Google Can’t Do Old Media; Pulls the Plug on Radio Ads
Google’s plans to extend its AdWords platform to traditional media appears to be going up in smoke as the economy falters. The company has announced that it’s discontinuing its radio advertising program, a business it got into back in 2006 with the acquisition of dMarc Broadcasting. The news follows word that Google would be pulling out of print advertising as well, which was announced less than a month ago.
The project was not all in vain, however. In a blog post, Google writes, “we will use our technology to develop Internet-based solutions that will deliver relevant ads for online streaming audio. We are dedicating a team of people at Google to explore how we can best add value for advertisers, broadcasters and listeners in this emerging advertising space.” In other words, a potential competitor to the podcast ad networks, which have experienced plenty of struggles of their own.
As for TV advertising, the last remaining arm of Google’s plans to move into the traditional media, the company claims it’s not going away. They write, “we will continue to invest in our growing TV advertising business, where we can measure audience response and help advertisers understand how effective their ads are.”
Meanwhile, the loss on the dMarc buy probably wasn’t huge by Google standards. The deal for dMarc was initially for $102 million, with incentives that could’ve pushed the total value of the acquisition to more than $1 billion. With the shutdown of Google’s broadcast advertising program, it’s safe to say that those incentives weren’t reached.
Make Your Site More Social With Google Friend Connect’s Social Bar
Google’s new Social Web Blog introduces us to the the social bar, a new gadget that “concentrates many of the basic social functions into a small strip at the top or bottom of your webpage.”
The social bar, which is a small strip that will appear atop web pages with the inserted code, highlights recent site activity in a global fashion, and displays an expanded view of your site’s activity feed, comment wall, and member list. Site owners can opt to enable the bar solo or in conjunction with other Friend Connect gadgets (like the one we have in our sidebar), and deploy it site-wide or keep it page-specific.
To add the social bar to your site, just head over to Google Friend Connect, log in, select your site, click on “social bar,” customize your options, and generate your code. The HTML code can be then placed anywhere within the body of your site’s HTML.
With the social bar, you’ll have an immediate way to bake community and social activity into your site without adding more clutter to your side bar.
Add Google Search and AdSense to Your Mobile Website
Google search can be found integrated on tons of sites across the Web, including this one. Now, Google is extending that functionality to the mobile Web, where publishers can now integrate Google search and earn money on the revenue generated from clicks on mobile ads.
Much like Google’s custom search for websites, the mobile version can be branded with your own logo and design to make it feel for like your property. From there, users can search the Web as well as Google’s local, image, and news content.
Just as it does on the Web, Google dominates mobile search in terms of market share. Their mobile search experience is sparse and quick-loading, just like Web search. Extending this functionality to publishers, who can also generate revenue from adding Google mobile search, is simply a slam dunk.
As for how profitable this could be for publishers, the ads are naturally powered by AdSense for Mobile, which has already been in use for selling contextual ads on third-party mobile sites. Though the ad market might currently be weak, search typically performs better than contextual, so there is certainly money to be made here, both for Google and publishers.
AdSense for Mobile Search isn’t yet up-and-running for everyone to test, however. The company is currently looking for beta testers – the application can be found here.
Coming Soon: Google Chrome Extensions
Google has already indicated that it plans to offer a platform for Chrome browser extensions, but now we finally have what looks like a firm date on when that will arrive. Apparently, a Google developer conference scheduled for May 27th will include a session on developing extensions for Chrome, which leads Google Operating System to conclude that we’ll see the extensions platform go live on or before that date.
The Chrome team has already published documentation outlining general goals and principles for how they believe the extension system should operate. High on the list of reasons that adding extensions to Chrome is important is that it will make the browser more attractive to “users coming from other browsers who are used to certain extensions that they can’t live without.”
While extensions will certainly make the browser more attractive to a certain subset of users, the bigger fish to fry for Google is adding a Mac version. That too is in the works (see documentation here), but if Chrome wants to draw in a lot more users of its browser, Mac support will be key, as these users have so far been completely shutout of experiencing the benefits of Chrome.
