According to the new Strategy Analytics Digital Media Index (DMI), revenue growth in global digital media resumed last quarter with 1.5% quarter-on-quarter growth in Q3 2008, up from minus 0.2% in the previous quarter but down from almost 7% growth in the same period last year. A milestone was reached in the quarter as twelve months of revenue in Apple’s ‘Music Related Products and Services’ segment—which includes iTunes—overtook revenues in Microsoft’s ‘Online Services Business’ segment for the first time. Among the five largest companies in the index, Amazon was the best performer while eBay was the worst.

On a trailing twelve months (TTM) basis, the Strategy Analytics’ Digital Media Index grew 4.3% in Q3 2008 to reach 156, equal to a 56% increase from the index base year, 2006. Nine companies managed to beat the quarterly index growth: Tencent Online (21.7%); Baidu (20.1%); Netease Online (12.1%), EA Digital (8.6%); Shanda (7.6%); Apple iTunes (7.4%); Google (6.7%); WMG Digital (6.2%); and NHN Online (5.2%) trailing twelve months growth in the quarter.

Jia Wu, Analyst at Strategy Analytics’ Digital Consumer Practice said, “While we saw a return to overall growth in the third quarter, it is still too early to talk about a turnaround as many of the leading companies in this index continue to show slowing quarter-on-quarter growth.”

Martin Olausson, Director of Digital Media Research at Strategy Analytics, added, “Although it is clear that the digital economy isn’t isolated from the offline world and the global financial crisis, the digital media sector has grown an impressive 26% in the last 12 months and should continue to outperform most offline sectors in the tough months ahead.”

Other findings from the Strategy Analytics Digital Media Index (DMI) Q3 2008:

• Baidu, the leading Chinese search engine, was the fastest growing digital media company on an annual basis with a stellar +118% growth in the last 12 months.
• Fox Interactive Media (FIM) was the fastest growing digital media company in the Western World with an impressive 40.7% growth in the last 12 months.
• Google saw continued growth slowdown in the quarter and has now suffered three consecutive quarters with slowing growth since the end of 2007.

Someone needs to remind Microsoft that we’re in a recession, AdGooroo unveiled their third quarterly report detailing several key performance indicators for Google, MSN and Yahoo!, such as changes in share of advertisers. Microsoft’s increase in active first page advertisers for Q3 was the biggest quarterly increase since AdGooroo began measuring advertising activity, and in just one year, Live Search has grown their active advertiser base by almost 32 percent.

“MSN looks to be in a strong position thanks to their ability to retain existing advertisers and bring in new ones in droves despite an uncertain economic environment,” said AdGooroo Founder and Chief Gooroo Rich Stokes. “We also measured a three percent increase in Google’s advertiser base; while Yahoo!’s active advertiser count dropped by 2.5 percent.”

While it appears that Google was taking steps to increase coverage (at least through July), ad coverage dropped to its lowest levels in August and September, suggesting that those two months may have been weak. Google also launched a new algorithm change in mid-September, which may be aimed at reducing low-priced inventory, a move which strongly favors big-budget advertisers.

Although MSN and Google generated significant growth in the third quarter, Yahoo! appears to be staying the course while it waits for the US government to approve its ad-sharing deal with Google. While Yahoo! showed a slight decrease in active first-page advertisers in Q3, there were no other significant changes in other metrics.

This has been a pretty exciting news for the tech industry, I’ve been using this new browser for the past two days and I’ve finally come to the conclusion that Google is just flat out good at what they do. Google launched Google Chrome, a new open source browser intended to create a better web experience for users around the world. Available in beta in more than 40 languages, Google Chrome is a new approach to the browser that’s based on the simplicity and power that users have come to expect from Google products.

In the early days of the Internet, web pages were frequently little more than text. But today the web has evolved into a powerful platform that enables users to collaborate with friends and colleagues through email and other web applications, edit documents, watch videos, listen to music, manage finances and much more. Google Chrome was built for today’s web and for the applications of tomorrow.

