Demand Media handily beat Wall Street expectations in its first quarter results today, released after the market closed.

The company reported revenue of $79.5 million and six cents a share in adjusted net income.

Investors were expecting the company to report about $69.6 million in revenue for the three months, with four cents a share in adjusted profits.

On a GAAP basis, the net loss per share was 13 cents compared to 94 cents a year ago.

The decent results could boost Demand’s stock, which has been hit hard since Google launched “Panda,” an overhaul of its search algorithm to improve results and remove poor quality content.

In a conference call at 2 pm PT today, which BoomTown will be liveblogging, most will be paying more mind to what the online content company’s top execs–especially CEO Richard Rosenblatt–have to say about the impact of the updates from Google to Demand’s various Web offerings.

As a first strike, some of Demand’s execs briefed the media earlier today on efforts to improve the quality of its content–you can read the official press releases here on that and also here.

In them, Demand said it will remove some online posts that were substandard and created under a now-suspended writers’ compensation system. It said it is also improving reader feedback tools and adding more substantive stories to its sites.

Those are all good ideas, since Google’s tweaks have been chewing away at a range of Web sites–such as those owned by Demand–which rely heavily on search engine optimization to bring in huge traffic.

One big hit for Demand, due to Panda, has been to its flagship eHow site.

All the mishegas has hurt the Santa Monica, Calif., company’s stock. It’s down just over 30 percent since Demand’s IPO in late January, as bearish investors fret over the implications of Panda.

Still, in its report, Demand said its content and media revenue was up 72 percent to $51.9 million, compared to $30.2 million last year.

Online performance marketing firm Efficient Frontier is acquiring San Francisco-based social marketing software and services start-up Context Optional, the company said.

While terms of the deal were not revealed, sources said the price was $50 million.

The purchase of Context Optional is the first acquisition for Efficient Frontier, which has grown from a start-up that focused solely on search engine marketing to now including display and social media campaigns.

The move is a significant sign, said Efficient Frontier CEO David Karnstedt, that social has become a key part of the advertising ecosystem and an end-to-end solution is important to marketers.

With the purchase, for example, he said advertisers will be able to run Facebook ads all the way through to managing their brand’s fan page and help with both acquisition and retention.

“Our heritage is that we were early in optimizing search engine advertising for clients, so we wanted to expand our efforts exponentially with Context Optional, since social is different than search,” said Karnstedt in an interview yesterday with BoomTown. “We want to help advertisers interested in social media keep engaged and regularly returning customers.”

Context Optional was founded in 2006 and competes with other start-ups, such as Buddy Media, Involver and Vitrue.

Here is the official press release from Sunnyvale, Calif.-based Efficient Frontier:

Efficient Frontier Acquires Context Optional to Create the First Comprehensive Solution for Social Media Marketing

Unites Leading Advertising and Page Management Platforms to Maximize Social Marketing Impact

Sunnyvale, Calif.–May 4, 2011–Efficient Frontier, a leading global performance marketing company, today announced that the company has acquired Context Optional, a leader in enterprise social marketing solutions. The acquisition expands Efficient Frontier’s social media offering which will combine the company’s advertising campaign management and optimization with Context Optional’s page management platform. This marks the first unified solution for managing and optimizing Facebook fan acquisition through to fan retention and engagement. Terms of the deal were not disclosed.

“We are excited to offer marketers a complete solution for capitalizing on the growing social marketing opportunity across Facebook, Twitter and LinkedIn,” said David Karnstedt, Efficient Frontier’s CEO. “Social media marketing is more than just the initial contact with the customer and requires both compelling experiences and an ongoing dialog to realize the full potential of the interaction. The acquisition of Context Optional will create a unified platform for marketers to manage all of their social media touch points with brand enthusiasts.”

Efficient Frontier’s platform manages ad campaigns across search, display and social media, enabling customers to acquire audiences across multiple channels and optimize for better results. Context Optional’s Social Marketing Suite of products is an enterprise solution for brands to engage and retain audiences across Facebook and Twitter.

By aligning acquisition and engagement strategies, the combined company will be able to deliver a seamless and measurable user experience by integrating advertising and social marketing content. Brands will be able to more efficiently target audiences based on social engagement insights and continually refine their Facebook application experiences to better match their audiences’ interests. Efficient Frontier will also be able to provide integrated analytics to provide a more complete view of performance including virality.

“Efficient Frontier is a leader in digital marketing and our respective clients are asking us for a comprehensive solution to both acquire and build relationships with their customers,” said Kevin Barenblat, Context Optional’s Co-Founder and CEO. “This combination is recognition that social media is now indeed a powerful marketing channel in which brands are significantly investing. “We’re excited to be the first in the market with an integrated, enterprise solution to enable brands to effectively scale their investment in social.”

