Google's Gbuy nears launch

Google's online payment system, Gbuy, is expected to launch June 28, further pitting the Internet giant against industry titan and rival eBay, according to a research note released Friday by a Wall Street analyst.

Gbuy is expected to be free during the initial phase, but merchants may eventually be charged a 1.5 percent to 2 percent per-transaction fee, Jordan Rohan, an RBC Capital Markets analyst, said in his research note. A fee of that size would be slightly less than that charged by eBay's online payment system, PayPal.

Google was not immediately available to comment.

"The brilliance of Google's Gbuy merchant-to-consumer payment platform lies in what Google may do with the transactional data it captures from the thousands of merchants that may ultimately offer Gbuy," Rohan said.

Google is able to gather the data when users click on a merchant's Gbuy feature. Consumers are then transferred to Google's Gbuy site, where they complete the transaction.

Google's payment system, as a result, holds the potential to monitor which paid-search results users click on and of that group, which ones turn into actual sales. With that information, Google may find itself in the enviable position of being able to identify which categories bring in the highest return on investment for advertisers, Rohan stated.

But Derek Brown, an analyst at Pacific Growth Equities, cites other reasons why the data may prove valuable to Google.

The data could provide useful guidance on where to place its sponsored links, in order to generate higher traffic, as well as give greater insight into the buying habits of its users. And that, as a result, may prompt the Internet titan to deliver targeted ads to those users, Brown said.

Some merchants, however, may fear that Google would use this information to deactivate keywords and then require a merchant to pay a higher minimum bid to reactivate the keyword, Rohan said.

But merchants may find the lure of having the Gbuy logo next to their sponsored search link too appealing to pass up, even if it potentially means giving Google a closer view into their business, Rohan noted in his research note.

"From the merchant's perspective, the placement of a Gbuy logo and the designation as a 'trusted Gbuy merchant' will be a point of distinction and theoretically raise conversion rates and traffic," Rohan states in his research report.

Merchants who are already involved in Google's Gbuy beta test are set for a June 28 launch, but those who are new to the program can expect an implementation period of six to eight weeks, the report states.

Yahoo Video to compete with Google and YouTube

Yahoo is taking on Google and start-up YouTube with a service that allows users to upload and share their videos.

Yahoo Video, launched on Thursday, will compete directly with Google Video but will initially earn revenues only from advertisements placed on its pages.

Google’s service charges users to view some videos provided by media companies.

YouTube has popularised the uploading of home videos and TV and movie clips, becoming the fourth-largest social networking site worldwide.

It had some 38m unique visitors in April, up 1,200 per cent over six months, according to the comScore research firm.

Yahoo has lagged behind its rivals, although it has offered a video search service since December 2004 and has delivered music videos over its Launch service now renamed Yahoo Music.

Yahoo Video will incorporate the search feature and will find videos on Yahoo Music. It will also show results from across the web as well as videos uploaded to its own servers by users through a new service called Yahoo Studio.

The company said it would stand out from its competitors in also being able to offer content created by its internal media group and direct feeds from partners such as HBO, Viacom and Warner Brothers.

Yahoo is also emphasising social networking features – users will be able to rate content and tag it with labels, create favourites lists and share them with other users.

Content can be shared via its Yahoo Mail and Yahoo Messenger programs and videos can be made to play from inside users’ own personal web pages.

“We’re combining core search with personal interactions to improve results,” says Jason Zajac, general manager of social media.

“As the video space continues to emerge, our strengths in search, content, personalisation and community make it possible for Yahoo to offer a highly engaging video experience for both users and publishers.”

Full integration with Yahoo’s other social networking tools will not be immediately available.

It has acquired a number of “Web 2.0” companies, including the photo-sharing site Flickr, tagging site del.icio.us and events service upcoming.org.

How We Use the Web Today

A new study presents one of the clearest pictures of how people get their fill of Web-based media, especially at work.

Study: Web is the No. 1 media

Web media is the dominant at-work media and No. 2 in the home, according to a new report from the Online Publishers Association.

The Web also ranked as the No. 1 daytime media.

A research project, conducted by Ball State University's Center for Media Design, tracked the media use of 350 people every 15 seconds. The subjects represented each gender, about equally, across three age groups: 18 to 34, 35 to 49 and 50-plus. The people were monitored by another person for approximately 13 hours, or 80 percent of their waking day.

"Someone actually came into their homes and workplaces and had a handheld computer, every 15 seconds registering their media consumption and life activities," Pam Horan, president of the Online Publishers Association (OPA), told CNET News.com.

According to Horan, this is the first type of study of its kind. Previously, consumers were monitored for media usage by phone survey or diary method.

