Online Advertising: Google rowing with the social networks
Despite a year 2007 marked a net profit of 4.2 billion dollars, Google has disappointed analysts. Its strategy on social networks, mySpace in mind, fishing. For its part, Microsoft is pleased with its partnership with Facebook.
Its partnership with MySpace to integrate listings on the social network, did not allow Google to generate anticipated revenue, as evidenced by the financial results that the company has just published internet for the year 2007.
The record is satisfactory, but below analyst expectations, in part because of an increase in costs to acquire traffic that is costly to the company. GM officials acknowledged that its inclusion on the social networks has not reported as much as one might expect. Without going into details, they evoke "some partners program sponsored links AdSense, whose payments are guaranteed," according to the chief financial officer George Reyes. In fact, Google has to pay the social network even if users do not click on the advertisements. Their agreement stipulates pay him a minimum lump sum.
"I do not believe that we have yet found the unstoppable way to advertise on social networks and to derive income. "Said Sergey Brin, co-founder.
Google doubting analysts
The stock immediately dropped to finish at 564 dollars late in the day; early November, it had peaked at $ 747. Still, Google has still garnered over the year 2007 net earnings of $ 4.2 billion - up from 3 billion in 2006 - for a total turnover of 16.5 billion dollars, against 10.6 billion the year before. But this performance is not enough for analysts, pointing loopholes.
"When the greatest player in the industry of online advertising, which in the hands monetization tool most advanced, talks about her difficulties in making money with certain types of pages, this may be the reflect a problem faced by the entire industry, "said Derek Brown, an analyst for analysis firm Cantor Fitzgerald.
By signing with MySpace, then number one network with 100 million members, Google had topped the pole Yahoo and Microsoft, and hoped to win the jackpot. The Redmond company had responded by picking up a contract with Facebook. His initial investment of the social network was then extended their partnership to include international and all types of advertising.
The leaders of Microsoft contend that the rate of monetization is good and constantly growing.
Yahoo, meanwhile, is a bit behind in this business. And the rivalry with Google will go crescendo, if the takeover bid by Microsoft to Yahoo results.
Asked methods?
How can we explain these differences of analysis? "Google has tried to apply mostly unedited its system AdSense MySpace, while Microsoft has tested various advertising techniques, including those appearing in blocks contextual or in the form of banners, for example," says John Tinter Microsoft who negotiated the agreement with Facebook.
"We have improved the level of targeting of advertising and how to propose. We have adjusted our approach more as they, "he insists.
But social networks are really the goose that lays the golden eggs have been waiting for? Mark May, the research firm Needham & Co., had reservations. "Today, social networks, like messaging, are communication tools that generate revenue still difficult with the publicity. This change, but it will take a lot of time.
Its partnership with MySpace to integrate listings on the social network, did not allow Google to generate anticipated revenue, as evidenced by the financial results that the company has just published internet for the year 2007.
The record is satisfactory, but below analyst expectations, in part because of an increase in costs to acquire traffic that is costly to the company. GM officials acknowledged that its inclusion on the social networks has not reported as much as one might expect. Without going into details, they evoke "some partners program sponsored links AdSense, whose payments are guaranteed," according to the chief financial officer George Reyes. In fact, Google has to pay the social network even if users do not click on the advertisements. Their agreement stipulates pay him a minimum lump sum.
"I do not believe that we have yet found the unstoppable way to advertise on social networks and to derive income. "Said Sergey Brin, co-founder.
Google doubting analysts
The stock immediately dropped to finish at 564 dollars late in the day; early November, it had peaked at $ 747. Still, Google has still garnered over the year 2007 net earnings of $ 4.2 billion - up from 3 billion in 2006 - for a total turnover of 16.5 billion dollars, against 10.6 billion the year before. But this performance is not enough for analysts, pointing loopholes.
"When the greatest player in the industry of online advertising, which in the hands monetization tool most advanced, talks about her difficulties in making money with certain types of pages, this may be the reflect a problem faced by the entire industry, "said Derek Brown, an analyst for analysis firm Cantor Fitzgerald.
By signing with MySpace, then number one network with 100 million members, Google had topped the pole Yahoo and Microsoft, and hoped to win the jackpot. The Redmond company had responded by picking up a contract with Facebook. His initial investment of the social network was then extended their partnership to include international and all types of advertising.
The leaders of Microsoft contend that the rate of monetization is good and constantly growing.
Yahoo, meanwhile, is a bit behind in this business. And the rivalry with Google will go crescendo, if the takeover bid by Microsoft to Yahoo results.
Asked methods?
How can we explain these differences of analysis? "Google has tried to apply mostly unedited its system AdSense MySpace, while Microsoft has tested various advertising techniques, including those appearing in blocks contextual or in the form of banners, for example," says John Tinter Microsoft who negotiated the agreement with Facebook.
"We have improved the level of targeting of advertising and how to propose. We have adjusted our approach more as they, "he insists.
But social networks are really the goose that lays the golden eggs have been waiting for? Mark May, the research firm Needham & Co., had reservations. "Today, social networks, like messaging, are communication tools that generate revenue still difficult with the publicity. This change, but it will take a lot of time.
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