Tonight, Demand Media–in reaction to a new study showing that its flagship eHow site had now gotten much more negatively impacted by Google’s rejiggering of its search algorithm than previously–released a statement and blog post about the tempest.

In it, the Santa Monica, Calif.-based company reaffirmed its outlook for fiscal year 2011, noting, in part:

“Certain third parties that have published reports attempting to estimate the effect of recent search engine algorithm changes made by Google on traffic to the Company’s owned and operated websites have significantly overstated the negative impact of those changes on traffic to eHow.com, as compared to the Company’s directly measured internal data.”

The company, though, declined to give specific details about the impact of Google’s attempt to clean up its search results by tweaking its algorithms to cut out poorly made material from so-called “content farms.”

While others had apparently been initially impacted by Google’s first foray, such as Yahoo’s Associated Content unit, Demand had not been.

That is, until a recent Sistrix poll (see chart below), showing eHow has now been hurt badly by even more Google search changes, codenamed Panda.

While acknowledging a decline in search traffic on eHow from the Google changes, Demand said the Sistrix data was way off.

In a blog post, Larry Fitzgibbon, Demand’s EVP of Media and Operations, wrote, in part:

“However, recent third-party reports attempting to estimate the impact to our search driven traffic, including one projecting a 2/3rds decline in eHow.com traffic, are so significantly overstated that we decided to comment.”

When Google began making changes to its search formula, Demand CEO Richard Rosenblatt told MediaMemo’s Peter Kafka in an interview that its relationship with Google was all sunshine and roses.

When asked how its relationship with Google was, Rosenblatt said:

“This is why our partnership with Google makes sense. 1) We help them fill the gaps in their index, where they don’t have quality content. 2) We’re the largest supplier of all video to YouTube, over two billion views and 3) we’re a large AdSense partner. So our relationship is synergistic, and it’s a great partnership. And it’s a partnership that we’re excited to continue to expand.”

It will be interesting to see how he feels now.

Here are both Demand’s official press release and blog below:

Demand Media Reaffirms Outlook for Fiscal Year 2011

SANTA MONICA, Calif., Apr 18, 2011 (BUSINESS WIRE)

Demand Media, Inc. (NYSE: DMD), a leading content and social media company, announced today that it is reaffirming its financial outlook for fiscal year 2011 that it previously provided on February 22, 2011.

Certain third parties that have published reports attempting to estimate the effect of recent search engine algorithm changes made by Google on traffic to the Company’s owned and operated websites have significantly overstated the negative impact of those changes on traffic to eHow.com, as compared to the Company’s directly measured internal data. Recent search engine algorithm changes have negatively impacted search driven traffic to some of our websites, including eHow.com, resulting in moderately lower year-to-date page view growth for the Company’s owned and operated Content & Media properties compared to page view growth rates before the algorithm changes. Nevertheless, the Company currently expects that its year-over-year page view growth across its owned and operated Content & Media properties in the second quarter of 2011 will be comparable to, or greater than, the year-over-year page view growth achieved in the second quarter of 2010.

As previously announced, the Company will report its first quarter 2011 financial results on May 5, 2011. The Company will host a conference call to discuss the results at 5:00 p.m. Eastern Time (2:00 p.m. Pacific Time). A live webcast of the conference call will also be available and can be accessed within the investor relations section of Demand Media’s corporate website at ir.demandmedia.com.

Another Statement About Search Engine Algorithm Changes

Posted by larry fitzgibbon at 4/17/2011 10:05 PM PDT

It’s hard to imagine a company more focused on the connection between consumers and content than Demand Media. That point of connection gives us the opportunity to inform, engage and serve the consumer. And it’s where trusted relationships start. So, how our content reaches the consumer–whether it’s through direct visits, social media referrals, apps or search–continues to be top of mind with everyone at the company. Consumers are connecting with more content than ever before as social media and mobile access have emerged to play huge roles that didn’t even exist just a few years ago. And search engines, of course, continue to play an integral part in content discovery and have been hard at work improving their products to create the best consumer experiences possible.

As I discussed on my last blog post, Google recently made significant search algorithm changes in an update dubbed Panda that has rolled out in various capacities from late February thru mid-April. With respect to Panda’s mid-April update, some of our properties saw Google search referrals move up while other properties, including our largest property eHow.com, saw these referrals go down.

As I said in my prior post, we generally do not comment or speculate on changes by major search engines, as these changes can happen nearly daily. However, recent third-party reports attempting to estimate the impact to our search driven traffic, including one projecting a 2/3rds decline in eHow.com traffic, are so significantly overstated that we decided to comment. As discussed in our press release issued today, we currently expect that in Q2 2011 our owned and operated Content & Media properties will generate year-over-year page view growth comparable to or greater than the year-over-year page view growth reported for Q2 2010. We have also reaffirmed our calendar year 2011 financial guidance in this press release.

