Microsoft, AOL and Yahoo team up in online ad deal

In a testament to how powerful Google and Facebook have become as Internet moneymaking machines, Microsoft, Yahoo and AOL are joining forces to sell advertising.

In a deal announced Tuesday, the three tech giants said they would pool their resources to sell leftover ad space beginning in January.

They pledged to continue to compete and maintain their own sales teams. Microsoft, Yahoo and AOL are looking to avoid the appearance they are forgoing their independence and avoid drawing scrutiny from antitrust regulators.

The effort is aimed at slowing the growing momentum of Facebook, which has become attractive to advertisers as the world's most popular online hangout. Research firm EMarketer says Facebook is already the leader in U.S. display advertising with a 16% share of the online ad market.

Google, the world's dominant search engine, spread its tentacles into display advertising with its 2008 purchase of DoubleClick. Its share of the display advertising market has jumped to 9% today from 2% in 2008. During that same period, Yahoo saw its share fall to 13% from 18%. Microsoft has 5% and AOL has about 4%, according to EMarketer.

The value of ads on AOL, Microsoft and Yahoo have slipped with rising competition from Google and Facebook. The three partners are hoping to drive up the price advertisers are paying for page views.

With Yahoo's revenue declining, the company's board is exploring whether to sell all or part of the company. Microsoft, on the other hand, benefits from Facebook's success: It bought a 1.6% stake in the social networking juggernaut for $240 million in 2007.

The advertising alliance gives the three companies the right to sell each other's excess ad space. The partners said the deal was not exclusive and would be open to other publishers. The three companies will integrate their real-time bidding technologies.

"While this collaboration could drive some incremental yield improvements for the portals' unsold display inventory, we believe it is unlikely that the combination of inventory can spur significant increases in overall display ad revenue given market share challenges," J.P. Morgan analyst Doug Anmuth said in a research note. "We believe this agreement comes more from a position of weakness as all three players attempt to create a compelling alternative to Google for marketers and agencies."

Anmuth said Google's vast network of more than 1 million advertisers makes it easy for them to reach large audiences. Google also offers targeting and measurement tools that "are appealing to performance-based advertisers," he said.

Anmuth estimates that Google's display revenue will gross $3.8 billion in 2011, compared with $1.9 billion for Yahoo.

In an interesting twist, he said the alliance would help Google in antitrust probes because the Internet search giant can point to it as an example of credible competition in online ads.

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Photo: A Google office in Brussels. Credit: Virginia Mayo / Associated Press 

Yahoo, still in CEO hunt, to buy Interclick for $270 million

Yahoo Inc. hasn't yet decided on a new chief executive and it hasn't yet decided what to do with itself, but the company did announce the decision to pay $270 million to take over Interclick Inc.

So why would Yahoo want to buy Interclick, a New York online advertising firm that helps advertisers find websites matching their target market and resells ad display space on websites? The Sunnyvale, Calif., company said in a statement Tuesday that the move will beef up its online advertising business, which has seen declines in recent years but still remains one of the tech industry's largest.

The purchase comes amid Yahoo's ongoing search for a new permanent CEO, after firing Carol Bartz from the post in September, and a strategic review that could result in selling the company. Yahoo Chief Financial Officer Timothy Morse has filled in as interim CEO since September.

"With Interclick, Yahoo! will acquire unique data targeting capabilities, optimization technologies and new premium supply, as well as a team experienced in selling audiences across disparate sources of pooled supply," Yahoo and Interclick said in a statement.

"This investment underscores our focus on enhancing the performance of both our guaranteed and non-guaranteed display business across Yahoo and our partner sites and, combined with Yahoo!'s reach and advertising leadership, will deliver a powerful solution for marketers."

Yahoo said it expects the deal to close in early 2012. On Tuesday, Yahoo board member David Kenny, who recently left his post as president of Akamai Technologies, a company that provides cloud services for businesses, told AdAge that he wasn't looking to be Yahoo's next CEO. Kenny remains at Akamai as a senior adviser.

"The timing is coincidence," Kenny told AdAge. "People should not draw conclusions about where I'm going next, the consumer internet is a big place."

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Photo: A Yahoo sign at the company's Sunnyvale, Calif., headquarters. Credit: Justin Sullivan/Getty Images

New Google feature tries to explain ads in search, Gmail [Video]

A lot of people still don't understand why certain advertisers target them while they are searching the Web. 

Google is rolling out a new feature that explains why its users see certain ads when they search Google or check their Gmail.

The move comes as Google, like other Internet companies, finds itself in the political cross hairs as lawmakers and regulators scrutinize how they collect and use consumers' personal information. Google says it tries to be transparent about the information it collects and show consumers the most relevant ads. If Google knows what ads to show you then it might even show you fewer ads, the logic goes.