As for how Chrome is doing so far, in addition to their self-reported 10 million downloads, our internal numbers show that Chrome is currently used by 4.50% of our visitors, up from 4.00% in the previous 30 days. Those numbers are no doubt higher than the general population given our tech focus, but point to a slight uptick in Chrome adoption.
AOL to cut 700 jobs: internal memo
NEW YORK – Time Warner Inc's AOL will cut about 700 jobs, or 10 percent of its workforce, as it copes with an advertising slump, in a move that could make the slimmed-down company more attractive to possible merger partners like Yahoo Inc.
The AOL offices in Beverly Hills, California are pictured November 12, 2007The Internet unit will also eliminate merit-pay increases this year to help minimize layoffs, AOL Chief Executive Randy Falco said in a memo circulated to employees on Wednesday. A copy of the memo was obtained by Reuters.
Most of the job cuts will be made in the United States and will be finalized by the end of March, he said. The rest will be made abroad over the next several quarters.
Falco said the steps were a result of the deepening recession. "Online marketers have tightened their ad buying across the board, reducing their spend by hundreds of millions of dollars," he said.
Time Warner has been in deal talks with Yahoo and Microsoft Corp to find a way to combine AOL's advertising business with either or both of those companies, aiming to gain greater audience scale.
Earlier this month, Time Warner Chief Executive Jeffrey Bewkes met with Microsoft CEO Steve Ballmer and Yahoo Chairman Roy Bostock at Time Warner's New York headquarters.
The additional cost cuts at AOL could help combination talks with potential partners as all sides seek ways to improve operating efficiencies in an increasingly difficult online advertising market.
But even as Bewkes explores an AOL deal, the Internet pioneer is being revalued downwards because of the tough economic environment. Last week Google Inc recorded a $726 million writedown of its 5 percent stake in AOL.
The stake, which Google bought in 2005, had originally valued AOL at around $20 billion. The writedown implies AOL is now valued at around $5.5 billion.
WEAK ADVERTISING
Time Warner said earlier this month that AOL had weaker-than-expected advertising sales in the fourth quarter, forcing a profit warning by the media conglomerate, which also owns cable news network CNN and Warner Bros movie studio.
UBS analyst Michael Morris said he is forecasting a 12 percent decline in AOL's fourth-quarter advertising sales.
"We expect advertising declines at AOL to continue through all four quarters in 2009," said Morris in a note to clients.
Time Warner has previously said it will separate AOL's dial-up Internet access business, leading to a possible sale of that business.
Falco, who took the helm at AOL two years ago, said his three-year turnaround plan was now focusing on three core businesses: advertising with its Platform A business; publishing with MediaGlow; and social media with People Networks, which holds its Bebo social network and AIM messaging assets.
In its cost-cutting efforts, the company is reviewing international operations and its global shared-services functions and is considering consolidating some domestic facilities as it moves corporate headquarters to New York from its hometown of Dulles, Virginia.
Others could follow Google's move to reset options
SAN FRANCISCO - Google Inc. is showing its love for its employees by giving them a second chance to profit from their wilting stock options. But the move irked shareholders still stuck with agonizing losses on their investments.
Nevertheless, Google's willingness to reset more than 8 million stock options at lower prices is likely to spur similar gestures by companies hoping to motivate their employees during a demoralizing recession.
"There is a lot of momentum building" to reprice stock options, said Alexander Cwirko-Godycki, a research manager for executive compensation specialist Equilar. "Everyone has just been sort of waiting for a big name to do it."
Google already has been joined by coffee chain Starbucks Corp., which unveiled a proposal to allow its employees to swap their existing stock options for new ones that will be more likely to put cash in their pockets.
But Google's repricing program made a bigger splash because it's far more generous to the employees — much to the dismay of the shareholders who have seen their holdings in the Internet search leader plunge by 57 percent, or a collective $130 billion, since the stock peaked at $747 per share in 2007.
Google shares surged $18.20, or nearly 6 percent, to close Friday at $324.70 as investors cheered the company's fourth-quarter earnings report. But analysts said the rally probably would have been even more robust if not for the decision to reprice the stock options.
"A lot of people just hate it," said Broadpoint AmTech analyst Rob Sanderson. "I had one money manager tell me, `The next time you talk to Google's management, tell them I want all the stock I bought at $400 a few months ago to be repriced at $285.'"