“We think of the browser as the window to the web – it’s a tool for users to interact with the web sites and applications they care about, and it’s important that we don’t get in the way of that experience,” said Sundar Pichai, Vice President of Product Management, Google Inc. “Just like the classic Google homepage, Google Chrome has a simple user interface with a sophisticated core to enable the modern web.”

Making the web experience better for users

Google Chrome was designed to make it easy for users to search and navigate the web for the content they’re looking for.

• A combined search and address bar quickly takes users where they want to go, often in just a few keystrokes.
• When users open a new tab in Google Chrome, they’ll see a page that includes snapshots of their most-visited sites, recent searches and bookmarks, making it even easier to navigate the web.

Google Chrome was engineered to deliver a seamless web experience for users. At its core is a multi-process platform that helps provide users with enhanced stability and security.

• Each browser tab operates as a separate process; by isolating tabs, should one tab crash or misbehave, others remain stable and responsive, and users can continue working without having to restart Google Chrome.
• Google also built a new JavaScript engine, V8, which not only speeds up today’s web applications, but enables a whole new class of web applications that couldn’t exist on today’s browsers.

Contributing to the innovation of browsers through openness

“While we see this as a fundamental shift in the way people think about browsers, we realize that we couldn’t have created Google Chrome on our own,” said Linus Upson, Director of Engineering, Google Inc. “Google Chrome was built upon other open source projects that are making significant contributions to browser technology and have helped to spur competition and innovation.”

To further advance the openness of the web, Google Chrome is being released as an open source project under the name Chromium. The intent is that Google will help make future browsers better by contributing the underlying technology in Google Chrome to the market, while continuing to develop additional features.

How to get Google Chrome

Google Chrome can be downloaded at www.google.com/chrome. It is being released in beta for Windows in over 100 countries in the following languages: Chinese (Traditional), Chinese (Simplified), Dutch, French, German, Italian, Japanese, Korean, Portuguese (Portugal), Portuguese (Brazil), Russian, Spanish, Spanish (Latin America), Turkish, English (US), English (UK), Arabic, Czech, Danish, Hebrew, Hindi, Norwegian, Polish, Swedish, Indonesian, Ukrainian, Bulgarian, Catalan, Croatian, Filipino, Finnish, Greek, Hungarian, Latvian, Lithuanian, Romanian, Serbian, Slovakian, Slovenian, Thai, Vietnamese, and Estonian.

Google Chrome for Mac and Linux users will be available in the coming months. For more information on the open source project, Chromium, visit www.chromium.org.

If you read this blog often you know that I am not a fan of ad networks.  They cannibalize a site’s premium inventory and they devalue the site as a whole in regard to revenue (disclosure: Editechial is owned by an ad network).  However that hasn’t stopped companies like Adify from launching very successful services that empower anyone to start their own ad network.  And now 24/7 Real Media introduced a new application for its Open AdStream ad management platform to provide more control for vertical network owners across every site they operate. Open AdStream can be used for total network management, with the tools and features needed to enable strong network and revenue growth.

Open AdStream provides effective internal controls that enable the efficient management of affiliate sites, offering real-time updates on campaign status and greater control and transparency for both vertical network owners and publishers, for effective ad delivery. Network managers at companies such as Hola Networks, Godengo and United Online Media Group are now taking advantage of Open AdStream’s capabilities for this purpose.

“We use Open AdStream to consolidate our properties and our 50 million members into a single audience,” said Jeremy Helfand, Executive Vice President and Chief Sales Officer, United Online Media Group. “Its intuitive technology allows us to run individual site advertising programs while maintaining an effective system for cross-property buys. With Open AdStream, we can access scheduling, targeting, optimization, and reporting capabilities uniquely suited to our properties.”

Affiliate sites can also use Open AdStream to determine which advertisements are delivered to their Web pages, with robust information fields and controls to help categorize and measure they payout. They have the ability to accept and decline ads with ease, see any given report regardless of location, and gain access to specific subsets of information. Ultimately this efficiency enables the owner to focus resources and energy on running a successful network and gaining revenue.

