Bill Gross on the paid-search Twitter model

Top 100 Websites Ranked by Google

Rank Site Category Unique Visitors (users) Reach Page Views Has Advertising




1 facebook.com Social Networks 540,000,000 35.2% 570,000,000,000 Yes

2 yahoo.com Web Portals 490,000,000 31.8% 70,000,000,000 Yes

3 live.com Search Engines 370,000,000 24.1% 39,000,000,000 Yes

4 wikipedia.org Dictionaries & Encyclopedias 310,000,000 20% 7,900,000,000 No

5 msn.com Web Portals 280,000,000 18.1% 11,000,000,000 Yes

6 microsoft.com Software 230,000,000 14.8% 3,300,000,000 Yes

7 blogspot.com Blogging Resources & Services 230,000,000 14.7% 4,400,000,000 Yes

8 baidu.com Web Portals 230,000,000 15% 27,000,000,000 Yes

9 qq.com Email & Messaging 170,000,000 11.1% 25,000,000,000 Yes

10 mozilla.com Internet Clients & Browsers 140,000,000 9.2% 2,100,000,000 No

11 sina.com.cn Web Portals 130,000,000 8.4% 3,600,000,000 Yes

12 wordpress.com Blogging Resources & Services 120,000,000 7.7% 1,200,000,000 Yes

13 bing.com Search Engines 110,000,000 7% 2,700,000,000 Yes

14 adobe.com Programming 110,000,000 6.9% 1,000,000,000 Yes

15 163.com Web Portals 98,000,000 6.3% 2,700,000,000 Yes

16 taobao.com Shopping 98,000,000 6.3% 10,000,000,000 No

17 soso.com Entertainment 97,000,000 6.3% 1,400,000,000 No

18 twitter.com Email & Messaging 96,000,000 6.2% 5,400,000,000 No

19 youku.com Video Clips & Movie Downloads 89,000,000 5.8% 1,700,000,000 Yes

20 ask.com Search Engines 88,000,000 5.7% 1,700,000,000 Yes

21 sohu.com Web Portals 82,000,000 5.3% 1,900,000,000 Yes

22 amazon.com Shopping 74,000,000 4.8% 3,300,000,000 Yes

23 windows.com Windows 74,000,000 4.8% 490,000,000 No

24 ebay.com Auctions 74,000,000 4.8% 9,400,000,000 Yes

25 yahoo.co.jp Web Portals 72,000,000 4.7% 27,000,000,000 Yes

26 myspace.com Social Networks 72,000,000 4.7% 27,000,000,000 Yes

27 apple.com Mac 72,000,000 4.7% 960,000,000 Yes

28 tudou.com Photo & Video Sharing 66,000,000 4.3% 1,100,000,000 No

29 conduit.com Advertising & Marketing 60,000,000 3.9% 2,000,000,000 No

30 hotmail.com Email & Messaging 60,000,000 3.9% 1,100,000,000 Yes

31 flickr.com Photo & Video Sharing 55,000,000 3.6% 1,800,000,000 Yes

32 photobucket.com Photo & Video Sharing 55,000,000 3.6% 1,100,000,000 Yes

33 tianya.cn Online Communities 55,000,000 3.6% 590,000,000 Yes

34 about.com How-To & Expert Content 55,000,000 3.6% 710,000,000 Yes

35 cnet.com Technology News 55,000,000 3.6% 490,000,000 Yes

36 hao123.com Online Directories 50,000,000 3.3% 1,400,000,000 No

37 iefxz.com 50,000,000 3.2% 270,000,000 No

38 xunlei.com TV Programs 50,000,000 3.2% 870,000,000 No

39 paypal.com Merchant Services & Payment Systems 49,000,000 3.2% 1,900,000,000 Yes

40 rapidshare.com File Sharing & Hosting 46,000,000 3% 800,000,000 No

41 go.com Web Portals 46,000,000 3% 3,000,000,000 Yes

42 fc2.com Blogging Resources & Services 45,000,000 2.9% 2,400,000,000 Yes

43 bbc.co.uk News & Current Events 45,000,000 2.9% 2,500,000,000 Yes

44 imdb.com Movies 45,000,000 2.9% 1,400,000,000 Yes

45 orkut.com Social Networks 45,000,000 2.9% 5,300,000,000 Yes

46 sogou.com Web Portals 45,000,000 2.9% 540,000,000 No

47 56.com Multimedia Content 42,000,000 2.7% 450,000,000 No

48 aol.com Web Portals 42,000,000 2.7% 4,400,000,000 Yes

49 craigslist.org Classifieds 42,000,000 2.7% 14,000,000,000 No

50 rakuten.co.jp Shopping Portals & Search Engines 41,000,000 2.6% 4,000,000,000 Yes

51 imageshack.us File Sharing & Hosting 41,000,000 2.7% 310,000,000 Yes

52 ku6.com Multimedia Content 41,000,000 2.7% 410,000,000 Yes

53 blogger.com Blogging Resources & Services 41,000,000 2.7% 1,700,000,000 Yes

54 goo.ne.jp Web Services 41,000,000 2.6% 810,000,000 Yes

55 ifeng.com News & Current Events 41,000,000 2.7% 860,000,000 Yes

56 linkedin.com Social Networks 38,000,000 2.5% 1,700,000,000 Yes

57 yandex.ru Search Engines 38,000,000 2.4% 7,000,000,000 Yes

58 mail.ru Email & Messaging 37,000,000 2.4% 10,000,000,000 Yes

59 partypoker.com Cards & Casino Games 35,000,000 2.2% 280,000,000 No

60 megaupload.com File Sharing & Hosting 34,000,000 2.2% 880,000,000 No

61 answers.com Dictionaries & Encyclopedias 34,000,000 2.2% 250,000,000 No

62 alibaba.com Management & Corporate Operations 34,000,000 2.2% 800,000,000 Yes

63 hi5.com Social Networks 34,000,000 2.2% 9,500,000,000 Yes

64 cnn.com News & Current Events 34,000,000 2.2% 1,300,000,000 Yes

65 amazon.co.jp Shopping Portals & Search Engines 34,000,000 2.2% 1,100,000,000 No