Understanding the angst triggered by option repricing requires an explanation on how the perquisites work.
Employees at thousands of companies generally receive a bundle of stock options when they are hired, and frequently receive additional grants in subsequent years.
The options are assigned what is known as an "exercise price" — the employee's cost for cashing in the reward. This price typically equals the stock's price at the time of the grant.
The more a company's stock price rises above the option price, the higher the profit for employees. The idea is to inspire workers to put in longer hours and come up with better ideas — to increase the company's value and the employees' potential windfall.
But if a stock price plunges below the option price — a phenomenon known as being "underwater" — employees can become dejected, distracted and perhaps even tempted to entertain other job offers, especially if a large portion of the compensation comes in the form of options.
The problem of underwater options faces 72 percent of the companies in the Fortune 500, based on Equilar's analysis of average exercise prices in mid-December.
Google's work force is awash in underwater options: Nearly 17,000 employees are holding more than 8 million stock options with an exercise price of at least $400.
Those are the options likely to be exchanged in a program running from Jan. 29 through March 3. The new options are expected to have an exercise price tied to the market value of Google's stock in early March.
Even though the repricing will result in $460 million in accounting charges, Google reasoned the cost is acceptable, to avoid morale and retention problems among its 20,222 workers. Since its inception in 1998, Google has given options to virtually all of its employees, turning thousands of them into multimillionaires.
"We think it's a good deal for shareholders and for our employees as well," Google Chief Executive Eric Schmidt said Thursday.
Even though it has been cutting back on some perks, Google is still renowned for pampering employees — a trait that isn't widely shared. That's why Sanderson isn't convinced Google's repricing will cause other companies to follow suit.
"Google gives away free lunches to employees, but that didn't compel everyone else to do it," he said.
Did Google even need to be so magnanimous at a time when many people are simply happy to have a job?
"While we agree with management that it is in shareholders' interests to keep Google employees motivated and retain the company's focus on growth, we question the necessity of the (repricing) program given the current employment environment," ThinkEquity analyst William Morrison wrote in a research report.
On the flip side, it could still be smart business to feel make workers feel wanted — even as millions of other people are unemployed.
"The reality is that talented people will always be able to find another job in any market," Sanderson said. "And if you lose your intellectual capital, you could be losing the future of the company."
Hoping to hold on to its employees, Google is extending the vesting period for each swapped option by a full year. Vesting refers to the time that must lapse before an option can be exercised. So a Google employee with an underwater option that vests in June 2010 would have to wait until June 2011 to exercise a repriced option.
Sanderson and Morrison both agree that Google could have lessened the backlash against its repricing by coming up with a program that didn't sting its shareholders as much.
Besides raising issues of fairness, Google's program threatens to lower future earnings per share by creating the need to issue more outstanding stock when the options are cashed in.
Google could have lessened the dilution experienced by its shareholders if it required employees to exchange anywhere from four to 10 of their current options for a repriced option. Or they could have traded for a share of restricted stock that would vest over several years.
It will probably take a few years before any definitive conclusions can be made about the wisdom of Google's repricing, said Collins Stewart analyst Sandeep Aggarwal.
"If it turns out to be good for Google in the long run," he said, "then it will be good for shareholders too."
Obama says his plan with tax cuts to get quick OK
WASHINGTON – President-elect Barack Obama plunged into rare pre-inaugural crisis talks with congressional leaders Monday, declaring the national economy was "bad and getting worse" and embracing tax cuts now expected to reach $300 billion. He predicted lawmakers would approve a mammoth revitalization package within two weeks of his taking office.
AP – President-elect Barack Obama, flanked by Treasury Secretary-designate Timothy Geithner, left, and Council
If the two-year plan is enacted, workers would see larger paychecks almost immediately because taxes withheld by the government would drop. The break would be retroactive to Jan. 1, and couples receiving a $1,000 tax cut would begin receiving an extra $40 in twice-monthly paychecks as the government tries to spark more consumer spending.
"The economy is very sick," said Obama, who met privately with leaders of both parties at the Capitol. "The situation is getting worse. ... We have to act and act now to break the momentum of this recession."