Not surprisingly, newspaper use peaked in the morning; that print media was consumed by 17 percent of the subjects between 8 a.m. and 11 a.m. When this media was combined with Web consumption, the potential reach for advertisers climbed to 44 percent. During the same morning period, the number of consumers using magazines jumped from 7 percent to 39 percent, and from 44 percent to 62 percent for television.

"The point is that there is an incremental reach that someone can gain by putting together a multimedia campaign," Horan said.

A conservative estimate from the study says 17 percent of overall media is consumed via the Internet, and Horan notes that other researchers like Forrester have placed that number even higher.

The OPA-commissioned study also used census data to determine the spending habits of its 350 monitored subjects. Web dominant consumers' retail spending averaged $26,450, while the TV-dominant group's spending averaged $21,401.

Yet, studies have shown that only about 8 percent of advertising goes to the Internet, Horan said.

"I hear more and more from marketers that they have shifted their business to be more responsive and realign. There is an active movement by traditional advertisers to be able to explore platform strategies," Horan said. She believes that research studies are attracting the attention of advertisers and media buyers and may result in a faster shift in advertising dollars to match the actual statistics of consumer media usage.

Others agree.

In March, the Pew Internet and American Life Project published a report that found more than 50 million Americans per day in 2005 used the Web as their primary news source. It also noted that news gathering was the third most popular Internet activity. A research report released that same month from the Association of National Advertisers, in conjunction with Forrester Research, indicated that advertising money would likely follow those people.

Researchers conducting the OPA study also found a consistently direct correlation between offline referrals to Web sites and Web traffic. When PBS tells people they can find more info about the topic being discussed on PBS.org, people do go to that Web site. The same was found for print media referrals to online counterparts like the New York Times and NYTimes.com.

CNET Networks is a member of the Online Publishers Association. OPA's Eyes on the Internet 2006 Tour is sponsored by CBS Digital Media, CNET Networks, the New York Times Media Company and Reuters.com, among others.

Net ad spend poised to overtake national press

The internet will this year overtake national newspapers to become the third biggest advertising medium by spend, according to authoritative forecasts.

By the end of 2007, internet advertising will close the gap on regional newspapers, the number two medium, but will still be well short of television, the biggest outlet in the £12bn-a-year media advertising market.

Old media to embrace internet upstarts

High-level media and advertising executives are to meet for a brainstorming session aimed at capitalising on the surging popularity of social networking websites.

McKinsey, the management consultancy, is understood to have asked senior executives from old and new media groups alike – from Yahoo to YouTube – to a session with advertising agencies to discuss ways of turning the hugely popular internet sites containing photos, videos, blogs and other user-generated content into viable media businesses.

The meeting, which could take place in New York within the next month but no date has been finalised.

Plans for the meeting reflect the rapid shifts felt by the media industry as people, particularly younger internet users, spend increasing amounts of time on social networking sites such as MySpace and sharing photos, videos and blogs created by themselves rather than professionally produced content.

In addition, the growth in high-speed internet connections has led to a sharp increase in video viewing on the web. Content from movie studios and television networks is increasingly available online.

So far, advertising linked to online video is estimated to be worth about $300m but this is expected to grow to $1bn within the next few years, according to Merrill Lynch. Of the record $12.5bn spent on internet advertising last year, most of it was spent on search and this remains the biggest source of online ad revenue.

“Advertisers are looking for leadership on how to find ways of reaching the growing audience for user-generated content,” said Aaron Cohen, chief executive of Bolt Media, who is involved in the meeting plans.

The Interactive Advertising Board will be asked to attend the meeting. One of the subjects that could be discussed is whether certain standards should be developed for user-generated content, such as always ensuring that content with ads has been deemed appropriate.

Most online video advertising is linked to professionally produced content, reflecting concerns that home-made content could be inappropriate or offensive.

However, technological advances are making it easier to insert video ads into online content.

The focus of large media companies on ways to attract advertisers to the web is expected to push this area. “Video [on the web] is a big deal,” said Jonathan Miller, chief executive of AOL, last week.

DOMAINS > Domain Parking's New Tack

REDHERRING.COM: Companies are dressing up unused domains with cheap content for profit.

When you type a web address directly into your browser, there’s no guarantee you’ll find what you were looking for. Using a search engine or following a link from another site gives you much better odds. But a growing number of companies are finding profits in showing visitors a good time as long as they’ve stumbled in. It’s nothing fancy or time-consuming—a list of related links, a search engine. Tarting up “parked domains” may become a billion-dollar industry, both for paid search operators like Google and Yahoo as well as a new breed of Internet real estate developers.