66 4shared.com File Sharing & Hosting 31,000,000 2% 1,600,000,000 Yes

67 ameblo.jp Blogging Resources & Services 31,000,000 2% 1,300,000,000 Yes

68 gougou.com Web Services 31,000,000 2% 410,000,000 Yes

69 skype.com VOIP & Internet Telephony 31,000,000 2% 370,000,000 No

70 renren.com Social Networks 31,000,000 2% 2,000,000,000 Yes

71 dailymotion.com Video Clips & Movie Downloads 31,000,000 2% 540,000,000 Yes

72 naver.com Search Engines 31,000,000 2% 5,400,000,000 No

73 weather.com Weather 31,000,000 2% 890,000,000 Yes

74 mozilla.org Internet Clients & Browsers 29,000,000 1.9% 210,000,000 No

75 mediafire.com File Sharing & Hosting 29,000,000 1.9% 370,000,000 Yes

76 bit.ly File Sharing & Hosting 28,000,000 1.8% 330,000,000 No

77 hp.com Educational Resources 28,000,000 1.8% 650,000,000 No

78 livedoor.jp Blogging Resources & Services 28,000,000 1.8% 490,000,000 Yes

79 ehow.com How-To & Expert Content 28,000,000 1.8% 190,000,000 Yes

80 nifty.com ISPs 28,000,000 1.8% 660,000,000 Yes

81 vkontakte.ru Social Networks 26,000,000 1.7% 30,000,000,000 No

82 alipay.com Banking & Personal Finance 26,000,000 1.7% 660,000,000 Yes

83 nytimes.com Newspapers 26,000,000 1.7% 600,000,000 Yes

84 overture.com Search Engines 26,000,000 1.7% 230,000,000 No

85 sourceforge.net Open Source 26,000,000 1.7% 230,000,000 Yes

86 fbcdn.net Language Study & Translation 25,000,000 1.6% 170,000,000 No

87 xtendmedia.com Web Design & Development 25,000,000 1.6% 160,000,000 No

88 xinhuanet.com News & Current Events 25,000,000 1.7% 190,000,000 Yes

89 wikimedia.org Dictionaries & Encyclopedias 25,000,000 1.6% 140,000,000 No

90 pconline.com.cn Mobile Phones 25,000,000 1.6% 250,000,000 Yes

91 daum.net Online Communities 25,000,000 1.7% 2,500,000,000 Yes

92 4399.com Online Games 24,000,000 1.5% 800,000,000 Yes

93 bankofamerica.com Banking & Personal Finance 24,000,000 1.5% 2,300,000,000 No

94 ebay.de Auctions 23,000,000 1.5% 5,800,000,000 Yes

95 uol.com.br Web Portals 23,000,000 1.5% 4,000,000,000 Yes

96 filestube.com File Sharing & Hosting 23,000,000 1.5% 250,000,000 No

97 zol.com.cn Hardware 23,000,000 1.5% 310,000,000 Yes

98 mop.com Roleplaying Games 23,000,000 1.5% 250,000,000 No

99 alexa.com Search Engine Optimization & Marketing 23,000,000 1.5% 960,000,000 No

100 biglobe.ne.jp Web Portals 22,000,000 1.4% 370,000,000 Yes

Small Business To Increase Traditional and Online Marketing

According to the FedEx Office third annual Signs of the Times national small business survey, small business owners are eager to lead the charge out of the country's protracted recession, with 72% saying they will be the driving force behind the U.S. economic recovery in 2010. 51% of the small business owners polled say their businesses have already, or will fully, recover by the end of this year.

This optimism is a marked improvement over the survey's findings last year, when 54% of respondents indicated they were very concerned about the economy's impact on their business. 18% of small businesses are considering an increased budget for staffing and HR activities in 2010, up from just 9% last year.

This study also found that 42% of those polled are considering increasing spending on marketing and advertising initiatives in 2010, and 30% say they may increase spending on sales initiatives. Both actions are specifically aimed at boosting customer traffic and revenues.

Randy Scarborough, vice president of marketing for FedEx Office, says "Small businesses are... identifying and investing in the tools that will help them bounce back... print ads, direct mail campaigns, online marketing programs, and a social media presence... maximize their budgets... connecting effectively with new and existing customers... "

Underscoring small business owners' firm belief in the value of traditional and online marketing and advertising:

• In 2008, before the recession was fully felt throughout the marketplace, 41% of those polled were considering increasing spending on marketing and advertising initiatives

• In 2009, with the recession in full-swing, 44% of small business owners reported considering a budget increase in that same area

• This survey shows that 34% made cuts to their marketing and advertising spend last year and 31% say that decision had a negative/extremely negative impact on their business results

87% of respondents report that printed marketing/advertising tools are somewhat to very effective at driving customers to businesses, and 61% believe traditional marketing/advertising methods are more effective than Web-based counterparts at bringing in customers

44% of small business owners plan to grow business in 2010 by increasing communication with existing and potential customers via printed materials like newsletters and direct mailings. These entrepreneurs are also actively leveraging other traditional marketing/advertising tools such as:

• Brochures (43%)
• Yellow Pages listings (39%)
• Flyers and signs/banners/posters (37% each)
• Newspaper advertisements (32%)

The small business owners putting the most emphasis in this area may be older than most would expect. 18-34 year-old small business owners are greater proponents of signs, banners and/or posters (51% for 18-34 vs. 36% for 55+) and flyers/brochures (57% for 18-34 vs. 47% for 55+) as cost effective marketing/advertising tools than older owners.

