Timberline Interactive

Yahoo! announced it was buying web analytics business IndexTools, setting the stage for Yahoo to offer an answer to Google Analytics.

Google bought the Urchin business in 2005, and set the web analytics industry on its ear by rebranding it as Google Analytics and giving it away free. Google Analytics is now used by hundreds of thousands of businesses and organizations -- including, says Google, scores of Fortune 500 companies.

Critics note that the software may be "free," but that Google Analytics users give Google something of significant value: data about merchants' traffic, paid search conversion rates, average order values, and more. All that data tells the ad-selling side of Google's business a great deal about how much higher click prices can go before they become uncompetitive with other direct-response advertising media.

Google silenced its critics (see my earlier post below) and delivered yet another quarter of surging earnings growth in the face of speculation that the company's paid search revenues were withering along with a recession-bound US economy.

In the earnings conference call, Google CEO Eric Schmidt -- speaking softly but carrying a big stick -- made a few, clear points:

• "Paid click growth is much higher than has been speculated by outside parties."
• "We are showing fewer but even better ads."
• "We're well positioned for 2008 and beyond -- regardless of the business environment that we find ourselves surrounded by."

In other words? In your face!

Google shares soared 18%, past the $500 level for the first time in months.

This should be a thrill to investors and soap-opera lovers alike! Google's Q1 2008 earnings call webcast will be streaming across the internet today at 1:30 pm Pacific time (4:30 pm Eastern time; you midwestern and mountain folks can do the math).

Why, if we don't own GOOG, should we care? Because it raises the curtain on a big question: Where is the online ad market going?

After quarter after quarter of torrid growth -- and a fourth quarter 2007 surge of 25% -- Google reportedly slowed to a crawl early this year. ComScore has been tracking anemic 2% to 3% growth in paid ad clicks, and although the firm took heat for the accuracy of their numbers, given the abruptness of the turnaround, many analysts have come around to the view that the numbers are real, and that they point to 1) the slowdown in the overall economy, and 2) normal post-holiday seasonality to which, up till now, Google has been immune.

While more experts accept the notion that fewer people are clicking ads, the other unanswered question is about ad quality. Google and Yahoo have been retooling their ad-serving algorithms to focus on higher-quality ads and higher-quality clicks (the latter by weeding out fraudulent and accidental clicks, better policing the quality of the content networks, etc.). If Google is, as a result of higher click quality, attracting a higher cost-per-click, the earnings machine may still be operating at full tilt. We'll know the answer this afternoon!

* (CNN Money sums up the story nicely.)

Well-known ecommerce retailing expert Lauren Freedman of the e-tailing group released an Online Chat survey, in cooperation with inQ, an ecommerce chat provider. The study assessed how 31 retailers and telcos use online chat technology to sell.

Christophe Cremault, senior vice president of marketing at inQ, said "We determined key dimensions of human interactions with online shoppers that are critical to inQ's customers' or live chat's success. We wanted to measure to what degree these dimensions have been adopted across the industry, and commissioned the e-tailing group to conduct a survey." InQ refers to these as "human interaction metrics," and tracks them as part of its HI Metrics service.

"One of the most surprising -- and disappointing -- findings when I conducted these chats was how seldom a chat culminated in the agent asking for the sale," said Freedman. She added "When a consumer is engaged in a live chat, the merchant should be opportunistic and when appropriate ask for the sale. You wouldn't expect to visit a retail store and not have the associate encourage you to buy the merchandise you had just tested or tried on. Not doing so is missing an enormous opportunity and in today's retail climate getting the sale is imperative."

Here are some key findings and suggestions for improvement:

Chat is not located to sell. 88% have chat on customer service pages while only 42% offer it on product pages.
Too-low usage of proactive chat. Only 15% leverage this technology.
Offering alternative or better products occurs too infrequently. Average rating of rating 1.7 out of 5.
Insufficient encouragement to buy. Average score of 2.7 out of 5 means a substantial number of potential sales are ignored.
Unacceptable response time. 39 seconds average is below par, especially when half the sites surveyed connect in 3 seconds or less.
Near-perfect customer service. With one exception, everybody did a great or excellent job at answering the initial question.
Technology works (mostly). With a couple of exceptions that required (unsuccessful) downloads, the technology does not seem to be any issue.

For a complete copy of the HI Metrics report, or to learn how inQ's HI Metrics differ from the industry at large, email Lisa deSouza at ldesouza@inq.com.

This morning our spam filters and those of some of our clients were clogged with a number of bogus emails purporting to be from Google AdWords. Bearing the subject line "Please Re-activate your account," they resemble some actual billing-info alerts from Google, but they are pure phishing scams -- sent to random email addresses and meant to get receivers to cough up their credit card info.

The sender email address and the links are spoofed to make them appear to be Google addresses. When you "view source" you'll see the links actually point to a "Adwords.Google.com" subdomain on the Chinese domain hki045.cn, or other non-Google domain. If you receive similar messages, IGNORE AND DELETE THEM! DO NOT CLICK THROUGH.

The copy of one of the emails we received is as follows:

---------------------------------------------------------------------------------
Dear Google Adwords Customer,

Your ads have stopped running because we were unable to process your billing information.
To activate your account and start running your ads, enter your billing information.

In order to activate your account and start running your ads, enter your billing information.
Pease sign into your account at http://adwords.google.com/select/login, and update
your billing information.

Once your account is reactivated and your billing information has been processed,
any your ads and campaigns can begin running immediately on Google.

----------------------------------------------------------------------------------
This message was sent from a notification-only email address that does
not accept incoming email. Please do not reply to this message.