Los Angeles-based Demand Media burst out of stealth mode last week, announcing that it had raised $120 million and bought domain name registrar eNom and content provider eHow. Demand Media CEO Richard Rosenblatt says his plan is to put up low-cost content on the 150,000 domains he has acquired—sites like beautifulhomes.com and mobilephone.com—driving up their number of visitors (already 25 million per month) and collecting click-through dollars for sending them to real destination sites. Similarly, Waltham, Massachusetts-based YesDirect, which was formed last year in a buyout of BuyDomains, says it has 650,000 sites with 24 million monthly visitors and tens of millions in revenue.

The companies face the challenge of eliminating trademarks from their growing portfolios of domains, as approximations of brand names often end up in collections after search engine marketing speculators try them out and drop them. “Cybersquatting” brings its operators millions every month, but it’s being increasingly cracked down on. The World Intellectual Property Organization said in January that cybersquatting disputes over domains such as internetexplorer.com and google.ir rose 20 percent last year, to 1,456 cases, and 84 percent were found in favor of the accusers.

On the other hand, what Demand Media, YesDirect, and publicly traded Marchex want to do—drive up the value of the estimated 5 percent of Internet traffic that comes through direct navigation—isn’t illegal. The industry could be worth a little under a $1 billion.
“It’s a little mercenary,” admits Steven Marder, the CEO of Eurekster, a San Francisco-based startup that makes customizable search engines and has seen revenue streaming in from initial tests with domain farms. “But it’s a really nice sandbox to play in.” Nicesandbox.com anyone?

SOCIAL NETWORKS > FastStats: Social Network War

The battle for the scalding-hot social networking space shows no sign of slowing down, and segment leader MySpace is continually beset by challengers, notably Bebo. According to Nielsen//NetRatings, MySpace and Bebo, respectively, are the fifth- and sixth-biggest brands online in terms of total web page views. During the month of April, MySpace had 2.84 million visitors, 680,000 more than Bebo. Since News Corp. purchased the site in July 2005, MySpace’s audience has grown 295 percent (see Murdoch Buys Intermix: $580M). Over the same time period, Bebo has seen a 162 percent jump in traffic. While MySpace remains the leading social networking site, its users also visit competing sites, and vice versa. According to NetRatings, 698,000 people visited both sites in April. Some 33 percent of Bebo users visit MySpace, while 25 percent of MySpace users visit Bebo. Crossover aside, each of the two sites is increasingly serving different types of users. Sixty-nine percent of MySpace’s audience is 18 or older. A majority of Bebo users (54 percent) are under 18. Both Bebo and MySpace have more than 1.2 million female users, but Bebo’s smaller size means a greater percentage of its users are women. Among social networking sites, Bebo reports the highest number of page views (429) and the greatest amount of time spent online (1 hour 52 minutes) per user each month. Bebo may see some success differentiating itself from MySpace, but competitors continue to make the market dynamic and uncertain (see The MySpace Wannabes).

SOURCE: Nielsen//NetRatings

DIGITAL > Microsoft to buy eBay?

The New York Post created some buzz among those who didn't cut out of town early this (U.S.) holiday weekend by reporting Friday that Microsoft, for several weeks, has been discussing the possible acquisition of online auction site eBay.

The Post cites multiple unnamed sources in its story claiming that Microsoft has considered buying eBay and merging it with its MSN portal in an effort to better take on Google.

"Sources indicate that the talks, while still active, have cooled somewhat in the last two weeks as executives considered antitrust issues," the story says, adding that it's unclear what impact news that Yahoo and eBay have joined forces will have on the talks.

SOCIAL NETWORKS > MySpace seeks link with Google or Microsoft

MySpace, the fast-growing “social networking” site, is in talks to forge a internet search link with either Google or Microsoft, in a move that would confirm the emergence of Rupert Murdoch’s internet site as a significant new power online.

The rapid growth of MySpace has turned it into one of the most attractive potential allies for search engines, which are hunting for new online audiences for their search-related advertising.

The internet site, bought by News Corp last year for $580m (£310m) and which now has nearly 80m registered users, is discussing an alliance that would let one of the search giants supply internet searches on its pages, along with adverts tied to results, according to people familiar with the discussions.

Such deals typically involve the two sides splitting advertising revenues, with the lion’s share going to the website that delivered the audience.

“They are looking for a partner and trying to figure it out,” said a senior executive of one of the internet search companies. “They have a good opportunity to increase the revenue on that property.”

The rivalry over MySpace is expected to echo the competition between Google and Microsoft last year over a link with AOL, which was eventually won by Google after the search company agreed to invest $1bn in the business.

Google and Microsoft are believed to be talking to MySpace. Yahoo is believed to be less interested. The search market is dominated by Google, which in April increased its share of US searches to 43.1 per cent, according to comScore Networks. Yahoo’s share was unchanged at 28 per cent and Microsoft’s share fell slightly to 12.9 per cent.

The rapid growth of social networking sites such as MySpace and Facebook has threatened to tip the balance of power on the internet away from traditional portals and search engines.