46% of respondents have plans to grow business in 2010 by improving their company's online presence, while another 36% plan to utilize social media/networking websites to build business.

With many small businesses planning to enhance their marketing and advertising efforts across the board this year:

64% say their marketing and advertising materials are, at best, only somewhat consistent in terms of brand, messaging and overall design

23% of small business owners can't invest in improving these materials due to budget restraints

13% find that they spend more than they should because they don't have the time or resources to find cost-saving deals

Twitter has confirmed the soft-launch of a "Business Center," which consists of various features, including the ability for businesses to accept direct messages on the service -- even from people they don't technically "follow."

"This is huge for businesses that perform customer service via Twitter," notes Mashable. "They can get feedback and deal with private customer issues without having to follow the person back first."

"The Business Center Toolkit will let companies using the micro-blogging site for marketing purposes turn on and off different options and functionality," Venture Beat writes.

"This is Twitter's move to offer specific business services that will enhance Twitter's abilities to serve the business community," notes Marketing Pilgrim. "Eventually this will be another one of those things that will maybe even help Twitter, ummmmm, make money ... How about that?"

Presently, only a small group of business users have received emails from the Twitter team, inviting them to test a so-called "Twitter Toolkit," according to Mashable.

According to Twitter: "Only a handful of accounts have these features presently," while it expects to roll out the features gradually. Twitter is asking participating businesses to "fill out some information which will help us verify your business or organization."

Once a business activates its account, it is automatically verified, which leads Mashable to believe that Twitter has finally decided to expand its Verified Accounts program to brands and organizations.

"Business accounts can also add multiple users so different employees can use the same account," notes Fast Company, adding: "The biggest change is in direct messaging ... Normally, direct messages can only be sent and received by two accounts that are following each other, in order to cut down on spam ... But business accounts allow the receiving of messages from users that account is not following -- this could be useful for customer service, since a business wouldn't have to mess around following every single user who also likes Peet's Coffee or whatever."

Mashable et al

What Google's Earnings Jump And CPC Sequential Revenue Slide Tell Advertising Industry

Google reported Thursday that revenue rose 23% to $6.77 billion for the quarter ended March 31, 2010, compared to the first quarter of 2009. And while earnings continue to improve, profits fell short of analysts' expectations, and sequential cost per clicks had a rocky ride.

Net income rose 37% to $1.96 billion -- or $6.06 a share -- from $1.42 billion, or $4.49 a share, in the year-ago quarter. JP Morgan Analyst Imran Khan had estimated net revenue growth of 2.4% versus Google's 2.2% sequentially.

Aggregate paid clicks, which include clicks related to ads served on Google sites and the sites of AdSense partners, rose 15% in the first quarter of 2010 compared with the year-ago quarter, and 5%, sequentially.

For the most part, advertising held strong, but revenue generated from cost per clicks took a bit of a roller coaster ride sequentially. Average CPC -- which includes clicks related to ads served on Google sites and the sites of AdSense partners -- increased approximately 7% in the first quarter, compared with the year-ago quarter, but declined 4% sequentially.

Google reminded those on a conference call with investors that the company has been releasing tools that help advertisers find long-tail keywords, which might make CPCs vary. In time the tech tools should drive higher revenue from CPCs.

Traffic acquisition costs -- the portion of revenue shared with Google's partners -- rose to $1.71 billion in the first quarter of 2010, compared with $1.44 billion in the year-ago quarter. TAC as a percentage of advertising revenue came in at 26% in the first quarter of 2010, compared with 27% in the first quarter of 2009. TAC relates to amounts ultimately paid to Google's AdSense partners, which totaled $1.45 billion in the first quarter of 2010.

Patrick Pichette, senior vice president and chief financial officer at Google, attributed any declined to seasonal swings, and the company plans to move forward with hiring new people, as well as making investments in search, display and mobile.

Large advertisers have come back in force, Pichette says, which might explain some findings from the Interactive Advertising Bureau (IAB) for 2009, as the industry moved into 2010.

Gian Fulgoni, comScore chairman and co-founder, points to the recent 2009 data from the IAB to provide perspective on industry trends that began to emerge in the first quarter of 2010. "In the fourth quarter search only grew 4% from a year ago, while display grew 15%," he says. "Spending on display ads, for some reason, grew four times faster than search, which raises interesting questions on the types of advertisers that are spending money."

Search revenue rose 4% to $2.9 billion in the fourth quarter of 2009, according to IAB. The industry group reported that display-related advertising -- banner, rich media, video and sponsorship -- accounted for $2.3 billion or 37% of total revenue during the quarter of 2009, up nearly 15% from the $2 billion -- or 33% -- reported in the year-ago quarter.

The advertising industry went through the recession toward the end of 2008 and through 2009. Ad spending slowed. During this time display and search ads were basically flat, Fulgoni says. "Then companies started spending more on advertising as the economy began to improve, but we came out on the other side of the downturn to see display outsell search," he says. "It struck me as odd because search had been growing faster."

Fulgoni says that perhaps the search industry has begun to reach maturity, pricing has become an issue for advertisers, or they realize clicks on ads don't produce relevant metric, so more advertisers have begun to sink money into display.

