Friday, July 18, 2008

Andy Beal's Marketing Pilgrim

Andy Beal's Marketing Pilgrim

Only 39% Growth? Wall Street Demands World Peace from Google Next Time

Posted: 18 Jul 2008 09:31 AM CDT

World PeaceHow many times do we have to read about this kind of "report"? What is wrong with a 39% rise in net income for a quarter? How can that number "disappoint" investors and cause a 10% drop in stock price after the announcement? Your answer: Analysts. Just look at the WSJ report from the 17th says to understand exactly how "poorly" Google performed.

Analysts are about details. After all, look at the root of the word and you can guess what kind of folks we are dealing with here (if you choose to go further with that one, be my guest ;-)). Funny thing is these folks are making projections based on data? WHAT DATA? Google is notorious (or maybe brilliant) for not giving guidance to these people. Of course, the danger there is that these folks have deadlines to meet and personalities to build. Oh, I'm sorry; they are acting in the interest of the shareholders. I keep forgetting that they all aren't Mary Meeker-like in trying to build a personal net worth on hype and theory.

Phew. Sorry I sound mad but I am. How can you fault any company for the following results?

  • 39% jump in revenue from prior year's quarter
  • US paid clicks up 19% from year before (but down 1% from last quarter)
  • They have ONLY added 448 employees in the quarter (how socially irresponsible of Google)

So what effect does this have on the internet marketers of world? Hopefully little in our day to day work. What could happen, however, is that if Google's stock price suffers greatly due to these assumptions being masqueraded as projections that are not realistic Google may need to change focus. What that means is that they may have to start to work to "Please the Street" and we have seen what that can do to companies. Rash decisions that are short sighted due to short term pressure thus models change then who knows what?

What are your thoughts? Should Google "play the game" with Wall Street so this "disappointment" in tremendous growth is more palatable? Do they continue to turn their back on Wall Street and let the market truly decide?

Not for nothing, but if I was asked to be disappointed about a 39% year over year jump in revenue, I would play the "Aw, shucks, we should have done better" game all the way to the bank.

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Pilgrim’s Picks for July 18 - Google Sucks Edition

Posted: 18 Jul 2008 09:18 AM CDT

What is it they say about the squeaky wheel? Well, it’s been over 13 hours now and my Google Calendar is still blank. I have no idea what my appointments or deadlines are for the day. Thanks Google!

For those of you with their lives fully diarized, I present today’s Picks.

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Google’s Russian Monopoly Begins with Acquisition of Begun

Posted: 18 Jul 2008 09:07 AM CDT

According to Mashable, Google just acquired Russian contextual ad company Begun for $140 million and grabbed a monopoly in Russia’s contextual advertising market in the process.

Begun is currently owned by two companies, leading to an interesting double-deal:

[Rambler Media Ltd] currently holds 50.1% of Begun. The transaction will consist of Rambler buying the remaining 49.9% stake in Begun from Bannatyne Limited, affiliated with the Finam group of companies, immediately after which Rambler will sell 100% of Begun to Google subject to certain approvals and conditions precedent for a total cash consideration of US$140 million, of which US$69.9 million is attributable to Bannatyne, with customary closing adjustments.

Anyone know how similar the Russian language is to Klingon? ;-)

Google and Microsoft’s Quarterly Earnings Disappoint; Trouble Ahead for Both?

Posted: 18 Jul 2008 08:33 AM CDT

Both Google (GOOG) and Microsoft (MSFT) reported quarterly earnings yesterday evening: it was not a pretty picture for either company.

First up, Google.

  • Net income of $1.25 billion
  • Revenue of $5.37 billion
  • Q2 earnings of $4.63 with Wall Street expecting $4.74

The Analysts said:

Analysts noted that Mr. Schmidt had made reference, for the first time, to the "more challenging economic environment" in his prominent statement on Google's earnings release. They also observed that Google had taken the unusual step of having Hal R. Varian, its chief economist, on the earnings call with investors and analysts.

Google said:

"We're very well positioned in a slowdown especially if it gets worse," said CEO Eric Schmidt, who added there would be "a flight to quality" if the economy tanked.

Some of the softness in Google's advertising revenue, moreover, was self-inflicted. Jonathan Rosenberg, Google's senior vice president for product management, said that Google had chosen to reduce is advertising coverage — the percentage of Web pages on which it displays advertising — to an all-time low.

"There is some evidence we have been a little more aggressive in decreasing coverage than we should have been," Mr. Brin said.

Next Microsoft.

  • Operating income of $5.68 billion
  • Revenue of $15.84 billion
  • Q4 earnings of $0.46 with Wall Street expecting $0.47

The Analysts said:

"The core business did well, but we were looking for a little bit more out of the Internet advertising business, and expenses were too high," said Andy Miedler, an Edward Jones analyst.

