

"Any time Microsoft builds something into the operating system, they don't want to get that from anyone else," said analyst Matt Rosoff of Directions on Microsoft, an independent research group based in Kirkland, Washington.

I suppose the message here is that it's easier to break the law with your own software than to try to use someone else's to do so!

Posted by Cory
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Wednesday, September 17, 2003

Towards a Semi-Literate Society: Courtesy

Frequent Amazon customers know it has many cool features, including the ability for civilians to offer book reviews and for these same individuals to create annotated, thematic reading "guides."

Where would the state of intellectual debate be without engaged, self-taught, non-accredited, non-tenured, but entirely opinionated people like Scott Belhorn?

Because Belhorn seems to have put together about a zillion reading lists with comments on each book on the list (sometimes numbering thirty or more books), the first thing that comes to mind is "what kind of a job does he have that lets you read so many books?" As it turns out, Belhorn had been an inner-city social worker, then worked in payment processing for a large Internet company, and currently attends law school hoping to set up a solo practice. Not only do we need more people like Belhorn, we probably need more lawyers like him.

One of the more interesting lists is his "people I really despise" guide. Belhorn's an equal-opportunity hater, lambasting Bill Maher, Bill O'Reilly, Geraldo Rivera, G. Gordon Liddy, Oliver North, Michel Foucault, and William Kunstler in equal doses. He's no fan of Malcolm X, either, nor of Thomas Jefferson: "Yes, that's right. The author of the Declaration was a miserable human being -- slaveholder, extravagent spender, Jacobin radical, states-rights southerner, proud atheist, hypocrite, and double-dealer. In short, a wretch."

His "people I really admire" guide could use work. It's much shorter, and includes two presidents and a pope.

Another guide, one that held considerable promise, also needs fleshing out, perhaps in the form of an article (looks like it would be a long article, like the long ones in Atlantic Monthly you can't get through), is Belhorn's "Tired of Baby-Boomer Self-Righteousness?"

His "Movies for People Age 20-39" also held promise, but dude, putting White Men Can't Jump in the same list as sex, lies, and videotape, Tuff Turf, and Heathers is a little bit strange.

Anyway, back to the question of "what kind of a job do you have to have..." ... is it possible that one could actually make a decent supplementary income just creating these guides and generating referral income from Amazon book sales? Now that would be a strange job indeed, but not unlike what a lot of online opportunists are up to these days.

And now back to, um, work.

Posted by Andrew
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Tuesday, September 16, 2003

When, precisely, did Yahoo! become evil? And how could it become good again?

Maybe a smart reader can help me pinpoint the day that Yahoo! crossed over to the dark side. Who knows, maybe it was the day they went public. But lately it seems increasingly evident that they don't "get," and don't want to "get," that intangible web sensibility we like to call "it."

They don't get it.

Like countless others, I often use Yahoo! Mail. Feature-wise, it's very good. It often solves a lot of problems for me. I expect a little advertising to come with this service, I honestly do. I just don't expect it to be so ridiculously intrusive. Not when I'm paying 50 bucks a year for the premium mailbox.

In the middle of a message that I don't want to send, I hit "cancel." Instead of taking me to a screen like the message list or the previous message (which would have advertising anyway), I'm served ANOTHER ad on a separate, useless page that says nothing but "your message has not been sent." And the ad, as all the ads in Yahoo Mail, is really, really big, and gives me a headache. I realize that there might be a good reason to tell me that my message wasn't sent... but with all this advertising on a service I paid for, I'm beyond caring.

Now I thought Yahoo was making the transition to fee-based revenue. If so, then why annoy willing fee-payers with ads of this nature? So far, the premium "StatTracker" for the fantasy football (only $10) isn't littered with ads - hey, I paid for it, right? But how long will it be before they figure out that this, too, is another source not only of incremental "upsell" revenue but also a nice place to plaster intrusive advertising that slows down the user experience?

The only thing users care about as much as email is, of course, search. If industry rumblings are any indication, Yahoo! plans to serve up a foul brew of paid inclusion, paid directory, and sponsored listings to replace what was a perfectly good Google index. For their sake, let's hope they've taken an accurate reading on the average user's sophistication level. I know the average reader of this site won't be thrilled with the latest incarnation of Yahoo Search.

