“This is your last chance. After this, there is no turning back. You take the blue pill — the story ends, you wake up in your bed and believe whatever you want to believe. You take the red pill — you stay in Wonderland, and I show you how deep the rabbit hole goes.”
Morpheus, The Matrix

Even though we may not realize it, we live in the matrix today. Often, it is easier to date someone who lives across the globe through text messaging and Skype than it is to sit across the table from him or her having dinner. We have the red pill — the world before mobile — and then the wonderful blue pill that takes us to exotic places through our iPhones, Galaxies, and Droids via a rapidly growing and powerful mobile applications ecosystem. With these, we can instantly be transported to many places at the same time — our friend’s adventure in Egypt on Instagram, a heavily tweeted TED conference in San Diego, or a real-time fashion party joined by thousands of women across the country — all the while having a glass of wine at the Press Club in San Francisco.

This mobile revolution is reshaping entire industries and perhaps more interestingly, shifting power from traditional search to new ways of discovery. Over the last six months, while the public has pondered its mobile strategy, Facebook has quietly emerged as the superpower of application discovery, and is progressively playing a powerful role in reshaping e-commerce, media and advertising on mobile platforms. Facebook’s new products — ranging from open graph and timeline to mobile installs — are reshaping how brands, companies and app developers can connect with their audiences and facilitate discovery in a crowded app world.

In the early days of the Web, portals, pop-ups and other advertising and discovery systems ruled the ways consumers connected with websites. The advertising engines and portals were very fragmented. Yahoo’s home page provided one of the most powerful discovery tools for the consumer. Then Google’s entry into search and the arrival of its advertising platform, Adwords, reshaped how e-commerce, brands and services connected with that same consumer. This repositioned the power of the Web ecosystem and put Google front and center in this new world. In response, advertisers and websites from e-commerce to media shifted their strategies to optimizing for discovery on Google. Whole new classes of advertising agencies were created, and new epicenters of commerce and media were developed to focus on Search Engine Optimization and Paid Search.

As we spend more time under the influence of the magical blue pill, increasing attention and spending is shifting to mobile. Mobile’s inherent advantage in being able to connect offline and online behavior will have massive ramifications on all industries as compared to the Web. Mobile is changing the paradigm of online interactions from searching for content with keywords to pressing a single button and being delighted with new content on our home screens. Collections of blue links are being replaced by visual feeds, keywords with button press, and search by discovery as the dominant method of information consumption. As the mobile infrastructure evolves, Facebook has increasingly positioned itself as the Sun in this new solar system. Last year’s acquisition of Instagram gives Facebook tremendous headroom as it slowly but surely rolls out its mobile products for brands and app developers. Increasing dollars and optimization energies are shifting toward Facebook’s mobile ecosystem and changing the shape of every mobile advertising network and mobile media platform. This seismic shift is akin to what happened in 2000 when Google arrived on the landscape with Adwords, and is positioning Facebook to do to mobile what Google did to search.

If the red pill is the world before mobile, do we even have the option of turning back to a world without navigation apps, instant access to email and photography filters? As we spend more of our time glued to our phones 24/7, we should take a moment to contemplate what is real. As Morpheus says, “If real is what you can feel, smell, taste and see, then ‘real’ is simply electrical signals interpreted by your brain.”

The hypothetical wormhole to this absurdly ambitious goal? The wish list.

Wish co-founders Peter Szulczewski and Danny Zhang

The startup is called ContextLogic, and it’s got some of tech’s most smartypants investors behind it, as well as 10 million people already signed up for its wish-list service, called Wish.com.

“We want to be Google AdWords for the retailer,” explained co-founder and CEO Peter Szulczewski, an engineer who previously worked on ad algorithms and search at Google for five years.

Users sign up for Wish to make wish lists. They save, tag and recommend products to each other (and, by default, it’s social-spammy, with automatic posts to your Facebook profile and rewards for inviting friends). Then the company matches participating merchants with potential customers, and sends out discounts for specific products.

So, basically, it’s like personalized coupons.

The target retailer for Wish is an Amazon Marketplace merchant who wants to get more distribution without paying Amazon a significant portion of each transaction. To that end, Wish plans to launch self-serve tools for retailers next month, Szulczewski said. Eventually, it wants to get more closely involved with transactions by offering checkout tools.

The 20-person, San Francisco-based ContextLogic has raised $8 million in funding, led by Palantir co-founder Joe Lonsdale’s Formation 8, with former Yahoo CEO Jerry Yang, Factual’s Gil Elbaz, Sling co-founder Blake Krikorian, Lady Gaga’s manager Troy Carter, Steve Chen of YouTube and Aydin Senkut of Felicis Ventures and others participating.

Because the Wish experience is all about tastemaking and discovery, “We’re creating hundreds of Fab.coms in different verticals,” said co-founder Danny Zhang, who previously worked on the Overture team at Yahoo.

Wish users have saved 100 million products, and recommend 100,000 of them per day, according to internal data.

There are many other wish-list products out there; for instance, Amazon and Pinterest. Zhang and Szulczewski say Wish’s advantage is that the wish list is pretty, it’s tightly and smartly integrated with an advertising platform and, most of all, it’s constantly being optimized.

Plus, Wish is especially sticky on mobile. Via iPhone, Android and iPad apps, engagement and sales are double what they are on the Web, the company said.

And now you want to make sure people see that content? There are people who can help with that, too.

And you only want to go to one place to do all that? Then Outbrain hopes you come to them: The well-funded content-recommendation service has purchased Scribit, a small start-up that fetches pre-made stories, videos, etc., that publishers need to buff up their Web sites. (If you want to see a bigger version of the same idea, check out NewsCred, which seems to be doing well.)

Outbrain is based in New York, but CEO Yaron Galai says he’ll leave Scribit (formerly Vertical Acuity) in Atlanta. He won’t disclose a purchase price and my hunch is it wasn’t a big one; more likely something closer to a soft landing for Scribit’s 10-person team, who are all supposed to stay on board.

Still, the deal is an interesting step for Outbrain, which is quietly becoming an important player for Web publishers via its core business, which circulates traffic to different sites using story and video links it publishes at the bottom of Web pages. (AllThingsD is an Outbrain partner, so you can see examples at the bottom of this post.)

Right now, Outbrain only uses links with “real” content, and Galai has recently booted some clients he says were producing spammy links in order to drive traffic to what were effectively marketing sites. You can’t really blame them for trying, since lots of Web advertising works that way, from Google’s AdWords on down.

But buying Scribit allows Outbrain to tiptoe into a more conventional ad network business, without actually becoming an ad network. Scribit’s clients use the service to acquire “real” content for their sites, and then they can advertise that content via Outbrain’s network. So in theory, eyeballs still show up on marketers’ pages, except now they’re looking at stuff they actually want to see.

So Google is the last company that needs to engage in holiday promotions to goose sales, right?

Maybe not. Here’s an email Google’s AdWords unit sent me earlier in the week, promising to give me up to two months of free advertising — up to $250 total — if I signed up for “AdWords Express” by Dec. 16, and spent money on it this month. If I did, I would get ad credits in January.

