Back in 2004, when Google and online shopping started growing, the trend started becoming visible. Since then, the volume of searches for ‘costumes’ around the Halloween period have spiked higher and higher, year upon year.

Comparative volume of searches for ‘Costume’ in 2004, 2006, 2009, 2011

A walk down the English High Street today reflects the growing popularity of what was once considered to be a solely American “festival”. Similarly, the number of children and adults dressing up on Halloween day is also growing steadily.

If the numbers to date are anything to go by, 2011 seems on its way to become the biggest ever day for online fancy dress retailers in the UK. Considering the corresponding search volume in October 2010, this means that over11 million searches for ‘costumes’ will be carried out in the UK during the month of October 2011 alone.

Spikes in search volumes around this period aren’t limited to regular Web search. Image searches spike even more sharply in the 2nd and 3rd weeks of October and product searches also get bumped up a good bit from the last week of September till the 3rd week of October.

As more retailers rush to capitalise on the opportunity, costs per click also spike during the same time. Recognised brands, retailers with guaranteed delivery and those with popular costumes in stock are the most likely winners in such a situation.

Yahoo! has now started serving ads from the Yahoo! Search Marketing system on mobile phones. These ads are served on all smart phones including iPhones and Android mobile handsets.

Ads on Yahoo! Mobile Search

The best part about this new feature for marketers and advertisers is that unlike Google AdWords, the Yahoo! Search Marketing system will not require the usual process of creating new campaigns, mining keywords and writing new ads.

Standard sponsored search ads are displayed automatically on mobile search results pages. The ads are just 2 lines long, consisting of the ad title and the display URL.

One ad is displayed at the top of the search results page and two more ads are displayed at the bottom of the page.

All advertisers will be able to reach an ever increasing audience of mobile Internet users with the introduction of this new feature.

Marketers who wish to specifically target mobile search users will also be able to continue using the Yahoo! Mobile Sponsored Search service at:

Yahoo! Mobile Sponsored Search

Some time last month, Yahoo! launched a new homepage layout. Their search team is now concentrating on unifying this homepage with the search results page. They have undertaken a lot of research with eye-tracking studies and usability experiments to achieve this. This new search results page is expected to provide which are personally more relevant to the user.

Yahoo! engineers are currently trying to align the framework of the search results page with the new homepage, in order to provide quick access to various search applications which are available in the left hand column of the three column page. The left hand column also provides direct one-click links to other pages, thus managing to retain the user on the Yahoo! page, which advertisers are bound to like.

One important new feature is a section ‘Show Results From’ which allows users to see results from the sites they are most used to and interested in.

The newly launched note-taking application, Yahoo! Search Pad’ is at the top of the left column to provide easier access to research carried out.

SearchScan and SafeSearch features are also in this column to protect against viruses and spam during the search process. The Search Assistance feature is placed directly below the search box.

New Yahoo! Search results page

Yahoo! is also looking out for new ways for users to explore the organic results through a ‘Related Concepts’ section in the left column. They are essentially trying to find easier ways to display enhanced results from a larger number of sites.

A few random users from the USA have already been selected as test subjects for the new search results page. Feedback from this test will be used to fine-tune the page before the general launch.

In light of Yahoo!’s recent search agreement with Microsoft, it remains to be seen how much Yahoo! itself will benefit from these innovations.

The 3 new features are as follows.

Demographic Targeting: Advertisers will now be able to select their target audience, based on age groups as well as gender separation. They can accordingly set higher bids for their target audience, while paying lower rates for others. Considering the wide spread user base which Yahoo! has, it would certainly help advertisers save some money, if they pay a lower rate for the non-target audience.

Ad Scheduling: Depending on the time of the day, or the days of the week, when the advertiser expects to receive a better response from his target audience, or the timings of his business, an advertiser can decide to run his ads at certain times, and on certain days. This ad schedule can be set according to the users time zone or according to the advertisers time zone. A similar feature was available in the past, and was known as dayparting.

Enhanced ZIP-level geo-targeting: The geo-targeting facility provided by Yahoo! Search Marketing, has been further updated compared to the beta ZIP- level targeting which was available earlier. Advertisers will now be able to mix and match geo-targeting settings at different levels, within a given ad campaign or ad group. The newly introduced dynamic mapping features will allow advertisers to select individual ZIP-codes and ZIP-codes surrounding them.

