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Local search site Local.com has integrated local video ads throughout its site. Initially the ads will come from Jivox, an online local video advertising provider. Eventually, the video ads will expand to include more providers.

“We believe that video advertising provides consumers with relevant, timely information about local businesses, products and services. It’s natural for video to be integrated into our local search ecosystem over time,” said Kim LaFleur, Local.com vice president, product management. “Local video bridges the product gap that exists between businesses that advertise in print, but perhaps don’t have the budget to move to television advertising yet, and unlike TV advertising, ROI is fully trackable. We plan to incorporate additional video capabilities and syndication to our network next year.”

Related Reading:
Local.com Partners with Hearst’s White Directory Publishers
Local.com Launches Ratings and Reviews Engine
Local.com Renews With Yahoo As Search Partner

Online publishers are increasingly turning to ad networks to sell unused inventory, according to a study released by the International Advertising Bureau (IAB) and Bain & Company.

In 2007, ad network accounted for 30% of total ad impressions, up fro 5% in 2006.

Two reasons were given for the growth:

• Interviews with online publishers, conducted as part of the study, indicate that the lack of adequate pricing tools and inventory management discipline contributed to the growth in available ad space. This is causing publishers to seek out ways to sell large inventories of unsold ads. Publishers often lack basic information on realized prices and inventory sold by client and channel, limiting management’s ability to make effective decisions.
• Large marketers continue to shift significant portions of their advertising budgets online and view ad networks as an effective way to achieve greater buying scale and drive down CPMs.

“What this benchmark study tells the industry is that there is a need for more sophisticated yield management on the part of premium publishers, for stronger partnerships between publishers and ad networks, for development of best practices, and more focus on the value of interactive advertising,” said Sherrill Mane, senior vice president, Industry Services of the IAB. “Our industry is at an important juncture and now is the time for publishers to adopt strategic approaches to the use of ad networks who themselves have become critical players in the digital ecosystem.”

Here are additional nuggets of information from the study:

• Overall, online publisher revenues grew by a healthy 32% in 2007 versus 2006, yet ad network revenues grew more rapidly (in excess of 50%), as marketers boosted online spending
• High demand for premium video inventory resulted in CPMs 2-3 times greater than display ads on average.
• Most publishers in the study lack information to closely measure the impact of cross-platform sales, though most indicate focus on using cross-platform to drive volume, not price.

Related Reading:
Two Large Ad Networks Embrace Behavioral Targeting
Local Advertisers Shifting Dollars to Internet

Analytics firm Covario says Yahoo gained paid search advertising at the expense of Google in the second quarter of 2008.

Covario also said that paid search has gone through a “compression” period, where growth has declined from 52% to 43%.

“Our client roster inspired us to launch this analysis series due to our customers’ unique positions in the advertising ecosystem – they are US-based, but also global in the scope regarding their paid search advertising programs, so they tend not to be retailers or ecommerce vendors who focus on one geographic region,” said Craig Macdonald, vice president of marketing and product management at Covario. “It is very exciting for us to be able to observe first-hand such trends as the bucking of the biggest losing streak in the paid search market – the loss of market share by Yahoo to Google.”

Of course, Google has seen a decline in clicks and search ads they attribute to increasing quality of their ads. That reasoning worked for Q1 results, which blew away Wall Street expectations, based largely on analytical data. Q2 disappointed the street, but so did Microsoft and Yahoo.

The theme of Microsoft Advance ‘08 is “Connected Entertainment:” mobile, music, TV/video, gaming. The big Live Search announcement will be covered live tomorrow.

Today, filmmaker James Cameron’s producing partner at Lightstorm Entertainment, Jon Landau said the abundance of digital information and the ability to use technologies opened up a whole new window for Jim didn’t know e3xisted.

James Cameron started making films when they were photochemical emulsions. Now, films are digital.

“The essence of storytelling stays the same,” said Cameron. “Intense CG (computer-generated) scenes with multiple shots doesn’t change that. My greatest horror was the best thing we create would end up like Ark of Covenant and put in a warehouse somewhere. I will make all my films in 3-D. I’ve been banging on the door at Microsoft since I introduced Windows Media 9 with LL Cool J and Bill Gates in 2002. Now I tell them, this is what you guys need to be doing. I’m going to continue to
surf that wave.”

His new film, Avatar, features a man who tries to become a miner by combining his being with an alien during an interplanetary war in which aliens can manifest themselves through human bodies — avatars.