And just to be sure I didn’t miss out on the sale, Google sent me another email an hour and five minutes later. Same offer, slightly different language at the top: “We hope you’ve been having a restful holiday season. Recently, we sent you a message inviting you to try AdWords Express and wanted to remind you that it’s not too late to sign up and get our special holiday offer …”

AdWords Express is a dumbed-down/simplified version of the core AdWords system that still accounts for the vast majority of  Google’s revenue and profits.

An AdWords lite seems like a smart thing for Google to promote to small businesses (or people it thinks might run one, like me), since figuring out how to use regular AdWords can still stump lots of people.

This isn’t the first time Google has pushed AdWords Express hard. Earlier this year it even paid people to pick up the phone and cold-call prospective clients. Now it’s selling the ads as a sort of Christmas stocking-stuffer.

(Image courtesy of Shutterstock/Kiselev Andrey Valerevich)

Slightly ahead of the holidays, a handful of venture-backed companies have announced TV advertising campaigns, including One Kings Lane, Fab.com, OpenSky, Gilt Groupe and Wayfair.

All of the companies are hoping to see a lift in sales and increased brand awareness, but the immediate beneficiaries of this trend will clearly be TV networks that have strong female demographics, like Bravo, the Food Network, HGTV, E! Entertainment, Oxygen, Lifetime and TLC.

The advertising campaigns could cost anywhere from tens of thousands to millions, depending on the ads and how often they are going to run, but many of the companies are being conservative and labeling the launches as experiments.

The options range wildly between Wayfair’s 30-second spot, which was developed in-house for $30,000, and One Kings Lane’s two 30-second spots created by the premiere ad agency Wieden+Kennedy New York. Meanwhile, OpenSky is characterizing its commercial as a “modest test,” and Gilt Groupe said it hired Ocean Media, the agency behind ad campaigns for Priceline.com, Overstock.com and Angie’s List. Fab.com planned to run its ad in six U.S. markets for three weeks and then take it national if it was satisfied with results.

What’s interesting is that the campaigns are trying to drive traffic to the companies’ mobile sites and applications, capturing the behavior of viewers who sit on the sofa and watch TV with their phone or tablet in hand. That trend has been coined “couch commerce.”

For example, in Gilt Groupe’s minute-long spot called “High Noon,” one cowgirl is able to order a sparkling pair of pumps in a desert shootout because she uses the app to pull the trigger faster.

Wayfair said it’s also hoping to see a significant increase in mobile traffic. After launching its first ad campaign in September, Wayfair saw a traffic lift in the five minutes following the commercial. It said 35 percent of traffic was coming from mobile phones and tablets versus 13 percent normally. The home decor site’s Black Friday commercial (which is not too shabby, considering the budget), started running in late October.

The biggest indicator of whether these commercials actually pay off will be if they are still around in any significant way in the New Year, or if they will be short-lived tests. The one drawback for any of these boutique shopping sites is Amazon’s dominance in e-commerce during the holidays. As I wrote earlier today, 53 percent of U.S. consumers are planning to begin their Christmas shopping at the mega retailer.

But potentially, if the advertisements are creative and just darn cute enough, they could help change that behavior.

Below are the Wayfair and One Kings Lane commercials (others are linked above):

Terms of the deal were not disclosed, but Sam Shank, HotelTonight’s CEO, said what interested him about the company was the team and the technology. He added that HotelTonight does not have immediate plans to get into the restaurant business. At least, not initially. “The platform that we’ve built is category agnostic,” he said.

The company’s first acquisition, though small, comes at a time when other large travel agencies are getting into the last-minute booking space by launching competing standalone hotel apps. Hotels.com, Priceline, Expedia, Orbitz and other large players have launched their own mobile applications that present special offers and deals to those booking rooms on the same day of travel.

Shank said he’s not particularly concerned about all the competition crowding the space, because his company has a lot of technology running behind the scenes that makes it all work. He said its tools help hotels determine how to price their rooms in order to fill their vacancies at the last minute. He’s particularly interested in PrimaTable’s forecasting and pricing technology. Three of the company’s employees will be joining HotelTonight, including the founders.

“Our platform runs a lot more like Google AdWords than Groupon, so our sales team isn’t calling hotels everyday. They are signing up new hotels and getting feedback on how to make tools better, but they aren’t dealing with daily inventory — that’s entered by the hotel,” he said.

The hotels that offer the lowest-priced rooms are the ones that get a chance to fill up three of the six slots that HotelTonight offers every day in each market — it does not offer hundreds of selections, like many of the competing apps, which often just copy their online experiences.

Since launching in January 2011, HotelTonight has been downloaded more than three million times — and it has no online presence. It is available in more than 60 destinations in the U.S., U.K. and Canada. It has 75 employees.

PrimaTable co-founder and CEO Jamie Davidson will become HotelTonight’s VP of Product. Before launching PrimaTable in 2012, Davidson worked at Google as a quantitative expert focused on optimizing the company’s display algorithm. PrimaTable co-founder Colin Zima will join as HotelTonight’s data scientist. Previously, Zima worked on Google’s search-ranking algorithms.

Here’s one of the ways they could get there: A new slug of ad dollars, generated by an overhaul of its ad platform.

We’ll go into details below, but here’s the summary:

*Twitter is effectively providing advertisers access to all of its 140 million users, via targeted “Promoted Tweet” ads. Prior to this, the only way you could shove a marketing message into someone’s stream was if they already followed your company, or if they followed someone who looked a lot like your company. Now those restrictions are gone.

*Twitter is also making it cheaper, at least potentially, to reach those 140 million users. Twitter sells its ads via an auction model, and used to require advertisers to bid at 50 cents per “engagement.” Now they’ve dropped the minimum to a penny.

Big picture: If advertisers like Twitter’s platform — and we don’t really know yet, because it’s so new — they now have many more ways to use it. Best-case scenario for Twitter is that this gets them closer to creating that elusive equivalent to Google’s AdWords, the most effective ad machine in history.

On to the details:

Lower prices: Straightforward, no? But for the record, Twitter product guy Kevin Weil wants us to know that this doesn’t mean Twitter will be flooded with bargain-basement ads for teeth whiteners. Twitter’s “promoted” product suite is only supposed to show ads that users are responding to, so simply winning an auction isn’t enough to get into the stream. Twitter’s preferred way to describe the move is that the lower prices will “drive greater ROI.” But an equally valid way to describe the move would be: A bunch of people who couldn’t afford Twitter ads now can.

“Enhanced interest targeting”: This is what’s going to allow advertisers to hawk their stuff more broadly on Twitter, and it’s what Twitter was referring to earlier this summer, when we got our hands on their ad pitch deck. The gist: Now advertisers can try targeting some 350 “interest categories,” as well as users who share “similar interests” with a specific Twitter account.

That allows more precision for pitches, but it also opens up a lot more territory.

Here’s how it would work: In the past, Starbucks could only send its “Promoted Tweets” to the 2.8 million people who were already following its own Twitter account, or to users that Twitter determined were “similar,” based on its own black-box algorithm.

But now Starbucks could pitch, say, technology fans, to tell them about its new Square tie-up. Or it could target people who resemble the people who follow Twitter and Square founder Jack Dorsey.