Another hypothesis points to the fact that smaller companies typically rely on search marketing. But if small companies are not doing well financially, they're likely not buying ads.

French Ad Retargeting Co. Brings CPC And Privacy Model To U.S.

The U.S. officially gains another retargeting company Thursday. Criteo has moved its headquarters from Paris, France to Palo Alto, Calif., bringing with it a performance-based cost-per-click (CPC) advertising model and advanced European privacy features.

JB Rudelle -- chief executive officer, who cofounded the company in 2005, along with two ex-Microsoft "technical geniuses" -- supports more than 400 customers worldwide, including several hundred ecommerce brands. The company, which just began supporting companies in the U.S. like AllPosters.com, boasts serving up about 4 billion retargeted ad impressions per month. In Europe, Criteo retargets ads for Expedia and Dell, and U.K. retailer Marks & Spencer.

Experience gained in Europe puts Criteo ahead of the U.S. market in terms of protecting consumer privacy, Rudelle says. "We have been working in countries like Germany, which is probably the most demanding country in the world when it comes to privacy," he says. "We put a direct opt-out link on all retargeting display banners in Europe, and hope to bring this feature into the U.S. market."

More than 95% of consumers leave ecommerce Web sites without making a purchase, taking an average of five visits before becoming a spending customer, according to data from Criteo.

Not having an ability to integrate even 1% of leads from incoming traffic through retargeting kept many of the older retargeting platforms in mothballs. As expected, U.S. online ad spending dipped last year for the first time since the 2001-2002 recession -- dropping 3.4% from $23.5 billion in 2008 to $22.7 billion in 2009, according to year-end data released Wednesday by the Interactive Advertising Bureau and PricewaterhouseCoopers. After running flat for most of last year, ad spending in the fourth quarter saw a seasonal lift, increasing 14% from $5.5 billion in the third quarter to $6.3 billion -- the most in any quarter to date.

Criteo's technology can scale quickly, and integrates with Google's ad-server technology, either Doublick for Advertisers, or Doubleclick for Publishers. Rudelle says Criteo's technology drops a cookie in the Web browser to find them when they return. Advertisers only get charged if someone clicks on the banner that brings them back to the company's Web site. It takes about half a day to integrate the technology for a client, he says.

Rudelle says the industry offers three different types of retargeting models, pointing to Google's retargeting platform as a simple "plug-and-play" solution that could augment Criteo's offering. Google recently announced a retargeting offering.

Driving the company's U.S. expansion plans, Karen Dayan comes to Criteo as vice president of marketing from Microsoft. She has 14 years of international experience in data-driven product marketing and program development. Jeff Mills assumes the role of vice president of strategic partnerships, bringing more than 13 years of marketing, sales and leadership experience at leading internet companies, including Yahoo and SideStep.

Webtrends Gives Marketers Facebook Analytics Tool To Measure Investments

Gaining qualified leads and measuring return on investments (ROIs) in social networks hasn't been easy. Webtrends Thursday will release a tool in its analytics package that tracks and measures activities in Facebook.

Webtrends Analytics for Facebook lets users see tabs, applications, and share features. Marketers can see Twitter activity driving to Facebook Fan pages, Facebook Fan page activity that overlays with corporate blog posts, and conversions in Facebook. It also provides a view into custom applications, Facebook page tabs and click performance.

"Facebook tends to cache all their information, including images, and that has rendered a lot of traditional data collection inept," Jascha Kaykas-Wolff, vice president of marketing at Webtrends. "We have found ways to work with Facebook's language to communicate directly into our core analytics product by a data collection API. This means we don't have to use image-pixel pushing, which is a pretty flawed technique."

The method allows marketers to see tons of data related to interactions on tabs and in applications, along with the Flash version that runs on Facebook. Kaykas-Wolff says Webtrends' early investments in microsites failed, and that's one reason the company has begun to move investments into Facebook.

Some of those investments have been in building Webtrends Analytics for Facebook. The platform relies on Webtrends Analytics 9, which combines the real-time analytics engine and user interface. It enables users to track custom tabs and applications, allowing marketers to measure Facebook campaigns alongside other digital marketing campaigns, such as Web sites and mobile applications. An RSS overlay feature also lets marketers see the impact of promotions.

Custom tabs and applications in Webtrends Analytics collect data differently because of Facebook's privacy regulations and Terms of Service. Brands can't use traditional methods for tracking custom tabs because the social network does not allow JavaScript.

Bringing Facebook data into Webtrends Analytics meant developing a method to bypass existing limitations. Webtrends did this through a data collection API. Aside from tracking tab views, the application also measures tab views segmented by fans and nonfans, as well as clicks on buttons and links, such as Share.

Before releasing it to customers, Webtrends tested the platform in a campaign called the "Great Data Giveaway." The company set out to demonstrate the new capabilities to show marketers that social channels, such as Facebook, can generate qualified leads.

The campaign is a drawing for prizes that appeal to Webtrends' target market. The application placed it on a custom tab on Facebook explains contest details. The person becomes a fan first, called a "fan-gate," and then allows the application to install.

Once the app installs, the user can enter the contest through a form driven by the company's marketing automation system, Eloqua. The key performance indicators are the entry, follow-up email opens, and follow-up email conversions. Webtrends allows users to post the contest info to their Facebook wall. The application measures the number of times the post is shared. Hopefully, the contest gets mentioned on Twitter and in blogs.

Kaykas-Wolff says in the next couple of weeks, Webtrends will start talking with marketers about how to track things in Facebook's version of Flash. Soon the company will launch analytics tools for Google Buzz and Twitter.