Demand Media has a myriad of impactful sites and many sources of traffic. We are encouraged that the investments we’ve been making in site experience and content quality are making an impact with our consumers. Organic growth in visits from non-search sources to eHow continue to grow rapidly and Cracked.com is now the most visited humor site on the Internet with the majority of its page views coming from direct visits. Improvements have been registered from eHow’s recent redesign and the introduction of new video series leading to significant growth in Facebook likes. Our brand advertisers have also reported encouraging results with their intent-targeted campaigns. Rest assured, just as we have been innovators in building one of the largest online audiences, we are applying that same rigor and intensity to delivering a quality experience for consumers and advertisers.

As a disruptive digital media and technology company, we have been operating in a fast moving environment since the company’s founding five years ago. While change is frequent, one thing is certain–Demand Media is steadfast in our commitment to produce great outcomes for our consumers, advertisers and community of creative professionals. We’re in the trenches listening, learning, adapting and innovating–and we are very excited about the opportunity in front of us. We look forward to providing details on all of these topics and more in our previously announced conference call at 5:00pm (Eastern) May 5th, 2011 to discuss first quarter 2011 financial results.

Larry Fitzgibbon is Demand Media’s EVP of Media and Operations, and manages the company’s rapidly growing network of consumer properties.

Microsoft’s legal eagle Brad Smith didn’t even bother to pretend the software giant’s filing of a formal antitrust complaint against Google with the European Commission wasn’t a wee bit ironic.

Wrote Smith in a blog post late last night:

“There of course will be some who will point out the irony in today’s filing. Having spent more than a decade wearing the shoe on the other foot with the European Commission, the filing of a formal antitrust complaint is not something we take lightly. This is the first time Microsoft Corporation has ever taken this step.”

But take it the company did, noting: “Microsoft is filing a formal complaint with the European Commission as part of the Commission’s ongoing investigation into whether Google has violated European competition law.”

Google, no surprise, disagreed, via a statement from a spokesman.

“We’re not surprised that Microsoft has done this, since one of their subsidiaries was one of the original complainants. For our part, we continue to discuss the case with the European Commission and we’re happy to explain to anyone how our business works.”

Here is the whole Microsoft post, in which Smith outlines Microsoft reasons for its action:

Adding our Voice to Concerns about Search in Europe

30 Mar 2011 9:00 PM

Posted by Brad Smith

Senior Vice President & General Counsel, Microsoft Corporation

Microsoft is filing a formal complaint with the European Commission as part of the Commission’s ongoing investigation into whether Google has violated European competition law. We thought it important to be transparent and provide some information on what we’re doing and why.

At the outset, we should be among the first to compliment Google for its genuine innovations, of which there have been many over the past decade. As the only viable search competitor to Google in the U.S. and much of Europe, we respect their engineering prowess and competitive drive. Google has done much to advance its laudable mission to “organize the world’s information,” but we’re concerned by a broadening pattern of conduct aimed at stopping anyone else from creating a competitive alternative.

We’ve therefore decided to join a large and growing number of companies registering their concerns about the European search market. By the European Commission’s own reckoning, Google has about 95 percent of the search market in Europe. This contrasts with the United States, where Microsoft serves about a quarter of Americans’ search needs either directly through Bing or through our partnership with Yahoo!.

At Microsoft we’ve shown that we’re prepared to work hard and invest literally billions of dollars annually to offer Bing, a search service that many now regard as the most innovative available. But, hard work and innovation need a fair and competitive marketplace in which to thrive, and twice the Department of Justice has intervened to thwart Google’s unlawful conduct from impeding fair competition. In 2008 the DOJ moved to file suit against Google for its unlawful attempt to tie up and set search advertising prices at Yahoo!, causing Google to back down. And last year the DOJ formally objected to Google’s efforts to monopolize book content, a position affirmed by a federal district court in New York just last week. Unfortunately, even this has not stopped the spread by Google of new and disconcerting practices in the United States.

As troubling as the situation is in United States, it is worse in Europe. That is why our filing today focuses on a pattern of actions that Google has taken to entrench its dominance in the markets for online search and search advertising to the detriment of European consumers.

How does it do this? Google has built its business on indexing and displaying snippets of other organizations’ Web content. It understands as well as anyone that search engines depend upon the openness of the Web in order to function properly, and it’s quick to complain when others undermine this. Unfortunately, Google has engaged in a broadening pattern of walling off access to content and data that competitors need to provide search results to consumers and to attract advertisers.

On PCs it is usually not difficult for people to navigate to any search engine. Google in fact makes this point virtually every time someone raises antitrust concerns about their practices. Their defense ignores the hugely important fact that there are many other important ways that search services compete. Search engines compete to index the Web as fully as possible so they can generate good search results, they compete to gain advertisers (the source of revenue in this business), and they compete to gain distribution of their search boxes through Web sites. Consumers will not benefit from clicking to alternative sites unless all search engines have a fair opportunity to compete in each of these areas.

