Microhoo. An Advertiser's Perspective.... we like a strong #2.

It's very interesting to me that 9 months after when rumors of the deal surfaced we actually have a deal AND it's the start of the new year. Good to yah Microsoft exec team. Thank you for stepping up to the plate and doing something about your search share woes.

Something drastic needed to be done while Google continued to extend their overwhelming share (~60%). If #2 Yahoo (~20%) and #3 MSN (~7%) were to make any run on their their own, it would have been a very LONG road by way of infinitesimally small gains. Not meaningful to them and certainly not meaningful to advertisers.

Integration aside (big, nasty, and hairy), I welcome this deal as an advertiser. PPC advertisers for the most part are beholden to Google's supply of goods (traffic, revenue) and what company wants to have one supplier. It's just not smart business.

The new Microhoo as I've dubbed the new company presents not a formidable competitor to Google but one with a fighting chance. All online advertisers should want to diversify their spend away from Google so that they aren't only drinking from the milk of Google. It can certainly be painful you when Google decides to, for whatever reason, shut down your campaigns. And then, that milk tastes pretty bad.

I think a lot of people have not paid attention to anyone outside of Google simply because they were irrelevant. Microhoo has now by way of math 1+1=2 (not saying 3 yet) become more relevant to advertisers. Relevance is good for your customers.

This merger and acquisition, however, needs more than relevance. Ultimately, the new company needs to create/reshape a search product, experience that rivals Google's (easier said than done) AND for advertisers, create a meaningful level of traffic that will deliver on their marketing dollars (i.e. ROI, conversions).

Supplier Power & Google Economy

Earlier this month, Google made a little boo-boo in their Ad Words system whereby they turned off many keywords for their customers and increased minimum keyword bids to very high levels (upwards of $10 a click) that became cost prohibitive to run campaigns. See below the dotted line for their explanation of this.

As a result of this snafu, I thought about all the companies out there who rely on CPC advertising for generating sales for their businesses so that they can pay the bills and their employees. The Google economy is big - with a current run rate of almost $16 billion and backed by a $150 billion market cap.

When parts of this bustling train come to a screeching stop, it reverberates. I am certain (very certain) that this put a mighty scare into all the small to medium (and big) businesses who rely on Google as their primary source for customer/sales acquisition.

Doesn't this make you wonder ...

When will people (meaning businesses) start to realize that they have to build other online channels and spread some of that channel risk around? I guess it's easy to be lazy when your largest supplier is meeting your needs. But no reason to be.

Shouldn't we all be scared of that awful b-school term, supplier power. I'm not a Google hater but there needs to be a much more competitive market in the paid search space so customers can make choices and aren't beholden to a hegemonic supplier (no offense Yahoo and MSN).

In the words of the bellicose Emeril, I would like Yahoo, MSN, et al. to "step it up a notch!"

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Unexpected Minimum Bid Increases

Last Friday, during a routine infrastructure update, we experienced a technical issue that significantly increased the minimum bids for some keywords. Because the maximum CPC for these keywords was not changed, a number of impacted keywords became inactive for search, resulting in fewer leads for some advertisers. This technical issue was completely unrelated to the Quality Score updates that we have planned for later this week. We sincerely apologize for any disruption that it may have caused to your traffic. Below, we've answered a number of questions that we've heard since Friday:

When was this issue resolved?
This issue was resolved by our engineers on Saturday morning (PST) for the vast majority of impacted keywords. The minimum bids for these keywords have since returned to normal.

Will you be issuing credits?
Once we have completed our analysis of the impact, we'll automatically issue credits to advertisers who overpaid due to this issue. As soon as these credits have been applied, we'll email the affected advertisers to let them know.

I paused some of my ad groups because the minimum bids increased and they are still unusually high. What should I do?
If you paused any of your ad groups on Friday due to this issue, we recommend that you unpause them, but do not raise your maximum CPC. Unpausing your ad group should allow the minimum bid to return to normal without taking any other action.

Will this happen again?
Our engineers have been working tirelessly to understand why this issue occurred and to ensure that the proper measures are in place so that this is not repeated in the future.

Does this issue reflect the upcoming Quality Score improvements?
No, this issue is not related to our upcoming Quality Score improvements, which remain scheduled for later this week.

We greatly apologize for this issue. Please let us know if you have additional questions that you'd like us to answer on the blog.

Posted by Sarah, Inside AdWords crew

Google's Play into Real Estate

Google's foray into Internet domination continues. Watch out Craigslist, Realtor.com, Ebay, et al.

It was announced yesterday that the company is teaming up with Trulia, one of more interesting online real estate plays today, to host real estate listings with a company called Realogy. It makes sense to me.

Real estate listings are a big draw for consumer eyeballs and this type of hot inventory is the way to start building momentum on Google Base, their searchable database. In online real estate, it's not easy for any ABC company to scale listings nationally due to the fragmented nature of the MLSs. MLSs are essentially little fiefdoms across the country who still control the distribution of property listings within their "jurisdictions." (That will slowly erode over time.) It's this reality that allows Realtor.com to maintain its hold as the #1 property listings site because of their special relationship with the National Association of Realtors (NAR).

Google's partnering with Trulia who already uses their technology (Trulia is a mashup) and a Realogy who has a base of core listings allows Google to put in a stake in the ground on real estate content.

This does beg the question of how much market power and reach Google will eventually achieve in all categories and verticals on the web. They've upped the ante in the game for online real estate players who's focus has been building a consistent pipeline of traffic to their site - giving consumers another choice/option for listings while building another channel for their advertisers to reach such consumers.