All of the above features will be available on both Sponsored Search and Content Match.

Considering the current financial meltdown, it would be good for advertisers to have these options with which to reach the maximum possible target audience with the minimal possible expenditure.

Two of these new products are meant for display ads while the third is for sponsored search ads.

Search Retargeting

Search retargeting allows advertisers to display ads to their target audience, based on the user’s search activities. For e.g. when a user types in the keyword ‘Sandals’, the advertiser can display ads for different types of footwear, encouraging the user to make his purchase online.

According to reports from the University of Phoenix, Search Retargeting allowed them to reach their targets at 50% lower costs than required in regular display retargeting efforts.

Enhanced Retargeting

Enhanced retargeting enables the advertiser to put up dynamically generated display ads across the entire Yahoo! network, depending on the user’s activities on the advertiser’s site. For e.g. when a user visits a page on the Yahoo! network, looking for details about flights from one destination to another, the advertiser can make a personalized offer to that customer for that specific flight.

A leading online travel company reported a 230% increase in the total bookings and a 651% increase in the click through rate with enhanced retargeting, compared to the traditional retargeting methods.

Enhanced Targeting

This is a combination of ad scheduling and demographic targeting within search. With this product, advertisers can control where and when the ad is shown, at the campaign as well as ad group levels. They can decide the time of day and days of the week when ads should appear. Advertisers can also decide the demographics (gender and age group of the user) that their ad should reach. The advertisers will be able to vary bids according to the different segments to increase the ability to reach a desired audience.

These announcements were made at the Interactive Advertising Bureau’s annual conference, as part of Yahoo!’s keynote presentation. During their presentation Yahoo! urged advertisers to stop the “artificial boundaries” being put up between display and search ads and make optimal use of search targeting products reach maximum users.

Rich Ads on Yahoo! Search results pages are being tested by a handful of advertisers since the end of 2008, and so far the results are encouraging. In fact, Yahoo! claims their advertisers have reported a rise of 25% in the click through rates for these ads. Not only that, the brand exposure and conversion rates have also reportedly increased significantly.

This new service allows the advertiser to add video, images, custom links and custom search boxes within their ads. These ads are placed in a separate box than the regular “Sponsored Results” and are labeled as “Promotional Results“, as shown below:

Click on the image to see a live Rich Media ad on Yahoo! search

Advertisers will also now be able to customise the ad to suit their needs. It will also be possible for them to decide the day, time and other demographics, for when the ad should appear, as is seen with TV and radio ads.

Google tested video ads in search results last year, but they have not gone mainstream with the feature. Yahoo! seems to be following in Google’s footsteps, but seems determined to beat them to the punch in delivering a rich media ad solution first.

Ads with the video and images embedded within the search results would certainly increase the impact that the ad has on the user. Yahoo!’s Rich Ads also allow the creation of deep links to the relevant pages and they can also contain boxes to enter data or select from lists of products, allowing customers to search for the product without having to navigate away from the page. Brand logos can also be incorporated into the ads.

While these features help advertisers and agencies to increase brand recognition and advertiser conversion rates, making them attractive to advertisers, it is not doubtful that they will make Yahoo! any dearer to end users. The company is desperately trying to lure advertisers, and could be shooting itself in the foot by alienating end users in the process.

Michael Walrath, Yahoo!’s senior vice president advertising marketplaces group says, “As the economy continues to put pressure on advertising budgets, marketers are looking for increased accountability for every dollar they spend. Yahoo!’s new targeting products significantly improve the ability for search and display advertisers to reach their target audience providing increased efficiency and accountability.”

Don’t they ever learn? Google had it right to start with – forget advertisers – concentrate on getting users and the advertisers will automatically follow.

In the last few days there have been some stories doing the rounds that this deal would be revived in a round about manner. It was suggested that Microsoft would lend money to some executives and investment bankers, who would then buy out Yahoo! at the price of about $13 per share, which is just a little over the current market price, and then sell it back to Microsoft. Sources at both the companies have rubbished these stories for now.