Obama, who takes office two weeks from Tuesday, has said there can be only one president at a time — and he repeated that principle Monday "when it comes to foreign affairs." But when it comes to the floundering economy, he clearly feels he cannot sit by until the swearing-in.
"The reason we are here today is because the people's business cannot wait," Obama said as he arrived on Capitol Hill.
"I expect to be able to sign a bill shortly after taking office," he said. Pressed on the timing, he said, "By the end of January or the first of February."
Obama's proposal to stimulate the economy includes tax cuts of up to $300 billion — including $500 for most individuals and $1,000 for couples if one spouse is employed — as well as more than $100 billion for businesses, an Obama transition official said. The total value of the tax cuts would be significantly higher than had been signaled earlier.
New federal spending, also aimed at boosting the moribund economy, could push the overall package to the range of $800 billion or so. Some $77 billion would be used to extend unemployment benefits and to subsidize health care for people who have lost their jobs.
The rest would go toward job-creation projects such as roads and bridges and toward long-term goals such as alternative energy programs.
Meeting with Democratic House Speaker Nancy Pelosi, Obama set a tone of urgency for dealing with a financial situation that he described as "precarious."
He said, "The speaker and her staff have been extraordinarily helpful in working with our team so we can shape an economic recovery plan and start putting people back to work."
But he also met with Republicans in an effort to build broad support for quick action.
"This is not a Republican problem or a Democratic problem at this stage," he said. "It is an American problem and we're going to all have to chip in and do what the American people expect."
At his meeting with bipartisan leaders of Congress, Obama said he would make his stimulus proposal available on the Internet, with a Google-like search function to show each proposed project or program, by congressional district, according to three people who attended.
After meeting with Obama, House Minority Leader John Boehner, R-Ohio, said he was concerned about the plan's cost.
"This is not a package that's ever going to be paid for by the current generation," Boehner said. "It's being paid for by our kids and grandkids."
Republican lawmakers want more details, Boehner said, but he replied "yes" when asked if he expected a stimulus plan to be enacted within six weeks.
Said Pelosi: "It is a great honor and personal privilege to welcome you to this office. Tomorrow we will swear in a new Congress and we will hit the ground running on the initiatives ... to ease the pain being felt by the American people."
The Obama plan's tax cuts for individuals and couples would be a bit different from the rebate checks sent out last year by the Bush administration and Congress in a bid to boost the slowing economy. The relief this time around would be awarded by withholding less from worker paychecks. That provision would cost about $140-150 billion over two years.
For businesses, the plan would allow firms incurring losses last year to take a credit against profits dating back five years instead of the two years currently allowed.
Another provision brought to the negotiations by the Obama team would award a one-year tax credit costing $40-50 billion to companies that hire new workers, and would provide other incentives for business investment in new equipment.
"We've got an extraordinary economic challenge ahead of us," Obama said, and he predicted a jobs report at the end of the week would show new declines.
He had meetings with a broad array of House and Senate Democratic leaders and with a bipartisan group of key lawmakers. He had hoped to have Congress enact the recovery plan in time for him to sign when he takes office Jan. 20, but no one thinks that will happen now.
Obama has insisted that bold and quick action is necessary if the nation is to rebound from the greatest economic crisis since the Great Depression. He has said repeatedly he wants a plan that will create 3 million new jobs.
The economic teams of new presidents often work behind the scenes with congressional leaders before their administrations move in, but Obama's direct and public involvement is highly unusual.
He arrived Sunday night in Washington and spent all of Monday at the Capitol before returning to the hotel where he has set up shop for the two weeks before his inauguration.
Later Obama attended a party at Bobby Van's restaurant, thrown by Illinois Sen. Dick Durbin, the body's second ranking Democrat, for new members of the House and Senate and the Chicago press corps. About 300 guests packed the restaurant's 13-story atrium, jockeying for pictures with the president-elect and holding their cell phones aloft as he tried to walk into the room. He made about 25 feet in 30 minutes, then returned to the hotel.
Aides have said the package Obama has dubbed the American Recovery and Reinvestment Plan could cost as much as $775 billion. The president-elect has refused to put a price tag on the plan, and some members of Congress expect it to go higher.