Vertical networks can also utilize the recently introduced MultiSite feature, which provides access controls to streamline management for networks with decentralized trafficking.

“As the most comprehensive ad management system available today, using Open AdStream for vertical network management provides an enormous benefit to vertical network owners and Web site publishers looking for enhanced control and flexibility over their sites,” said Nicolle Pangis, Vice President, Product Management, Global Media and Technology for 24/7 Real Media, Inc. “Open AdStream gives network operators an all-in-one tool for managing revenue and combining feature sets to operate their business more effectively.”

If you’re in the online marketing world, you will want to check this out.  The Interactive Advertising Bureau (IAB) today announced the release of “Revenue Cycle Best Practices,” a document that recommends a series of internal controls and processes for publishers aimed at increasing efficiency and effectiveness in the online advertising revenue cycle. This is the fourth in a series of documents that are part of an IAB-led industry initiative to increase operational efficiencies within the interactive advertising ecosystem. “Revenue Cycle Best Practices” was created by the IAB’s CFO Council, and is comprised of financial professionals representing 46 leading interactive companies.

Key recommendations from the document include:

• Specific processes for obtaining internal pricing approval
• Advice to publishers that they closely monitor open receivables that are more than 60 days overdue and that they recommend actions to their sales teams for collections
• Implementation of appropriate controls along the insertion-order process to ensure proper execution
• Regular meetings between collections teams and Ad Sales Management.

“The work that we’ve done collectively as an industry in streamlining many areas of the advertising supply chain is important for the growth of interactive advertising,” said Randall Rothenberg, president and CEO of the IAB. “By working with our members to enhance operational efficiencies, we deliver on the promise of an extraordinary medium that is transforming consumers’ lives.”

“This document provides guidance on how to improve our internal and external communications. This will not only increase productivity, prevent costly errors and decrease the amount of time it takes to collect payment but it also improves customer satisfaction. It ultimately means more revenue for the company,” said Christie Lay, Senior Credit Manager, Microsoft Corporation and one of the working group members who participated in the document’s creation.

The “Revenue Cycle Best Practices” document along with the other three documents in the series—“Billing Methods Best Practices,” “On-time Delivery Toolkit” and “Campaign Setup Best Practices”—can be found here.

I was very excited this morning to meet with Atul Patel, the founder and CEO of a new startup, BankAround.  BankAround is a simple to use  web site for consumers to identify the best checking, savings, and money market rates at local, national, and online financial institutions.  He said he envisioned the concept for the business model when his brother sent him a link to join ING Direct and he felt like he could make a much more robust offering.  After working with lead generation in the financial services space for years with companies like Countrywide and LeadROI, he recognized that most of the industry was focused heavily on informing or selling consumers on debt-related products, such as mortgage loans, auto loans, home equity lines of credit, and debt consolidation.

Even vertical portals, namely BankRate, made finding information difficult because their portals were filled with editorial content and they made most of their revenue from how many banner ads you viewed. A user would have to click “6 Month CD”, then “California”, then “Orange County”, then “Anaheim”, then “Top 100″ — 5 pages for a piece of information! It’s akin to surfing through mounds of information on Orbitz and Expedia to book an airline flight. Just give me the damn info!  Farecast (acquired by Microsoft for $100mm) and Kayak.com, have done a great job simplifying the process.

BankAround was started with the vision to simplify finding the best place to save money outside the stock market (in 2008, a rough place to invest), and real estate (in 2008, who wants to go into this). BankAround profiles checking, savings, and money market rates, and allows users to search with a simple interface. Patel gives tremendous credit to James Chheng, the co-founder of BankAround, who developed the platform and software.  Chheng is also a veteran of the online lead generation and financial services spaces.

The banking industry is going through a major transformation because of the credit crisis. The Indymac closure last week and Wamu’s stock plunge, are examples of the turmoil that is concerning consumers who are simply worried they will loose their deposits. The brand names are a good place to bank, but if you can find a local credit union or thrift that provides you similar rates, why not go local. Just like you wouldn’t book a flight on an airline or airplane that was in the news for a major malfunction, you should be careful how you bank.

