Category: media lobbying

Trade Analyst on Google/Yahoo!: Google becomes “monopolistic gatekeeper”

From Diane Mermigas June 18, 2008 column in Online Media Daily [excerpt]:

excerpt: The deal puts more than 90% of the search ad market in Google’s hands, and raises the likely prospect that Google and Yahoo will work together on display ads. Executives from both companies have suggested as much, calling the partnership “good for competition;” when they should have said that it is “good for the competition.” The deal is a Trojan horse that makes Google the monopolistic gatekeeper, sucking the democracy and free capitalistic process out of advertising and e-commerce. The nonexclusive clause in the deal seems meaningless…Deutsche Bank, CitiGroup and Merrill Lynch are among investment banks reducing their estimates on Yahoo in anticipation of its advertisers shifting their business to Google. “This effectively signals the end of Yahoo’s competitive entry in the paid search business and signals to advertisers /agency customers to simply work with Google to purchase ad impressions from Yahoo longer term,” said Deutsche Bank analyst Jeetil Patel.

Yahoo opposed Google/DoubleClick Deal a few months ago: Tales of corporate turn-around

via Paidcontent.org. October 15, 2007:

“Yahoo (NSDQ: YHOO) has made its first public comments on the European Commission’s review of Google’s (NSDQ: GOOG) $3.1 billion purchase of DoubleClick, and, as you can probably guess, its take is pretty negative. In a submission to the Commission, Yahoo says the purchase, if approved, will mean higher prices for online display ads and less competition in the digital publishing sector. Andrew Cecil, public policy head for Yahoo Europe: “Combining Google’s search business with Doubleclick’s ad technology will strengthen Google’s dominant position in Europe. The competitive landscape for online advertising will be negatively impacted.”

and via Search Engine Watch: “Meanwhile in Europe Yahoo is heading the push with the EU. Yahoo has longer online advertising standing in Europe.
“Combining Google’s search business with DoubleClick’s ad technology will strengthen Google’s dominant position in Europe,” Andrew Cecil, head of public policy for Yahoo! Europe, said in an e-mailed statement today, Bloomberg reported. “The end result will be higher prices for Internet publishers and advertisers and less choice for European consumers.”

Ad Biz Looks Critically at Google/Yahoo! Pairing

Just some excerpts from today’s coverage, to give policymakers and the public a sense of how the 10 year pact is viewed from inside the ad industry.

First, from Ad Age: “Yahoo is outsourcing search monetization to Google in a 10-year deal, the companies officially announced tonight. But advertisers see less competition and higher prices…But the agreement… doesn’t necessarily protect Yahoo from the possibilities that the deal will erode its search business in the long run or make Google an even more dominant player. When Google search ads are mixed in with Yahoo search ads for a particular search query, Google will almost always win the better placement… And if Google consistently wins, marketers may be less inclined to bother using the Yahoo system, instead choosing to put their optimization efforts toward a single system.”

Yahoo, Google Strike a Deal on Paid Search. Abbey Klaassen. Ad Age. June 12, 2008 [sub required]

Online Media Daily: “…some in the industry have questioned whether Yahoo brass thought about the repercussions of the deal in terms of competition and advertiser perception in the mid- to long-term.

“I think the financial rationale is pretty clear,” said Bryan Wiener, CEO of 360i. “But $450 million is a lot of money, so it can’t just be all tail terms that Google will be serving. I can’t imagine that there won’t be some very valuable commercial terms in that mix.” Wiener said that if advertisers no longer saw the value in buying keywords directly through Yahoo, then fewer companies would end up using (Yahoo’s Search Advertiser Platform) Panama in the long run.

According to Neeraj Kochhar, vice president/director of SMG Search, there are definite concerns among advertisers. “I don’t see this as a positive move in terms of competitive activity,” Kochhar said.”

Final Microsoft Rebuff Sends Yahoo into Google’s Arms. Tameka Kee. Online Media Daily. June 13, 2008 [reg. required]

Stephanie Clifford of the New York Times has a good blog post on advertising industry concerns about the deal.

From the Los Angeles Times, 6/14/08:  “The consolidation of everything under Google is not good,” said Aimee Reker, global director of search at digital agency MRM Worldwide. “It will aggregate so much power and control in one place that it no longer is an open marketplace.”