Google Unleashes Click-To-Call Mobile Search Ads

Google released a mobile feature Thursday that allows advertisers to add a clickable local phone number to mobile paid search ads. The phone number appears as an additional line of text in the mobile paid-search ad at either the bottom or top of the search query page.

The phone number in the ad enables consumers to initiate a call to the business immediately, similar to the way the person might click through to the company's Web site.

Mobile phones running Google's Android or Apple's operating system support the ad service. AdWords recently added a feature that allows advertisers to specify the type of phone to run the paid-search ad. Paul Feng, Google group product manager for Mobile Ads, says Google ran a test with a handful of advertisers for several months. Online Media Daily first heard about the tests, to insert phone numbers and coupons in mobile ads, last week. "In some cases advertisers saw the overall success of the ads increase dramatically," he says. "The click-through rates on search ads increased up to 30%."

Paid-search ads will become a more important tool as companies attempt to gain space on the mobile screen. Search traffic continues to climb, and more people have begun to adopt smartphones that allow them to browse the Web easily. In fact, mobile search traffic has already grown five times within the past few years. Feng suggests the uptick -- driven by smartphones, such as Motorola's Droid, Apple's iPhone and Google's Nexus One -- should increase.

Internal data from Google suggests that consumers with iPhones search 50 times more than those with prior-generation phones. Bloomingdale's and Vegas.com, which have been running a variety of mobile ads, have seen click-through rates rise. Vegas.com has seen mobile ad click-through rates as high as 20%, prior to today's launch of the click-to-call feature.

The two-step process to show a click-to-call business phone number in ads on mobile devices with full Internet browsers requires AdWords advertisers to set up a local extension to add a business phone number and check that you chose to show the ad. From there, customers can click to call the business from the ad. If your campaigns are already set up this way, the phone numbers will display automatically.

Google will charge the same for click-to-call ads as the cost for a click to visit the business's Web site, according to Feng. The advertisers' bid remains unchanged. Advertisers make one cost-per-click (CPC) bid for calls and clicks to the Web site.

Google Faces The Slickest Click Fraud Yet

Click fraud, that perpetual bane of online advertisers, is usually hard to detect in the moment, but easy to spot after the fact. That's because, unlike real clicks, sham clicks performed by automatic click software or human fraudsters pump up an advertiser's pay-per-click fees but never generate sales.

But on Tuesday, Harvard Business School professor Ben Edelman revealed what he says is a new form of click fraud that accomplishes what online fraud watchdogs might have once thought impossible: a scam that not only simulates valid clicks on a Google ad sold to an advertiser, but seems to result in a real customer who spends money on the advertiser's site.

"This is a particularly insidious kind of click fraud," says Edelman. "It takes more effort to organize, but it gives the perpetrator the capacity to impose charges in a way that's much harder for the advertiser to notice."

In a real example dissected on his blog, Edelman described how that complex and stealthy click fraud scheme works. According to Edelman, the perpetrators of the fraud, who run a site called TrafficSolar.com, make a deal to host Google's pay-per-click ads through a long string of Google affiliate partners, each of which agree to place their ads on other sites in exchange for a share of those ads' revenue.

Then Edelman says the TrafficSolar owners infect Web surfers' machines with spyware through a common cybercriminal tactic, exploiting a security vulnerability in either Windows XP or Internet Explorer when the user visits a popular, compromised Web site. (Edelman says he isn't sure which site the fraudsters used to infect his test machine.)

When someone with an infected computer later visits any of a number e-commerce sites, including Expedia.com, Gap.com or the shoe-seller Finishline.com, the spyware on his or her machine throws up a large pop-up window that covers the entire browser with another browser window displaying the same site. Unsuspecting shoppers make purchases on that pop-up window they normally might.

But that second window "reflects the fruit of click fraud," says Edelman. To create that pop-up, TrafficSolar invisibly simulates a click on one of the ads it hosts through its deal with Google affiliates, an ad for the same site the user intended to visit.

The result is that TrafficSolar.com--along with Google and each of the affiliates it shares its revenue with--gets a share of the pay-per-click fee paid by the advertiser. Meanwhile, the e-commerce site that paid for the ad receives real traffic and real sales, with no reason to suspect wrongdoing.

TrafficSolar's sleight of hand? Those sales would have happened regardless. But its spyware hides lucrative fraud in what otherwise would have been normal transactions.

"The retailer may think it can detect click fraud by a low sales conversion rate," says Edelman. "But here, the traffic converts. Based on that high conversion rate, they might even decide to raise their bid [in Google's advertising auction system] and have no way to realize that it's all a ruse."

TrafficSolar didn't respond to an e-mail message sent to the address listed in its domain registration or to a message left at its listed Austrian telephone number, whose voicemail greeting welcomed callers to the tourism center for the Austrian city of Graz. A site advisory warning from the cybersecurity company McAfee warns users that TrafficSolar.com may be infected with malicious software, and urges visitors to use "extreme caution."

Edelman, however, isn't focused on TrafficSolar so much as the seemingly legitimate deals that allowed the site to host Google ads. For those, he blames Infospace, another search engine that dealt directly with Google to broker the ads that were in turn passed on to more than seven other affiliates in a chain of deals that eventually led to TrafficSolar's scheme.

Those tangled arrangements, according to Edelman, should lead Google to cut its ties with Infospace. "It's all well and good for Google to have partners," he says. "But for the partners to have partners who have partners ... it becomes virtually impossible to monitor.
Google owes its advertisers something better than that."