To top things off, American’s need to start to save more. Check out some of these stats:

• Only 53 percent of Americans say that they save at least 5% of their income, while only 57 percent of those not retired say they are saving enough for a retirement with a “desirable standard of living”.  (source: Consumer Federation of America)
• More than $1 trillion is currently stashed in bank accounts that pay 1 percent or less (source: Washington Post)
• Between 2001 and 2004, the share of U.S. households that had savings accounts dropped 8.1 percent, to 47 percent (source: Federal Reserve)

To sign up and start taking advantage of the service, go to www.bankaround.com.

I’m always on the looking for start ups that have a different take on search, and so I was pretty excited to see Scour.com, a social searching site.  Blending the best of algorithmic and human powered search, Scour launched today as a meta social search engine which encourages voting and commentary on search engine query results called from Google, Yahoo! and Microsoft’s Live Search. Scour fosters community- building and enables discovery through user feedback, friends and groups while giving users control of the search parameters needed for accurate results based on their preferences.

“Scour gives people a different way to search by infusing the best search results available on the web, with a way to benefit from the previous work and feedback of millions of searchers,” said Daniel Yomtobian, president and CEO of Scour. “The concept is not new, but we believe we can bring the elements together better than some of the other engines have to date.”  Here is a video of it being demonstrated:

Scour differentiates itself from other social search, ratings and community sites in that it:

• lets users vote and comment on search results
• provides superior privacy control
• gives weight to preferred engines
• lets people redeem search points for VISA gift cards.

Scour pulls search results from the top three search engines. From there it thrives on feedback to make the results ever more relevant. After enough votes on results, a search result can rise or fall in ranking which will make listings across all the engines more relevant on Scour.

Scour Rewards—How It Works

People can earn up to 4 points per search through a combination of actions:

• Search – 1 point
• Vote – 2 points
• Comment – 3 points
• Friend Referral – 25% of each friend’s points

In one scenario, an average of 4.5 searches per day translates into $25 a year. Then adding in referrals with an average of three searches per day for each user, 25 friends who sign up and use Scour could earn the user an additional $100+ a year.  I personally don’t think that these type of “incentive” programs ever translate into long-term user engagement.  A good product attracts users, there is no secret formula.

Already trying to keep the main focus away from the incentive program, Yomtobian adds, “We’re not trying to provide users with an alternative income, the Scour points program is a way for Scour to reward the user for helping build the community to refine search results beyond what the algorithms say.”

It’s official, Mozilla’s Firefox “Download Day” was a success, on June 17th, over 8 million users downloaded the latest version of the open platform browser.  The download requests were so heavy that Mozilla servers crashed for several hours on the 17th, which makes the number of downloads in the 24 hour span even that much more impressive.

All of that being said, I do not believe that anyone at Mozilla cares about the Guinness world record compared to the fact that the Firefox browser is now used by 19% of web users.  This is a very significant increase from 14.5% marketshare percentage from last year.  Who did they take the users from?  Microsoft’s Internet Explorer’s ownership of the market decreased from 79% down to 73% from a year ago.

Being an avid Firefox user myself, I’m quite confident that these marketshare gains will continue for Mozilla since they offer a much more dynamic product offering to the public.  Once you go Firefox… You never go back.

I was in the middle of writing an editechial on the launch of Peer39, the first true semantic ad network, when a story came across my Google Reader page saying that Microsoft was purchasing Powerset for $100 million dollars.  We actually did a feature on the status of the Semantic search industry and discussed Powerset on June 19th (coverage).  So at least we know that we’re writing about the sweet spots in the industry.  This price point doesn’t come as too much of a surprise since Microsoft has proven that they not afraid for dramatically overpaying for technology if they feel that their investment will pay off 5-10 years down the line.  And I usually enjoy finding the negative spots of a deal, and you readers seem to like it, however I actually believe this to be an extremely intelligent move by the software giant.