Acquisition rumours may have been fuelled by a comment by Steve Ballmer, in an interview with the Financial Times, where he said, “now is a good time for the software company to buy.”

However, in an interview with the Fox Business Network last week, Steve Ballmer told Brian Sullivan that the attempt to acquire Yahoo! was “a thing of the past”. He made it very clear that the deal would not be revived, while still keeping his options open about a partnership in any other form.

During the unveiling of the next Windows operating system, Windows 7, Steve Ballmer also admitted that the current financial crisis had affected the IT industry adversely, and it was realistic to expect that fewer people would be buying technology at the moment. While he sidestepped questions about the possibility of layoffs at Microsoft, he did acknowledge that it was important to conserve cash resources and be prudent about expenditure.

In the meantime, Yahoo! has just named Carol Bartz, who was the chairman of Autodesk, as its new CEO. This announcement has once again raised speculations that the Microsoft-Yahoo! deal may go through under her leadership.

Amongst the supporters, oil investor T. Boone Pickens, has bought 10 million shares, a hedge fund, Third Point, led by activist Dan Loeb, which had 1 million shares of Yahoo! in its possession on March 31, now has more than 5 million shares and may collect up to 10 million shares. And yet another hedge fund, Paulson, has 50 million shares of Yahoo!

It is believed that Icahn’s supporters now have over 80 million shares, that is more than 5% of Yahoo! between them, and Mr. Icahn himself has the option of purchasing another 49 million shares.

Although Microsoft has withdrawn its offer to acquire Yahoo! at $33 per share, the two firms are in talks with each other to arrive at a working relationship that would be mutually beneficial to both. The shareholders of Yahoo! are annoyed at the board’s decision because, according to a source, “they haven’t laid out a game plan that gets you to $33 to $34 per share on a stand–alone basis”.

Yahoo! is trying to fend off Icahn’s advances to replace the board by delaying their 3 July 2008 shareholders meeting to the end of the month. In the meantime the current board of directors at Yahoo! need to either fix an alternative deal with Microsoft buying only part of the company or an advertising agreement with Google that could inject $1 billion revenue per year.

Since comparisons with similar social networks are inevitable, it should be noted that traffic on MySpace reduced slightly from 60.3 million to 58.7 million, while that on LinkedIn shot up from 7.8 million to 8.6 million during the same period. Coming back to Facebook, the average yearly growth of the network, which was 98% between 2006 and 2007 has fallen to 56% between 2007 and 2008.

Seasonal variations in traffic have occurred on Facebook in the past as well, but that does not seem to be the case here, as other networks such as LinkedIn, Buzznet and Imeem continue to grow. It seems more likely that Facebook users are simply getting tired of it as the novelty wears off and application clutter grows.

Plans are afoot to launch a new Facebook profile layout that will be devoid of all the application spam and clutter currently seen on most user profiles. It remains to be seen whether Facebook will be able to gain back its lost users with these modifications or whether the social network has already lost its appeal and these changes come too late.

News of this loss in popularity does not seem to have reached Microsoft. The blogosphere is abuzz with rumours that Microsoft may be looking to acquire Facebook completely for somewhere between $15-20 billion, after buying Yahoo!’s search business.

The only visible advantage, according to Janet Meiners at Marketing Pilgrim, seems to be that Facebook, which has a lot of walled-off content will allow Microsoft and Yahoo! Search (which will by then also be owned by Microsoft) to access these pages, while keeping Google at bay. It seems unlikely, however, that this move alone will give Microsoft an edge over Google.

If the rumors are indeed true, Microsoft seems to have developed a worrying new penchant for picking up Web properties that are declining – first Yahoo! and now Facebook – rather than snapping up new and upcoming businesses like they did in the past.

In a brief formal announcement Microsoft said have resumed talks with Yahoo! The talks are not about acquiring Yahoo! but rather to find an alternative transaction that would help Microsoft to improve its services, and also help Yahoo! in the bargain.

However, Microsoft have also mentioned that the company reserves the right to reconsider the original option of buying over Yahoo! entirely, depending on the circumstances that may arise in the near future, following talks with Yahoo! or the shareholders of Yahoo! or Microsoft or any other concerned party.