Microsoft said:

Chief Financial Officer Chris Liddell said during a conference call with analysts that heavy spending on the division — from data centers to employees needed to sell online ads — is likely to continue. "The Yahoo transaction would have accelerated our progress," Liddell said, "I can’t promise you you’re going to see massive turnaround in the short term."

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Dear Google, Can I Have My Calendar Back Now?

Posted: 17 Jul 2008 07:46 PM CDT

You may experience difficulty accessing Google Calendar during the
hours of 1:30 pm and 4:30 pm PDT, today (July 17th). For each affected
calendar, this should last approximately 15 minutes.

We apologize for any inconvenience this may cause and appreciate your
understanding.

That’s the message you’ll find at the Google Calendar Help center.

It’s currently 5:50 pm PT–an hour and twenty minutes after the timeslot–and my calendar is completely blank.

Now, before anyone comments “what do you expect for free,” keep in mind that I pay for Google Apps and, as a consultant, I kinda rely on my ability to schedule client appointments.

Google, can I have my calendar back?

UPDATE: It’s 7:20 pm PT and a rather vague response on the Google Calendar Group:

We're aware that a very small subset of people may be seeing an empty calendar, but rest assured that your data is safe. The team is working on a fix.

No apology, no explanation as to what the issue is, nor a timeline for when the data will be back. My response included:

What are we looking at? A few minutes, hours, days, weeks? Do I need to ask Viacom to get a judge to hand over my calendar entries, before I see them again?

UPDATE 2: 12 hours in, and my Google Calendar is still completely empty. Google, this sucks!

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Linky Goodness, July 17

Posted: 17 Jul 2008 04:19 PM CDT

[Something snappy!]

Pilgrim’s Update: Learn online reputation management skills directly from Andy Beal. Attend the Online Reputation Management Workshop and save $400 when you register today!

Yahoo Calls Microsoft Actions Stupefying; Will Sell for $33

Posted: 17 Jul 2008 04:11 PM CDT

I think I’ve made a terrible mistake. Somehow, by using every cliché in the book, I think I just guaranteed that I’ll always have get to be the one covering Microsoft/Yahoo/Google deal news. Well, today we’ll go with mixed sport metaphors. Mixing metaphors is even more fun than just using them!

Okay, so let’s hit one out of the park, shall we? There’s a new letter to Yahoo shareholders today—from Yahoo itself. It’s quite long, and since I’ve been working on synopses today, I’ll go ahead and boil this one down give you just the box score on this one, too. But just because I like you.

Dearest Stockholders,
Carl Icahn and Microsoft are spitballin’ you. Meanwhile, we’re still out running suicides for you: trying to lead in search and display advertising, gearing up out Google deal, tapping into our Asian assets, and staying open for a deal that will provide real benefits.

Let’s go through Icahn’s plays:

  • He just likes to change lineups.
  • He’s traveling—he’ll be selling off his stock ASAP.
  • His backfield is in motion—he has ulterior motives, but no real plan for Yahoo if there is no deal.
  • His lineup isn’t familiar with our game plan, or our company. Icahn has even said that “It’s hard to understand these technology companies.”
  • He thinks he has our playbook and Microsoft’s, but he doesn’t.
  • He doesn’t know which uniform to wear—first he encouraged us to reject Microsoft’s search-only deal and accept the Google deal, now he says we should go for the search-only deal.

Look, this just isn’t the guy you want calling the shots around here. He’s not even a good teammate for Microsoft—other than the fact that neither of them can settle on a single game plan:

But Microsoft’s flip flops and inconsistencies over the past five months are so stupefying that one can only conclude that Microsoft was never fully committed to acquiring Yahoo! either because:

* Microsoft can’t decide what is and isn’t strategically important to its online business;

or

* Microsoft is more interested in destabilizing a key competitor so that it can either enhance its competitive position or buy our highly valuable search business–and the enormously desirable intellectual property associated with it–at a bargain basement price.

Look, we all know Microsoft’s in the clinch, even more than we are. They’re not exactly in the position to take us to the big dance.

Meanwhile, we, your board (the underdogs!), continue to play a good, clean game:

[W]e will sell the entire Company to Microsoft for $33 per share or more if Microsoft will negotiate a transaction that delivers certainty of value and certainty of closing. This is the simplest, most straightforward way to maximize value for you. Second, we remain open to selling only search to Microsoft as long as it provides real value to our stockholders and resolves the substantial execution and operational risks associated with the separation of our search and display businesses.

Third, your Board takes seriously its obligation to examine all value-creating steps it could take and continues to actively examine many of these now, including a potential spin-off of our Asia assets and a return of cash to stockholders.

When it comes down to the wire, vote for us. We’re the ones who will be loyal to our fans shareholders and make sure you get your money’s worth.

For the love of the game,
Roy & Jerry

To me, the most astounding parts of the letter are the offer to sell for $33/share and calling Microsoft’s actions “stupefying” (though they do have a point, I could definitely see Microsoft saying the same thing). What do you think?

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