Vinny Lingham's Blog

So with this new Panama implemention, Yahoo has started to become even more sticky about affiliate advertisers.  Unlike Google, they’re becoming tighter and I believe this is going to have a material impact on the way Panama’s numbers play out (i.e. substantially lower earnings than predicted).  Affiliate advertisers with Google are a large chunk of Google’s PPC spend in terms of market impact (not just the money that they spend, but also the impact that the added competition has on other advertisers).

What Yahoo doesn’t understand (and probably won’t anytime soon):

By allowing merchants to create their own affiliate policies, they will get more ads into their marketplace and all they have to do, is dedupe the ads, as Google & MSN does to ensure that their users receive the MOST RELEVANT ad, not the only ad that a merchant has uploaded.  GOOGLE DOES THIS!!! This is not technically difficult at all, and let me ask the question again: “Why does Yahoo insist on creating policies instead of letting their merchants decide for themselves – this is not customer centric at all!”

Affiliate Marketers are very often more savvy than the merchants they represent and will go after a larger and more diverse universe of keywords.  What is the point of trying to police merchant advertising policies if it does not contribute to having more relevant listings for YAHOO USERS!!!

If the (baseless) argument is that affiliate ad copy is poor, then do what Google does and disable the keywords for low CTR’s.

I see no reason whatsoever, to prevent affiliates from launching campaigns on behalf of their merchants (assuming they concur), as ultimately, we believe that the best model for managing paid search is NOT the typical agency % of spend, but instead on a mutually agreed upon success based relationship (ultimately, profit share).  We even wrote a special report on it last year - run this through any mathematician, and I’ll bet that they concur!

If Yahoo is trying to catch up with Google using these terms, they have a long way to go!  We spend a lot of money with Yahoo (we WERE budgeting over 7 figures this year, and we’re not the only affiliate out there) – and technically, all that is going to go out of the window.  If these terms get enforced rigidly, then we’re going to see Yahoo’s quality of listings drop (less ads per keyword per merchants, means less chances to get good performing ads), as well as less competition and spend from affiliates (which lowers prices).  This simply will translate into less revenue and way you slice and dice it.

Can anyone explain this logic to me, because it simply does not make sense?!

Ultimately, isn’t the end user (the searcher) best served by having the largest possible number of ads competing for his click, in order to find the best ones (which would be originated via the quality score).  What’s worse is that they allow 1 “Co-Brand” (Cough *Bullsh*t) site – which surely will just be abused. I am baffled.

At least Google gets it…

Here is the email we just received:

February 22nd, 2007

Dear Mr. Lingham,

Thank you for contacting Yahoo! Search Marketing regarding your UK account X.

The decline reason Site Ownership basically means in order for Yahoo! Search Marketing to provide a breadth of results for users, affiliates must take users to their own unique site and terms that relate only to the content on that site will be approved, as in our “Content” guideline.

Affiliate sites that link directly to their grantor’s site, either directly or through a frame, will not be granted terms relating to their grantor’s content, unless substantial information has been presented for that term prior to the link. This applies to shopping carts, secure servers, third-party databases or fulfilment engines.

Co-branded sites may bid on a search term only once, as in our “Duplicate” guideline.

Affiliates must also state that they are affiliates in their title or description. This can be achieved simply by adding “Affiliate” at the end.

To ensure that you will receive all necessary information regarding your account, we need accurate contact information for every advertiser. Please take a moment now to check your account contact information at https://secure.overture.com/login.do?mkt=uk&locale=en_GB and update it as necessary. You can edit your information in the ?Edit Profile? section of the Account tab.

Please do not hesitate to contact us if we can be of any further assistance.

Yours sincerely,

Customer Solutions

Yahoo! Search Marketing

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Ok, this is not some cop-out because I haven’t written a post in a week – after all I’ve been very busy plotting the way forward after closing our latest round of funding! incuBeta has really evolved into a broader Internet investment company with an increasing number of investments in companies with great people! Blogging has really risen quickly in the past few years, and many of the people in the broader incuBeta Group are bloggers who have really great blogs as well – here is a handy reference of them (not all Internet related), as well as a few more that I read.

The Comrades Blog by Andrew Smit gives a regular account of his training for the Comrades Marathon, which unfortunately has been hampered by an ankle injury. Andrew is a bit of a geek, so he’s managed to integrate all his training stats into his site, and even built a great Google Co-Op search engine for runners!

One of our Senior PPC Campaign Managers, Gordon Choi, with about 5 years of PPC experience runs a great blog focusing on Internet Marketing Strategy, PPC & China! Gordon regularly comments on this blog.