Edelman's interest in Google is less than completely objective. He's currently serving as counsel in a lawsuit by Vulcan Golf alleging misplacement of the company's ads, and he's also worked as a consultant to Microsoft. But he says neither company funded his latest research.

It isn't the first time that Infospace, which didn't respond to a request for comment, has been the target of Edelman's criticism. Since 2005, Edelman has repeatedly accused the company of brokering deals that place ads on people's computers via security exploits and spyware. Even earlier, the company faced lawsuits and ousted its chief executive in 2001 after its stock price lost most than 99% of its value in the dot-com bust.

A Google spokesperson responded in an e-mailed statement that it's the company's policy "to prohibit [advertising] partners from being associated--whether directly or indirectly, intentionally or unintentionally--with parties who buy traffic in ways that cause a poor user or advertiser experience," and that it responds quickly to any violations of that policy.

As for its ability to detect the new form of click fraud, Google has long argued that it credits advertisers for as much as 10% of their ad spending based on click fraud that the company detects. While the company wouldn't comment on Edelman's TrafficShare example, a spokesperson wrote that the company uses "hundreds of data points" to detect fraud, not just clicks.

In a report last October, click fraud research firm Click Forensics measured click fraud at around 14%, significantly higher than Google's estimates. But even Click Forensics may not be counting the sort of click fraud Edelman accuses TrafficSolar of committing. Because Click Forensics' data is pulled from advertisers, the company can't necessarily detect click fraud that is disguised as real customers and real sales, according to the company's chief executive, Paul Pellman. Pellman believes, however, that the kind of click fraud Edelman discovered is likely mixed with traditional click fraud to increase the scheme's traffic volume while keeping it hidden.

Because the new form of click fraud involves installing spyware, it's likely used at a much smaller scale, Pellman says. But by mixing it with traditional fraudulent traffic, the spyware trick could cause higher-volume scams to seem to result in some sales, and thus lend them credibility.

"This is about adding a bit of what seems like quality traffic to what is otherwise a stream of junk," Pellman says. "It's just another example of how incredibly lucrative click fraud has become for its perpetrators, and the kind of sophistication that they've come up with to protect their income."

AOL, Unique Vacations Sue Each Other In Search Marketing Contract Dispute

A $1.2 million dispute between AOL and Unique Vacations about online marketing services has landed in federal court, with both sides alleging that the other broke the contract.

AOL quietly filed suit in August against Unique Vacations, representative of Sandals and Beaches resorts, alleging that the company recently stopped paying bills for Web marketing management services. Unique Vacations countersued for fraud, breach of contract and other claims.

Last month, U.S. District Court Judge Harvey Bartle III in Delaware ruled that Unique Vacations could proceed with its allegations that AOL broke its search marketing services agreement, but not on the fraud claims.

Unique Vacations tapped AOL for online ad services -- including search marketing management -- in 2006, according to the legal papers. Initially, the vacation company agreed to pay a search management fee of 12% of the total amount it paid for clicks. In 2008, Unique Vacations paid $3.7 million for search ads, including around $387,000 paid to AOL for search management services, according to the legal documents.

In late 2008 -- as the economy was reeling -- AOL agreed to slice its fee to 7% for six months, according to the court papers.

Nonetheless, AOL alleges that Unique Vacations stopped paying its invoices in the beginning of 2009.

The companies canceled their search marketing contracts last June, following which AOL filed suit against Unique Vacations to recover around $1,180,000 in unpaid invoices dating back to January of 2009. That figure included the pay-per-click charges as well as AOL's 7% fee.

Unique Vacations countersued for fraud, negligent misrepresentation, breach of contract and breach of good faith and fair dealing. The company alleged that it learned in August of 2008 that AOL "had never provided the search engine management services it had promised." Specifically, the resort company said in its court papers that Platform A did not remove "non-performing" keywords.

"An examination of the one-year history of the non-performing keywords showed that 90% of the keywords generated either no revenue at all or less than 10% of the amount spent by Unique Vacations," the company alleged.

"Despite the non-performance of these keywords, Platform A had continued to maintain these keywords and charge Unique Vacations for clicks on these keywords," Unique Vacations continued. "Remarkably, the audit did not reveal that even one non-performing keyword had ever been removed by Platform A, as should have been the case if Platform-A was properly managing and optimizing the keywords."

AOL asked the court to dismiss all of Unique Vacations' counterclaims. Bartle dismissed the fraud and misrepresentation charges, but said that Unique Vacations could proceed with its breach of contract and breach of good faith claims. He ruled that Unique Vacations' allegations are "sufficient to demonstrate that these claims are 'facially plausible.'"

An AOL spokesperson said Unique Vacations' counterclaim was without merit. "We're confident of our performance under the contract," the spokesperson said.

Search, but You May Not Find

AS we become increasingly dependent on the Internet, we need to be increasingly concerned about how it is regulated. The Federal Communications Commission has proposed “network neutrality” rules, which would prohibit Internet service providers from discriminating against or charging premiums for certain services or applications on the Web. The commission is correct that ensuring equal access to the infrastructure of the Internet is vital, but it errs in directing its regulations only at service providers like AT&T and Comcast.

Today, search engines like Google, Yahoo and Microsoft’s new Bing have become the Internet’s gatekeepers, and the crucial role they play in directing users to Web sites means they are now as essential a component of its infrastructure as the physical network itself. The F.C.C. needs to look beyond network neutrality and include “search neutrality”: the principle that search engines should have no editorial policies other than that their results be comprehensive, impartial and based solely on relevance.