Our filing details many instances where Google is impeding competition in these areas. A half-dozen examples below help illustrate some of our concerns.

First, in 2006 Google acquired YouTube–and since then it has put in place a growing number of technical measures to restrict competing search engines from properly accessing it for their search results. Without proper access to YouTube, Bing and other search engines cannot stand with Google on an equal footing in returning search results with links to YouTube videos and that, of course, drives more users away from competitors and to Google.

Second, in 2010 and again more recently, Google blocked Microsoft’s new Windows Phones from operating properly with YouTube. Google has enabled its own Android phones to access YouTube so that users can search for video categories, find favorites, see ratings, and so forth in the rich user interfaces offered by those phones. It’s done the same thing for the iPhones offered by Apple, which doesn’t offer a competing search service.

Unfortunately, Google has refused to allow Microsoft’s new Windows Phones to access this YouTube metadata in the same way that Android phones and iPhones do. As a result, Microsoft’s YouTube “app” on Windows Phones is basically just a browser displaying YouTube’s mobile Web site, without the rich functionality offered on competing phones. Microsoft is ready to release a high quality YouTube app for Windows Phone. We just need permission to access YouTube in the way that other phones already do, permission Google has refused to provide.

Third, Google is seeking to block access to content owned by book publishers. This was underscored in federal court in New York last week, in the decision involving Google’s effort to obtain exclusive and unfettered access to the large volume of so-called “orphan books–books for which no copyright holder can readily be found. Under Google’s plan only its search engine would be able to return search results from these books. As the federal court said in rejecting this plan, “Google’s ability to deny competitors the ability to search orphan books would further entrench Google’s market power in the online search market.” This is an important initial step under U.S. law, but it needs to be reinforced by similar positions in Europe and the rest of the world.

Fourth, Google is even restricting its customers’–namely, advertisers’–access to their own data. Advertisers input large amounts of data into Google’s ad servers in the course of managing their advertising campaigns. This data belongs to the advertisers: it reflects their decisions about their own business. But Google contractually prohibits advertisers from using their data in an interoperable way with other search advertising platforms, such as Microsoft’s adCenter.

This makes it much more costly for Google’s advertisers to run portions of their campaigns with any competitor, and thus less likely that they will do so. That is a significant problem because most advertisers figure that they have to advertise first with Google. If it’s too expensive to port their advertising campaign data to competing advertising platforms, many won’t do it. Competing search engines are left with less relevant ads, and less revenue. And while this restraint isn’t visible to consumers, its effects are nonetheless felt across the Web. Advertising revenue is the economic propellant fueling the billions of dollars needed for ongoing search investments. By reducing competitors’ ability to attract advertising revenue, this restriction strikes at the heart of a competitive market.

Fifth, this undermining of competition is reflected in concerns that go beyond Google’s control over content. One of the ways that search engines attract users is through distribution of search boxes through Web sites. Unfortunately, Google contractually blocks leading Web sites in Europe from distributing competing search boxes. It is obviously difficult for competing search engines to gain users when nearly every search box is powered by Google. Google’s exclusivity terms have even blocked Microsoft from distributing its Windows Live services, such as email and online document storage, through European telecommunications companies because these services are monetized through Bing search boxes.

Finally, we share the concerns expressed by many others that Google discriminates against would-be competitors by making it more costly for them to attain prominent placement for their advertisements. Microsoft has provided the Commission with a considerable body of expert analysis concerning how search engine algorithms work and the competitive significance of promoting or demoting various advertisements.

Over the past year, a growing number of advertisers, publishers, and consumers have expressed to us their concerns about the search market in Europe. They’ve urged us to share our knowledge of the search market with competition officials. As they’ve pointed out, the stakes are high for the European economy. On any given day, more than half of all Europeans use the Internet, and more than 90 percent of them look for information about goods and services on the Web. Indeed, the European Commission’s Digital Agenda made clear that commerce is moving online, where two-thirds of Europeans begin their shopping process. It’s therefore critical that search engines and online advertising move forward in an open, fair and competitive manner.

There of course will be some who will point out the irony in today’s filing. Having spent more than a decade wearing the shoe on the other foot with the European Commission, the filing of a formal antitrust complaint is not something we take lightly. This is the first time Microsoft Corporation has ever taken this step. More so than most, we recognize the importance of ensuring that competition laws remain balanced and that technology innovation moves forward.

We readily appreciate that Google should continue to have the freedom to innovate. But it shouldn’t be permitted to pursue practices that restrict others from innovating and offering competitive alternatives. That’s what it’s doing now. And that’s what we hope European officials will assess and ultimately decide to stop.