Over at Quirk, one of our investment companies, they run a truly excellent blog at Gotta Quirk with over 20 contributors from Quirk regularly posting gems such as this post on internet traffic measurement companies.

From the company side, we have the Synthasite blog, which I will be posting on more regularly going forward (I promise!). There are some exciting things happening at Synthasite, none of which I can reveal right now! We also have the Clicks2Customers blog with contributions from the Clicks2Customers team.

From the company side, I can defend the shortage of posts by saying that we’ve have been too busy to post regularly enough, but hopefully that will be changing soon – I’m making it my mission to enforce regularly blogging on the company blogs – kinda makes you think that there is a new role developing in companies, Chief Blogging Officer (oh, no! not another C-Level Exec position!).

The Synthasite team recently had a strategy & planning session, and one of the things we did, was to look at the real benefits of why users (we hope) would use a platform like Synthasite, instead of Dreamweaver or Frontpage (i.e. Web App vs Desktop App).

There is a screencast demo of Synthasite that we produced from the sessions, but also, here is the list of reasons that we came up with as to why Web Apps are superior to (most) desktop apps – and herein lies the future of the web! The clip is available on YouTube here and in higher res format here.
And here are the 20 reasons why Web Apps are superior to Desktop Apps!

Never installed

Browser based software never requires installation processes or hard drive space. It lives in a virtual cloud in the Internet and this means that whenever you launch it, it always has the latest version. Ajax has made it possible to deliver Desktop-like look & feel, and functionality, with no loss of performance!

Updates are seamless

Instead of having to patch each and every individual user, the patches/upgrades are applied to the server and each user received the updated version the next time they log in.

No legacy

This is a big issue for traditional software vendors. Users who purchase previous versions of a software almost always will result in legacy versions lying around which need support (which is costly). The problems relating to legacy software are almost limitless, and often is not efficient for both the vendor or the customer.

No admin rights required

Finally, a world where the network administrator in the company does not have to approve the installation of your software!

Available anywhere, anytime

Ok, so the anytime comment is a stretch, but that’s only until Adobe’s Apollo gets here (here’s hoping!). The same way that people access their email from any browser, web apps are exactly the same.

Platform independent

This opens a wider market for software vendors – no longer do they have to build technology around a specific platform and limit their market (or incur additional costs to build for another platform). The browser is the platfom and therefore I believe you will see increased uptake in OS’s like Mac OS and Linus, due to the increased availability of Web Applications.

Less environmental conflicts

There are certainly going to be a lot less bugs in Web based software, due to the fact that it is not depending on any of the hardware or environment settings in the OS that may usually cause a problem.

Enables social possibilities

Many Web Apps are creating chat facilities and the ability to share your work in real time. This removes the previous “stand-alone” functionality that use to exist with most installed desktop applications. The world is becoming more and more social – people want to collaborate and work online together – Web Apps allows this, painlessly.

Lower cost of sale

No boxes, printed manual, expensive shipping costs, CD’s, distribution channels, middlemen, etc. Desktop apps are going to be more economical to produce and will result in a lower cost of sale!

Usable from inexpensive PCs

$100 Laptops, here we come! What do you need a dual core processor for, if you’re running a thin client application? This opens up a world of cost savings for both companies and consumers, especially in the field of productivity apps (obviously, not gaming!).

Piracy-proof

Here is a big one. Imagine a world without software piracy. That world is here, and Web Applications are the solution to that problem. Next problem, please!

No bad debts

Sofware companies are often owed money from distributors, that invariably go bust from time to time. With Web Apps, the cash is collected upfront and as long as the customer pays, the account is in good stead.

Low-cost support and maintenance

Given that the browser is now the platform, operational support costs and maintenance for Web Application providers will drop substantially. No need to have expensive operating system gurus on hand to help with installation problems. Also, using products like the Amazon EC2 cloud, will allow scalability, without a proportionate increase in costs.

User’s data is kept safe in hosting environment

Although this is probably not going to be true for all Web App companies, but using providers like Rackspace or Amazon’s EC2 cloud will go a long way in reassuring your customers that their data is safer than on their desktop!

No Viruses

No installation, means no viruses. Start shorting all those Anti-Virus stocks! Enough said!

Low cost global distribution

No more channel reliance. Most software companies make it or break it, depending on their channel. Forget that – focus on the biggest channel of all – the 1 billion users online!

Lower software price entry point for customers

Given the benefits above, you will see more products such as Basecamp and Synthasite that will offer far greater value than their desktop equivalents.