This change of sentiment, following the statements issued earlier by Microsoft on withdrawal of their original offer, may very likely have something to do with the ongoing shareholder unrest following the failure of the original deal, especially the threats issued by Carl Icahn to have the entire board of directors of Yahoo! replaced during the next shareholder meeting.

According to the Financial Times, Steve Ballmer, Microsoft’s chief executive, had highlighted Microsoft’s interest in the Yahoo! search business when he abandoned his pursuit of a full acquisition. In a letter to Yahoo at the time, he said Microsoft had dropped its offer partly because of a potential search advertising alliance between Yahoo and Google, which had been under discussion for some weeks.

Yahoo! has also issued statements to the effect that they are willing to consider any option that will maximise their strategic value. As of now nothing has been finalised.

Leading the pack is Carl Icahn, who purchased 50 million shares – about 4 percent – of Yahoo! at $1.3 billion, after Microsoft walked away from the deal. He is known to have a history of waging corporate battles against companies and pressurizing them into taking decisions they had earlier resisted.

Icahn has threatened to motion for an alternate board of directors to replace those who are currently on the board, during the next shareholder meeting, which has been scheduled for July 3. The deadline to nominate these directors is May 15.

According to the Wall Street Journal, he is not the only one baying for blood. There has been a lot of criticism from several shareholders over the board’s decision to refuse the Microsoft offer. Bill Miller of Legg Mason, Yahoo!’s second largest shareholder hopes Mr. Icahn can force the parties back to the negotiating table.

Although it is the majority shareholders who will determine the end result, a lot of small share holders are also upset with the present situation and feel that Yahoo! was wrong to turn down Microsoft. One of them, Eric Jackson, has decided to launch a ‘vote no’ campaign, to convince shareholders to out vote all 10 directors presently on the board. He wanted to wage his own proxy battle but realized that he could not afford the million dollar fight; hence the grass roots campaign. He feels the board has made several mistakes over the years, and Yahoo! shares have remained more or less steady over the last 4 years, in spite of the stock market rising 30% and Google stock going up by 440%.

According to Shirley Westcott, Managing Director of Policy at Proxy Governance, Mr. Icahn’s entry into the arena will put a lot of pressure on Yahoo! to renegotiate with Microsoft. She further adds, “if there is no progress, between Yahoo! and Microsoft, you could end up with enough angry shareholders and institutions voting the whole board out of office, and that would be a horrible scenario.” Robert McCormick at Glass Lewis and Company says that in such cases the company often negotiates with the main dissident shareholder and offers them a few seats on the board rather than risk losing a proxy battle which would be distracting, expensive and time-consuming for both sides.

Yahoo!, Mr. Icahn and Microsoft have all declined to comment.

The policy change has been made following a change in U.K. legislation regarding advertising of gambling services. It used to be illegal to issue ads that contained any invitations for gambling, or a mention of the money, bonuses or prizes that could be won by gambling. Following the recent changes in legislation, any or all of the above subjects can be incorporated into an ad.

Yahoo! has decided to update its own editorial policy and allow gambling to be promoted in ads displayed through their search marketing platform. The email sent by Yahoo! says:

• Previously, gambling ad copy could not contain invitations to play or any mention of money, bonuses and prizes. Under recent UK legislation on gambling advertising, UK gambling ads may now include any or all of these. This new legislation does not however extend to gambling advertising in Northern Ireland or Republic of Ireland, and so the relaxation on ad copy restrictions applies only for advertising which is run in mainland UK.
• Advertisers are responsible for blocking any regions within the market where their ad copy is not compliant with local gambling advertising legislation. Because the laws on gambling advertising are different in Ireland and Northern Ireland, as an advertiser with gambling ads on UKIE properties, you must use your geo-targeting settings to block non-compliant ad copy in Ireland and Northern Ireland.
• The existing rules on responsible advertising continue to apply, and gambling ads may be rejected on the grounds that they:
• Lead people to adopt styles of gambling that are unwise
• Are socially irresponsible and/or encourage excessive gambling
• Exploit the young, the immature or those who are mentally or socially vulnerable.
• The existing rules on location and licensing of gambling advertisers also continue to apply.