Please see this disclosure related to me and Google.

Yahoo’s Luke Beatty said he is not worried.

“We welcome the change,” he insisted about Google taking aim last Friday at so-called “content farms,” producers of low-quality content that spam up the Web and the search giant’s results. “And we endorse what Google is doing 100 percent.”

That’s ironic, given among those allegedly hit hardest by changing of its famous algorithm–based on early, and perhaps questionable, surveys–is Yahoo’s Associated Content.

But, if true, and traffic at Associated Content–which the Silicon Valley Internet giant bought for $90 million last May–is indeed badly hurt, it’s obviously going to be a problem for Yahoo, which relies on advertising revenue as its core business.

A quick poll by Sistrix, a search engine optimization firm, using one million keywords before and after Google’s changes, showed that Associated Content’s “visibility index”– including keyword and ranking positions ranking and clickthrough rate–was down 93 percent.

So yesterday, Beatty, who founded Associated Content and now works at Yahoo, dialed up BoomTown to talk about what the Google shift will mean to Yahoo.

First off in the wide-ranging interview, he noted, “everything on the Web is changing all the time,” noting that Associated Content used to rely more on the now weakened Digg and RSS for its traffic and distribution.

“Obviously, that has changed and we have still managed to grow,” he said.

Beatty said it is still not clear that the new tweaks in search criteria at Google would mean for Associated Content’s offerings–coming from 400,000 contributors of all kinds.

“Our data will not be reconciled for weeks…but some will be up and some will be down,” he said, adding the overall, “I suspect it will be down, although it’s not accurate by any means in the numbers released so far, since there is no way you can know this early.”

Still, it’s obvious that Google’s latest move has not been not good for Associated Content, although Beatty noted that the Silicon Valley search king is no longer the main source of traffic for Associated Content material.

Instead, that would be the owned-and-operated sites of Yahoo, most of all, and–increasingly–social networking sites such as Facebook.

“When we sold the company, we know that sites of Yahoo itself would be the biggest driver of our growth and that was the plan,” said Beatty. “And, though smaller, social means of distribution are clearly the way people are now finding our content.”

In an email later, Beatty underscored this point:

“Search traffic is not our focus within Yahoo–it hasn’t been for 10
months…traffic sources have changed endlessly over that last six years…search is one, albeit an important one and clearly, [but] now it too is changing and we see the future of our content distribution coming from O&O properties and social networks, as much as anything.”

Still, Beatty said Associated Content will adapt as long as Google does not make its tweaks on a network basis and rather than on a site basis. (Interestingly, that would presumably include Google’s own–and often spammish–Blogger property, which is fueled by its powerful AdSense engine.)

“It appears that changes have been made on an asset-by-asset basis
is good–networkwide cramdown would be inappropriate and uneducated,” he said.

Still, the best way to fight the Google initiative is by delivering higher quality content, which Beatty said was being done at the company via a series of ongoing measures to improve overall submissions.

Those include a Yahoo style guide for content creators, a two-tiered human editor review process, analytical analysis, a featured contributor program and, interesting, an online tutorial process called the Yahoo Contributor Network.

It’s not exactly Harvard University, of course, but Beatty said there is more to come.

“We are committed to supporting and helping our contributors navigate through this and every other change in the crowdsourced content economy,” he said. “We want the best article to get more traffic.”

Of course, with Google’s doubtlessly continuing changes in its criteria for what good content is, presumably, that won’t be Yahoo’s to decide.

In another significant search announcement yesterday, Google said it was revising its algorithm to target makers of low-quality content.

The search giant has been criticized by many of late for the presence of too much spam in its results, which degrades the consumer experience on the powerful site.

Thus, “pretty big algorithmic improvement to our ranking–a change that noticeably impacts 11.8% of our queries,” said Google in a blog post.

The company continued:

“This update is designed to reduce rankings for low-quality site–sites which are low-value add for users, copy content from other websites or sites that are just not very useful. At the same time, it will provide better rankings for high-quality sites—sites with original content and information such as research, in-depth reports, thoughtful analysis and so on.”

Who Google is aiming at is unclear–some point to Demand Media, whose top exec recently said the content company welcomed any improvements to the search results in its recent quarterly call.

“We consider ourself very white hat,” declared CEO Richard Rosenblatt, who has often touted the Demand’s good relations with Google, to a question from a Wall Street analyst about the series of recent declarations by Google to clean up its search results.

That was further underscored yesterday.

Interestingly, the Google post about the changes, titled “Finding More High-Quality Sites,” was authored by Google’s Amit Singhal and Matt Cutts–who have cut a high profile of late in the search arena.

Both Singhal and Cutts were quite vocal recently in loopy accusations about Microsoft’s Bing lifting Google’s search results.