Twitter guesses which “interests” you have, or if you’re similar to the users who follow a given account, based primarily on the stuff you’re already following, and the stuff you retweet. Weil won’t go into detail about how it arrives at those conclusions, but notes that it’s already using similar logic when it makes “who to follow” suggestions on your home page, or when it tells you about particular stories on your “discover” page.

One important note: Twitter still isn’t responding to anything you actually type on Twitter yourself. That is, if you ask your Twitter pals for recommendations for a new backpack, Twitter can’t figure that out and serve up Tweets from backpack makers.

That makes it less effective than Google’s ad machine, which has users’ “intent” nailed. But, then again, no one has a machine like Google. And given that most Twitter users rarely or never Tweet at all, Twitter’s never going to work that way, anyway.

But figuring out what kind of stuff you like, based on the people and things you pay attention to, is one of the core tenets of social media marketing. Which no one has really cracked yet. If Twitter can do it, it’s a big deal.

I have five predictions of how Facebook will be maturing in the first year after its IPO:

1. Search

Facebook has become home base for users in many ways. But when it comes to search, Facebook makes you take a bus transfer at Google every time you want to leave the house.

And that’s a shame, because Google starts each search from a place of knowing almost nothing about me. When I’m taking a vacation to Bali, I’m far less interested in Google’s generic recommendations of things to do than I am in recommendations from my friends who have been there.

Facebook already knows which of my friends have been to Bali, and which restaurants and attractions they liked the best. It can even differentiate between the friend I trust for restaurant recs and the friend who always finds the best surfing spots.

There is a clear battle between Google and Facebook. But it’s not over “search vs. discovery,” as it is often framed. Rather, it’s “transaction vs. relationship” — which is why Facebook has the potential to disrupt search as we know it.

Prediction: Facebook will launch a purely social search by the end of 2012 (before tackling the whole hog in 2013).

2. Advertising

Despite the company’s fierce ethos of consumer experience first, business concerns second, an IPO will inevitably put upward pressure on the latter. With the numbers published quarterly and the prices reset every day, Facebook will be forced to support that share price (if not for the sake of its shareholders, then at least for its employees!) by expanding its advertising revenues.

Facebook today brings in quarterly ad revenue of $872M — just a tiny fraction of Google’s $9B. But transactions are by nature pecuniary — and relationships are priceless. As a gatekeeper to nearly a billion consumer relationships, Facebook can roll out new advertising products that are far more valuable than AdWords.

The market for online brand advertising is already huge at $85B today. As soon as Facebook unlocks the potential of relationship-based advertising, the market will open up by tens of billions more.

Prediction: By Q2 2013, Facebook will have more than tripled ad revenues to $3B per quarter.

3. Open Graph

Occupy Facebook! Oh wait, we already do. Or does Facebook occupy us? Facebook currently occupies 1 in 7 minutes of all time spent online.

As the locus of consumer identity, attention and relationships, Facebook has the potential to be the one true platform that links together every destination on the web.

But it’s not there yet. Open Graph was a start, but it lacks a complete and actionable vision for how publishers can connect, access data and establish relationships. Publishers don’t want bits and pieces of data that they need to analyze themselves — they want a unified schema that bridges their audiences’ online worlds and real lives.

When I buy a chicken at Whole Foods using a Facebook app’s mobile grocery coupon, Facebook can match that incoming data point with the fact that I read Cooks Illustrated and that I’ve been on an Indian food kick lately (based on my restaurant check-ins). By the time that chicken is in my reusable bag and I’m hauling it out the door, there should be chicken curry recipe suggestions on my Facebook page.

Facebook has an opportunity to turn data from the long tail of Facebook apps into real inferences about you and me that publishers and other brands on the web can actually use.

Prediction: Facebook will completely redesign their analytics offering by Q2 2013 to provide not just data but real, integrated audience insights that will guide brands’ personalization efforts.

4. Commerce and Currency

Advertising won’t be the only revenue play Facebook makes in its first year as a public company.

Digital commerce (i.e. digital goods) already represents more than $16B in market size, and is projected to grow to $36B globally by 2014. E-commerce is another $680B on top of that. Both are currently conducted by arcane means: Visa card numbers and PayPal accounts.

Why have digital payments been so slow to evolve? Because even the most trusting of us only allow a few close associates access to our most private details. Who knows me the best? My bank, my lawyer, my mother and Facebook. In fact, no one owns my identity as well as Facebook these days (sorry, Mom!). Just because Facebook doesn’t have access to my wallet yet doesn’t mean it’s not going to happen.

A host of companies today (Google, Apple, Square) are trying to become your digital wallet, but Facebook holds a valuable advantage: it is already the locus of your relationships with third-party Web sites through Open Graph. While the logistics will certainly be no piece of cake, commerce is right up Facebook’s alley.

Prediction: By Q2 2013, Facebook will be presiding over $2B in transactions.

5. Timeline

There’s nothing more core to Facebook than its user experience, and Facebook has since its birth shown a consistent healthy dissatisfaction with it no matter what the status quo.

The current timeline experience is a nice try, but it’s not quite right. Timeline solved one problem — the indigestible frequency and quantity of updates at all levels of priority — while creating several more. New Problem #1: Timeline’s intuition about what’s important is too frequently just plain wrong. And while it gives us a great retrospective on people, it does a surprisingly poor job of helping us stay up to date with them. New Problem #2: Timeline depends heavily on Open Graph widgets to summarize our lives.

The latter is both ambitious and troubling. We admire great biographers for their ability to identify and communicate the essence of a person. It’s an insult say that a Nike Fuel score algorithm can capture the “real me” in the same way.

Timeline is a v1 product. It will take significant and deep tuning over many versions to reach its full potential.

This may seem like it’s just a UI update, but it’s not. Timeline is the clearinghouse for everything that happens on Facebook. Getting Timeline right is probably the single most valuable thing Facebook can do to grow its effectiveness with users — and its revenues.

Prediction: Facebook will release the first major redesign of Timeline by the first half of 2013.

Will the precocious kid that Facebook is today grow into a smart, savvy adult? A boatload of investors and J.P. Morgan certainly seem to think so. Over the long term, it will depend on Facebook’s ability to leave its youthful single-minded focus on users behind and execute consistently against two metrics: great user experience and revenues to match.

This is a guest post by Ben Elowitz (@elowitz). Elowitz is the co-founder and CEO of next-generation media company Wetpaint, and the author of the Digital Quarters blog about the future of digital media. Prior to Wetpaint, Elowitz co-founded Blue Nile (NILE).

But there’s one thing that even the most ardent Facebook fan can’t argue with: Facebook advertising is very much a work in progress.

Don’t take my word for it. Listen to Facebook itself: “We believe that most advertisers are still learning and experimenting with the best ways to leverage Facebook to create more social and valuable ads,” the company says in its IPO filing.

If you’re a Facebook bull, those words sound reassuring. Facebook sold $3 billion worth of ads last year, and it’s just getting started. Imagine what happens when things really kick in.

But if you’re a skeptic, and there are lots of them, that uncertainity is a real problem. When Google went public in 2004, it had already built AdWords, the search ad engine that still generates the majority of its revenue today. Facebook doesn’t have an AdWords, so it doesn’t have a tried-and-true plan it can present to advertisers: Put dollars in here, see results over there.

