Permanent linkLima Consulting Group participates in Click Fraud Index research with the leading industry researcher, Click Forensics. The Click Fraud index provides statistically significant data collected from online advertising campaigns for both large and small companies across all the leading search engines. The recent findings are out and there is good and bad news. First, the bad news. Bad News #1: Click fraud in the content search networks is up from 21.9% to 27.8% which is a 27% jump.
Bad News #2: The overall industry average click fraud rate (which includes keyword, site targeted, and content searches) is up over 10% from last year. (Q1 2008: 16.3% and Q1 2007: 14.8%)
Bad News #3: For the first time in the three years of the data collection, botnets accounted for more than 25% of all click fraud traffic. This means that sophisticated programers are harnessing the power of "bots", meaning that they are using dormant computers left on to run some kind of code designed to spend an advertisers dollars. University computer systems have been historically prone to vulnerabilities in the Microsoft Windws operating system. Enterprising hackers install their software and in low usage hours the machines wake up and become "zombie" computers. This method of click fraud is so difficult to stop because so many computers can be performing the fraudulent activity from various locations the traffic appears normal. Google is taking a lead in developing algorithms to back out the costs that they can attribute to a botnets impact, but these efforts require sophisticated algorithms (think about how hard it must be to write the equation that correlates to the bots movements and activities). To the PhD's Google hires, this must be like chasing ghosts and even by Google's own admission in the white paper is a bit like playing the game where you hit the mole back into the ground.
Now for the good news. In most cases, the click fraud trends have spiked. While it's only one quarter of downward trending, it appears that the fight is beginning to turn in favor of advertisers.
Google recently wrote a whitepaper (The Anatomy of Clickbot.A) listing out some of their efforts and methodologies as to how they are combating the problem by showcasing how they stopped a 100,000 computer botnetwork. While they didn't reveal all of their secret sauce, they illustrate the need for industry watchgroups to collaborate in fighting this problem. The last recommendation in their Whitepaper reads:
Security researchers and corporate IT departments can proactively and more agressively share data and publish results to help the white-hat community prevent, detect, contain, and recover from attacks conducted by miscreants in the underground Internet economy.
Lima Consulting Group works with Click Forensics, so of course we have a bias, but with that said (in the spirit of full-disclosure) solutions such as Click Forensics take a proactive approach in preventing click fraud and relative to the cost of the solution is usually recovered within days.
To read more about the study visit www.ClickFraudNetwork.com Permanent linkIn January of 2008 Omniture completed one of the largest web analytics acquisitions through the purchase of Visual Sciences giving HBX customers the opportunity to migrate to Omniture SiteCatalyst. Since then we have received a lot of inquiries from online marketers for an objective assessment as to whether they should move to SiteCatalyst.
1. HBX customers should begin planning for the move. The product road map for HBX looks very thin.
2. There is no such thing as an “Upgrade” from HBX to SiteCatalyst. The two architectures are fundamentally different and automating a conversion is impractical. Therefore, if you do choose to switch, expect to re-tag pages and undergo a SiteCatalyst implementation from square one.
3. No parallel periods. Once you cutover from HBX you’ll be in the new world of SiteCatalyst. You’ll still have your historical data, but you’ll need reference historical data by hopping between the two systems.
4. On a technical note, SiteCatalyst offers the ability to use standard naming conventions for page views while HBX does not. For sites that are content rich, this was a major drawback in the HBX solution.
5. Check out your Genesis partners ahead of time. The Genesis solutions are generally developed directly between the providing company and Omniture and you should generally have little need to customize the bridge. However, keep in mind that the solution purchased from the partner may need to undergo an implementation that is different than your current HBX install.
6. Using SAINT, or 3rd party integration tools with Omniture may simplify the import of external data sources such as data with Call Centers, IVRs, Customer Relationship Management systems (CRM), In-Store Kiosks, and Point of Sale (POS) data. The biggest challenge here is ensuring that each definition of the field/column is consistent across all systems.
Permanent linkNetSuite’s purchase of OpenAir solidifies NetSuite’s position as the Software as a Service (SaaS) provider for Professional Services firms. As a NetSuite implementation partner, we ran up against OpenAir on occasion and we have a terrific respect for the product. OpenAir is a leading provider of professional services automation solution delivered as SaaS and this acquisition clearly places Netsuite as the leading provider in on-demand services automation for professional services businesses.
While it will take probably six months to a year to fully integrate all of the OpenAir solutions into the Netsuite platform, the NetSuite platform already has a significant set of features designed for professional services firms. Lima Consulting Group has historically focused on serving professional services firms and we are excited about the merger for the following reasons:
- More resources and investment for the OpenAir product. By joining NetSuite, OpenAir gains significantly more resources to continue improving and extending the OpenAir product and continuing to execute the company's vision of revolutionizing how service companies can manage their businesses.