And Cutts has been a frequent visitor to Washington, D.C. of late, to defend Google over its controversial acquisition of the ITA Software flight information company, as well as its search ranking process.

At a January 13 meeting, in an email obtained by BoomTown, Cutts was the draw:

Please join us!

You’re invited to learn

How Google’s Search Engine Works

Myth-busting and Q&A for House/Senate staff members

with

Matt Cutts

Principal Search Engineer, Google

Thursday, January 13, 2011

2:30 – 3:30 PM

House Visitor Center Room 201

How does Google’s search engine really work? Can websites pay Google to improve their ranking in Google results? What’s the difference between the “natural” results and the ads on the right hand side? And why does a particular website rank #1 or #3 when you do a Google search for your boss’ name? You’re invited to join Matt Cutts, one of Google’s top search engine engineers and the company’s ambassador to webmasters for a session on Capitol Hill where Matt will explain how Google ranks websites, address common myths about Google’s search results, and answer your questions. Please join us!

In another invite, low-quality content was the topic:

Matt Cutts is one of Google’s top search engineers who heads up the team ensuring that spam and low-quality sites don’t game search results. He is going to be here in DC to talk with folks around town about some of the recent calls for government to police or regulate the “fairness” of search results. Matt is a bit of a rock star in the search world and spends a lot of time speaking and blogging about these issues. Basically he’ll talk about how Google goes about ranking websites, how his team fights webspam, and he’ll provide a closer look at sites like Foundem and MyTriggers (who have filed antitrust actions against Google).

Finally, he’ll talk about the recent calls by some for Google’s search results to be regulated.

Perhaps I’m being cynical, but the noisy search algorithm changes, while welcome to those using Google, also have a pretty clear goal to burnish the Silicon Valley company’s image.

Please see this disclosure related to me and Google.

I don’t have the deal terms, but my hunch is that no cash is involved, and that AOL’s compensation could come in the form of equity in privately held Outbrain, or a tax benefit, or both.

“In keeping with the AOL strategy, any place where we are not a leader in the category or profitable, we are going to look at partnerships or other alternatives. This is one of those businesses. We are pleased we found a great home for the Surphace technology and its employees,” AOL venture and local head Jon Brod said in a statement.

Outbrain CEO Yaron Galai declined to comment.

AOL acquired Surphace for something north of  $25 million in 2008, when it was called Sphere, and Armstrong was still running ad sales at Google. Co-founder Tony Conrad left AOL in 2009, but has since come back as part of the About.me acquisition late last year.

Both Surphace and Outbrain do roughly the same thing: They allow publishers to automatically present related pieces of content to Web surfers, based on the very straightforward theory that a visitor interested in a certain kind of story would stick around if offered similar stuff. (All Things D is a Surphace customer, so you can see it in action at the bottom of this post).

AOL reports earnings early tomorrow morning.

Perusing AOL’s leaked damn-the-journalism-full-speed-ahead business plan, BoomTown was a little late to the Microsoft Bing event this morning called “Farsight: Beyond the Search Box.”

But things had certainly been cooking with gas when I walked into the meeting room at the University of San Francisco, which the organizers had decked out in white nubby rugs, white pleather couches and those white egg-shaped chairs found only in 1970s decor.

Schweeet!

First up was well-known investor and entrepreneur Peter Thiel, poo-poohing Microsoft’s prospects of ever making money in search.

“It’s difficult to produce a new search company,” said Thiel, noting that even with a growing market share it’s curtains for Bing, given the huge fixed costs. “As far as I can tell, it’s still not breaking even.”

Ouch!

By the way, Thiel sold semantic search engine Powerset to Microsoft for upward of $100 million in 2008 to help it, you know, get ahead in search.

Way to insult your money-bearing hosts!

Then, moderator Vivek Wadhwa harangued the panelists from Google, Microsoft and Blekko in the session “Who Will Win the Spam Wars?”

And they say I’m a snarky moderator! Wadhwa is snarktastic!

Wadhwa did not like any of it–not crappy content sites that sully Web search, not the efforts the companies were making to fix things, not the vision the trio had of the future.

And, by the way, Microsoft was not ever going to make money off all the company’s efforts.

Way to insult your hosts! I like this event!

Of course, what everyone was interested in was a smackdown between Google and Microsoft, given that the search giant accused the software giant of stealing its results today.

In an excellent, if exhaustive, post by Search Engine Land’s Danny Sullivan, Google said Bing was cheating by lifting its search results, which Google said it had proved via a “honeypot” sting operation.

“I’ve spent my career in pursuit of a good search engine,” Google’s Amit Singhal told Search Engine Land. “I’ve got no problem with a competitor developing an innovative algorithm. But copying is not innovation, in my book.”