Instead, Facebook marketers try different things over time. A few years back, they were all building Facebook apps. Then they started concentrating on amassing fans/followers. Now, digital marketing people tell me with confidence that all of that thinking is outmoded, and that the real Facebook pros are the ones who create “engaging content” on the site, then buy ads to “amplify” that message.

Facebook’s challenge gets even tougher because instead of search ads, whose success and failure are easy for advertisers to evaluate — Did someone click on my search ad? If they did, did they buy something or fill out a form once they got to my site? — Facebook aspires to the big branding dollars that advertisers spend on TV. And those are much harder to score. So convincing GM or anyone else to move big money from traditional ads, which marketers are at least comfortable with, to the wild world of social, requires a lot of work.

The good news for Facebook is that it’s so big that it might succeed even if it never cracks the social ad code. Any Web site with 900 million users and counting, who spend a ton of time there, is going to pull in a lot of ad dollars through sheer force of gravity. If Facebook can keep its users happy, it may get away with muddling through on the ad part.

But being a big, lumbering giant that attracts ad dollars without knowing what it’s doing isn’t the message Facebook wants to sell to advertisers. Or to investors.

OK, on to the “this isn’t that big of a deal” arguments. I’ve heard a bunch, all of which come from (different) people who don’t want to be quoted.

• Obviously there’s a backstory here. If GM didn’t want to keep advertising on Facebook, it didn’t have to announce that three days before an IPO.
• Big Fuel, GM’s social media ad agency, didn’t do a good job. That’s why GM fired them in December. For the record, here’s a quote from a Big Fuel rep: “GM never seemed persuaded of the value of social media in general and Facebook likes in particular. In a sales-driven culture, it is very hard to wrap your head around putting money in places where you don’t see immediate results in an uptick in sales.”
• Starcom, GM’s media buying agency, didn’t do a good job. That’s why GM fired them in January.
• How the heck did GM spend $3 on Facebook “content management” for every $1 it spent on Facebook ads, as the WSJ reports? That’s a sure sign that someone was doing something wrong.
• Ford loves Facebook.
• GM is pulling $10 million out of Facebook. Facebook did more than $3 billion in ads last year.

Again, all of those may be valid points.* But if Facebook really wants to allay outsiders’ fears, it needs to be able to prove conclusively that its ads work, in a scalable way, for a wide variety of advertisers. It can’t do that yet.

*I’m totally amazed by the $3-to-$1 ratio, and am wondering if it’s not to late to pivot myself into a “Facebook content creation consultant.” Those numbers also remind me very much of the late 90s, when companies like Organic went public based on the fact that they knew how to build Web sites and their clients didn’t, and they could charge accordingly. That didn’t last long.

The probe, which could take several months to complete, is initially focused on AdWords — Google’s flagship advertising product and main source of revenue. But the agency conducting the investigation, the Competition Commission of India, could expand it to scrutinize other Google services if it sees fit, the officials said.

Read the rest of this post on the original site »

And marketers have been looking for ways to target ads through app search stores, the way they’re able to through Web search engines.

Appolicious, one of the earliest app discovery engines, thinks it has the answer to both.

It’s now taking a Google AdWords-like approach, allowing developers to bid on keywords associated with their apps — for example, a popular music app maker like Rhapsody or Pandora could theoretically bid on the word “music” — Appolicious’s top search results for apps will also include advertised apps associated with keywords.

For developers, this means bidding through Appolicious on how much they want to pay each time a user clicks on a targeted ad, with a 10-cent minimum per bid and a one-dollar fee per ad.

It also means that advertisers will be able to track users’ clicks throughout Appolicious’s ad network.

For consumers, targeted app ads mean that the apps being advertised among a list of search results are less likely to be random apps that wouldn’t appeal to them, says the company’s founder, former Yahoo News executive Alan Warms. If a user is searching for music, for instance, both the advertised apps and the ones that come up in search results will pertain to music.

Appolicious already has enough app data about its users to figure out what they’d likely be interested in, and uses that data to serve up recommendations. When someone signs up for Appolicious or downloads the Appolicious app, the service asks to scan the user’s iPhone app library (or in the case of Android users, scans it automatically — yes, really), so Appolocious knows what a user likes, whether it’s health and fitness apps, casual gaming or education.

And since Appolicious also acts as a white-label app — powering the app search engines for Best Buy, Samsung Apps on the new Samsung Note device, and other, unnamed mobile carriers — it has access to user data through those channels, too.

But with keyword search ads, the company says it’s offering something different from what other app search engines offer. Studies show that Web users are very good at ignoring ads, even targeted ones (though some studies show mobile ads are stickier). Whether the strategy of serving up an ad that looks like just the app you were looking for will work, remains to be seen.

Chicago-based Appolicious first launched in May 2009, a few months after Chomp — which was recently acquired by Apple — launched its app discovery service. Since then, others like Tapjoy, Kinetik, AppTap and App-o-Day have entered the app discovery space, all offering ways for consumers to search for apps both online and through mobile app stores.

Twitter has already been showing some limited advertising on its mobile apps. But now it will start showing its “Promoted Tweets” — its primary ad product, and its attempt to replicate Google’s AdWords program — on phones, as well.

Just like the Promoted Tweets that Twitter shows on its primary Twitter.com site, these ads will show up in users’ “timelines.” At first, Twitter will only allow advertisers to place the ads in front of users who are already following their accounts. But within months, it will expand the program to allow marketers to reach people who don’t follow them — just as it does on the Web.

The announcement comes a day before a Facebook marketing event, where that social network is widely expected to roll out a mobile ad product of its own. So the timing may be more than coincidental.

But the bigger picture is that Twitter needed to increase its ad inventory anyway, in order to accomodate a wave of new ad buyers from its self-serve ad program. So this move would have come sooner than later.

Twitter says that any ad buys will automatically include mobile, and that it won’t sell mobile ads separately. One odd exception to the expansion: For now, the ads still won’t show up on iPads.

But how exactly does Facebook’s ad business work? We still don’t know a lot about that part.

The S-1 mentions “advertising” 123 times, and “advertisers” another 117 times. But when it comes to describing how the company actually sells advertising, it is vague.

We know that some of Facebook’s ads are sold via an automated self-serve system, and some are sold via sales teams working in 30 offices around the world. And we know that Facebook uses an auction system to price some of its inventory, and that it lets advertisers target users to some degree, based on their demographics and interests.

But Facebook doesn’t break any of that out in its filing. It simply has one big bucket labeled “advertising.” There’s no discussion of click-through rates, or the size of the average ad buy, or what percentage of ad buys come from repeat customers, or how “lumpy” its sales are.

The company does mention that last year revenue increased, in part because it served up 42 percent more ads, and in part because it was able to charge an average of 18 percent more for each ad it served. But it doesn’t get any more specific than that.

Not that we should expect much more in an S-1. When Google went public eight years ago, its description of its ad business was also pretty vague (here we note that Facebook is stocked with Google expats, starting at the top, with COO Sheryl Sandberg). But by the time of the Google IPO, lots of ad folks had a decent grip on AdWords, its one key offering.

Facebook doesn’t have an AdWords, but a mix of stuff that it is playing with. It admits that this is a work in progress: “Advertising on the social web is a significant market opportunity that is still emerging and evolving. We believe that most advertisers are still learning and experimenting with the best ways to leverage Facebook to create more social and valuable ads.”