- Breakthrough solutions for automating and managing services businesses. OpenAir and NetSuite are both pioneering leaders in on-demand software. By bringing together OpenAir's deep domain expertise in on-demand Services Automation software and NetSuite's expertise in integrated business suites, we will jointly create exciting, revolutionary new end-to-end business management solutions for professional services companies.
- The integration of OpenAir products into the NetSuite platform. In the short term, the products may be sold separately and NetSuite has not made clear how professional services firms will migrate to NetSuite. We are looking for a release schedule to integrate the OpenAir product into the NetSuite platform but as is typical with mergers of this sort, even that announcement is probably going to take months. Lima Consulting Group believes that NetSuite will merge the the OpenAir technology in its 2009 major release. Announcements of this sort are usually made at the NetSuite partner conference in early October and we would expect that an announcement for a release date would be made at that time. They may surprise us and have an initial roll-out ahead of time for a very limited number of features, but don’t count on it.
- An integration of the OpenAir PSA and PPM Solutions might look like this:
- Integrating OpenAir Professional Services Automation into the Netsuite Platform. The OpenAir Professional Services Automation (PSA) Solution helps project-based organizations increase profits by helping professionals perform their jobs more effectively and by providing managers and executives with clearer, more immediate visibility into the key operational and financial metrics. Combining NetSuite’s general ledger application with OpenAir’s project management, resource management, and project accounting features will improve operations, allow executives to manage by metrics and optimize profits by providing precise, quantifiable, real-time insights.
- Integrating the OpenAir Project Portfolio Management (PPM) Solution with the NetSuite platform will allow executives increased visibility to the status of projects, portfolios and resources. This insight enables managers to align projects and resources to match business objectives. Executives can make smarter, more informed decisions, improve their return on human capital and IT investments, and maximize employee productivity while minimizing project risks. This solution will be particularly useful to organizations that have a significant professional services staff such as accounting firms, ad agencies, consulting firms, law firms, event planning and destination management companies, software development firms, IT services and computer maintenance and support companies. It also might be an interesting use of franchises that offer services in support of one another or non-profits that also bill out their staff for special projects as a source of revenue.
- Lima Consulting Group hopes that NetSuite maintains OpenAir’s Defense Contract Audit Agency (DCAA) Compliant designation. The OpenAir solution is DCAA Compliant meaning that the software is on a list of approved Commercial-Off-The-Shelf (COTS) software that government contractors can use. It is likely that they will bring the platform into DCAA compliance now and in the short term, they might create this capability as a module in the future. We don’t think that will last forever though since many of the DCAA features would require very tight integration into the programming of the core NetSuite application.
- NetSuite recently announced that they opened their platform up to multi-national corporations through their introduction of global accounting, CRM, e-commerce, and business intelligence. They have versions for multi-national businesses with multiple subsidiaries and single-country businesses with multiple subsidiaries. Combined with the OpenAir product, the eventual integration of on-demand project management solutions for virtual teams offers a very compelling value proposition for geographically separated and virtual teams.
- Early adoption promotions. For companies who are already considering both OpenAir and Netsuite, NetSuite announced that they have special incentives to reward their early investment.
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Microsoft acquisition bid for Yahoo! isn't enough for Yahoo!'s liking (they wanted another $5 billion), Yahoo! collaborates with Google to runs Adsense technology for about 3% of Yahoo ads, and Google manages to walk away having left both firms with reductions in their stocks prices. It's as if the youngest sibling set things up to get his older brothers in trouble and walked away smiling while mom scolded them. So here is why the oldest brother (microsoft) says that the Google / Yahoo! partnership wouldn't work for them. Ballmer's bullets are in black, my opinions below are in red.
•First, it would fundamentally undermine Yahoo!’s own strategy and long-term viability by encouraging advertisers to use Google as opposed to your Panama paid search system. This would also fragment your search advertising and display advertising strategies and the ecosystem surrounding them. This would undermine the reliance on your display advertising business to fuel future growth. Absolutely right. It also would slow the pace of search innovation at Yahoo given that the collective data about PPC analytics would be shared with Google. Remember that search innovation stems from having access to the trends of searches. Google will be able to learn how users are searching on Yahoo! and Yahoo won’t learn how users use Google. With more data, Google should be able to benchmark use and develop innovative products faster than any competitors or collaborators.
•In addition, it would raise a host of regulatory and legal problems that no acquirer, including Microsoft, would want to inherit. Among other things, this would consolidate market share with the already-dominant paid search provider in a manner that would reduce competition and choice in the marketplace.
While Microsoft has rarely sidestepped a court battle it can’t afford to lose (which means it takes on just about all comers) this battle would be bad news for everyone in the industry as it would undermine the public’s confidence in the search market. This is like letting the wolf guard the hen-house in that the major search providers would be in a position to collaborate fixing the prices of pay per click searches.