Access to the entire assets of the Web (APIs, widgets, messaging, collaboration)

By being wired into the web, Web Apps are able to integrate seamless into API’s etc and are a lot more customizable, than traditional software applications.

Mobile is here

Compiled desktop applications are going to have a hard time being adapted for mobile devices. Web apps are ready made (in most cases).

Widest potential audience

For all the points above, this basically unlocks markets for software vendors that previously were inaccessible due to technical reasons.

I’m glad to finally be able to announce the incuBeta has finalised a transaction with Mark Shuttleworth’s Venture Capital company, HBD.  The details of the deal are highlighted in the press release below and the total value of the investment is R25m or c. US $3.7m.  The capital will enable us to grow rapidly across global markets.  We will be making a few more announcements over the next few weeks, relating to how we intend to utilize the capital, but all I can say for now is that exciting times are in store!

Congratulations to the entire incuBeta team (and all our partners & clients) for taking our business to the level that makes this transaction possible – it’s hard to believe we’re in our 4th year of business already!

VC FUNDING BOOST FOR AWARD-WINNING SA ENTREPRENEURS

Cape Town, January 31, 2007: Top Technology 100 winners and internet marketing pioneers, incuBeta, this week received the first R15-million installment from a new R25-million investment from Mark Shuttleworth’s HBD Venture Capital. Already positioned at the forefront of the search engine marketing game, the South African entrepreneurs will use the investment to expand incuBeta’s presence in the US and UK and progress its growth strategy which aims to ultimately list on the Johannesburg or London stock exchange.

incuBeta was founded four years ago by SA entrepreneur Vinny Lingham who recognised the opportunity represented by bidding on Google keyword searches and advertising products and services related to each keyword. The business grew quickly and today it has 50 staff, offices in Cape Town, Johannesburg and London and turnover of over R50-million a year.

Giles Douglas, CEO of incuBeta said the investment would allow several goals to become reality. “Our first priority is to open offices in the heartland of technology in Silicon Valley in California so we can be closer to our major search partners, Google and Yahoo, and our US clients. We are already a major virtual player and a physical presence in the States will allow us to build a stronger brand and accelerate our growth prospects. We will also strengthen our European presence. We ultimately plan to list on either the Johannesburg or London stock exchange within the next 24 months and this funding will assist in this growth strategy.”

Eben van Heerden, Portfolio Manager of HBD Venture Capital – one of the few true venture capital firms in South Africa – said, “We are very excited about this investment. This is a truly South African company with no real local competition. It is rated as one of the top three internet marketing companies in the world by Commission Junction, part of the Nasdaq-listed ValueClick Inc. The company has developed robust technology in-house and this provides the perfect platform to achieve future expansion.  incuBeta’s clients include many of the biggest online retailers in the world and it operates one of the world’s most sophisticated keyword bid management software systems. We plan to work closely with incuBeta to ensure exponential growth happens quickly.”

Douglas said that search engine marketing was growing at over 40 percent per annum – particularly since the advent of Web2.0 which has changed the internet from a tool used largely for information purposes to an interactive social arena. “Google is the fastest growing company of all time, and is at the forefront of search and more recently Web2.0. Its turnover is derived predominantly from auctioning keywords for searches which allow merchants to link advertising or marketing campaigns to each specific search. It allows for highly targeted advertising campaigns and is the preferred marketing method for most online merchants.”

He said, “incuBeta bids on millions of different keyword combinations and links targeted advertisements for its clients to each keyword combination. We currently place over 50 million targeted adverts every month. In the next few years we expect to see search engine marketing moving from personal computers onto mobile phones, television and even in-car navigation systems.  We aim to be at the forefront of these technological changes – and the investment by HBD will help us achieve this.”

Douglas said that incuBeta would remain a South African company. “We will keep our headquarters in South Africa and have recently launched incuBeta Consulting in response to local demand for our expertise. The core focus of the consulting business will be to transfer our knowledge of search engine marketing and other Web2.0 trends to other South African companies that are interested in enhancing their brand online. This will enable them to reap real business benefits from the many possibilities which the internet offers.”

Van Heerden concluded that he hoped incuBeta’s success would inspire more South Africans to take the entrepreneurial plunge. “All too often, we are put off ‘going it alone’ because we believe that our ideas must have already been done abroad – this is often not the case and we encourage local talent with business ideas to explore these to the full. Many of the leading economies of the world were built on small-to-medium size enterprises so this is a definite priority for South Africa’s future growth.”
For more information visit www.hbd.com or www.incubeta.com