We’ll look at Yahoo first. About midway through Jerry Yang’s 100-day reassessment and overhaul of the search engine, the company went shopping. It came back with ad network BlueLithium in its cart, for a cool $300 million. Given Yahoo’s historic problems with monetizing its service as well as arch rival Google, the deal could turn out to be a bargain.
The company has high hopes for the acquisition. It is hoping that BlueLithium’s technology will improve its ability to serve behavioral and contextual ads, and help build up its Smart Ads service. In fact, some within the company are portraying it as the last piece of a puzzle that is finally coming together. Todd Teresi, senior vice president of the Yahoo Publisher Network, notes of his company’s latest actions that "We have methodically identified where we need to move and move quickly. The strong, off-network deals with companies like eBay, Comcast, and the newspaper consortium were the first steps, acquiring Right Media was the second step, and now increasing direct marketing and performance expertise with BlueLithium is the third."
Yahoo has a massive network, and probably needs all of these tools to get the most out of it. The purchase of BlueLithium in particular looks like it will play well on Wall Street, since it is exactly the kind of move that financial analysts have been hoping to see Yahoo make. It’s also not a surprise; BlueLithium has been looking like an attractive acquisition for a while, it was only a matter of who would pick it up. It’s even possible, and Mike Cassidy, CEO of Undertone Networks speculates, that Yahoo made the purchase to keep BlueLithium out of Google’s hands. At the very least, it will help keep Yahoo competitive with Google and MSN.
This probably won’t be the last purchase of an advertising network by a search company we see this year. "Yahoo bought two, AOL bought two. The category has shown it’s got a lot of value, and I’m pretty sure we’ll see at least two more [acquisitions] before the end of the year," said Cassidy. "They can double BlueLithium’s business in a few years, and it complements the Right Media purchase, which was valuable, but not a full solution." Bringing together the technologies from its in-house platforms and its recent purchases just might give Yahoo the full solution it was looking for.
As mentioned above by Cassidy, AOL has also been purchasing ad networks. The company recently completed its purchase of behavioral targeting network Tacoda. Tacoda joins several other ad networks that AOL seems to have acquired for their specialized markets. Third Screen Media focuses on mobile ads, while AdTech AG is an international online ad serving company based in Germany. Lightningcast, which AOL purchased in 2006, delivers ads for video content.
Clearly, this kind of diversity is AOL’s goal. "Behavioral targeting is a fast-growing part of the advertising business, as marketers increasingly look to get efficient and measurable results from their advertising dollars," said AOL chairman and CEO Randy Falco in a press release. "Combined with our own network, our Advertising.com third party network, and our other recent acquisitions in the advertising space, AOL now has one of the most robust and sophisticated advertising platforms in the business."
Advertising.com boast about 3,000 publishers. Tacoda adds the New York Times and NBC Universal, among others, to the mix. Its list of clients includes Coca-Cola, Bank of America and General Motors. Like BlueLithium, Tacoda was clearly a very tempting acquisition target.
Like Yahoo, AOL must have felt that it needed to make this purchase to become more competitive. Market research company eMarketer noted that the behavioral targeting market was worth only $350 million in 2006, but expected it to grow to nearly $4 billion — yes, with a "b" — in the next four or five years. Even Google can’t leave that kind of money on the table; the search engine giant launched a behavioral ad product in April, which it insists is not "traditional" behavioral targeting because it targets the user for only one search session. We’ll see if AOL’s purchases help it better serve its advertisers and customers, to say nothing of earning a respectable bottom line.
If you have ever wondered if some of your long-lost friends are hanging out on Facebook, finding out may soon become easier than ever. The site is beginning to open up its profiles so that they’ll be searchable from Google and Yahoo in the next few weeks. It’s the latest step on Facebook’s path to become a little less exclusive and to open up more to the masses.
With an apparently growing consciousness of the gaffes it has made in the past, Facebook warned its users to check their privacy settings long before the change would take place. By adjusting the privacy settings on their Welcome page, the owner of a Facebook profile can still make it invisible to the search engines.
Already, it’s clear that the company is trying to avoid ruffling any feathers. Facebook engineer Philip Chung posted in the site’s blog that "The public search listing contains less information than someone could find right after signing up anyway, so we’re not exposing any new information, and you have complete control over your public search listing." Even so, this is something of a big deal; up until now, Facebook has not allowed search engines to have access to its user profiles, unlike other social networks.
Some worry that opening the profiles to search engines could open Facebook users to identity thieves. "Social networking sites should be a source of fun, not worry, but there are people out there who spend their time trying to exploit people through their private information," warns Keith Reed, online manager for web security firm Trend Micro. "Facebook users often provide details such as mobile numbers or employment history and these can be used to hack or steal a user’s identity."
Facebook has been growing in leaps and bounds. Formerly used exclusively within Harvard University, it later spread to other universities, then schools, then finally opened up to everyone with a valid email address about a year ago. It boasts well over 30 million users, and has been growing at a rate in excess of 500 percent in the last six months. This latest move could encourage further growth of the network; when people who aren’t members of Facebook can find their friends on the site, they’ll be more likely to want to join.
Finally, Jupiter Research put out a report recently that just might make you want to hit the pause button on your viral marketing campaign plans. "Viral Marketing: Bringing the Message to the Masses" looked at viral marketing campaigns over the past year, and discovered that only about 15 percent of them managed to get consumers to promote the marketer’s message. In other words, 85 percent of these viral campaigns never became truly viral.
Part of the problem could be that marketers are not appropriately segmenting and targeting their audience. "Viral marketers often send one campaign to all influentials," noted Jupiter analyst Emily Riley. "Different influential groups not only respond very differently to advertising campaigns, but also influence others in very different ways."
For example, the study points out the different ways that "relatively older" and "relatively younger" online users take advantage of the Internet. Older users are most comfortable with email and watch videos; younger users are more likely to be interacting on social sites. It’s the older users that are more likely to forward ads to their friends, or at least tell them about ads, so it makes sense to target these users for viral marketing campaigns. Jupiter believes that they "should be absolutely incorporated into viral marketing campaigns — especially because they are the traditional target audiences for brands or products."
This does not mean you should rule out younger users. It does mean, however, that anyone targeting their viral marketing campaign to this group needs to work on understanding what makes them tick. Such marketers can start by trying to understand the unwritten rules of online social networks and how they work. David Schatsky, president of Jupiter Research, notes that "While these sites may appear to be the most effective manner of delivering a message regardless of brand appropriateness, by failing to truly understand the audience, viral marketers stand to alienate as many consumers as they interest." When you’re dealing with social networking and a viral marketing campaign, it is NOT true that "any publicity is good publicity." There have been enough fiascos to drive this point home. Don’t be afraid to do the research; you don’t want to become part of the 85 percent.