"Our advertising system is designed to show the right ad to the right person at the right time. Because ads should be just as useful as any other information on the web, we try to make them as relevant as possible for you," Susan Wojcicki, Google's senior vice president of advertising, wrote in a blog post.

Wojcicki says the new feature, called "Why these ads," helps users learn more about why they see certain ads and gives them the ability to block advertisers or opt out of ads that are personalized to them.

For example, Google search users who click on "Why these ads?" next to ads that show up in search results will get an explanation such as "this ad is based on your current search terms." Users can then decide if they want to block that advertiser or turn off ad personalization altogether.

Users of Gmail, Google's email service, will also be able to block advertisers. Google serves up ads based on the contents of emails (although Google does not "read" your emails).

Google derives the vast majority of its revenue from advertising, chiefly search ads, which are popular because businesses can track the effectiveness of their ad dollars.

What Google still does not do: Let users stop Google from collecting information based on their search history.

Privacy watchdogs remain skeptical.

"For every little tool Google provides to help users protect their data, they create a host of new digital marketing apps to capture it," said Jeffrey Chester, executive director of the Center for Digital Democracy. "The test of this new tool will be to see if it really enables you to control your information."

 

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Verizon now tracks and shares Web surfing, location, app usage

Verizon Wireless has made a change in its privacy policy that clears the nation's largest wireless carrier to track its subscribers' Web browsing, location and app usage habits.

The change in Verizon's privacy policy covers all customers of the company by default, automatically opting-in subscribers, though they can opt out of this if they want.

So why would Verizon want to track its customers' Web surfing, location, app usage and other data-consuming behaviors? Verizon said in a statement announcing the privacy change on their website that the data will help them make "mobile ads you see more relevant."

The policy change also clears Verizon to share the Web browsing data to produce "certain business and marketing reports" and then share that information with "other companies to create business and marketing reports."

Verizon also said that all the data shared with outside companies will be anonymized and that Verizon "will not share outside of Verizon any information that identifies you personally."

The specific types of information Verizon will now track and share with outside companies, as listed by Verizon on its website is made up of:

Mobile Usage Information:

• Addresses of websites you visit when using our wireless service. These data strings (or URLs) may include search terms you have used

• Location of your device ("Location Information")

• App and device feature usage

Consumer Information:

• Information about your use of Verizon products and services (such as data and calling features, device type, and amount of use)

• Demographic and interest categories provided to us by other companies, such as gender, age range, sports fan, frequent diner, or pet owner ("Demographics")

For those who want to opt out of Verizon's new information sharing practices, the carrier said its subscribers can do by filling out a form available at www.vzw.com/myprivacy or by calling 1-866-211-0874.

While the policy changes from Verizon might make some of its users feel uneasy or maybe even a bit creeped out, it's worth nothing that every carrier stores these types of data, though they all have different approaches to how they do or don't use them.

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Photo: The Verizon logo is seen at a Verizon Wireless in San Francisco. Credit: Justin Sullivan/Getty Images

Personal log-on info often leaks to advertisers, researcher finds

Information that could identify you often leaks from major websites to online advertisers because of the practice of embedding such data in the Web addresses shared between sites when a user logs on.

Such data leakage may involve a person's name, user name or email address and is pervasive, though not necessarily intentional, among the most popular websites, said Jonathan Mayer, a Stanford graduate student who has studied the phenomenon and released findings Tuesday.

The information is transferred because the unique Web address, or URL, created when a person logs on to a site is sent to third parties to assist them in delivering pertinent ads and other content on the page. Mayer and other privacy advocates said the leakage is a risk because one identifiable piece of information associated with a Web browser's unique sequence of numbers could allow all that browser's activity to be connected to a particular person.

For example, when a user logs on to the Home Depot website and then looks at a local ad, the person's first name and email address is sent to 13 companies, Mayer said.

"And that email and first name get associated not just with what you're doing right now, but get associated with what you've done in the past and what Web-browsing activity you might have in the future," Mayer said.

Mayer also found that trying to log on to the Wall Street Journal website and using the wrong password sent the user's email address to seven companies. Changing user settings on the video sharing site Metacafe sent the person's first name, last name, birthday, email address, physical address and phone numbers to two companies.

Mayer studied 185 of the most-visited websites that offered free individual log-ins, though he excluded the main Google, Yahoo and Facebook sites because they offered so many features that it was impractical to study them all.

He found that 61% of of the 185 sites shared a person's user name or ID with another website. Some sites shared the information with numerous third parties. Mayer created accounts for sites and then tracked where the information went. On the photo-sharing site Photobucket, his study found that a username was sent to 31 other websites.