----------------------------------------------------------------------------------

Google Adwords Team

eMarketer posted a great recap of the Virtual Worlds Conference, in which online gaming executives talked about their industry, growth trends in the online gamer audience, and the mixed experiences of advertisers who have set up shop in virtual worlds like Second Life.

Robin Harper is senior vice president of Linden Lab, the San Francisco company behind Second Life. She told eMarketer that some disappointments in the virtual advertising space could be chocked up to a "Build It and They Will Come" mentality.

"Like any other campaign, you have to consider what your objectives are," said Ms. Harper. "Building a virtual store and then not staffing it properly will leave customers disappointed."

eMarketer's piece also shares survey results from a Deloitte/Harrison study. Headed "Types of Online Ads that Influence Users," the list is topped by search engine text ads top the list. Ads in "Web 2.0" media like online games and online videos bring up the rear. Unsurprisingly, oung "Millenials" and "Gen Xers" surveyed a little higher on the impact of ads in virtual worlds , they still corresponded with the overall totals.

• Search Engine Ads: 78%
• Interactive ads incorporated into information or entertainment: 62%
• Banner Ads: 60%
• Video Pre-roll Ads: 31%
• Video Post-Roll Ads: 19%
• Embedded Video Ads: 17%
• Ads or Product-placement in Online Virtual Worlds: 17%
• Ads  or Product-placement in Online Video Games: 15%

Say goodbye to 10-cent minimums on Yahoo. The company has started tweaking the minimum bid requirements for its Yahoo Search Marketing text ads, so they will now be calculated based on market demand and ad quality scores.

Mediapost's Tameka Key quoted a Yahoo spokesperson as saying the move was designed to "More to more closely align keyword bids with the value and relevance associated with those keywords."

On SearchEngineLand, Barry Schwartz offered some screen shots of the new alerts you'll see for any key terms affected by the change. He also provided a number of guidelines for keeping your click costs low and your ROI high.

As with past minimum-bid increases, few high-volume positions will be affected by the change, as market forces have already pushed the effective key terms well above the 10-cent floor.

We are now beta-testing a new feature for TI Commerce: an automated system that identifies abandoned carts and generates customer-service emails to the customer to convert sales that would otherwise be lost.

Abandoned cart emailing programs can be a huge boon to online retailers. On average, about 50% of visitors that begin an online transaction abandon their cart before completing the order.

Many orders are abandoned out of simple confusion, distraction, concerns about security, or other factors that can be responded to in a well-crafted customer-service message. Estimates vary on how much gain is to be had from abandoned-cart recovery:

• Lighthouse Depot reported about 5% conversion from their abandoned cart program (Internet Retailer)
• Marketing Experiments reported over 4,000 recovered orders for one customer
• Limoge Jewelry converted over 13% of abandoned cart emails into buyers (Hacker Safe study)

The Timberline programming team put together the solution, in response to client demand and guided by their particular requirements. Using custom html email templates with a low-key and friendly "can we help you complete your order?" message, and supporting the outreach with toll-free telephone or online chat access are among the best practices we recommend.

We'll be updating Timberline clients on this new feature in the weeks to come, or contact Bud Reed at 802-388-8322 x 201 for more information.

With talk of recession hanging in the air and consumer confidence on the wane, businesspeople might be expected to be jittery. But while the national and global economic news is certainly relevant, we see a different reality on the ground with the businesses we talk with.

What's cooking at our clients this spring? Lake Champlain Chocolates is gearing up for one of its major gift-giving seasons, offering Mother's Day chocolates, truffles, gift baskets and the like. Along with Christmas, Valentine's Day and Easter, Mother's Day is one of the most popular times of the year to send sweets.

At Gorton's Fresh Seafood, the emphasis is on sending a gourmet birthday or anniversary dinner. Gorton's will also gear up for Father's Day on June 12, when lots of dads receive live lobster and surf-and-turf gifts.

Meanwhile the tool company Garrett Wade is greeting spring by rolling out new gardening and outdoor tools, grills, and woodworking tools. spring is a busy season for do-it-yourselfers, and Garrett Wade also does brisk Father's Day business.

VBT Bicycling Vacations, which offers deluxe bicycle all over the world, is putting the spotlight on its most popular destination, Italy, with its "Bella Toscana Festival." The promotion includes mystery photo contests, authentic Tuscan recipes, and free prizes like rare gourmet olive oil to visitors who book one of their Tuscany bicycle tours.

Yahoo -- in the crosshairs of a takeover bid by Microsoft that Steve Ballmer says may soon go hostile -- is reaching out to arch rival Google.

Yahoo will provide some of its advertising space to Google AdWords ads, in a two-week experiment that is seen as testing the waters for a broader partnership. Of course it may just be posturing by Yahoo, which has countered that Microsoft's offer is too low, and has been scrambling for weeks to find white knights to save it from either 1) being gobbled up by Microsoft in a hostile bid, or 2) being made increasingly marginal in the search and search-advertising game.

Meanwhile, Google has no interest in a Yahoo-Microsoft marriage. On its blog, Google (which knows a little something about competition) whined that such a deal would be anticompetitive.

The partnership will display Google ads in response to about 3 percent of Yahoo searches made in the U.S.

Cuddling up to Google may help Yahoo fend off a takeover bid, but to search marketers like Timberline Interactive, the attractive thing would be more exposure with less work. Why manage ad campaigns in both Google and Yahoo if Yahoo would simply roll over and syndicate our Google ads across its whole platform?

In the short run, that would certainly make things more convenient for online marketers. But talk about anticompetitive! In the long run, it's best for marketers when a few robust ad platforms are competing for their business. Search-engine ads and other online advertising products will be more fairly priced, and offer better management tools and targeting options, when there are more strong players in the game, not fewer.