How Search Engines Decide Whom to Trust
Bill Slawski does the usual patent deep-dive, evaluating how Google decides which writers to trust. As Google moves from domain trust to author trust, this will hurt the dwindling number of online media companies that rely on cheap, mass-produced content. (One surprising side effect: this will make the market for writers more efficient.)
“The evolution of search in six minutes”
Google presents a nice overview of how search has changed over time. Google isn’t especially fond of highlighting the trend that more space gets handed to: Big brands, people paying for their space, and Google’s in-house products.
Firefox May Have Lost its Google Sponsorship
Google’s search partnership with Google expired in November. Mozilla is cagey about whether or not it’s been renewed, but Firefox is losing marketshare to Chrome. Google has ample incentive to choke off their most viable browser competitor if they see that as a viable strategy, but they also have plenty of reasons to outbid Bing. An even more interesting outcome could be a consortium of lesser search engines: Blekko and DuckDuckGo are both more in sync with Firefox users’ ideological leanings, and Yandex has the money. (Yandex, by the way, invested in Blekko’s last round.)
Web-Native Ad Formats
Andrew Weissman posits a golden age of web-native marketing. The supply-side narrative works: Google is not the last company to build a revenue model out of a special case of their main product. But the demand-side case falls apart: low banner click-throughs aren’t the problem people used to think. The engagement rate for banners will likely hit something close to the engagement rate for print ads (modulo targeting, which is a big variable). The banner ad model right now is to get the product in mind for new customers, or to remind old prospects; neither of those is specifically contingent on clickthroughs.
Poorly Calculated Churn Rates Considered Harmful
Right around when they raise their Series B or C, many companies hit an inflection point, when they can reasonably calculate their customer acquisition cost and lifetime value. If the “<” sign points in the right direction, that’s a good reason to raise a lot of money. But as it turns out, it’s easy to miscalculate one of the variables in this formula.
Bogus Facebook IPO Risks
Josh Constine, one of the writers TechCrunch hired after most of the original talent left, has a weak article on the risks Facebook runs in an IPO. Facebook certainly does face risks, but nearly all of the ones enumerated in that piece will be addressed in two ways: First, Facebook can afford to be picky about its investors—like Google, Facebook will likely craft some early shareholder communications that emphasize their extremely long-term focus. But even if they somehow end up owned mostly by mutual funds with a quarter-to-quarter focus, Facebook is only selling 10% of their total shares; founders and early investors have a dominant stake. And, of course Facebook has a dual-class share structure, so they’re basically immune to this issue.
This article, by the way, was a followup to the Wall Street Journal‘s blockbuster article whose thesis is, basically, that the 500-shareholder rule is probably still in effect, so Facebook will probably IPO in early 2012. This has been pretty clear since their Goldman round at the beginning of 2010.
Meanwhile, here’s Goldman’s IPO hitlist.
Amazon’s End Run Around Publishers
Sci-fi author Charles Stross has a smart post on how Amazon is outmaneuvering publishers. He approaches it through the unconventional angle of DRM: Amazon’s marketshare lets them set a format standard, which no single publisher can match.
Aspects, Circles, and Lists
Launch.is asks who copied Circles/Aspects from whom: Google or Diaspora. The problem, of course, is that Facebook had them first. And the idea isn’t hugely original; it’s a two-way version of tagging an RSS feed, and LiveJournal has had a social network-specific implementation of this—in fact, had it back when Mark Zuckerberg was a member, before Facebook.
In other Google news, Google Music is running ads on Facebook, embarrassingly close to people advertising Spotify for free.
A Counterpoint on Business Development and M&A
Chris Dixon identifies an interesting edge case: when a product is so important that it’s irresponsible not to build it in-house. This looks like an example of overreach rather than smart strategy: if a company really thinks that such a product is strategic, they’re arguing that they are in a winner-take-all industry; such companies should crank up all the levels of risk they can; the default outcome is failure no matter what, so chasing volatility is a disproportionately skewed strategy. But Hunch’s (rumored) prospective acquirers include plenty of cautious companies.
Groupon’s Stock Price is Down, but Meanwhile in the Real World
Yipit has some timely data on Groupon’s recent daily deal performance. Month-over-month, they’re responsible for most of the industry’s revenue growth. (Groupon’s current market value, after a horrible week, is merely twice what Google tried to pay for them.)
Google Drops the Black Bar
Google has replaced their black navigation bar with a drop-down menu listing their various services. One side effect of this: since the services are in a fairly undifferentiated grid, it’s easy to quietly add new ones, and even easier to shuffle them around. This could make it easier for Google to experiment with new products.
The Most Shared Articles of 2011
Facebook lists the 40 most-shared articles this year. Mostly big news and human-interest stories. These stories are not the most significant acts of sharing on Facebook this year, though. That honor would have to go to Occupy Wall Street materials: they got far fewer pageviews, but their conversion rate (from pageview to substantial action) more than mitigated that. As Facebook gets more mainstream, this kind of data will become less and less generally useful.
Bing Targets Thin Deal Sites
Bing has gone after content-light, affiliate-driven sites. This might be a PR move ahead of the holidays. If not, it’s interesting to consider how this could affect the rapidly-growing, well-funded online coupon business.
Who’s Really Making Money on the Chinese Internet
TechRice contrasts flashy, VC-ready Chinese companies with the ones that actually turn a profit. This is worth reading, both for its perspective on what’s happening now and because of what it implies as more of the Chinese market starts functioning (and spending) like the US.
Digital Due Diligence Weekly