Given that Facebook generated a crazy $3.15 billion in ad revenue last year, up from $764 million two years ago, that seems to be a pretty awesome experiment. But Facebook itself seems to think things will need to change.

That’s why, for instance, it is pushing the industry to measure its ads using “gross ratings points” — the same metric buyers use for TV — instead of “traditional” Web metrics like impressions and click-through rates.

And that’s why a good chunk of the S-1 talks about the overall market for advertising — not just Web advertising, but all advertising. The message: There is a lot of money being spent on ads, and as we get even bigger, and smarter, we’ll figure out how to capture more of it.

And at some point they may share some of that knowledge with the rest of us.

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Hollywood and Google have been circling each other for years, as each side tries to figure out what to make of the other. Now they’re finally starting to link up in a serious way, via YouTube’s new “channels” strategy.

Which means it’s a perfect time to hear from YouTube CEO Salar Kamangar. And if you’re at D: Dive into Media in January, that’s what you’ll be able to do, as one of the world’s most important Googlers joins us onstage.

Getting Kamangar out of Mountain View and into the public eye would be a big deal under any circumstances, because — while he keeps a very low profile — he has enormous clout: He’s one of Larry Page’s most trusted lieutenants, a position he has earned by joining the company as hire No. 9 in 1999, then helping to build the AdWords product that has generated a vast majority of Google’s revenue.

Kamangar has been formally running YouTube for the past year, but in reality he had been overseeing the world’s largest video site for some time. Kamangar is also in charge of Google’s broader video plans, including Google TV, which is now making a second stab at inserting itself into the world’s living rooms.

So there’s going to be plenty to talk about when Kamangar joins a lineup of media heavyweights Jan. 30 and 31 at the Ritz-Carlton in Laguna Niguel, an hour south of Los Angeles. Previously announced speakers include Viacom CEO Philippe Dauman, New Yorker editor David Remnick, Warner Music Chairman Edgar Bronfman Jr., News Corp. Chief Operating Officer Chase Carey, Clear Channel CEO Bob Pittman, Legendary Pictures head Thomas Tull, and VEVO CEO Rio Caraeff.

We’ll announce more in the weeks to come. If you want to make sure you get a seat, you should sign up now.

Everybody wants in: The oddball start-up, substantial media companies like the New York Times, even AT&T and Amazon.

And it won’t stop there. No really, trust me, it won’t.

The next crop of companies that you may start getting offers from could include your bank, or even that hotel chain or airline you use most frequently.

This is through a nifty invention called card-linked offers, which honestly isn’t all that new at all. It works very similarly to how your credit card company offers you discounts on rental cars or hotel rooms. But now it’s becoming an ad network of sorts that can accept offers from all kinds and can take place with any brand.

I’ve written about this before, and to be sure, there’s no lack of venture-backed companies all hoping this is the next Groupon-killer. Some of the participants in the space include BillShrink, FreeMonee, Clovr Media, Offermatic and Cardlytics.

In this case, I talked to Lexington, Mass.-based Cartera Commerce.

The company, which has 165 employees and has raised $30 million, is announcing a partnership today with InterContinental Hotels Group to allow hotel guests to earn rewards points while doing everyday shopping.

If users link a credit card to IHG’s loyalty program and make purchases at participating retailers with that card, they will earn points that can be redeemed at such InterContinental Hotel brands as Holiday Inn, Hotel Indigo and Crowne Plaza.

The Aite Group estimates that by 2015, 460 million consumers will have signed up for incentive programs such as these, totaling about $1.7 billion in annual revenue for card issuers.

Tom Beecher, Cartera’s president and CEO, walks me through a PowerPoint presentation, comparing how it is better than Groupon’s business, and how it compares with Google.

On one side of the equation, he explains, there are the publishers, and on the other side there are advertisers and brands. That’s sort of like Google’s AdWords and AdSense.

In the same way, Cartera works with advertisers and also the banks, airlines, hotel chains, or other similar services that have access to the consumer. Some of its customers include Chase, Wells Fargo, American Airlines, Best Buy and USAA.

Because consumers link a credit card to these offers, these are considered very well-targeted ads. Cartera is able to collect information at the aggregate level to find out about spending habits. Advertisers can selectively make offers to consumers who shop at their competitors, but not current customers who already visit regularly. That helps retailers acquire new customers and not just give discounts to already loyal patrons.

So far, Cartera says it has processed $1 billion in transactions on its platform, and is seeing conversion rates from 20 to 40 percent.

Even though these offers are not as well recognized as Groupon, they are typically easier to redeem.

The offers don’t need to be purchased in advance or printed out. Consumers automatically get the discount when they use the same credit card that received the offer. The offers can appear in a number of formats, from a Web site to an email or a line item within their bank statement.

Photo Credit: Images_of_Money.

What that means to advertisers: They’ll now have an improved chance to get their messages directly in front of some users, by inserting ads directly into their main “timelines.”

What that means to users: Depends. Marketers will only be able to deliver the ads — which will use the “Promoted Tweet” format the company rolled out more than a year ago — to users who already follow them on the service. And they’ll only appear on Twitter’s main Twitter.com site.

So if you don’t follow any brands/marketers/companies on Twitter, you won’t see the ads. And if you’re checking Twitter on your iPhone, or via clients like TweetDeck, you won’t see them there, either.

Here’s how Twitter described it to advertisers:

UPDATE: Here’s Twitter’s blog post about the new ads — or, if you prefer, new ad delivery system.

One important note is that even this program can’t guarantee that an advertiser’s message will reach their followers. That’s because Twitter will only show a certain number of Promoted Tweets using this system, and Twitter will use a bid/exchange system on the back-end, which incorporates both pricing and “relevance” into picking a winner.

As I noted earlier this month, delivering ads into users’s main timelines has been on Twitter’s agenda since April 2010. But this move doesn’t get them all the way there. Eventually, CEO Dick Costolo and company want to deliver ads to users who aren’t following particular companies by using targeting that finds likely recipients.

That is, Twitter wants a way for Starbucks to reach me even if I don’t follow the company, or any other coffee-related companies on the service. You know — just like lots of Web advertising works (or is supposed to work).

The fact that the company has been slow to do that is telling, I think — it shows that they’re quite content to move slowly on ads, despite the braying of outsiders (sometimes including me). Then again, when they’ve got outside investors lining up to spend $800 million on a $8 billion round, that confidence is a little easier to come by.

This isn’t the equivalent of Google’s AdWords, which was Twitter’s original intention when it started its ad platform a year ago. But Twitter may not need that kind of magic bullet to make this thing work — Facebook hasn’t found one, and things are working out okay over there.

Margo Georgiadis (pictured here), VP of Global Sales Operations at Google, will be COO of Groupon, Google confirmed.

She is currently located in Chicago, where the social buying site is headquartered.

A Google spokesman confirmed the move by Georgiadis, while Groupon–which specifically denied a query about her appointment that BoomTown made Tuesday–dithered.

In a statement, her boss, SVP and Chief Business Officer Nikesh Arora said:

“I’m grateful for all that Margo has done for our team over the past two years. We will miss her, but we’re also very excited that she’s joining a terrific company and a great partner for Google.”

