How Google gains from MS-Yahoo war

SEATTLE: Neither Microsoft Corp nor Yahoo Inc wants to blink first in the software giant's proposed $41.7 billion takeover of the Web pioneer but as the gamesmanship drags on, arch rival Google Inc, the merger's raison d'etre, is the biggest beneficiary.

Not much has progressed since Microsoft offered to buy Yahoo on February 1, a proposal that was rebuffed by Yahoo's board as under-valuing the company. Microsoft has countered by saying its offer was fair and urged the board to take a second look.

The union of its two biggest Web rivals could eventually loosen Google's grip on online search and advertising, but a messy takeover battle followed by a complicated integration could give Google ample time to build on its advantage.

"Google benefits if Yahoo is in a state of limbo," said RBC Capital analyst Jordan Rohan. "The longer the uncertainty persists, the greater lead Google has in online advertising."

The impasse between Microsoft and Yahoo has lasted almost a full month and while analysts think that the two companies will eventually strike a deal, the stand-off shows no signs of a quick resolution.

Microsoft has not ruled out a proxy fight to win Yahoo and Yahoo continues to probe for other options. A proxy fight could stretch until July, the latest it could hold its annual meeting this year, followed by a strict regulatory review process in the United States and Europe.

After clearing those hurdles, Microsoft and Yahoo will have to merge two different advertising systems and consolidate completely separate back-end computer systems. Already, Microsoft is seeking to absorb its $6 billion purchase of advertising services company aQuantive from mid-2007.

All the while, Microsoft has to figure out how to head off a feared mass exodus of Yahoo employees while paring back redundant brands.

Microsoft expects the Yahoo transaction to close in the second-half of 2008, but analyst Marianne Wolk at Susquehanna Financial Group said a deal may not be finalized until early 2009, meaning Google may not face a stronger number two in Web search and advertising until 2010.

Google dominance
Google has proven what it can do when given an opportunity to build on a lead. Over the last year, Google's US Web search market share has jumped 11 percentage points, while Yahoo and Microsoft have both posted steady declines, according to research firm comScore. Factor in Web searches done overseas and Google's lead is daunting -- with three-quarters of the world market.

Its profitable search engine allows Google to devote more money toward research and development for growth areas like Web video advertising and search on mobile phones.

Google's $3.1 billion acquisition of DoubleClick, due for completion later this year, should also shore up its position in display advertising, banner ads placed on Web sites, where it has only begun to make inroads against Yahoo.

Without a clear number two to challenge Google, advertisers and Web site publishers may opt to stick with the status quo. "In the short term, Google is likely to continue to see renewals and traffic wins as various players realize that because of the merger and the time that could take that neither Microsoft or Yahoo could catch up for some time," said Susquehanna's
Wolk.

Microsoft and Yahoo, however, will become a "substantial force" in the online market over time, according to Wolk. At the same time, Google faces its own challenges. Two Wall Street analysts, UBS and BMO Capital, cut stock price targets on Google on Tuesday, citing a comScore report that showed a decline in advertisements delivered by the site in January, even though searches increased in the same period.

Google has raised concerns about a Yahoo-Microsoft deal, saying that coupling the two most often-visited Web portals with Microsoft's desktop software monopoly could undermine competition.

Mountain View, California-based Google could also see its R&D advantage shrink with a combined Yahoo-Microsoft. According to Wolk, Google spends about the same amount of money on Web R&D as Microsoft and Yahoo combined, but as separate entities, there is a lot of overlap in that investment.

"There is a lot of redundant development going on..., and at the end of the day, you don't need both," Microsoft Chief Research and Strategy Officer Craig Mundie said at the Goldman Sachs Tech Investment Symposium.

Little Known 'Boring' Websites That Make Incredible Money With AdSense

LOS ANGELES — Jerry Alonzy figured he'd be working into his 70s at least.

As an independent handyman at the mercy of weather patterns near Hartford, Conn., he'd always made a decent income that rarely grew.