The very presence of the word “honeypot” in any story about search algorithms is superb, in my book, even though this “controversy” is pretty much a he-said-he-said geek-off.

Google’s Matt Cutts kept up the cheater pressure at the Bing event, in a short debate with Microsoft’s Harry Shum, who was not having any of it.

“It’s not like we actually copy anything,” he said.

Translation: Actually, we do borrow, just like Facebook’s Mark Zuckerberg did to the Winklevii, resulting in a social networking behemoth that will soon take over all search and make this whole debate moot.

Microsoft is rubber, Google is glue. And Facebook, which was not present at the search event, is the real sticky honeypot.

The company’s “social modules” dynamically populate with fresh content on any topic.

So, for instance, a news organization could automatically input the tags associated with its articles into a module, and on each page it would show relevant tweets about similar topics (and not just lame redundant retweets of the article itself, like you often see).

Or a site could show a live-updating widget that displays its most tweeted articles that day. Publisher IDG is already using the modules on some of its sites.

Anyone can create a self-service module, and Topsy will offer premium features such as analytics and revenue-shared advertising. Content within the modules is automatically filtered for profanity and language preference.

You might ask why Topsy and its random blog widgets are important. For one thing, Topsy is among the few independent players remaining in real-time search, with OneRiot pivoting to focus on ads, and Ellerdale acquired by Flipboard. Twitter does have its own search service, but it stores only a week of tweets at a time.

Topsy organizes its index of eight billion tweets using social signals, such as figuring out which accounts on Twitter are influential and which tweeted links are important, something Google and Bing are only starting to do. That’s a change from the dominant PageRank mindset, where a parent domain carries a certain weight without differentiation for all the different people who have accounts on it, from influential authorities to spammers.

And while it’s true that few Web pages need any more widgets than they already have, prominent tech publishers like Business Insider and TechCrunch use Twitter sidebar widgets from PostUp (formerly TweetUp) that show a rotation of promoted accounts. A more timely and dynamic alternative like Topsy Social Modules might be more useful.

After All Things Digital finished up a recent tour of the not-yet-reopened Computer History Museum, conducted by Apple co-founder Steve “Woz” Wozniak, one of the curators offered a special treat for a few of the geekiest reporters in attendance.

That meant the cult-legendary Babbage Difference Engine, a Hummer-size calculator originally designed by Charles Babbage in 1847 and later built from the original plans by the Science Museum in London in 2008.

Every part, and there are over 8,000, was finished by hand, using only techniques available in Victorian England.

The bronze, cast-iron and steel engine uses a dizzying series of gears, cams and catches to calculate and print tables of numbers that you might be familiar with if you’ve used one of those little brown pocket reference books.

Plus, it’s the only computer that requires an oil pan.

When “turned on,” which means turning the hand crank, the whole thing clatters to life in a decidedly organized symphony of metallic motion.

There are only two Babbage Engines in existence, and the maintenance alone means they’re almost never brought to life.

But, just for our nerdtastic audience, here is a short video of the whole thing in action in Silicon Valley–something you’ll probably not see again if you wait a lifetime.

Geek on:

]]> http://allthingsd.com/20101204/the-steam-punk-dream-computer-watch-the-babbage-difference-engine-in-action/feed/ 0 http://allthingsd.com/20101109/ask-adds-to-consensus-social-is-the-way-to-compete-with-google/ http://allthingsd.com/20101109/ask-adds-to-consensus-social-is-the-way-to-compete-with-google/#comments Tue, 09 Nov 2010 21:00:24 +0000 Liz Gannes http://networkeffect.allthingsd.com/?p=139 IAC’s Ask.com is giving up the ghost on algorithmic search and Web crawling. Rather than continuing to wilt while competing directly with Google, Ask said today it will devote its resources to Q&A search. That will strike 130 engineering jobs in New Jersey and China, according to Bloomberg.

Ask will now concentrate its efforts on a recently launched Q&A search tool with the team at its Oakland, Calif., office.

Ask has long been the fourth-place player in search, despite some innovative spurts like its origin as a natural-language search engine using the fictional butler Jeeves, and its early efforts to visually parse search results and media into snippets–now features of all major search engines.

IAC CEO Barry Diller, who has recently publicly disparaged Ask, told Bloomberg today, “We’ve realized in the last few years you can’t compete head on with Google.”

Ask launched a new Q&A approach in July, following a recent trend but also playing back to its roots. Sixty percent of questions on the service are now answered, up from 30 percent, Ask.com president Doug Leeds told SearchEngineLand today.

So, is Q&A and social search the way to compete with Google? It could be. Despite buying Aardvark and launching some minimal social search features, Google hasn’t done much in the area. There’s a lot of value in getting your network of friends to give recommendations, as many people do on Facebook and Twitter, and building communities to add knowledge to the Web rather than just crawl it, like on the small but promising Quora. These more recent innovations follow the surprising strength, in a Googlefied world, of products like Yahoo Answers and Korea’s Naver.