Besides COO, I will officially bestow the title of “Chief Cat Wrangler” on Georgiadis, for the massive organizational job ahead for her at the notoriously chaotic start-up. (As evidenced by Google being the company confirming a major Groupon hire.)

Still, Groupon’s growth had been stunning. It now has thousands of employees and has already washed out one COO, former Yahoo exec Rob Solomon, whose departure was reported here.

It has also turned down a $6 billion acquisition offer from Google, raised a badillion dollars in venture funding from tech’s top investors and also is prepping an IPO valuing the company at upwards of $15 billion.

Phew!

Georgiadis must bring calm to this perfect storm.

Because of her solid resume (see below) and quiet demeanor, I had included her in a list of candidates several weeks ago and had queried the social buying company about her specifically this week.

In fact, when I asked for a comment if Georgiadis was hired on Tuesday, a Groupon spokeswoman said: “This would be news to me. Nothing to announce yet.”

At the time, Google had the class to simply say “no comment.”

(Lesson learned!)

Crain’s Chicago Business’ John Pletz first posted on Georgiadis’ hiring earlier today.

In any case, Georgiadis is just the kind of candidate that Groupon has been looking for–a competent and experienced sales and operations exec who would not overshadow its quirky CEO and co-founder Andrew Mason.

As I wrote two weeks ago:

Lastly, and perhaps most important, the Groupon COO candidate is going to have to accept that the role will not be a CEO-in-waiting, either before or after its inevitable IPO in the next year.

While I have received several tips that co-founder and CEO Andrew Mason might not stay its principal exec, extensive checking with sources inside and outside the company indicate that such a move is highly unlikely.

“Andrew is beloved to the board, by investors and, most of all, by employees,” said one source. “He’s not going anywhere.”

Indeed, Mason has a close working relationship with co-founder Brad Keywell, as well as Groupon co-founder and Chairman Eric Lefkofsky.

In fact, despite other business interests, Lefkofsky has been very involved in all key decisions with Mason.

That job, presumably, would fall to the new COO, which Groupon should be hiring sooner rather than later.

“Groupon needs a world-class COO, who can manage hyper-growth, but also who knows that a No. 2 stays in the background while doing it,” said another source. “That’s a tall order.”

Groupon has looked at a number of top execs, most specificially at former DoubleClick and Google exec David Rosenblatt. Sources said the high-profile exec did not want to play second fiddle to Mason or move to Chicago.

That’s moot now. Here is Georgiadis’ bio at the Silicon Valley search giant, which shows why Groupon picked her:

Georgiadis is responsible for driving Google’s sales operations and strategies across regions, channels and products as well as leading the sales technology teams which enable the successful commercialization of Google’s products (e.g., AdWords, AdSense, display and mobile ads) with advertisers and publishers.

She also leads the company’s local and commerce businesses, working to extend services like Checkout, Google Places and commerce search to small and large businesses alike.

Before joining Google, Margo was a principal in Synetro Capital LLC, a private investment firm based in Chicago. She also spent five years as the executive vice president of card products and chief marketing officer of Discover Financial Services where she led a radical turnaround of business performance and revitalized its rewards leadership with award-winning new products, customer experience and marketing. Prior to Discover, Margo was a partner at McKinsey and Company for 15 years in London and Chicago. She was a leader in the firm’s marketing and retail practices, and also co-founded and led the customer acquisition and management and retail marketing practices.

She has a bachelor’s degree in economics from Harvard College and an MBA from Harvard Business School.

The 13-page CID includes 39 different requests for documents ranging from those setting forth Google’s policies and procedures for calculating AdWords prices and minimum bids to minutes and agendas from search quality team meetings and records of the “black listing” or “white listing” of specific Web sites. Also requested: Documents that “describe, analyze, or discuss competition for advertisers from Bing and Yahoo” and others concerning the strategy for e-commerce services like Froogle and Google Shopping.

It’s an extraordinarily thorough set of demands and shows the Texas AG to be reviewing not just Google’s ranking of search results and setting of advertising prices, but questioning whether the company favors its own businesses and advertisers in results. Has Google complied with them? That’s not yet clear, though company spokesman Adam Kovacevich says discussions with Abbott’s office continue.

“Since we started Google we have worked hard to do the right thing by our users and our industry, and while there’s always going to be room for improvement, we’re committed to competing fair and square,” he said. “We’re continuing to work with the Texas attorney general’s office to answer their questions and understand any concerns.”

Texas_GOOG_CID –

Twitter doesn’t have a formal rate card, but ad industry sources say the going price for a one-day promoted trends purchase has settled between $70,000 and $80,000, after starting out as high as $100,000 a day.

Now Twitter has started telling buyers the coming price hike will consistently push the ads into the $100,000 to $120,000 range.

Promoted trends give an advertiser a chance to essentially purchase a small sliver of Twitter’s site, by inserting their message at the top of the “trends” section of users’ pages. For now, Twitter sells only one per day, and has been selling the slot out with some frequency.

And promoted trends could become even more valuable for Twitter CEO Dick Costolo and his company if they start carving the ads up into different geographies, giving them the ability to sell more than one per day.

If, say, Twitter could sell at least two different promoted trends, in two different territories each week, at $100,000 a pop, those ads alone could generate $20.8 million a year. Play around with those assumptions, and you can quite easily bite off a big chunk of the $100 million-plus ad revenue estimates we’ve seen floated.

Ad buyers also tell me Twitter has been bullish about its “Promoted Accounts” product, which it rolled out toward the end of last year.

When I first wrote about the concept last summer, and described it as a way to let marketers (or anyone) “buy” followers, the concept upset some Twitter traditionalists.

But they’re going to have to get over it, because it’s exactly what Twitter is selling: It prices the ads, which show up on users “Who to follow” list, on a “cost per follow” basis. Buyers pay between $1 to $3 for every new account that follows them.

The one Twitter ad product I haven’t heard buyers talk that much about is the first one Twitter rolled out. “Promoted Tweets” were supposed to work like Google’s AdWords–”organic” tweets, tied to keywords, that showed up in search results, and later in users’ regular streams.

That seemed like a promising tactic at first. But I’ve never seen a promoted tweet “in the wild”; the only time I’ve seen them is when they’re attached to the promoted trends.

But perhaps I’m just missing them. If you’ve bought one, or if you see one, please pass drop me a line (peter@allthingsd.com) and let me know.

The advertisers, including high-end medical professionals, said their ads for services such as cosmetic dentistry or plastic surgery are showing up even when Google users search for unrelated topics such as haircuts or limo services.
Some of the advertisers said when their ads were placed next to search results for unrelated topics, Google users were much less likely to purchase their product or service after clicking on the ads. Advertisers pay Google each time a user clicks on a search ad.

Jeff Dorfman, a cosmetic dentist in New York, said the issue—known in industry parlance as “session-based clicks”—has cost him approximately $3,000 in wasted ad spend of the total $40,000 spent on AdWords ads since late 2009.

Read the rest of this post on the original site

You’d have to search a long time to find someone who’s been closer to the evolution of Google than Susan Wojcicki. It was in her rented garage that Sergey Brin and Larry Page launched the company, which she joined in 1999.