“‘Avatar’ will make people truly experience something,” said Cameron.”One more layer of the suspension of disbelief will be removed. All the syn-thespians are photo-realistic. Now that we’ve achieved it, we discovered CG characters in 3D look more real than in 2D. Your brain is cued it’s a real thing not a picture and discounting part of image that makes it look fake.”

Part of the movie is subtitled because it takes place on alien planet.

Avatar will have a human heart beating at its narrative center. It’s an emotional journey of redemption and revolution; the story of a wounded ex-marine, who’s thrust into an effort to settle and exploit an exotic planet rich in bio-diversity. He eventually crosses over to lead the indigenous race in a battle for survival.

Cameron has created an entire world, a complete ecosystem of phantasmagorical plants and creatures, and a native people with a rich culture and language. The film has a December 2009 release date.

“I don’t know whether will be great film from narrative and critical standpoint,” said Cameron. “The experience of Avatar will be an experience unlike any other movies.”

He started with Microsoft Research looking at the way people see. The project soon moved out of the realm of speculation.

“‘Avatar’ is the single most complex piece of filmmaking ever made,” said Cameron. “We have 1,600 shots for a 2.5 hour movie. It’s not with a single CGI character, like King Kong or Gollum. We have hundreds of photo-realistic CG characters. We were Microsoft’s sandbox for filmmaking beyond the cutting edge.”

During the film he would grab chairs, gather his team, and talk about what they were doing wrong, how to do it better. That just isn’t done on a film set.

The heart of the film technology is a digital asset management system created by Microsoft, which was praised by Cameron and Landau for understanding the arts and filmmaking. The system can track every cloud and every blade of CGI grass in the film.

Cameron noted that Titanic was about how technology let us down. He has always tried to be on cutting edge of what’s going on. The Abyss featured the first photo-realistic CG character. Then “The Terminator” combined CG and human actors. “True Lies” pushed the bar even higher with composite technology.

In “Titanic” as a filmmaker, I struck the perfect balance of technology and the human heart,” said Cameron. “I haven’t forgotten that lesson with Avatar. It’s the best lesson for any filmmaker.”

Cameron also noted the radical changes in film distribution and made a prediction for the future:

“I’m on the fourth screen. The giant screen. Then it scatters down to other screens. It gets more interesting as more means of digital distribution become available to us. The interesting thing the actual movie business going strong. If valued up revenues of what’s lost to piracy, movies doing better now than they ever have. You can have HD screen in your home.

He noted, “Windows organized things spatially. That gave it its power. But we’re not displaying things spatially. What could happen is now that digital cinema revolution has taken place is killer app is 3D. Dreamworks has announced all its animated films will be made and projected in 3-D. Gaming will be changed by 3-D. Consumer electronics people will need to make players stereo-enabled monitors. Future version of Windows should be fully stereoscopic. Smaller devices already are 3D enabled without glasses. If you play “Avatar” on a 50 inch monitor, you’re in the game.”

Cameron said, “This is the ultimate immersive media. It’s my fundamental belief that when you’re viewing media in stereo, more neurons are firing, learning rates are higher. Engagement levels are higher. As advertisers, you need to think about how you’re going to use this new dimension. How will you use the deeper levels of engagement?”

Microhoo bid raised aloft; Google-Yahoo Kool-Aid quaffed. “No Mas” cried Ballmer’s Microsoft.

Yahoo drank the Google paid search Kool-Aid to fight off Microsoft, leading the Redmond giant to retract its higher bid to acquire the Sunnyvale search engine. Microsoft reportedly offered $33 a share, and Yahoo held fast at $37 a share. That was too rich for Steve Ballmer’s blood. The prospect of Yahoo outsourcing its paid search to Google was also too much for Ballmer to stomach.

So Microsoft walked. In a letter to Jerry Yang (full text below), Steve Ballmer cited Yahoo’s intention to outsource search as the primary reason he decided to scotch the deal.

Of course that doesn’t mean enraged Yahoo! shareholders won’t sue Yahoo.

Ballmer wrote, “I hereby formally withdraw Microsoft’s proposal to acquire Yahoo!.”

Here’s why, according to Microsoft’s business logic:

Advertisers would use Google rather than Yahoo! Panama to manage paid search, fragmenting not only PPC but display advertising and the Yahoo! advertising ecosystem.
Yahoo then wouldn’t be able to retain talented engineers working on advertising systems - engineers whom Ballmer considers a key aspect of Yahoo’s attractiveness.