Google currently prohibits any form of promotion of gambling, even if it is for play-for-fun websites. By relaxing their rules on gambling ads Yahoo! could be winning some money that Google has left on the table.

The minimum bid amount for each keyword may now be above or below $0.10. Account holders will be informed about the changes in due course.

Sources at Yahoo! explain that the new minimum bids will be like the reserve prices held at auction houses. This price will be based on a variety of features such as quality and value. If the quality of an ad is good and it receives more clicks than those of its competitors, it will receive a higher ranking and the minimum charge will be lower.

If the ad quality is poor Yahoo! will charge more by raising the minimum bid, but will still keep running the ad, which seems to show that they do not really care about quality if the advertiser can pay for it.

Keyword value is calculated using the number of advertisers bidding on the word and the amount they are willing to pay for it. Ads will be displayed for a keyword when the advertiser’s bid equals or exceeds the minimum bid fixed for it. If the advertiser’s bid falls below the minimum amount required the keyword will be inactivated.

Account holders will be informed via the Yahoo! Search Marketing dashboard about these changes and they will be allowed a grace period to make the necessary bid adjustments to keep their keywords active. The new system will be similar to Google’s and is likely to increase Yahoo!’s revenue at least in the short term, as it seems unlikely that the minimum bid for any word will be set below $0.10.

In the long run, however, it is possible that advertisers may go elsewhere rather than pay an exorbitant charge for ad placement on Yahoo!, in which case Yahoo! may end up being the ultimate loser. Advertisers will also have no way of knowing what their competitors are being charged and the level playing field that most advertisers liked about Yahoo! Search Marketing will now be completely lost.

A number of advertisers are already complaining that the new bids have overnight been increased by 2 to 4 times the earlier price and they think it is especially wrong to do so in the given market conditions.

Jim Phillips, one of the many unhappy customers that commented on this announcement, said “I will eventually pull ALL my business from Yahoo! if this is the same as Google. What they are really doing is punishing the advertisers for a slow economy and poor ad revenue from click through. So you pay a LOT more for the few clicks you might get vs. all the impressions you get.”

A number of advertisers also saw the move as a poor way to induce Microsoft to increase the amount they pay to acquire Yahoo! While that may not actually be the case, it has still left the few advertisers that still use Yahoo! Search Marketing quite unhappy.

Yahoo! recently announced that they have been working hard on this aspect of advertising and will shortly come out with a new format called AMP! (Advertising Management Platform) They believe that AMP! Will revolutionize the way the ad industry functions, and make it much simpler to advertise while saving a lot of time and effort.

Yahoo! Press Release for AMP!

Google launched a similar ad management system last month – Google Ad Manager. Yahoo!, as always, is lagging behind. Their new system is not even ready, but they have announced its launch to either give the market a reason to believe in their lofty goals or to give another reason for Microsoft to increase their acquisition bid.

In a statement released on 6th April, Sue Decker, president of Yahoo! blogged about how innovations have changed the world, from old-fashioned postal services to email and VCR to DVR. She believes that the ad industry is in dire need of an innovation to smoothen out the way it works, while cutting out the unnecessary “paper work” and clutter.

A team of dedicated engineers, strategists and managers from the online ad industry have been working to improve this system and Decker thinks that they have achieved their target of creating a system that allows advertisers to book inventory, negotiate pricing, seek approval, find the right audience, create test sheets, test ads and do even more in an efficient manner, without unnecessary faxes and phone calls.

AMP! has been designed to automate advertiser processes, allowing tasks to be completed in a few minutes, rather than weeks, by working through one interface, to buy, search, and display local, mobile and video ads. Yahoo! has already used this format with some of their partners from the Newspaper Consortium, with excellent results.

Yahoo! expects to release AMP! by the next quarter with some of their publishers, advertisers, ad networks and agencies, with the process gradually rolling out over the next year. A video demonstration of the AMP! system can be seen at:

advertising.yahoo.com/amp/

Official Press Release

In a letter to the board of directors at Yahoo!, Microsoft CEO Steve Ballmer says, “Microsoft’s consistent belief has been that the combination of Microsoft and Yahoo! clearly represents the best way to deliver maximum value to our respective shareholders, as well as create a more efficient and competitive company that would provide greater value and service to our customers. In late 2006 and early 2007, we jointly explored a broad range of ways in which our two companies might work together. These discussions were based on a vision that the online businesses of Microsoft and Yahoo! should be aligned in some way to create a more effective competitor in the online marketplace. We discussed a number of alternatives ranging from commercial partnerships to a merger proposal, which you rejected. While a commercial partnership may have made sense at one time, Microsoft believes that the only alternative now is the combination of Microsoft and Yahoo! that we are proposing.”

The first thing that springs to mind when reading this is that the rumours were true – in 2007 and even back in 2006 the two companies were considering ways to partner or join forces!

Another post on TechCrunch UK discusses the regulatory implications of such a merger. Microsoft is no stranger to regulatory scrutiny. The new merger will just add to the heap of inquiries already underway in the EU. The dynamics of this merger will be quite interesting, though…

Yahoo! Search Marketing is the most desirable asset that Microsoft will obtain as a result of this merger. The combined popularity of Microsoft Live Search and Yahoo! Search in the UK and Europe will still amount to less than 20% (even less than 10% in many countries) of the total search market. So by no means could this be considered anti-competitive.

Email and instant messaging, however, are a different story. The combined popularity of Yahoo! Messenger and MSN Messenger as well as Hotmail and Yahoo! Mail would dwarf all the competition. While the services are free, they do represent significant ad inventory, which could irk Google greatly.

Kelkoo and MSN Shopping are both extremely popular shopping portals that were once competitors, but will now join forces. This could create minor issues from a regulatory stand point, but the greater likelihood is the eventual absorption of the Kelkoo brand in the larger MSN portal.

Microsoft’s offer could not have been better timed. Yahoo! recently announced poor results and a bleak outlook, causing their stocks to fall (NSDQ: YHOO). The news has been received well by Wall Street, with shares of both Yahoo! and Microsoft (NSDQ: MSFT) rising in early hours trading and the overall market receiving a much-needed boost of enthusiasm.

If the two Internet giants do merge, it is not clear what will happen to the workforce. Yahoo! will most likely go ahead with the layoffs announced earlier this week. And as the two companies align departments, more downsizing is likely to occur in order to minimize overlap in job functions.

An interesting question stemming from this latest piece of news is ‘what will this merger mean for the search and search marketing industry’?

Update:

An official press release from Yahoo! states that the board have confirmed receipt of the offer from Microsoft and are considering the offer.

1. Beginners usually get carried away by the rankings of their ads. While it is surely advantageous to be #1, rather thanat the bottom of the page or worse, on the second page, where most potential buyers might not even look, advertisers must realize that rankings bear no significance to customers.Consumers buy from websites that offer good services, good prices and reliable products. Few consumers even remember whether the site they had clicked on was number 1 or number 5 once they are on it.

   Moreover, as Mike correctly notes, nowadays search engines offer personalized results in the paid and organic listings, so that people with different requirements get different results even with the same keyword. This just further necessitates focus on other measures of marketing efficacy than mere ranking.

   The only time when traffic without sales can be justified by an advertiser is when they are using search to build their brand. Then too, one must be mindful of the user. Consistently showing irrelevant ads to a consumer can put them off the brand. Companies like eBay have negatively impacted their brand image in the past by advertising on irrelevant keywords such as “Golders Green College”, which then delivered meaningless ads saying “Buy Golders Green College on Ebay”!

2. The next parameter that lures novice search marketers is traffic. While traffic does matter, it is important to differentiate between the window-shoppers and real buyers. For paid search operations, especially, it is a very costly error to have a lot of searchers but only a few buyers.Advertisers pay for every click. The revenue generated from each click may be negligible or even nothing. Hence it is important to focus on overall conversion rates rather than just traffic volumes. For this it is important to use keywords and ad copy that encourage sales and don’t just drive traffic.
3. The final common error that should be avoided is delivering a relentless sales pitch. While it is important to highlight the salient features of a product, advertisers must also provide a proper background to customers. Few consumer like being sold to all the time. It is important for advertisers to address consumer problems rather than just rattle on about product features or advantages or “fantastic prices” and “super deals”!