The need for search neutrality is particularly pressing because so much market power lies in the hands of one company: Google. With 71 percent of the United States search market (and 90 percent in Britain), Google’s dominance of both search and search advertising gives it overwhelming control. Google’s revenues exceeded $21 billion last year, but this pales next to the hundreds of billions of dollars of other companies’ revenues that Google controls indirectly through its search results and sponsored links.

One way that Google exploits this control is by imposing covert “penalties” that can strike legitimate and useful Web sites, removing them entirely from its search results or placing them so far down the rankings that they will in all likelihood never be found. For three years, my company’s vertical search and price-comparison site, Foundem, was effectively “disappeared” from the Internet in this way.

Another way that Google exploits its control is through preferential placement. With the introduction in 2007 of what it calls “universal search,” Google began promoting its own services at or near the top of its search results, bypassing the algorithms it uses to rank the services of others. Google now favors its own price-comparison results for product queries, its own map results for geographic queries, its own news results for topical queries, and its own YouTube results for video queries. And Google’s stated plans for universal search make it clear that this is only the beginning.

Because of its domination of the global search market and ability to penalize competitors while placing its own services at the top of its search results, Google has a virtually unassailable competitive advantage. And Google can deploy this advantage well beyond the confines of search to any service it chooses. Wherever it does so, incumbents are toppled, new entrants are suppressed and innovation is imperiled.

Google’s treatment of Foundem stifled our growth and constrained the development of our innovative search technology. The preferential placement of Google Maps helped it unseat MapQuest from its position as America’s leading online mapping service virtually overnight. The share price of TomTom, a maker of navigation systems, has fallen by some 40 percent in the weeks since the announcement of Google’s free turn-by-turn satellite navigation service. And RightMove, Britain’s leading real-estate portal, lost 10 percent of its market value this month on the mere rumor that Google planned a real-estate search service here.

Without search neutrality rules to constrain Google’s competitive advantage, we may be heading toward a bleakly uniform world of Google Everything — Google Travel, Google Finance, Google Insurance, Google Real Estate, Google Telecoms and, of course, Google Books.

Some will argue that Google is itself so innovative that we needn’t worry. But the company isn’t as innovative as it is regularly given credit for. Google Maps, Google Earth, Google Groups, Google Docs, Google Analytics, Android and many other Google products are all based on technology that Google has acquired rather than invented.

Even AdWords and AdSense, the phenomenally efficient economic engines behind Google’s meteoric success, are essentially borrowed inventions: Google acquired AdSense by purchasing Applied Semantics in 2003; and AdWords, though developed by Google, is used under license from its inventors, Overture.

Google was quick to recognize the threat to openness and innovation posed by the market power of Internet service providers, and has long been a leading proponent of net neutrality. But it now faces a difficult choice. Will it embrace search neutrality as the logical extension to net neutrality that truly protects equal access to the Internet? Or will it try to argue that discriminatory market power is somehow dangerous in the hands of a cable or telecommunications company but harmless in the hands of an overwhelmingly dominant search engine?

The F.C.C. is now inviting public comment on its proposed network neutrality rules, so there is still time to persuade the commission to expand the scope of the regulations. In particular, it should ensure that the principles of transparency and nondiscrimination apply to search engines as well as to service providers. The alternative is an Internet in which innovation can be squashed at will by an all-powerful search engine.

Adam Raff is a co-founder of Foundem, an Internet technology firm.

Online News May Soon Cost Money

58 Percent Of Newspapers Surveyed Considering Fees
BY: MICHAEL LIEDTKE, AP Business Writer

SAN FRANCISCO -- With their advertising revenue drying up, newspaper publishers spent much of the spring and summer debating whether to cut off free online access to some of the material they run in their shrinking print editions.

It looks like the talk will turn to action this fall, when some large newspapers are expected to put up Internet toll booths.

They'll be testing readers' willingness to pay for information and entertainment that mostly has been given away online for the past 15 years. That happened largely because most publishers could afford to subsidize their Web sites with profits from their print franchises. But now those profits have crumbled, just as the prices for online ads are tumbling, too.

A recent study by the American Press Institute found 58 percent of the responding newspapers are considering online fees. Of that group, 22 percent expect to introduce the fee before the end of the year. The findings drew upon 118 interviews of newspaper executives in the U.S. and Canada.

The free-to-fee transition likely will occur in tentative steps rather than bold leaps that would lock all online content behind a pay gate. Publishers are taking this cautious approach because they are still trying to devise online payment plans that will generate more revenue without alienating too many of their readers.

For instance, the Pittsburgh Post-Gazette, a newspaper with a weekday circulation of about 206,500, recently launched a Web site that includes coverage and commentary on sports, politics and entertainment that isn't in its printed product or free online edition. The service costs $36 annually or $3.99 per month.

Other newspapers that have talked up subscription plans remain reticent. Newsday of Long Island, N.Y., still hasn't rolled out fees for its Web site, even though the newspaper's owner, Cablevision Systems Corp., said it was going to do so this summer. Newsday spokesman Paul Fleishman declined to comment.

The conundrum facing publishers: It's hard to figure out how much, if anything, readers will be willing to pay. Internet search engines and digital communication tools such as Twitter and Facebook ensure people still will be able to find and share plenty of free content.

But running totally free sites hasn't been paying off for most newspapers. Even before the online market began to slump this year, Web ads were generating only a small fraction of the revenue that print ads do. The disparity has made publishers realize they need more ways to make money on the Internet, but few of them have been able to figure out how.

"This is like a four-dimensional chess game. It's really complex," said former newspaper editor Alan Mutter, who is now an industry consultant when he isn't writing "Reflections of a Newsosaur," a free blog.