•This would also effectively enable Google to set the prices for key search terms on both their and your search platforms and, in the process, raise prices charged to advertisers on Yahoo. In addition to whatever resulting legal problems, this seems unwise from a business perspective unless in fact one simply wishes to use this as a vehicle to exit the paid search business in favor of Google.
His taunt to Yahoo! was not lost to Wall Street and the stock price dropped about $1.50 or 6% since Friday.
•It could foreclose any chance of a combination with any other search provider that is not already relying on Google’s search services. Accordingly, your apparent plan to pursue such an arrangement in the event of a proxy contest or exchange offer leads me to the firm decision not to pursue such a path. Instead, I hereby formally withdraw Microsoft’s proposal to acquire Yahoo!.
Sounds like Microsoft wants a monogamous relationship, and while Yahoo’s lawyers could setup non-exclusives between Yahoo and Google, Microsoft wants none of it. In the end, Yahoo’s willingness to date Google on the side while in strategic discussions about "marriage" with Microsoft must have been a point of contention for some time. I'm sure this came up in January when Yahoo and Microsoft started discussions.
Was Yahoo naïve to think they could date Google while they were talking about being bought with Microsoft? Does Ballmer’s backhanded taunt actually have some truth in it about Yahoo selling the search business? Why would Yahoo be so careless if they didn’t feel comfortable in their own strategy? Was it foolhardiness or deperation? For now, I suspect that it was Google who is managing the situation by offering a sweet deal to Yahoo! to run the test and that there will be a major announcement, although I do not think that the announcement will come anytime soon. Google had to act to thwart the Microsoft deal just enough to get them to go away. With Microsoft gone, they’ll go back to a turtle’s pace in actually doing anything with this test of running 3% ads in behalf of Yahoo!. By early 2009 we should see an outcome from these tests that results in some new product development strategies for both companies, but I do not anticipate anything more and probably no references to the tests since I think it's something none of the companies want to remember. I do not believe there will be any mergers or acquisitions for the time being because it would undermine the public confidence in search marketing. That isn’t something that any of these companies wants to do. Permanent link
Here is the text of the letter Microsoft CEO Steve Ballmer sent to Yahoo chief Jerry Yang after talks broke down on Saturday.
May 3, 2008
Mr. Jerry Yang
CEO and Chief Yahoo
Yahoo! Inc.
701 First Avenue
Sunnyvale, CA 94089
Dear Jerry:
After over three months, we have reached the conclusion of the process regarding a possible combination of Microsoft and Yahoo!.
I first want to convey my personal thanks to you, your management team, and Yahoo!’s Board of Directors for your consideration of our proposal. I appreciate the time and attention all of you have given to this matter, and I especially appreciate the time that you have invested personally. I feel that our discussions this week have been particularly useful, providing me for the first time with real clarity on what is and is not possible.
I am disappointed that Yahoo! has not moved towards accepting our offer. I first called you with our offer on January 31 because I believed that a combination of our two companies would have created real value for our respective shareholders and would have provided consumers, publishers, and advertisers with greater innovation and choice in the marketplace. Our decision to offer a 62 percent premium at that time reflected the strength of these convictions.
In our conversations this week, we conveyed our willingness to raise our offer to $33.00 per share, reflecting again our belief in this collective opportunity. This increase would have added approximately another $5 billion of value to your shareholders, compared to the current value of our initial offer. It also would have reflected a premium of over 70 percent compared to the price at which your stock closed on January 31. Yet it has proven insufficient, as your final position insisted on Microsoft paying yet another $5 billion or more, or at least another $4 per share above our $33.00 offer.
Also, after giving this week's conversations further thought, it is clear to me that it is not sensible for Microsoft to take our offer directly to your shareholders. This approach would necessarily involve a protracted proxy contest and eventually an exchange offer. Our discussions with you have led us to conclude that, in the interim, you would take steps that would make Yahoo! undesirable as an acquisition for Microsoft.
We regard with particular concern your apparent planning to respond to a “hostile” bid by pursuing a new arrangement that would involve or lead to the outsourcing to Google of key paid Internet search terms offered by Yahoo! today. In our view, such an arrangement with the dominant search provider would make an acquisition of Yahoo! undesirable to us for a number of reasons:
•First, it would fundamentally undermine Yahoo!’s own strategy and long-term viability by encouraging advertisers to use Google as opposed to your Panama paid search system. This would also fragment your search advertising and display advertising strategies and the ecosystem surrounding them. This would undermine the reliance on your display advertising business to fuel future growth.
•Given this, it would impair Yahoo’s ability to retain the talented engineers working on advertising systems that are important to our interest in a combination of our companies.
•In addition, it would raise a host of regulatory and legal problems that no acquirer, including Microsoft, would want to inherit. Among other things, this would consolidate market share with the already-dominant paid search provider in a manner that would reduce competition and choice in the marketplace.
