Filter looks at the day's top technology news through snapshots and analysis of what the world's media outlets are covering. Washingtonpost.com's new Mon.-Fri. feature is penned by technology reporter Cynthia L. Webb. If a technology story breaks, a company falters or triumphs, or there's a new trend in technology, Filter wants you to know about it.
The San Jose Mercury News pointed out, like News.com, that the move to serve standard banner ads is a departure from Google's traditional text-only, ad-lite presentation. The ads won't actually appear on Google's own Web site, however. "Google's core business is selling ads on its own Web site alongside search results. But a sizable chunk of its revenue comes from selling ads that appear on other Web sites through a program called AdSense. ... The AdSense ads typically appear grouped together inside boxes that run horizontally across the top or bottom of Web pages or vertically down the sides. About.com, IVillage and the New York Times are some of the larger Web sites that carry AdSense ads."
The Merc also reported that some people think Google's move will be interpreted as a stab in the back: "It's kind of scary that Google is moving into a medium that they helped crush," said Andy Beal, vice president of search marketing for WebSourced. "It's almost like they switched sides. They're saying they won't cave into the pressures of Wall Street. But I can't think of any other reason to do this other than to make money."
• The San Jose Mercury News: Google to place ads with images (Registration required)
The Wall Street Journal provides more details on ad revenue and what Google hopes to accomplish vis-a-vis its search-engine rivals: "The move expands the potential universe of ads that Google can sell, since many Web sites display both small text ads and graphical ads. Google is counting on increased revenue from ads it places on other companies' Web sites. Such ads accounted for 21% of Google's net revenue in the first quarter, up from 8.6% a year earlier. ... Google's move into image ads heightens the competition with rival Yahoo Inc., whose Overture division sells similar keyword-related text ads on other companies' Web sites. Overture allows advertisers to include graphics with text in a small box, but doesn't offer the larger-image ad formats Google is unveiling."
• The Wall Street Journal: Google Is Testing Ads With Images on Others' Sites (Subscription required)
How Much Is That Google in the Window?
Google's securities registration statement for its upcoming stock offering doesn't give us an idea of how much the company values its shares, but a couple of financial wizards say they have a general idea. The Wall Street Journal cited Jack Ciesielski, publisher of Analyst's Accounting Observer, who says the shares will be valued between $80 and $91 each. That, he said, would put the company's worth at $20 billion to $22 billion.
The math-averse should probably stop reading here, but if you're interested in how he came up with the number, here's the Journal's summary: "Mr. Ciesielski says Google added $75.4 million to its deferred-compensation account during the first quarter. Dividing that by the slightly more than one million options Google issued during the first quarter, he estimates that Google figured the excess value of the options at $75. Those options carry an average exercise price of $16.28. Adding the two figures together, Mr. Ciesielski estimates, Google valued its shares at roughly $91. Mr. Ciesielski has a second method for determining how Google valued its shares that yields a different result. It relies on the Black-Scholes formula that companies use to value the options they grant to employees. ... Here is how it works: Google says that, based on the Black-Scholes formula, the fair value of the options it issued in the first quarter was $67.06. Using that figure, the $16.28 exercise price and Google's other financial assumptions, Mr. Ciesielski says Google valued its shares at $80.44."
• The Wall Street Journal: Google Search: How Does It Value Its Shares? (Subscription required)
Keyword: Auction
So how does Google make money on those little text ads? The Washington Post reported this morning that 150,000 advertisers participate in a "continuous electronic auction" to get the right to place an ad on the first page of Google's search results. It's 95 percent of the company's $1 billion yearly revenue. The Post cited Gateway Inc. executive Antonella Pisani as someone "who spends her days bidding on words and phrases as part of a behind-the-scenes marketplace that generates virtually all of Google Inc.'s sales and profit."
More from the Post piece: "Every advertiser willing to pay at least a nickel gets the right to place an ad, but only the top bidders as determined by Google get placement on the first page of search results. To find buyers online for its computers, cameras and other products, Gateway spends millions of dollars quarterly on Google. One day last week, Gateway's bidding for the words 'digital camera' averaged about 75 cents, while its bidding on the plural, 'digital cameras,' averaged $1.08. Pisani said plural terms often cost more because consumers using them in searches are more likely to end up as buyers. 'My average on Google is just under 50 cents per click. It is a very efficient marketing program,' Pisani said. 'You are capturing people while they are interested.'"
• The Washington Post: Advertisers Bid, You Click, They Pay (Registration required)
A Win-Some Side Note
Every so often we have to talk about ourselves: washingtonpost.com walked away yesterday with two 2004 "EPpy" Awards from Editor & Publisher and Mediaweek magazines -- honors that are worth their weight in gigabytes among us Internet types. Post.com won best news service on the Internet with more than 1 million monthly visitors, as well as best Internet entertainment service. The Topeka Capital-Journal took the top spot for Internet news service with under 1 million visitors. Top honors also went to nytimes.com for best overall Internet service, Minnesota Public Radio as best radio-affiliated Internet service, CBS SportsLine.com as best Internet sports service and Wall Street Journal Online as best Internet business service. Here is the complete list of winners and honorees.
• washingtonpost.com: washingtonpost.com Wins 2 EPpy Awards (Registration required)
• The Topeka Capital-Journal: CJOnline receives top honor
And let's not forget the Webby Awards, which have mirrored the tech industry's decline from the glory days to the gory days. The San Francisco Chronicle asks: "If an honor is bestowed in cyberspace, does it carry the same cachet?"
The answer apparently is no, as the awards now are now announced via e-mail, a far cry from 1998 when celebrities like Sandra Bernhard and John Perry Barlow (does anyone outside of the Grateful Dead fan club and the techie libertarian cadre even know who this guy is?) did the honors. Nevertheless, the Chronicle reported, recipients still cherish the honor: "Rob Semper, executive associate director of the Exploratorium, the San Francisco science museum, which won for best science site, said he'd probably crack open a bottle of champagne, and then get back to work trying to win another one next year. 'We've gone through the dot-com craze and bust, but the point is that the Web is an amazing invention. It's giving people the opportunity to do things they would not be able to do on their own,' Semper said." A complete list of this years Webby winners is online here.
• San Francisco Chronicle: Winners of Best Internet Sites Receive E-mail Notification
Cindy Webb is out today and Friday. She will return on Monday.
Filter is designed for hard-core techies, news junkies and technology professionals alike. Have suggestions, cool links or interesting tales to share? Send your tips and feedback to cindyDOTwebbATwashingtonpost.com.