The Associated Press also has been part of the online fee movement. The not-for-profit cooperative, which is owned by newspapers, is setting up a system that will track the usage of its stories. It's a crucial piece of a plan that could improve the AP's ability to run ads next to news stories and perhaps even lead the AP to charge readers to see major scoops or other "premium" content.

"The value of content has to rise," said Tom Curley, the AP's chief executive. "We are all looking how to make that happen."

Even as newspapers mull just how much to commit to charging readers, a competition is already brewing to provide the technology to enable it.

Four of the world's largest technology companies -- Google Inc., Microsoft Corp., IBM Corp. and Oracle Corp. -- have expressed an interest in developing an online payment system for publishers. Mutter also has been promoting his own approach to Internet fees, a concept he calls ViewPass.

Separately, more than 1,000 newspapers and magazines have signed nonbinding letters of intent to join an Internet fee system being assembled by Journalism Online LLC. It intends to begin collecting money on behalf of publishers before winter.

Backed by former leaders from Court TV and The Wall Street Journal, Journalism Online wants to run the cash register for a digital news smorgasbord. Readers will be able to buy stories from a wide range of participating publishers without having to repeatedly provide their credit card numbers and other personal information at each Web site. The content would be distributed on the Web and electronic reading devices, with each publisher dictating its own terms. As a commission, Journalism Online plans to keep 20 percent of the revenue collected through its system.

Although he isn't jumping on board with Journalism Online, News Corp. Chairman Rupert Murdoch is sold on online fees.

News Corp. already owns the newspaper industry's most successful Internet subscription model in The Wall Street Journal, with more than 1 million customers who pay for online access. The annual rates vary from $103 for an online-only subscription to $140 for a package that includes delivery of the print edition too. Now, Murdoch hopes to make online fees pay off for his other publications, which include the New York Post and The Times of London. Murdoch hasn't provided a timeline or specifics about his plans, however.

The New York Times is considering charging online readers a membership fee, with more details promised in the fall. It's a road the newspaper has been down before, only to reverse course after management concluded that the online subscription it required to read the Times' top columnists was crimping its Internet ad sales. The subscription service, which cost $50 per year, was scrapped in 2007 after a two-year run. It had 221,000 customers when the Times tore down the toll booth.

These days, the printed versions of newspapers are suffering so much that publishers appear determined to find a way to get readers on the Internet and mobile devices to pay something, even if it's just a few bucks per month. The question is mainly which publisher will jump off the sidelines first.

"There's still a lot of 'wait-and-see' attitudes out there," said Randy Bennett, senior vice president of business development for the Newspaper Association of America. "I think a lot of publishers would like to see some empirical evidence of what happens to other publishers who dip their toes into the water."

In a worst-case scenario, imposing online fees would drive away so much of a newspaper's Web audience that publishers would lose more in Internet ad sales than they would gain in new revenue.

In a best-case scenario, newspapers charging their online readers would still retain enough of the audience for their Web sites to remain attractive marketing channels. What may be even more important, the fees might make readers more willing to pay for the print editions if the same content isn't on the Web for free, especially if print subscriptions include free or discounted Web access.

Preserving the value of their print franchises is one of the main reasons for publishers to charge for Web access. That's because newspapers still get most of their money from print ads, which accounted for $35 billion of the industry's revenue last year. Newspaper print ads are on pace to fall below $30 billion this year.

Online ads, in contrast, contributed just $3.1 billion in revenue last year. And while that category had been growing until this year, it wasn't fast enough to offset the erosion in print ads. From 2005 through 2008, the industry's annual revenue from print ads dropped by $12.7 billion. Meanwhile, newspapers' annual revenue from online ads increased by just $1 billion.

Journalism Online's co-founder, Steven Brill, believes newspapers can still hold on to most of their online readership by charging for only their best work -- information, images and audio unlikely to be found anywhere else on the Web. This presumes publishers will be able to prevent the content from being copied and pasted or even just summarized at other sites, a potentially daunting task.

Some publishers still have no intention to charge for online access because they have concluded online fees are bound to backfire on the newspaper Web sites that adopt them, Mutter said. The American Press Institute study found 44 percent of the respondents don't think Internet fees will provide a significant lift to newspapers' future revenue.

"The guys who hold off (on Internet fees)," Mutter said, "could get a have a huge windfall in new traffic."

Spoof ads run in Philly.com, Inquirer, Daily News

The Inquirer, the Philadelphia Daily News and Philly.com ran a series of spoof airline advertisements yesterday that a spokesman said were meant to gauge their collective power "in generating awareness and traffic for, in this case, a brand that doesn't even exist."
The full- and partial-page ads for Derrie-Air, a fictitious environmentally friendly airline purporting to offer fares based on a passenger's weight, appeared 21 times in sections of The Inquirer, 15 times in the Daily News, and on the Philly.com home page.

Jay Devine, spokesman for Philadelphia Media Holdings L.L.C., owner of the newspapers and Web site, said the ads were also meant "to put a smile on people's faces."

The ads carry no disclaimer, but one does appear on the Web page to which readers are referred in the ads. It says, in part, "The Derrie-Air campaign is a fictitious advertising campaign created by Philadelphia Media Holdings to test the results of advertising in our print and online products and to stimulate discussion on a timely environmental topic of interest to all citizens."

Devine said the print ads carried no disclaimer because "our goal was to drive people to the Web site."

He said early results showed a "click-through" rate for the online ads of 1.25 percent, compared with a national click-through average of 0.05 percent. The advertisements were to appear yesterday only, he said.