•This would also effectively enable Google to set the prices for key search terms on both their and your search platforms and, in the process, raise prices charged to advertisers on Yahoo. In addition to whatever resulting legal problems, this seems unwise from a business perspective unless in fact one simply wishes to use this as a vehicle to exit the paid search business in favor of Google.
•It could foreclose any chance of a combination with any other search provider that is not already relying on Google’s search services.
Accordingly, your apparent plan to pursue such an arrangement in the event of a proxy contest or exchange offer leads me to the firm decision not to pursue such a path. Instead, I hereby formally withdraw Microsoft’s proposal to acquire Yahoo!.
We will move forward and will continue to innovate and grow our business at Microsoft with the talented team we have in place and potentially through strategic transactions with other business partners.
I still believe even today that our offer remains the only alternative put forward that provides your stockholders full and fair value for their shares. By failing to reach an agreement with us, you and your stockholders have left significant value on the table.
But clearly a deal is not to be.
Thank you again for the time we have spent together discussing this.
Sincerely yours,
/s/ Steven A. Ballmer
Steven A. Ballmer
Chief Executive Officer
Microsoft Corporation
Permanent linkWe’re past the point where the early adopters are getting funny looks when they mention that they’ve moved their General Ledger and CRM systems to internet based applications. The fast followers and early mainstream adopters are just getting warmed up and the industry is entering the steep growth part of the S-Shaped Adoption Curve. There are four on-demand technologies influencing these trends. Mid-sized businesses in particular need to be watching these trends in the coming two years as they begin to think about their technology budgets and assess the ROI of their internal technical resources.
1. General Ledger Systems (Netsuite)
2. CRM (Netsuite , Salesforce.com, Siebel On Demand)
3. Content Management Systems (Ektron, Omniture Publish, Sharepoint)
4. Web Analytics Platforms (Omniture, Unica, Webtrends)
Of these four trends, the one most overlooked is the Web Analytics Platforms. It deserves much more attention with the difficult economic enviroment because marketing officers need to be able to quantify in terms of revenue what a slash in their budget will do to revenues using real numbers and through unequivocal reporting. The integration of lead management with General Ledger Systems provides the CMO the needed firepower to keep the marketing budget even in a downturn.
The industry leader in Online Marketing Platforms is Omniture. With their acquisition of Visual Sciences and Offermatica, it will take a behemoth (such as Yahoo!) to acquire one of their competitors to present any serious threats of a rivalry. With the Omniture Platform as a Service (PaaS), companies can integrate their general ledger, CRM, and e-commerce applications with their pay per click bid management system, and e-mail marketing applications.
Omniture recently integrated the Offermatica platform, which enables multivariate testing of e-mails and landing pages. They also just integrated sophisticated keyword portfolio features that take integrates Harry Markowitz’s Modern Portfolio Theory. Using higher-order math the platform optimizes the portfolio of keywords using the Efficient Frontier model that earned Markowitz his Nobel Prize in Economics. If that weren’t enough, they ran the play that gave Salesforce.com so much attention, they created their own version of the AppXchange. Omniture calls it Genesis.
So, a prediction from Lima Consulting Group, Platforms as a Service, while adopted by the trend setters so far, is about to explode in the market. The recession will put more pressure on marketing and technology budgets and new models will be widely explored this first cycle and widely adopted once we start coming out of the downturn.
Permanent linkHow Much are Super Bowl Ads Worth and What Re-sale Value Do They Have?
Every year I enjoy seeing how much better the Super Bowl ads are getting at driving traffic to their websites. Whether it was "in-game" advertising encouraging users to go to www.myspace.com/superbowl (a company owned by FOX, who carried the super bowl), or Go Daddy encouraging users to check out the video that couldn't be shown on TV (reminscint of Janet Jackson's bad girl antics) or "Doritos Idol" spin off with voting for the best musician on their website, the ideas to drive traffic were the best this year by far. Companies who can afford to advertise during the Superbowl are finally understanding how to boost their online presence and consequently strengthen relationships with existing clients and prospective buyers through awareness campaigns.
Nothing was more self-serving than Fox, the company paid to air each $2.7 million 30 second ad, who promoted the Myspace page that they own to drive viewers to the Super Bowl ads at Myspace. How does MySpace make money... by selling ad space. So the deal is that you can go view the Super Bowl commercials and while you're doing that, they're going to present additional ads to you (the ad I saw said that it will reveal the name of my soulmate - ooohh). Insidious!
Takeaway: We've all heard it before, Content is King. Compelling content, even in the form of a 61 Super Bowl advertisements, has value on the internet. Find a five star rated ad (this link is for You Tube because MySpace doesn't have ratings for video! - they made a big mistake there) and tell me you didn't laugh!
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