Then he found Google and his life changed. Alonzy, 57, now makes $120,000 a year from the ads Google places on his Natural Handyman website, and he couldn't be more thrilled.

"I put in two, maybe three hours a day on the site, and the checks pour in," he says. "What's not to like?"

In return for placing its ads on websites and blogs, Google pays Web publishers every time one of its ads are clicked. Those clicks help keep Alonzy and his wife living comfortably and talking about moving to Hawaii. "All I need is a laptop and a high-speed Internet connection, and I can live anywhere."

The Internet may be a young person's medium, but the retired and those nearing retirement such as Alonzy have found that they can work the Web just as well. Sometimes, such "Gray Googlers" can live a richer, more financially rewarding life than when they were supposedly working.

"Google isn't just for kids anymore," says Google executive Kim Scott, who runs the company's AdSense program, the ad platform that provides the income for Web publishers such as Alonzy and others.

Take Jerrold Foutz. The former Boeing engineer, 75, started a website a few years ago devoted to one of his passions — switching mode power supplies, which help drive, for instance, the inside of video cameras.

He put Google ads on his smpstech.com site four years ago. After just one month, the first Google check was for $800. The second check totaled $2,000.

"I thought, 'Wow,' " he said. "This was the most amazing thing that ever happened to me. Something I thought would make $50 a year now equals my Boeing retirement check."

That comes out to around $25,000 yearly.

Foutz's experience is not an anomaly.

After Hope Pryor's four kids left home, she grew intrigued with the Internet and learned how to design a Web page. She didn't want it to focus on just her, so she posted some of her favorite recipes on the site.

Now, her Cooks Recipes site is bringing in nearly $90,000 yearly, mostly from Google ads. The holidays are the biggest-producing months of the year.

"Last December alone, I netted $30,000 from Google," she says. "There's not too many people I know who can walk into a car dealership and buy two vehicles at one time. I did just that recently."

While the upside of working with AdSense sounds exhilarating, it's not that way for everybody.

Scott says she posted an unsold novel on Google and earns about $5 a month from the AdSense ads on the site. Al Needham, 74, who runs a site about the care of bees (bees-online.com) from his home near Boston, reaps about $250 a month.

"Forget about getting rich overnight," says Alonzy. "It takes time to learn."

Jennifer Slegg, a consultant whose JenSense blog is devoted to tips for using so-called contextual advertising, says the easy part is getting AdSense up and running. Google provides computer code that must be copied and pasted onto a website. Figuring out how to do that "is very easy for new publishers."

Foutz says even if you've never cut and pasted code before (hint: On Windows PCs, highlight the text, press Control C to copy, then Control V to paste it), "Just follow what Google says. They have very easy-to-understand instructions."

Hard work, big reward

Introduced in 2003, AdSense was an outgrowth of Google's AdWords program, which put sponsored ads at the top of search results at Google's own site. Google created AdSense as a way to expand beyond search listings and onto hundreds of thousands of websites and blogs.

Google rivals Yahoo and MSN have similar programs, but they have found limited acceptance on the Web, where Google dominates both search, with more than 50% market share, and search advertising, with 90%.

Now everyone from big sites such as the New York Times and CNN.com to mom and pop operations such as Cooks Recipes and Natural Handyman have the familiar "Ads by Google" text-box somewhere on their site.

"With AdSense, we fund creativity on any topic," says Google's Scott. "If you have a subject you know something about, write about it, find a like-minded audience on the Internet and we'll take care of monetizing the content."

Or, as Joel Comm, author of the AdSense guidebook The AdSense Code, puts it: "People are amazed. They say, 'Really, all I have to do is write, Google will put ads on my site and pay me?' Yes, it's that simple."

There is a little more to it. The folks who reap the biggest rewards put in long hours setting up their site and feeding it lots of content.

"Write about what you know, write like mad and often," says Alonzy. "The more you write, the more opportunities you have to make money. If you post 500 pages on a topic, you'll have 500 pages with ads, and many more potential clicks."