What Yahoo should do, of course, is to resurrect Inktomi (with help from scientists at AltaVista and FAST, who also now work for Yahoo through Overture) as an unpaid index and genuinely compete with Google on the search quality front. The index could be syndicated to other portals or search destinations in a package deal with Overture listings. The Yahoo site's revenues wouldn't suffer too much, because high-quality search would be accompanied by banner ads and Overture listings.

Nah, I guess that just makes too much sense for Yahoo. We expect them to make a mess instead, plodding along with a paid-inclusion index that isn't really search. And hope that they prove us wrong.

Posted by Andrew
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Monday, September 15, 2003

That Same Old SEO Soft Shoe?

Fredrick Marckini, a well known author and entrepreneur in the search engine optimization business, is a recent addition to ClickZ's author lineup.

Unfortunately, Marckini's first two columns are little more than a transparent attempt to sell his company's services. Though not universal, self-promotion is a growing trend at ClickZ which many have noted in the past year. I suppose I'd do the same put in Marckini's position, but that probably underlines a key point about editorial integrity. Someone at ClickZ has got to start taking a tougher stance (although that would probably require them to pay writers).

No one's saying that natural search traffic is a bad thing, so Marckini and others seem to be arguing against straw figures when they extol its benefits. But on the "SEO vs. PPC" debate, we'd like to see a little more objectivity. When readers write to me to ask for studies or resources to help them in their marketing presentation to the boss, I'm often at a loss, because most of the studies and stats in this area are produced by companies with an ax to grind. LookSmart is fond of pointing out that "organic listings" get a higher percentage of clicks overall than the advertising listings (I should hope so!), but they naturally fail to question just how organic a search listing is if the listee, er, advertiser, er, website, is paying LookSmart and MSN for every click.

Today's column by Marckini trots out numbers: big numbers of visitors to websites from organic search. Oh, yes, visitors, remember them? The metric favored most by bubble companies at the height of the dot-com madness. Again, it's little surprise that search engines refer a lot of traffic; people love search engines! But isn't it a little outdated to discuss "visitors" without discussing the revenues or on-site actions those visitors might produce? Are we supposed to go on faith? No doubt in the third instalment of Marckini's trilogy he'll address the need to convert visitors (a key phase in what Marckini dubs "inquiry marketing" with nary a tip of the cap to Godin and permission or to Nielsen and "request marketing"). But to some extent, the damage has already been done. We're back to fixating on big visitor numbers, with a promise that you, too, can get it all for free.

Moreover, is it not the case that ultimately, the search engine (and the external community) determine which websites are relevant and deserving of visitors? Is it also not the case that they might well tweak their algorithms to favor resources and publications of general interest so that commercial sites and their product pages ultimately don't rank as well? Companies like Google stake their future on making money on commercial listings and on retailers listing in shopping engines like Froogle.

Even for those merchants who do rank well in the organic results, it's often the case that these rankings are little influenced by an optimization strategy. That's as it should be.

Marckini's columns, unsurprisingly, gloss over a couple of tough issues that face the search engine marketer. In particular, it needs to be admitted that algorithmic search scientists do have something of an adversarial relationship with product marketers, especially when the algo designers are embedded in search companies whose revenues depend on ad revenues from such marketers. (In the immortal words of the late Pierre Elliott Trudeau: "Why should I sell your wheat?") It's also clear that many optimization companies (and those who simply observe what optimizers have traditionally done) know this.

In Marckini's previous column, Forrester analyst Charlene Li was quoted as saying that you have to shape your optimization strategy for different search engines... that a "Google searcher is not the same as a Yahoo searcher." The fact that there are different demographic profiles on different search destination sites is no secret, but how does one respond to this fact? Does this mean we're still designing websites with an eye to reverse-engineering their search methods, to "crack" each one separately? Does that mean cloaking and doorway pages? If not, then what? (Making rational choices about how to allocate paid advertising, perhaps?)

Natural search traffic is great for any business. But it's time to stop cloaking it in mystique.

Posted by Andrew
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