Their potential to become the places where many young people spend most of their internet time could make them the “gatekeepers”, or the entry point for online activity.

The rise of the social networking sites has already forced the established internet powers to revise their views of how new audiences will emerge on the internet.

“We’ve looked at this carefully, these online communities will evolve and search will be part of it,” Eric Schmidt, chief executive of Google, said earlier this month. “There’s not going to be a single winner.”

Steve Ballmer, chief executive CEO of Microsoft, added: “All the analysis suggests that’s where all the growth will come from.”

MySpace.com declined to comment on the status of its search negotiations.

Ross Levinsohn, president of Fox Interactive Media, the News Corp internet division of which MySpace is the cornerstone, said last week that improving the technology underpinning the site and making it easier for advertisers to access its users was “still our highest priority”.

Do you Blog?

Yahoo! and eBay Form Strategic Partnership to Further Expand Their Businesses in U.S.

SUNNYVALE and SAN JOSE, Calif., May 25, 2006 - Yahoo! Inc. (Nasdaq: YHOO) and eBay Inc. (Nasdaq: EBAY) today announced a multi-year strategic partnership designed to mutually benefit both companies by better serving their user, merchant, and advertising communities in the U.S. The agreement consists of four major components in the areas of search and graphical advertising, online payments, a co-branded toolbar, and the opportunity to explore "click-to-call" functionality.

"Our consumers will benefit from the combination of Yahoo! and eBay's leading technology and services, providing them with one of the best online experiences," said Terry Semel, chairman and chief executive officer, Yahoo! Inc. "Yahoo! holds a leadership position in all forms of online advertising. This partnership with eBay provides us with a great opportunity to further extend our sponsored search and graphical advertising reach to one of the largest and most active communities on the Web."

"We are thrilled to be working more closely with Yahoo! and we think this agreement represents a great opportunity to benefit our communities and grow our businesses," said Meg Whitman, president and chief executive officer, eBay Inc. "Yahoo! offers an engaged online audience, which drives massive traffic through its rich consumer content and premium services. Working together, we can create more exposure for our properties, which in turn makes them more valuable to our users."

Yahoo! and eBay will begin to roll out the initiatives outlined in the agreement this year. This will include a testing phase that will take place over the next several months, with a plan to achieve full implementation in 2007.

Further details of the agreement include:

Search and Advertising:

Yahoo! will become the exclusive third-party provider of all graphical advertisements throughout the eBay.com site, and sponsored search for complementary products on some eBay.com search results pages in the U.S. Yahoo! already provides a broad and deep array of essential services to an extremely engaged audience around the world. Through this partnership, Yahoo! can expand upon these strengths with the addition of eBay.com's high quality online inventory, offering advertising clients an optimal marketing experience.

Yahoo! and eBay have also agreed to collaborate on ways to increase the quality and comprehensiveness of Yahoo! Web search results for eBay.com and to provide Yahoo! search users with more up-to-date listings from the millions of products on the eBay.com marketplace, with the goal to create a better search experience by enabling shoppers to more easily find relevant eBay listings.

Integrated Commerce Payment System:

Yahoo! has selected PayPal to become the exclusive third-party provider of its online wallet - allowing customers to pay for Yahoo! services from bank accounts, credit cards or balances associated with their PayPal accounts. PayPal, which has 73 million accounts in the U.S., also will be deeply integrated on the Yahoo! site and will receive prominent positioning when users purchase Yahoo! services across its network. This offering will provide Yahoo! consumers with additional online payment choices and the option to use PayPal across the entire Yahoo! network.

PayPal will be integrated and promoted as Yahoo!'s payment solution to Yahoo!'s merchants and publishers, which includes the Yahoo! Publisher Network, Yahoo! Search Marketing, Yahoo! Merchant Solutions and other small business services.

Co-Branded eBay Toolbar:

Yahoo! Web search functionality and Yahoo! site links, including the Yahoo! Home Page, Yahoo! Mail and My Yahoo!, will be integrated into a co-branded version of the eBay toolbar. The eBay toolbar has been downloaded by more than four million eBay users to date, and lets consumers quickly link to preferred eBay locations while offering enhanced online protection. This new co-branded toolbar will make it even easier for consumers to take advantage of both companies' offerings to quickly access information wherever they are on the Web.

"Click-to-Call" Advertising Functionality:

Yahoo! and eBay will explore developing and deploying "click-to-call" advertising technologies on their respective Websites in the U.S., accessible by users of both Yahoo! Messenger with Voice and Skype. "Click-to-call" is a product feature link included inside an advertisement that consumers can use to directly call that advertiser to pursue a transaction.

Yahoo! and eBay do not expect this relationship to have a material impact on their financial results in 2006. Both companies will incorporate any financial impact for 2007 and beyond when they deliver their business outlook for those periods.