Google's computers scan the content on Web pages to match it with appropriate advertisers. Articles on Alonzy's website about how to keep mice away might result in ads for pest control services, while a recipe for turkey casserole at Cooks Recipes might generate ads for diet tips and beauty makeovers.

"The beauty of our system is that we have so many advertisers," says Scott. "The content may not change, but our ads change every day. So you'll always see something different there."

Slegg says the biggest mistake new AdSense publishers make is clicking on AdSense ads — their own or others. That's a big no-no in Googleland, and can get you dumped from the program.

The computer won't break

Alonzy and other Gray Googlers say they haven't experienced any problems working in a young person's world.

"Many people my age are scared of computers; they think they're going to break them," says Needham. "The computers aren't going to break. But you won't find out unless you get in there and try."

At $250 a month, Needham's site generates revenue in line with its niche audience of folks who want to learn about bees.

"I bring in enough to fund a free vacation to Key West every year for the family," says Needham, a retired Department of Defense employee.

One stumbling block for many people is translating a great idea into a nice-looking Web page.

In the past, creating a Web page required knowledge of complicated HTML computer code, or learning off-the-shelf Web design software such as Microsoft's FrontPage or Adobe's Dreamweaver.

Now, Google and Yahoo have free tools to create Web pages or blogs. And many Internet website-hosting companies (such as GoDaddy and Brinkster) have online site creators that come as part of their monthly fees. Apple's iWeb is another such tool. With these, AdSense can be automatically added to your pages with the click of a mouse.

"When you retire, you have to have some interests," says Needham. "This is my indoor activity. I did a search online for how to create a website and found lots of good help out there for nothing."

The Internet, he says, opened up a new world for him.

"I started searching for other sites about bees and met some people from Australia with similar interests. We've since become friends, and I went to Australia last year to visit."

The same thing happened with Gail Bjork, 63, who runs the Digicamhelp site from her home base near Tampa. She designed her site but made a friend online in Ireland who has since redesigned it for a more professional sheen.

"My background was art," says Bjork. "I was an art teacher. I didn't know about code. My friend does. So now she handles the design, and I operate the site."

Bjork is a former local school board member who ran a print shop with her husband. A camera buff, she started the site because her friends were always asking for photo tips.

"This started as something to help my friends, and I've gone from a 14-page site to one with over 700 pages," she says. "I'm legally retired now — but not mentally."

Her site brings in around $1,500 a month. Bjork's advice to others: "For anyone, no matter what age they are, if they find something they truly love, write about it. You have nothing to lose but time. And it could really pay off."

MSN gains on search market share

MSN is finally making gains against giant search engines as Google and Yahoo! MSN literally lost years of search market share and have now at least made minor gains against Google.

Latest ComScore results have revealed that following are major engines:

• Google site dropped a total of 1.2% with 50.7% market share in May 2007 and 49.5% share in June 2007.
• Yahoo1 had market share of 26.4% in May 2007 and 25.1% in June 2007 with overall drop of 1.3%.
• Microsoft site had an overall gain of 2.9% with 10.3% in May and 13.2% in June.
• The ask network was steady at 5.0% market share.
• The Time Warner Network dropped from 4.6% to 4.2% from May to June 2007.

ComScore also disclosed some other facts and statistics as:

• • In June 2007, Americans conducted 8.0 billion online searches which was 6 percent higher than may 2007 and almost 26 percent more when compared with June 2006 results.
  • Google solved 4.0 billion search queries, followed by Yahoo sites with 2.0 billion and Microsoft sites with 1.1 billion search queries handled. Ask network had 403 million and Time Warner Network dealt with 341 million search queries. The search market in June declined but still Google and yahoo had increased search query volume.
  • Microsoft sites experienced a momentous increase in search query volume which is about 36 percent up and search engine share with approximate 2.9 share points up in June. Microsoft launched a large part to live search club, in late may which engaged and rewarded users of live search.

ComScore is a great base to know about search market share and even lets one know about latest hit search engine which helps web developers a lot.