One industry driving component is quantifiable differentiation.  And that is what Microsoft needs and it is what Powerset could deliver to them.  Semantic search is a hot topic in the industry for a reason and it has a very lucrative ad revenue potential.  Advertisers are looking to drive intent to engage, here is a quote from the CMO of VideoEgg, Troy Young, talking about this:

What the data shows is this: In creating value for brands, we need to look beyond “intent to buy” and towards “intent to engage” with a brand message.  In many cases, this has absolutely nothing to do with traditional models of targeting and everything to do with the “mode” a consumer is in when spending time on a Web page. We see as much as a 15x difference in our ability to get consumers to spend time with advertising across popular social media sites. We also see massive differences in time spent on ads when looking across various blogs and gaming environments.

Intent to engage is not an easy thing to accomplish through contextual or category driven targeting methods.  However, Semantic is looking to turn the industry on its head by examining what a site’s content is really about, and then placing a relevant advertisement alongside it.

So this could be the key to Microsoft gaining market share over Google since they would be bringing something different to the table.  And if they can make the user experience fast and easily navigated, they might have something disruptive to the current search industry.  And of course they would have to be able to take the Semantic algorithm past Wikipedia searches (currently the only site that Powerset searches through) to the rest of the web.

This news is not 100% confirmed, even though both VentureBeat and Silicon Alley Insider reported it as completed, Techcrunch’s Michael Arrington posted that he had inside tips that the deal was close to being completed but had not been officially signed.

So here I am on a Friday night, fairly late at the office with nothing to do except to analyze the exodus from Yahoo! I’ve had quite a few friends who have been at Yahoo! since the late 90’s and I can’t help but contemplate the good, the bad and the ugly years for this technology empire.  I think everyone should enjoy this history timeline.

1994

Yahoo! was founded in 1994 by Jerry Yang and David Filo, it was originally Jerry Yang’s “Guide to the World Wide Web”, they wisely changed the name to Yahoo!

1996

IPO time!  Yahoo! goes public at $13 per share and subsequently raises over $33 million dollars.  Yahoo! is the talk of Silicon Valley with unlimited potential.

1997

Rise and Conquered (acquisitions), Yahoo! goes through the industry like a hurricane and buys up everything in site: rocketmail, classicgames.com, GeoCities, eGroups, along with many others.  These would later be followed up by buying up: Maven Networks, BlueLithium, Right Media, along with a number of display ad networks.

2001

The bubble burst and Yahoo! was one of the strong one’s, not only surviving, but coming through successfully and emerging as the online leader in every major online industry.

2001

Yahoo!, wanting to start expanding into the entertainment industry hires long time entertainment mogol, Terry Semel, and issues him a bonus of $110 million dollars to become the CEO of Yahoo!  Jerry Yang becomes Chief Yahoo!

2002-2007

And here is the fall of the Yahoo! Empire.  It happened slowly, with the notable disgrace of losing market share on a daily basis to Google, who they could have acquired if they would be paid $3 billion as opposed to their offer of $2 billion.

2008

Microsoft offers what now appears to be a great acquisition offer.  Trying to play hardball, Jerry Yang refuses multiple offers and decides to keep Yahoo! independant.  Investors grab torches and pitchforks, including corporate raider, Carl Icahn (read his blog for his opinions).

And now in the present we are in the middle of a Biblically sized exodus, with all the best talent Yahoo! had working for them.  Jeff Weiner, the executive many describe as the heart and sould of Yahoo!, started the migration when he left for the VC industry.

You may wonder why I put an image of the tower of Babel at the top of this post, believe me, it was strategic.  Yahoo!’s main issue for the fall was the same reason the Biblical tower of babel ceased to be built: the inability to work together.  For the past few years Yahoo! has developed the reputation for being a terribly disjointed online enterprise.  The different divisions of the company rarely communicated with each other and had inumerable issues working in tandem.  This meant that Yahoo! grew by acquisition, however it literally grew “apart”.

And so we’ve come to the end of this timeline and what will the future hold for Yahoo!?  No one knows for certain.  However you can be sure there will be history books written about this rise and fall, with the intriguing dynamic that Jerry Yang will play the role of both conquering hero and fallen warrior.