Today, while much of the attention on Google focuses on Android or Chrome, Gmail or YouTube, Wojcicki oversees the operations from which Google generates the bulk of its revenue and profits: AdWords, AdSense and DoubleClick among them. And in October she was made one of Google’s eight senior vice presidents.

She’s lately been quoting research from Forrester, which found that while 42 percent of people do research online before buying something, only 7 percent of those purchases happen online. Mobile advertising, she has argued recently, can help bridge that gap. Expect lots of discussion around that stemming from last year’s $750 million acquisition of mobile advertising firm AdMob.

Meanwhile, let’s be honest: Everyone wants to know what really happened between Google and Groupon.

Liveblog

8:36 am: Everyone is seated in the ballroom, and the session with Wojcicki is about to start.

8:39 am: Walt and Kara have come out onto the stage, thanking the audience for their support at big D and this week at D: Dive Into Mobile.

Before Wojcicki comes to the stage, they are introducing the new writers at All Things Digital:

• Liz Gannes, NetworkEffect
• Ina Fried, Mobilized
• Tricia Duryee, eMoney
• Arik Hesseldahl, NewEnterprise
• Drake Martinet

8:43 am: Walt and Kara hand the stage off to Peter Kafka, who will be conducting the interview with Susan Wojcicki.

8:44 am: We’re getting started. Peter Kafka is interviewing Susan. She says when she first rented to Larry and Sergey, they weren’t allowed to come in the front door.

8:45 am: Susan: I charged them $1,700 a month in rent.

8:45 am: Peter: Let’s start with mobile. It’s a big business but small for Google at $1 billion. Break out that billion dollars.

Susan: We don’t break it out. But they are all growing. To give you an idea of the growth, we saw a 4x increase year over year in the number of searches. AdMob has doubled, and is doing more than a billion ad requests per day.

8:48 am: Mobile brings an opportunity not just to bring people to a Web site but to a store. We just did something with Google Ad Goggles, with Buick, where you can see a magazine ad, scan and that takes you to an ad site.

8:51 am: Peter: In-app advertising is a small opportunity, but Google owns it.

Susan: We’d like to have everyone be an advertiser. We think about having very mobile-specific campaigns.

Our barriers to entry are a lot lower than those at Apple. We offer all the formats like video. We want it to be easy to advertise, we have a lot of systems that measure quality.

8:52 am: Peter: Who’s running AdMob day to day? Original management has left.

Susan: We’ve taken different parts of it and integrated it into our advertising and sales organizations. [Former AdMob CEO] Omar [Hamoui] has left for personal reasons, but pretty much most of the staff who joined with AdMob have stayed. The goal is how do we continue to innovate on that platform.

Peter: Do you view the phone differently from a privacy standpoint than on the PC?

Susan: I think the phone is a really personal device in a lot of ways. If you drop your phone or lose it there’s a moment of panic. On the other hand there’s a lot of control that users have.

8:57 am: Peter: You guys and the rest of the ad industry are telling Washington that they will self-regulate around privacy. FTC says that’s not going to fly, and they want something like an opt-out browser.

Susan: Google is a consumer brand and people need to be comfortable. If we were just an advertising brand we wouldn’t have the same concerns. We’ve always tried to promote transparency and choice among our users. We didn’t have a cookie on the AdSense network until about a year ago. There were a lot of things we couldn’t do.

8:58 am: Susan: We’re always interested in what’s being proposed. We’ll always participate in any discussion around proposals to improve privacy for users.

8:59 am: Peter: Do you think users really care about this? They’ll say they care if you ask them. Practically, do they really care?

Susan: People care. They also want to have good content. And they want the advertising to be relevant. We see advertising as information, and as long as we can make that information useful, the better it is.

9:01 am: Susan: We’ve had ads in Gmail since Gmail first launched. Ads get a bad reputation sometimes because theyr’e not useful. They’re not relevant, or slow. If you’re planning a trip to Hawaii, and see ads that are related to that, that’s useful information.

9:02 am: Susan: The moment that our products are not as good, people will go somewhere else.

Peter: So you were employee No. 18; now there are 23,000 employees at Google. Talk about how the culture has changed over time.

Susan: Google is a much bigger company obviously. We’ve tried to have a lot of different divisions and groups and have given them autonomy. Our display group is run like a separate group within Google.

The secret is to break into groups that are manageable, and give them as much autonomy as possible.

9:05 am: Peter: What are we to read into the fact that you’re offering employees bonuses to stay at the company?

Susan: Our employees are really valuable to us. They are basically our business. Google has been doing well. As much as possible we’re trying to share back with the employees. They will continue to create a lot of value.

9:06 am: Peter: If you’re coming to Google as a hot young engineer out of Stanford, what’s the most compelling thing you can say to bring them on board?

Susan: Google’s scale and platform. If you have a passion, and want to get things done. [Cites Andy Rubin, and the scale he's working at now vs. when Android was a start-up.] When you do something, it matters.

9:07 am: Peter: You guys were talking to Groupon. That deal has now gone away. [Asks about integrating companies into the Google culture.]

Susan: Each deal is different and you have to consider how best to integrate them.

9:09 am: Peter: What’s the product you’re most excited about?

Susan: Mobile ads. How can we enable you, when you’re walking around, to find out the best local offers around? As an advertiser, how can I find out if someone saw my ad and went to a store?

The local market is a huge market, we’ve always wanted to be in it.

9:09 am: Now going into Q&A from the audience.

9:13 am: Q: What do you view as being so hard about local?

Susan: The reason local is hard is because it needs to be simple. For small businesses, they don’t have a lot of time. You need to create a model that works for them. And it needs to be easy for them to sign up. On the back end, everything needs to just work for them.

9:15 am: And we’re done!

Here are the three data points that the search giant showed off during its earnings call this afternoon. All of them “begin with the letter B,” as product SVP Google Jonathan Rosenberg noted, and all of them come with caveats:

• $2.5 billion: Non-text display ad revenue run rate. That number includes ads from its DoubleClick unit as well as YouTube.
• 2 billion: YouTube monetized views per week.
• $1 billion: Mobile annualized revenue run rate.

All of those seem big–and they are! But they’re also deliberately fuzzy enough that it’s hard to tell exactly what they mean.

For instance: As Henry Blodget notes, those display-ad dollars are gross revenue, which means that Google only keeps a portion of them. And while that two billion YouTube views number is up from a billion a year ago, it’s proportionally the same: A year ago YouTube said it was monetizing a billion views a week while serving up a billion views a day; now the video site says two billion views a week and two billion a day.

Meanwhile Google officials, who routinely announce that YouTube is close to profitability, refused to tell analysts whether YouTube is actually profitable.

No matter! The point of b-as-in-big numbers was to impress Wall Street with Google’s ability to create new revenue streams beyond its core search ads. And the data, along with the company’s impressive Q3 performance, seems to have worked: Shares are up nine percent in after-hours trading.

——————

EARLIER

There’s the beat Wall Street was looking for. Google reports earnings of $7.67 a share and net revenues of $5.48 billion. The consensus was for $6.67 and $5.25 billion. GAAP EPS was $6.72.

Google (GOOG) has been plowing money into capital expenditures and people–it now has 23,300 employees, up from 21,800  months ago, a 6.8 percent increase–but it has been able to keep operating income quite healthy, anyway. Adjusted operating income was $2.93 billion, well above the $2.77 billion consensus.