The decision would also create a morass of regulatory and legal problems that no acquirer - especially Microsoft - would want to slog through. Ballmer believes search market share of the combined Yahooo-Google deal would reduce competition and advertiser choice.

Ballmer took the argument one step further, stating the deal would “effectively enable Google to set the prices for key search terms on both their and (Yahoo!) search platforms and, in the process, raise prices charged to advertisers on Yahoo.

While it would be hard to prove a keyword-auction would enable Google or any search engine to “set prices,” the deal would increase keyword prices based on Google’s ability to monetize inventory more efficiently.

Yahoo responded by promising (again) to maximize shareholder value and pursue strategic opportunities. Yahoo still maintains Microsoft undervalued the company.

Yahoo! banged the drum (again) about:

“– a refined strategic focus to drive enhanced volume and yield;

– reorganized to focus its efforts on its most promising products and services;

– invested in innovations designed to revolutionize display advertising and facilitate closing the competitive gap in search; and

– enhanced expense and resource management to support improved profitability.”

As Jerry Seinfeld might have said, “Yadda, Yadda, Yadda, Yahoo.”

Be prepared Monday for Yahoo shares to plummet back to earth. (Full text of Steve Ballmer’s statement after the jump.)

Click to read the rest of this post…

The value of Google’s stock has taken a bit of a beating recently from their high of $747 last year to yesterday’s close at $438. After doing my weekly news review, I saw a lot of articles questioning many actions Google has been doing lately.

Is this pervasive critiquing of Google having an impact of investors’ confidence?

The articles I read this week came from a wide range of sources - not just limited to the search industry specific ones we all know within the industry. (I was at a offline/online media event on Thursday where the majority had not heard of SEW, AussieWebmaster or for that matter Danny Sullivan!)

The firing of people from DoubleClick supposedly slated for April 1, according to ValleyWag, should show investors that they are lowering expenses and thus increasing profits for them. But the general public usually sees the company laying people off after an acquisition as Gordon Gekkoish. The eventual impact should be seen in the coming week as this actually happens.

I was having dinner one night during SES NYC last week, I noticed a friend there who does angel investing and asked him what Google closed at that day to determine who in my party was paying. He knew to the penny as he told me he was shorting Google (now I know where he gets his seed capital).

Then I see an article this morning from the UK Guardian stating Google’s PPC numbers were slowing. Given January had shown zero growth and February’s growth was low single digits compared to previous growth being as high as 30-40%, this spending and growth wall could be a major hurdle for the company’s valuation.

“Google maintains that the deceleration is a consequence of its strategy of focusing on quality. The Silicon Valley firm has been trying to eliminate accidental clicks and has been working with advertisers to make sure that links relate closely to users’ search queries.

But the slowdown has contributed to a 36% slump in Google’s shares since the beginning of the year and analysts are divided on whether the company’s confidence is justified,” the Guardian stated.

This is also challenged a little by recent complaints by advertisers over some of these methods of improving the quality. The $10 Minimum Bid push has lost Google advertisers. The arbitragers squeezing a few pennies from a click have had to drop away (leaving the really good ones at it a cheaper range), but so have the companies that provide legitimate inexpensive products or services very relevant to the people searching from that perspective.

The impact Google is having on other online industries may also be impacting their brand and through that their value. The analytics industry was impacted by Google’s purchase of Urchin and the development of the free services of Google Analytics - so even a popular free service gets flak, and their mistakes are made public quickly as was the case with GA information being displayed in the Google organic results..

There will be an additional backlash from the DoubleClick acquisition. It is going to be hard for the soon to be unemployed to find jobs in the industry as Google launched Ad Manager which offers ad serving for free and thus will hurt the job market in the industry as the competitors lose market share.

The words of Larry Page’s recent Annual Report letter reflect the perspective the founder sees his realm of “users, customers, Googlers (our employees), and investors who help bring everything that is Google to life”.

Part of Google’s success has been in its ability to maintain the “church and state” separation of organic listings and paid search ads. While that is to be commended, isolating customers from the users pool is a little naive - people advertise on Google because they have used Google and want to advertise to similar users.

Google would not still be in business if they had not been able to monetize the popular search engine. When they first started the company was nearly sold to Excite.com for a million dollars, because they could not monetize what they were doing.

With revenues of more than $10 billion last year - 90% of which came from paid search advertising - you would think the customers would take top billing, but the behemoth of search still sees search through the eyes of its users.

” We continue our effort to extract more and more real meaning from the web in order to help people find the right answers. We recently improved universal search, integrating different types of relevant information, such as video, maps, news, books, images, and more, right into your search results.

Sometimes you don’t get a good answer to a search because the information simply isn’t available on the web. So we are working hard to encourage ecosystems that can generate more content from more authors and creators. For example, we recently announced an early version of a tool called “knol” to help people generate and organize more high-quality authored content.”

Watch out Wikipedia your space is soon to be seriously invaded.

And one has to wonder if Google is getting into the conference and hotel business next. Their proposal to develop a parcel of land in the Mountain View industrial park for office space, conference center and a hotel is lodged with the local council.

Wonder if they plan on starting their own search conferences, with attendees staying at the nearby hotel? Are we to see a conference advertising tab soon in our AdWords accounts?

Click to read the rest of this post…

It’s good to be Google, CEO/Pilot Eric Schmidt and Apex Aviation. Big-spending AdWords advertiser and vertical search engine Virgin Charter? Not so much.

Apex gets the Google gold.

Eric Schmidt has the use of a corporate jet that he makes available from time to time to Apex Aviation Corporation for charters by Apex to its customers. This aircraft has been chartered by Google from time to time and made available to certain Google executive officers for time-critical business trips.

In 2007 Google paid Apex $7,000 per hour for use of this aircraft.

(That’s more than some SEOs charge for hourly consultations!)

The Google board of directors approved this hourly reimbursement rate based upon a competitive analysis of comparable chartered aircraft and which Google’s board of directors determined was at or below market rates for the charter of similar aircraft.

In 2007, Google used Schmidt’s aircraft for business-related travel services for certain of our executive officers and we paid Apex approximately $1,107,938 in fees through December 31, 2007.

Bluestar Jets must be singin’ the Blue Star Blues to Google. Great SEO and position in Google. Great Google paid search results. Blue Star follows the 10 Golden Rules of SEM.

It’s not all that bad though. Google runs an auction and doesn’t show any favoritism in this case to big spenders in the Google ecosystem.

Plus, Blue Star Jets reportedly posted their most profitable month ever in February for customers of private jets (46% increase on the month, and 27% increase on the year).

That’s not proof of recession. That’s recession-proof.

At the Mix08 Conference in Las Vegas, Microsoft loudly declared its intentions to increase its share of the search market. Yesterday, Steve Ballmer told a room of 1,500 software developers that the software giant has its eyes set on catching Google.

During a Q&A with Guy Kawasaki, he called search the “killer application” of online advertising which he said will be the next “super big thing” and is the reason for the company’s Yahoo offer.

Ballmer lamented the fact that Microsoft did not get an earlier start in the search game, but maintained that they were still the “little engine that could.” He even rallied the troops by reenacting his famous “Monkey Boy” routine from 2001, but this time gave it a twist by chanting “Web Developers! Web Developers! Web Developers!”

Earlier in the week, during his keynote address, Chief Software Architect Ray Ozzie spoke about how search was driving community-based innovation in the software industry and how the change was affecting online advertising.

“With online advertising projected to grow from $40 billion today to $80 billion over the next three years, advertising is going to continue to be the primary way that we and you monetize services and apps of all kinds of the Web,” Ozzie said. “And so in terms of strategically what is Microsoft’s role in advertising on the Web, the answer is, in short, to do our part and to use the resources that we have to ensure that there’s a vibrant advertising ecosystem on the Web based on a highly competitive ad platform that’s attractive to advertisers, publishers, and developers alike.”

Ozzie also said these changes are affecting the way companies store information. “Most major enterprises are, today, in the early stages of what will be a very, very significant transition from the use of dedicated application servers to the use of virtualization and commodity hardware for consolidating apps on computing grids and storage grids within their data center. This trend will accelerate as apps are progressively refactored, horizontally refactored to make use of this new virtualization-powered utility computing model. A model that will span from the enterprise data center, and ultimately, into the cloud.”

Yahoo, in desperate need of good buzz these days, today launched Yahoo! Buzz, promising to uncover and deliver the most interesting and relevant content from Web sites across the Internet to the Yahoo homepage.

Sounds like a search engine! Social search anyone?

The only problem: Y Live! redux. This was the message on Yodel Anecdotal, Yahoo’s official corporate blog:

“Not Found … Sorry, but you are looking for something that isn’t here. How did I get here?”

I know how I got there, Yahoo. The question is, How did you get here?

We saw your new Y! buzz logo on TechCrunch but not on Yahoo!

Still in beta, the new Yahoo! Buzz allows consumers to vote (Digg) and even submit to Digg and other social media sites.Yahoo! Buzz also uses search patterns to identify stories and videos from news sources and blogs.

The prize? Editorial consideration for feature placement on Yahoo.com.

The audience? More than 500 million users. The final judge? Human editors.

Yahoo! Buzz ranks the most popular content using what Yahoo terms “a unique approach that combines consumer votes with search popularity” to give a story a Buzz Score. The Yahoo initiative creates a lens (Squidoo!) on what people are most interested in to enhance relevance on Yahoo.com, and help publishers deliver content to a wider Yahoo audience.

The goal? To make Yahoo the gateway to the Internet again. The world’s home page.

In its beta phase, Yahoo Buzz has content from nearly 100 publishers, ranging from large online publishing brands to small, influential blogs. It will open up to all publishers interested in having their content included in Yahoo! Buzz.

Participating publishers are given an online ‘badge’ enabling their readers to vote and submit stories to Buzz in real-time. Stories with the highest Buzz Scores will be highlighted via direct links to the publishers’ sites from http://buzz.yahoo.com and submitted to Yahoo.com’s editors for possible coverage on the Yahoo! homepage.

Yahoo “allows” users to submit Buzz stories to social news sites including delicious, Digg, Facebook, Propeller, Reddit and Stumbleupon.

We’d like to see Yahoo try to stop ‘em!

Yahoo Buzz promises to form the basis for an open ecosystem of publishers, advertisers and consumers.

Coming soon: new syndication and monetization tools that enable publishers to share relevant content, connect to more advertisers and reach a broader audience. For example, a Yahoo! Buzz API will enable publishers to add customized Yahoo! Buzz modules or shortcuts to their sites to showcase their own most buzzed items or other popular stories on relevant topics.

Over time, Yahoo expects this to extend into a powerful content exchange that connects owners of content with distributors of traffic.

Adsdaq anyone?

So who were the mystery beta testers? The proponents of the “Free-conomics.” Find out what Yahoo and fire hoses have in common after the jump.

Click to read the rest of this post…

While the Google vs. Nokia global battle escalates (GPS-enabled Nokia phones vs. Google Android-driven handsets), the mobile phone is fast becoming the gateway to the Internet, Wireless Web and local search.

You can imagine the frantic calls lately between Silicon Valley and Redmond:

Steve: “Jerry, have your people call my people.”
Jerry: “Frack off, Steve.”

Yahoo announced a strategic partnership today with T-Mobile in Europe. Yahoo! oneSearch will become the exclusive mobile search service for T-Mobile’s 11 European markets by the end of next month. Yahoo! oneSearch is designed for mobile phones to deliver relevant results and instant answers without navigating through a sea of blue links.

A number of Yahoo! oneSearch partnerships have been announced in the last year. Since introducing Yahoo! oneSearch in early 2007, Yahoo! has signed partnership agreements with more than 29 mobile operators covering more than 600 million mobile subscribers worldwide.

In a statement, Marco Boerries, execute vice president, Connected Life, Yahoo, said, “When we created Yahoo! oneSearch, we had a belief that mobile search was not the same as PC search. A fundamentally different approach was required, one that included different usage models and results filtering. Most importantly, we believed there was no guarantee that success in PC search would automatically translate into similar success in mobile search, creating a real opportunity for those who innovate.”

Recent strategic Yahoo! oneSearch partnerships include AT&T (United States), a global framework agreement with America Movil (16 countries across Latin America), a partnership with Rogers Wireless (Canada), partnerships with 16 operators (Asia Pacific Region), and an agreement with Telefonica (portals in 15 countries in Europe and Latin America). Yahoo! will be the exclusive or preferred mobile search service on the carrier portal.

Yahoo! oneSearch has added Flight Tracker, movie reviews (critics and UGC), and movie trailers (select carriers/handsets), along with Yahoo! Answers and Wikipedia. If you’re lucky enough to read this at the Mobile World Congress in Barcelona, Yahoo will discuss its strategy for the local mobile search ecosystem.

Or, if you’re in New York, join the Search Engine Watch, Search Engine Strategies, and ClickZ teams at the Yahoo Search Spotlight Awards.