Asked how consumers could avoid such data leakage, Mayer said, "The best thing they can do is to block advertising, because the moment content is loaded on the browser there is a risk of tracking."

Online privacy advocates said the problem of data leakage shows the need for a do-not-track mechanism, similar to the popular do-not-call list for telemarketing. Such a mechanism would allow consumers to opt-out of online tracking, which is used to deliver advertising tailored to a person's behavior.

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Photo: Attendees at the First Latin American Congress of Social Networks surf the Internet in Panama City, Panama. Credit: European Pressphoto Agency

AP's iCircular puts Sunday coupons in Times app, mobile site

The Associated Press and 40 newspapers, including the Los Angeles Times, are taking one of the print industry's largest revenue sources, preprinted advertising inserts, to the mobile, digital world.

The AP's iCircular business will embed coupons and advertisements like those found bulking up the Sunday editions of newspapers into the mobile websites and apps of newspapers on smartphones and tablets.

The digital coupons and ads began rolling out to newspaper mobile sites on Monday in a testing phase, the AP said.

"You've always relied on your Sunday newspaper ads for great deals and savings. Now you can have the best of both worlds -- look at your inserts at home, then take them with you on your mobile phone," the AP said, describing its iCircular business in a statement.

The ads and inserts can be accessed through a newspaper's app or mobile site in a new built-in "deals" tab. A tap of that tab on the touchscreen devices and "you'll find all of the merchandise and products contained in your weekly preprint -- browse retailers' store ads and view product information, plus you'll be able to make a shopping list, get directions to the closest store, share with family and friends, plus many other great features and tools," the AP said.

Preprinted advertising and coupon inserts are one of the few major revenue sources for the newspaper industry, which, as noted by the site PaidContent.org, has experienced 20 consecutive quarters of advertising revenue declines.

iCircular is available to newspapers as essentially a pre-built addition that can be added to a newspaper's mobile site or app, sort of the same way that the advertising circulars are preprinted and inserted into newspapers themselves. Currently, iCircular is available as an HTML 5 insert for mobile site or an insert for apps built for Apple's iOS, which runs on the iPhone and iPad. An Android version of iCircular isn't yet built, but the AP is working on it, PaidContent said.

The program is open to all newspapers, not just papers that pay the AP for its wire service of photos, stories and video, though the AP didn't offer details on how much iCircular might cost a newspaper to implement. During the testing phase, the mobile ads are free to retailers and will later become an advertising option alongside the preprinted circulars.

For now, 20 national retailers are taking part in the iCircular testing phase, such as JCPenney, Kohl's, Kmart, Macy’s, Staples, Target, Toys R Us, Walgreens and Wal-Mart. Some regional and local retailers, such as supermarkets, are taking part in the testing phase as well.

Among the other newspapers taking part are the Chicago Tribune (which, like the L.A. Times, is owned by the Tribune Co.), New York Daily News, Philadelphia Inquirer, Dallas Morning News, San Francisco Chronicle, Boston Globe, Atlanta Journal-Constitution and "other representatives of nearly every major newspaper company," the AP said.

So, can print coupons and ads be successfully translated onto a three- or four-inch smartphone screen? Will this give readers a reason to not buy the Sunday newspaper?

Rick Edmonds, a writer for the Poynter Institute who does research on the business side of journalism, said in a blog post that iCircular looked good after he was able to demo the digital insert last week.

The preview, and an interview with those heading up the iCircular business, "left me convinced that more than a year of tinkering in the lab has produced a credible digital replica of the printed insert," Edmonds said in a blog post.

"I don't have a crystal-ball prediction on whether iCircular will fly high or flop," he added. But, "a significant presence in smart-phone commerce would count as an important business win for an industry that hasn't had many lately."

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Image: Screen shots of the AP's iCircular advertising and coupon inserts in the mobile apps of the Fort Worth Star-Telegram and the Quad City Times. Credit: Associated Press iCircular

Facebook had 1 trillion page views in June, according to Google

Facebook hit 1-trillion page views in June, according to Google.

But that staggering number on Facebook's traffic is just what's served up by Google's DoubleClick Ad Planner rankings, which compile data on Web traffic "from a variety of sources including anonymized, aggregated Google Toolbar data" and data from Google's DoubleClick ad management service.

There is, of course, Web traffic that takes place without the eyes of Google peering in and so one could guess that Facebook is past the Google DoubleClick monthly estimate. Mind boggling.

Also massive: Facebook had a 46.9% reach among all the Web surfers tracked by DoubleClick.

According to the Google data, Facebook had about 870 million unique visitors in June. Facebook has said it has more than 750 million users. The website Techland guessed that the disparity between the two numbers is likely due to visitors to Facebook who don't have, or weren't logged into, Facebook user accounts -- sounds like a good guess.