GOOG is up considerably, now seven percent, in after-hours trading. Robot cars for all!

You can listen to (and watch) Google’s 4:30 pm ET earnings call by clicking on this YouTube link. I’ll add updates from the earnings call occasionally starting here:

As in recent quarters, CEO Eric Schmidt is sitting this one out.

CFO Patrick Pichette starts off. Aha! Teases that “we may have” Schmidt available for the first 30 minutes of Q&A before he gets on a GooglePlane.

300 of those new 1,500 employees came from acquisitions.

Discussion of “long-term” growth–”the next 5 to 10 years.” “Simply put, we’re on this growth agenda at full throttle…investing heavily in people and in product.”

There’s a “war for talent” in our industry, which is “out of synch” with the broader economy. Currently exploring how to attract and retain people. Winners and losers determined by this battle.

Re: Product investment, which you’ll hear about from product SVP Jonathan Rosenberg. He’s going to tell you about some numbers, but don’t expect to hear an update on these–they’re merely “proof points” about Google’s success.

Here’s Rosenberg, teasing new previously unreleased numbers.

Here they come. Starting with search and Google Instant:

Impact has been “very minimal” on revenue and “quite expensive” from a resource perspective.

But! “We launched it because we could.”

As search gets better, ads have to keep pace. Great momentum with AdWords.

New ad formats appear on more than 10 percent of query. Some formats show clickthrough rates as much as 10 percent on some, up 30 percent in others.

Big numbers, “which all begin with the letter B.”

$2.5 billion: Non-text display ad revenue run rate. That includes DoubleClick, YouTube.

2 billion: YouTube monetized views per week

$1 billion: Mobile annualized run rate

Mobile search queries up 5 times in the last few years.

Back to Pichette, to tamp down numbers.

In some cases, there is overlap with numbers. For instance, with AdMob, numbers counted in both display and mobile.

Time for Q&A, Schmidt is now on the line.

Schmidt says query growth is pushing click growth, and so are new ad formats. Ads are more compelling, etc.

Pichette notes that AdX numbers are included in the $2.5B display total.

Q: Please talk about YouTube. Of the two billion monetized views, what percent is that of total views? And are you profitable yet?

Pichette: Re: Profitability, “We have not made any comments on it.” [Except of course when they do, over and over.]

Rosenberg: Note that we’ve said we do two billion views per day–that will give you context.

Sorry, missed a Q.

Schmidt says growth of Android is “well past what I had ever hoped for.”

90,000 apps on Android “and growing very fast.”

Question about “proprietary benefits” of Android.

Schmidt: Android is the “largest single platform play” in mobile today.

We’re growing it by giving software away. How does that help us? Well, for starters, people who use Android search two times more than anyone else. Obvious benefit for us there, and search is more lucrative for us there as well, and that makes Android “hugely profitable.”

And we can add other value-added services to Android, but that’s not the focus right now.

Questions on cost: Cost per employee has declined. Can you continue that? And on mobile, will you stay with the “indirect monetization” Android strategy?

Pichette: Wouldn’t read anything into the cost-per-employee numbers. But we’re continuing to be frugal and generous.

Ad boss Nikesh Arora: We’re excited about the revenue model we have. We have no reason to change the model we have with Android.

Schmidt: And display will become a very big component of mobile.

Q: On display, can you break out YouTube and AdX numbers? And what do you think of competitive Android marketplaces?

Pichette: No breakout of numbers. [Duh.]

Schmidt: Goal of the app store is to make money for developers. Not a revenue goal for Google. More stores are a “win for everybody.”

Question about CPC on mobile devices. Rosenberg: They’re lower than desktop, because there aren’t many practical ways to consumate transaction. But on the iPad, activity looks a little bit more like it does on a PC, because there’s more room to enter credit card numbers, etc.

Q: Please discuss cannibalization between smartphone and PC–are iPad and tablet searches incremental or cannibalization? And can you give us color on international 26 percent growth?

Rosenberg: We don’t see cannibalization. We see mobile as complimentary to desktop. Different use patterns–mobile search is on weekends, during lunchtime, etc.

Arora: Generally, trend positive across the board. U.K. a bit weaker, but some of that is FX. Southern Europe way better than Northern. Asian markets robust.

Q: Competitors make $300 profit per handset sold over the lifetime of a device.You’re approaching this with a different model, but do you think that’s an upper limit on that number?

Schmidt: Our model is that handset makers and manufacturers make a lot of money from the phone, and we make money from advertising. So can’t compare the two, and premature for us to guess what we can do. “It should be highly lucrative” and a “very very strong revenue stream compared to a PC.”

Q: On social search. How do you “capture the signal” without access to the data feeds, as you have with Twitter.

Schmidt: “There are some ways we can do that” now, and we’re working on new ways.

Sorry, stepped out. Back now.

Q: TAC rate seems to be lowest since IPO. Sustainable? Growth has been driven by volume, not price. Sustainable, and/or will pricing increase going forward?

Pichette: MySpace deal is now over. That saved us a bunch of money. And mix of our partners will effect our TAC. That’s about it.

Rosenberg: Can’t answer volume/price question without “being forward-looking.” [Heh]

Q: Microsoft/Facebook deal was exclusive. But do you think you’ll see exclusive data deals? And what about Groupon, etc.? Can you compete there?

A: Value of exclusive data is “swamped” by “vastness” of the Web. So no concern there.

Schmidt: Always a concern that large chunks of data are not accessible to search engines….long pause… up to the content owner to decide how much to expose. We believe the world is better off if more information is searchable. “We fundamentally believe that.”

Rosenberg: Daily deals are very exciting. “A lot of small companies doing a fabulous job there.” We participate a little bit via sitelinks. But no question “that’s a very exciting and hot space.”

Q: When will Google Instant be on the BlackBerry or iPhone? What’s Android activation rate? And why not let advertisers bid directly on mobile inventory?

Rosenberg: Instant availability on other platforms “relatively soon”–probably this fall.

Not updating Android activation numbers.

Q: Given that non-core search is more material, do you think you’ll keep allocating resources with your 70-10-10 model? And when do you anticipate mobile overtaking desktop?

Schmidt: On mobile vs. display: Even if we knew I don’t think we’d talk about it.

On core vs. emergent: We talk about this all the time. Depends. Android is very small, and growing fast, so they get all the resources they need. We end up still at 70-10-10, but that’s not really a formula for us.

Pichette: What really matters the most to us is as Eric says, “When you see a hockey stick, pour gasoline on that fire.”

Q: Big-picture data question: What does Google think about leveraging user data to better target ads (see Facebook, Yahoo, etc.)–particularly with search data and display?

Schmidt: “We have a pretty strong opinion that we’re not going to do very much of it.” We’re intensely serious about privacy.

So “we’re not going to do the kinds of things that we could do with it… without your explicit permission. And in many cases we probably won’t do it forever.”

A question on display, which I’ve missed but will have to return to.

Pichette wraps things up. Today’s data points “are not about giving you information” for coming quarters, but to give you confidence that we’re building long-term businesses.

Call ends.

Mark Mahaney’s cheat sheet will help you decipher the numbers: