The Stock Market Loves Every Dog for a Day

Jan 5th

Recently Miva announced that they were dumping a partnership with Yahoo! in favor of distributing Google ads.

MIVA said in its papers that it will adopt Google advertisements on applications and sites managed by its subsidiary, MIVA Direct, which produces white-label toolbar and Web search. The deal, which will run for two years and has "broad termination rights," will begin within 30 days.

The market responded by bidding Miva's stock from $3.40 up to $4 a share. What does that mean to marketers?
If a small ad network makes more profit redistributing the ads of a large player than selling ads directly they probably don't have much value in their advertising product. This is why increasing the efficiency of your AdWords account by 10% is worth far more than trying to find under-priced clicks from 50 pay per click search engines you never heard of.

The second interesting thing worth noting from the market reaction to the Miva / Google partnership is that if changing from Yahoo! to Google increases the value of the company by 15% that shows how efficient Google's ad platform is compared to Yahoo!'s or that the stock market just loves Google...either way, it is going to keep smaller public companies favoring partnerships with Google over Yahoo!. It also shows the strong consolidating trend amongst ad networks. If Google is worth 15% more than Yahoo! then they are probably 40% or 50% more than Microsoft, and as monetization rate drops off there is no reason for anyone syndicating search and contextual ads to look far beyond the top few players.

The search market is also going to parallel the ad market. Google's ad network is so strong because they own so much of the search market. If you can get a few more high quality editorial links that will boost your authority in Google that is worth far more long-term than picking at the edges gathering hundreds of low quality links which may hurt the stability of your rankings.

Lots of money is being spent on new ad network start ups which largely duplicate one another. Networks that are able to deliver real tangible value and get enough media exposure to become synonymous with their ad or media type will thrive while most will fall to the fate of a Miva or a Looksmart...a legacy network with random bits and pieces which makes more redistributing someone else's ads rather than by innovating and selling their own ads.

Google is already getting a foothold in print, audio, and video ads. I just saw a Fat Joe Cadillac Escalade AdSense video ad on this page, pointing to a site called MyCadillacStory.com. That is pretty slick and streamlined for how new Google's video product is.
Fat Joe on Google AdSense video.

The race to create an ad network and buy distribution has changed to a race to create toolbars, applications, software, communities, and plugins that allow people to redistribute ads. Even some password applications (such as Roboform) have search built into them, and Google Custom Search Engine makes it easy for anyone to get paid syndicating Google results (or a biased subset of them).

Published: January 5, 2007

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Comments

January 8, 2007 - 12:42am

It's been proven that Yahoo could drop their own ads in favor of Google's and make a few billion dollars. That would drive any company's stock price higher.

January 8, 2007 - 2:42am

Hi Aaron,
The state of ad networks is so heavily dominated by Google that is is inconceivable that you could compete without very deep pockets, like MSN/AdCenter (Microsoft). Good luck to the smaller players!

Yours In Success,

Steve Renner
Marketing Director
The Affiliate Community
http://www.affiliatecommunity.com

January 8, 2007 - 8:06pm

Interesting point about video ads.

If you are an AdSense publisher, then you have probably noticed Google's push towards video ads, asking folks to see if they have the space on their sites to host them. I am guessing their rates (click thrus, conversions, etc) are excellent if things are moving so quickly.

Note to self: Get a video camera ; )

Brian Henderson
Survey Software HQ Blog
http://www.surveysoftwarehq.com

January 10, 2007 - 5:57pm

Ultimately MIVA will make more money from the deal as Google must pay more than Yahoo.

However this doesn't hide the fact that MIVA content network is very poor indeed. Traffic levels has dropped significantly in recent months so unless MIVA get more quality traffic and fast then its difficult to see them mixing it with the big boys.

January 5, 2007 - 8:06pm

Wow - for a minute there I thought you were running ads for Cadillac.

Your first point about increasing the efficiency of your AdWords account rather then chasing the lower tiers is so true.

January 5, 2007 - 8:39pm

I just wanted to echo what Chris said. We've chased lower-tier providers for a long time now, but I've found them all to have either virtually no traffic or rife with clickfraud -- or both.

January 5, 2007 - 9:42pm

Lower-tier ad networks are only good for one thing -Arbitrage that funnels spaz clickers & less experienced internet users from the "bad areas" that got them to the 3rd tier networks, back to quality sites. Unless one has good knowledge of automating those processes, focusing on value creation through Adwords is a far better way to spend usually-limited time.

James Dunn
January 6, 2007 - 5:53am

I don't know that just because Miva has a lower average CPC that they don't have very much value. Google has market share. More market share = more advertisers = higher CPC. I'm not saying that the lower tiers have the same value at a lower cost than Google (I don't have much experience with them). I'm only stating that Miva switching to Google doesn't mean they have less value per visitor, only a lower CPC.

Furthermore, if these 2nd tier search engines do have lower value, then they are diluting Google's value by using their ads. If they are filled with click fraud and junk traffic, then Google is now getting that garbage traffic in addition to their own click fraud problems. Albeit, all of the 2nd tier networks combined would still probably be a drop in the bucket when compared to Google.

Ross Bradley
January 6, 2007 - 5:57am

Hi Aaron Wall, I must say that I honestly feel that your total logic has almost been based around the day to day irrationality of the market.

You wrote: " The market responded by bidding Miva's stock from $3.40 up to $4 a share. What does that mean to marketers?"

But hang on .......When MAMA (following an announced Video Link to their site) went from the low $2's up to $8.60 odd, so why wouldn't that mean something to marketers too?

Or, another, in Onstream Media Corp., (which provides live and on-demand digital media services), a Co that surged 72% a day after it announced it's new platform with on-demand video capabilities?

Video is BIG as you have told us. Right? So both the above should surely mean something to marketers, based on your MIVA/YHOO/GOOG thoughts.

And ..."If a small ad network makes more profit redistributing the ads of a large player than selling ads directly they probably don't have much value in their advertising product."

Tell that to Newscorp who will see some $900M (in time) for their Google/myspace search/Ads deal. And in the case (your mention) of Looksmart, haven't they guided for increased revenues of 26% - 28% for the Q4 period, 2006? Why would marketers bother and shouldn't they simply stick with Google, according to your thoughts?

Marketers will follow audiences and some marketers will (& do) recieve much better results when targetting specific (or, niche type) users, that they find are more receptive to their particular product or, service, many may feel.

Big (& the 'hit and miss', one size fits all) is not necessarily always best, as has so often been proven.

Cheers.

January 6, 2007 - 8:23pm

Hi Ross
I agree that the stock market may overreact to news, or even react to non news, but the trend of Google monetizing better than the competition is a trend that is hard not to notice.

Have you tried buying Looksmart traffic? When I did I was amazed at the (lack of) traffic quality.

January 6, 2007 - 8:28pm

Also Ross,
Your MySpace statement sorta proves my point more than disagrees with the point of my post. MySpace is a platform that can have ads sold against it, it is not a small ad network provider. And the Google ad deal on MySpace was for more than what many of the second tier pay per click engines are worth (roughly 8 times what Looksmart or Miva are capitalized at right now).

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