Google doesn't include Google.com or Gmail and other Google services in its monthly DoubleClick Ad Planner rankings. But YouTube, a Google-owned website, does get included and came in second in June with 790 million visitors, 100 billion page views and about a 42.6% reach of those online.

Yahoo, a Google rival, took third place with 590 million visitors in June, 78 billion page views and a reach of 31.8%, the rankings said. But a win for Yahoo is also a win for Microsoft's search engine Bing, which powers Yahoo's search.

Bing, on its own and without Yahoo, ranked 11th on the list with 230 million unique visitors, 9.6 billion page views and a reach of 12.4%, according to the DoubleClick data.

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Photo: Facebook Chief Executive Mark Zuckerberg speaks during a news conference at Facebook headquarters in Palo Alto in July. Behind him is a map of the location of Facebook's users worldwide. Credit: Justin Sullivan / Getty Images

Google agrees to $500-million settlement over online drug ads

Online search giant Google Inc. has agreed to pay $500 million to settle federal claims that it sold ads to online Canadian pharmacies that targeted U.S. consumers, leading to illegal imports of prescription drugs.

Under the settlement, Google forfeited the revenue it received from the pharmacies plus the revenue those companies gained from their sales through Google’s AdWords program.

The Justice Department said the forfeiture was one of the largest ever in the United States.

Google said it first set the money aside for this settlement months ago and disclosed that it might settle with the Justice Department in a SEC filing in May.

"This settlement has already received extensive coverage as a result of our earlier filing back in May," the Mountain View, Calif., company said. "However, we'd like to make clear that while we banned the advertising of prescription drugs in the U.S. by Canadian pharmacies some time ago, it's obvious with hindsight that we shouldn't have allowed these ads on Google in the first place."

As a part of the settlement, the Justice Department said that Google has also agreed to "a number of compliance and reporting measures which must be taken by Google in order to insure that the conduct described in the agreement does not occur in the future," though the department didn't specify what those measures were.

Shipping prescription drugs from pharmacies outside the U.S. to stateside consumers "typically violates the Federal Food, Drug and Cosmetic Act and in the case of controlled prescription drugs, the Controlled Substances Act," the department said, adding that Google was aware of this as far back as 2003.

"This settlement ensures that Google will reform its improper advertising practices with regard to these pharmacies while paying one of the largest financial forfeiture penalties in history," said Deputy Atty. Gen. James Cole in a statement.

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Photo: A Google logo at Google's headquarters in Mountain View. Credit: Kimihiro Hoshino/AFP/Getty Images

LinkedIn 'social ads' will stop displaying users' names, photos

LinkedIn will no longer turn its users into unwitting cheerleaders for products and services, the professional networking site said Thursday.

LinkedIn users began protesting this week a new form of advertising on the site called "social ads" that  used individual user's names and photos to promote products or services they recommended or companies they followed.

The company said Thursday that it would stop displaying users' names and photos in ads. Instead, social ads will tell you when people in your network recommend a product or follow a company.

LinkedIn is not the first social networking site to tap into the power of recommendations from friends. And it's certainly not the first to automatically include members in features. But the practice of making users opt out, instead of asking them to opt in, has alarmed privacy advocates and officials in the United States and in Europe.

"What we've learned now, is that even though our members are happy to have their actions, such as recommendations, be viewable by their network as a public action, some of those same members may not be comfortable with the use of their names and photos associated with those actions used in ads served to their network," Ryan Roslansky, a director of product management at LinkedIn, said in a blog post.

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Screen shots: LinkedIn's social ads before (top) and after (bottom)

Google's Eric Schmidt to testify at September Senate hearing

We have a date: Google Chairman Eric Schmidt will face a U.S. Senate antitrust subcommittee hearing Sept. 21.

The hearing, held by the Senate's Subcommittee on Antitrust, Competition Policy and Consumer Rights is officially called "The Power of Google: Serving Consumers or Threatening Competition?" and so far, the only witness announced is Schmidt, who will face questions regarding the Internet giant's dominating role in the online search market and search advertising.

The Senate announced the hearing's date and time Thursday.

Schmidt ended a 10-year run as Google's CEO in April, stepping aside for co-founder Larry Page.

Google is also dealing with an antitrust investigation conducted by the Federal Trade Commission, as well as questions from the Justice Department over its proposed purchase of AdMeld, an online advertising firm.

Google has previously said it will cooperate with federal regulators and investigators as they probe into its businesses.

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Photo: Google's Eric Schmidt at the World Economic Forum annual meeting in Davos, Switzerland, in January. Credit: Tomohiro Ohsumi/Bloomberg