IAC hopping out of algorithmic search and crawling doesn’t change much in the market, but it does reaffirm Microsoft’s Bing as the other major player investing in search after Google. Elsewhere, I don’t even want to try to parse the Yahoo-Microsoft partnership. Facebook processes a ton of search queries already, despite a very basic offering, and also is working with Microsoft on search. And Twitter has seen serious growth in search–it says it gets a billion queries a day–but the company seems to count just about every time someone pings its service as a search.

]]> http://allthingsd.com/20101109/ask-adds-to-consensus-social-is-the-way-to-compete-with-google/feed/ 0 http://allthingsd.com/20101109/vurve-launches-advertising-on-autopilot/ http://allthingsd.com/20101109/vurve-launches-advertising-on-autopilot/#comments Tue, 09 Nov 2010 18:02:14 +0000 Liz Gannes http://networkeffect.allthingsd.com/?p=118 You know how the Internet is supposed to make things measurable and accountable, and, thus, democratized? There’s still a lot to be done. Vurve today is coming out of stealth to try to make that premise more true when it comes to small-business advertising on Google, Facebook, shopping engines and the like. (The idea is to figure out what’s actually working, and do more of it.)

Vurve (formerly called Palaran) is almost all automated (customers have to put in about 15 minutes per week, the company says), and to start it is focused on e-commerce businesses. The company figures out what combination of search, display, remarketing, social and shopping engine advertising will be most effective on a dynamic basis.

A partnership with Shopify gives Vurve access to more than 10,000 stores, and it is also available through an integration with Yahoo. Customers spend a minimum of $200 per month. Vurve has also scored preferred access to Google and Facebook’s APIs so it can create its ads more easily. As you can see in the image above, the company does a neat job of illustrating where every sale actually comes from.

Vurve founder and CEO Amit Kumar said that though he doesn’t see much direct competition now, he expects there to be a demand-side platform-style gold rush for optimization and data mining. “Anyone can do this; it’s not voodoo science,” he said. Vurve has had a year in stealth to get its product ready and also has a strong team. Kumar previously worked on Yahoo SearchMonkey, and was also at Dapper, which was acquired by Yahoo last month. Vurve recently hired Kent Brewster, formerly a well-known Yahoo engineer, who apparently “singlehandedly” built the Netflix iPhone app.

Vurve raised $1.2 million from True Ventures and is based in Sunnyvale, Calif.

]]> http://allthingsd.com/20101109/vurve-launches-advertising-on-autopilot/feed/ 0 http://allthingsd.com/20101008/from-the-department-of-the-obvious-poll-finds-parents-are-worried-about-privacy-on-social-networks/ http://allthingsd.com/20101008/from-the-department-of-the-obvious-poll-finds-parents-are-worried-about-privacy-on-social-networks/#comments Fri, 08 Oct 2010 07:10:43 +0000 Kara Swisher http://kara.allthingsd.com/?p=35149

A national poll released today by Common Sense Media asking how well social networks protect kids online produced an answer that should come as a shock to exactly no one:

Not very well, at least according to parents.

A full 75 percent of them gave social networking sites such as Facebook a negative rating for the task.

About 2,000 parents were polled by the nonprofit media organization, as well as 400 teens, who also gave thumbs down to social networks’ ability to police themselves.

There will be a big roundtable discussion on the topic in Washington, D.C., this morning, which will include Common Sense Media head Jim Steyer, Federal Communications Commission Chairman Julius Genachowski, Federal Trade Commission Chairman Jon Leibowitz and Deputy Secretary of Education Anthony Miller.

Along with the poll results, San Francisco-based Common Sense Media said it will also announce the launch of the “Protect Our Privacy–Protect Our Kids” campaign to help parents protect kids’ reputations and personal information online.

I love the smell of impending privacy legislation in the morning!

Already from Rep. Ed Markey of Massachusetts: “As the House author of the Children’s Online Privacy Protection Act, I remain intently interested in ensuring that children are not targeted online and their privacy is strictly protected. Twelve years after the bill was signed into law, entire new technologies and industries have emerged that could put children’s safety at risk, making a legislative update necessary. I look forward to introducing such legislation to bring COPPA into the 21st century.”

Thus, here is more for pols to chew on: The bulk of those surveyed are more concerned with online privacy than they were five year ago (another obvious one); parents do not believe Web sites, including search engines such as Google (GOOG), should share the location of kids (count me in on that one too!); and teens think their friends overshare (you think?).

But instead of me telling you, just read it all here in top-line results for adults and teens, as well as in the official press release:

Final CSM adults topline

Final CSM teen topline

Privacy Poll Results and Campaign Launch

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