Congress and Anti-trust Officials Must Take Action on Google-Yahoo! Deal: Competition and Privacy Issues at Stake

The government must take swift action to prevent the creation of a digital combine that merges assets and services of the first and second leading online search advertising companies—Google and Yahoo!
Google is the country’s (and world’s) leading search firm. Yahoo is ranked number two and says it is the foremost online display advertising company. This combination potentially threatens user privacy, as more data (including behavioral and mobile) about consumers are shared or pooled by the two leading online giants. Competition in the online ad sector—already weakened by a series of takeovers and acquisitions—is seriously threatened. This deal will have a significant impact on the advertising industry, including agencies. Both Google and Yahoo also provide critical search advertising services for many of the nation’s leading newspapers. Congress will need to explore how this deal impacts journalism, especially at a crucial marketplace juncture for the traditional media industries. Yahoo is permitting Google to extend its reach into one its significant assets–paid search. Shareholders will also suffer, as Yahoo! will be viewed by advertisers as a less effective means to target consumers.

Statement on behalf of the Center for Digital Democracy

ATT: DoJ, EC and Congress: Yahoo!’s own claims should raise alarms about a Google or Microsoft deal

No one should sit by and let either Google or Microsoft carve-up or take-over Yahoo! without a serious examination of the competition, privacy, and other consumer protection issues. This week, Yahoo! ran a four-page ad inserted in Advertising Age. Here’s some of Yahoo!’s own copy for regulators and the public to ponder:

“Yahoo! delivers the largest audience in the U.S.-the most 18-34 year olds, the most 35-54 year olds, the most women….Today, Yahoo! reaches over half the world’s Internet users. And with our growing network of premium publishing partners, including over 625 leading newspapers, we’re working with the other half…Our insights and understanding of our users lead to smarter targeting, so we can connect the right audience with the most relevant message–yours…With more ways to connect to your customers more deeply than ever, the future is wide open.”

From Yahoo! Advertising Age insertion. June 2. 2008 entitled: “What Happens When You Can Connect To More Than 550 million People From Over 170 countries Who Spend 2 Billion Hours Each Month In One Place?”

A Yahoo! & Google Deal is anti-competitive, raises privacy concerns

Based on news coverage [reg. required], it appears that Google and Yahoo! will attempt to team up in some way. We will await to see the details. But we want to point readers to Yahoo! 2008 annual 10K report. It discusses Google’s role as a competitor–something which would basically vanish in any outsourcing of its search ad business. As Yahoo! explained, “[W]e face significant competition from companies, principally Google, Microsoft, and AOL, that have aggregated a variety of Internet products, services and content in a manner similar to Yahoo! Google’s Internet search service directly competes with us for Affiliate and advertiser arrangements, both of which are key to our business and operating results…Additionally, Google and Microsoft both offer many other services that directly compete with our services, including consumer e-mail services, desktop search, local search, instant messaging, photos, maps, video sharing, content channels, mobile applications, and shopping services.” Yahoo! also made clear that search was an integral part of its business plan: “We believe that we can expand our communities of users by offering compelling Internet services and effectively integrating search, community, personalization, and content to create a powerful user experience. We leverage our user relationships and the social community the users create to enhance our online advertising potential, as well as our fee-based services.” Once Yahoo!, in our view, cedes part of its search ad business to its leading competitor, it will not have the viability to pursue growth relying primarily on building out its display business. Search and display, cross-platform and application, are increasingly inseparable necessities in order to survive in the online ad business.

Why too, would Yahoo!, in essence, neglect its investment to improve its search ad technology–known as Panama. In its annual 10 K, Yahoo! explained that it “launched its new search marketing system, known as Project Panama, in the fourth quarter of 2006. This system provides advertisers with additional tools for budgeting, testing, and optimizing their marketing campaigns. This new system also provides a new ranking model launched in early February 2007 as the second phase of Project Panama that ranks ads by relevance in addition to keyword bid price. We believe the new search marketing system provides a more relevant search experience to users, more valuable customer leads to advertisers, and additional opportunities to our distribution partners. We have completed the global roll-out of the technology across all relevant geographies.”

As Yahoo! told shareholders and the SEC in 2007, “[O]ur Search offerings are often the starting point for users navigating the Internet and searching for information, whether from their computer or mobile device. In Search, our goal is to provide the world’s most valued and trusted search experience for users, advertisers and developers…” Undermining its own business by outsourcing search ads to its leading competitor will weaken Yahoo!s ability to be a “starting point” for both users and advertisers. Permitting Google to operate a portion of its leading competitor’s business would be harmful to online diversity as well. Having Microsoft acquire Yahoo! also raise serious competitive concerns, although they require thoughtful examination in a post `Google now owns DoubleClick’ environment.

Charter Cable to Spy on its Broadband Users to Serve Targeted Ads via NebuAd

We have long pointed out that deep-packed inspection can be used by ISPs to both eavesdrop on users and undermine the neutrality of the Internet. Via Wired and other sources we learn that “Charter Communications, one of the nation’s largest ISPs, plans to begin eavesdropping on the web surfing of its customers, in order to help web advertisers deliver targeted ads. In letters being sent to some of its 2.7 million high-speed internet customers, Charter is billing its new web tracking program as an “enhancement” for customers’ web surfing experience. The letters were first reported by a BroadbandReports.com user on Sunday. The pilot program is set to begin next month.”Charter, using language straight out of Orwell’s 1984, claims it’s offering an “enhanced” service. Demonstrating its monopoly clout, Charter is imposing this service on an opt-out basis. Charter will be using, notes Wired, NebuAd. Here’s what NebuAd says it does (our emphasis): “NebuAd delivers the most actionable consumer intelligence by extending its reach dynamically to encompass the ever-growing network of sites that consumers visit. NebuAd combines this web-wide view of pages navigated, searches performed, ads clicked, etc., with the industry’s most accurate targeting capabilities, matching consumer interests across more than 1,000 categories…The result is behavioral advertising on a vast scale with a level of relevance that drives significantly improved response and engagement rates across all categories of advertisements.”

Here’s what NebuAd told Behavioral Insider magazine last November (excerpt, our emphasis): “The kind of data we do aggregate includes Web search terms, page views, page and ad clicks, time spent on specific sites, zip code, browser info and connection speed…within this vast universe of information we create a map of interest categories, beginning with the widest definitions, auto, finance, education, what have you. But within those we can provide far greater granularity. So if you’re talking about auto, we can drill down into particular interest segments, say SUVs, luxury cars, minivans, and then even to particular brands or models. Within the interest category of travel, we can identify consumers interested in learning about Martinique, the south of France or Las Vegas.”…“ISPs have been a neglected aspect of online’s evolution over the past several years. But the fact is the depth of aggregated data they have to offer, anonymous data, is an untapped source of incredible power… The conventional approach to behavioral targeting has been to place cookies on specific Web sites or pages. We’ve gone about it in a very different way. We place an appliance in the ISP itself. Therefore we’re able to get a 360-degree, multidimensional view over a long period of time of all the pages users visit. So what we’re really talking about for the first time is a truly user-focused, though still anonymous, targeting, taking the totality of anonymous behaviors rather than just a subset of sites on a network.” Here’s what NebuAd said in a November 2007 release: “NebuAd’s rich insight into consumer interests surpasses any other behavioral targeting solution and enables NebuAd to deliver precisely targeted ads that drive substantially increased value per impression…NebuAd’s deep insight into anonymous consumer commercial interests across the Internet, combined with its ability to micro-target the most relevant ad placements, brings a new level of value for advertisers, publishers and ISPs:..ISPs, who have up to now facilitated but barely participated in online advertising opportunities, can open new revenue streams that complement advertiser and publisher objectives to maximize revenue and generate higher revenue-per-subscriber.”

Both the FTC and FCC must investigate Charter’s plan (and other ISP’s permit snopping schemes. Congress needs to hold oversight hearings as well). ISPs should not be in the business of letting online marketers have access to the rich informational personal data streams of their customers. Broadband providers such as Charter get paid handsomely already by their subscribers for connectivity (and also benefit from their monopoly status to secure lucrative `bundle’ packages from consumers). Charter, which has a checkered financial history, should not be allowed to weaken the privacy rights of U.S. consumers. Paul Allen, Charter’s chairman and the co-founder of Microsoft, should do better than this.

Opposition to Google/Yahoo! (or other mergers) Should be Based on Principle: Digital Pawns in Play?

Yesterday, we were contacted by a reporter asking our position on the possible Google/Yahoo! search advertising deal (we are opposed to such an arrangement, on both competition and privacy grounds). When we read the story online, we learned that one of the groups sending a letter to the DoJ was the Black Leadership Forum. That raised our concern, since we know that the Black Leadership Forum has had relationships with phone and cable companies. It has also, in the past at least, worked with Issue Dynamics (a company which helps phone, cable and other interests “organize” support from not-for-profit groups. I cite Issue Dynamic’s role with the Black Leadership Forum on page 75 of my book.).

We have not read the letter to the DoJ. Nor do we know of any financial or other relationship between the Forum and any of the many interests who are fighting Google (phone and cable companies, for example, are opposed to Google’s positions on network neutrality). But we believe that all financial relationships, even from the recent past, need to be identified. I know this is Washington, where too many people “lease out,” as we say around my office. But there are important issues at stake with the new media marketplace. Reporters will need to do more to identify whether there are financial and other relationships with groups from Google, Microsoft, phone and cable, etc. But the real focus should be to examine the state of competition in the online ad market–and what it means for the future of communications in the digital democratic era.

U Penn Prof. Joseph Turow responds to the

Randall Rothenberg of the Interactive Advertising Bureau lobbying group wrote a commentary where he made a number of misleading statements. He incorrectly characterized the work of Professor Joseph Turow. Prof. Turow, a leading academic expert of the online marketing industry, is on the faculty of the Annenberg School for Communication, University of Pennsylvania. Here is Professor Turow’s response:

“In one sentence, Mr Rothenberg manages to make two fundamental misrepresentations. What I really say on page 2 of my 2006 book Niche Envy (where the quote originates) explicitly relates to marketers use of surveillance technologies without consumers understanding: “Over the long haul, however, this intersection of large selling organizations and new surveillance technologies seems sure to encourage a particularly corrosive form of personal and social tension.” Nor do I anywhere lament the passage of the three network universe. For example, I explicitly state in Breaking Up (on page 199, for example) that three network era had its own forms of social exclusions and state that “that “the proper response to this hypersegmentation of America is not to urge a return to the mass-market world of the 1960s and 1970s.” My conclusion: when I see Mr Rothenberg quote someone I will be sure to check the source to make sure the passage has not been wrenched from its context. I should add, too, that I accept the need that digital interactive media have for target marketing and database marketing. But there are many creative ways to meld data analytics and their implementation with openness and public engagement. I fear that Mr Rothenberg”s policies and writings indicate he will lead this important organization in directions that are misguided for marketers and for society.

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Former journalist and now online ad industry lobbyist Randall Rothenberg, in a BusinessWeek commentary, suggests that the call for privacy rules ensuring individuals have control over their data will undermine the Internet. You would think a Madison Ave. trade group could craft more creative PR copy. But the online ad industry’s position is indefensible, since they built a system based on the harvesting of our information without believing they would need to get our permission first. The IAB board should realize it has embarked on a very dangerous campaign here that will undermine credibility for many marketers. Here’s my response submitted to BusinessWeek:
Mr. Rothenberg, as head of the interactive ad trade group lobbying against the call from consumer groups for the government to protect personal privacy online, fails to address the central question regarding online advertising. The call for regulation is designed to ensure individuals control their data while on the Internet or using their mobile phones—not companies such as Google, Microsoft, and AOL. Public interest groups are not opposed to interactive marketing: indeed, we recognize it as a key source of funds for online publishing. But Mr. Rothenberg’s members have created a commercial surveillance system that rivals the NSA—tracking and analyzing our every move while on the Internet, all so we can be encouraged to behave favorably to some marketing message. Responsible ad industry leaders will seriously address the privacy threats created by the interactive marketing apparatus—and not hide behind self-serving claims that unless our privacy is lost, we won’t have a robust digital medium.

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