Author: Serkadis

That’s not on the social network but away from it. Bad for Facebook: The youngest, and presumably most active users, are the most likely to step away this year for prolonged breaks, according to Pew Internet.

“Sixty-one percent of current Facebook users say that at one time or another in the past they have voluntarily taken a break from using Facebook for a period of several weeks or more”, according to report “Coming and Going on Facebook“, which published this week.

This year, Americans 18-29 are least likely to spend more time on the service (1 percent) and most likely to take a break (38 percent). By comparison, among those over 50, only 17 percent plan breaks, while 4 percent plan do use the social network more. For each group 61 percent and 78 percent, respectively, expect activity to be unchanged.

Among the 61 percent of Facebook vacationers, reasons vary:

• Conflicting activities — 21 percent
• Lack of interest — 10 percent
• Content not compelling — 10 percent
• Too much drama, gossip — 9 percent
• Spending too much time — 8 percent

Some of the verbatim thoughts from those who took Facebook breaks include the following:

• “I was tired of stupid comments”.
• “[I had] crazy friends. I did not want to be contacted”.
• “I took a break when it got boring”.
• “It was not getting me anywhere”.
• “Too much drama”.
• “You get burned out on it after a while”.
• “I gave it up for Lent.”
• “I was fasting”.
• “People were [posting] what they had for dinner”.
• “I didn’t like being monitored”.
• “I got harassed by someone from my past who looked me up”.
• “I don’t like their privacy policy”.

While 67 percent of American adults use Facebook, 20 percent of respondents left the service altogether. Some others who stay use it less: “Some 42 percent of Facebook users ages 18-29 and 34 percent of those ages 30-49 say that the time they spend on Facebook on a typical day has decreased over the last year”.

To emphasize, younger adults are a core demographic for the service and coveted by advertisers. This is not a group Facebook should want to lose, whether they cut back or take a vacation from the service.

Photo Credit: Robert Scoble

One of the big stories in tech today was that Greenlight Capital sued Apple to block a move that would eliminate preferred shares. Greenlight’s David Einhorn wrote a letter to shareholders calling Apple’s plan to discard preferred stock “an unprecedented action to curtail the company’s options.”

The New York Times has an extensive report on the matter, including the complaint in its entirety.

This afternoon, Apple released a statement saying that it is in talks with Greenlight Capital. Here’s what the company had to say:

By early last year, Apple’s cash balance had built to a point beyond what we needed to run our business and maintain flexibility to take advantage of strategic opportunities, so we announced a plan to return $45 billion to shareholders over three years. As of next week we will have executed $10 billion of that plan.

We find ourselves in the fortunate position of continuing to generate large amounts of cash, including $23 billion in cash flow from operations in the last quarter alone.

Apple’s management team and Board of Directors have been in active discussions about returning additional cash to shareholders. As part of our review, we will thoroughly evaluate Greenlight Capital’s current proposal to issue some form of preferred stock. We welcome Greenlight’s views and the views of all of our shareholders.

As a part of our efforts to further enhance corporate governance and serve our shareholders’ best interests, Proposal #2 in our proxy includes some recommended changes to our articles of incorporation. These changes were recommended independently of Greenlight’s proposal and would not preclude Apple from adopting their concept. Contrary to Greenlight’s statements, adoption of Proposal #2 would not prevent the issuance of preferred stock. Currently, Apple’s articles of incorporation provide for the issuance of “blank check” preferred stock by the Board of Directors without shareholder approval. If Proposal #2 is adopted, our shareholders would have the right to approve the issuance of preferred stock. As such, Proposal #2 has the support of many of our shareholders.

We remain committed to having an ongoing dialogue with our shareholders to get perspectives around return of capital and driving shareholder value.

A couple months ago, rumors were heavily circulating that Facebook was preparing to buy the Atlas ad platform from Microsoft, which picked it up in its acquisition of aQuantive in 2007. Today, Ad Age is reporting that such a deal could transpire as soon as next week.

Reporter Jason Del Rey cites multiple people familiar with the matter, and says the price is unknown, but expected to be under $100 million.

“Facebook is methodically laying the groundwork for an off-Facebook ad network powered by social data, but that’s not the only reason it wants Atlas,” Del Rey writes. “Facebook is very focused on proving the worth of the data it sits on as well as the effectiveness of its ads. Owning an ad server would allow big advertisers and agencies to connect directly to Facebook to better measure the effectiveness of their campaigns. Now, most advertisers use one of the many Facebook ads API partners, third parties that connect to Facebook’s display tools and exchange.”

If this deal goes through, it would be just the latest in a string of major announcements in the online advertising industry. Google announced a major upgrade (though not everyone sees it as such) to AdWords, and Yahoo announced a new deal with Google on contextual ads.

Facebook itself also just launched the Lookalike Audiences targeting feature for advertisers.

As you may have read, Microsoft is attacking Google again. This time, they’ve extended the “Scroogled” campaign to call out Google over ad targeting in Gmail, based on a feature that Google has openly implemented since Gmail came out.

But that’s not all, Bing is also pushing the “Bing It On” campaign again as well, with some updated testing. Microsoft commissioned another study by Answers Research using 1,000 people 18 and older from across the United States, choosing them from a random survey panel. These people were required to have used a major search engine in the past month, and according to Microsoft, had no idea that Bing and Google were specifically being tested, nor were they told the study had been commissioned by Microsoft.

Like on the Bing It On site, people were shown results without ads, Bing’s social features or Google’s Knowledge graph. Just raw organic search results. Instead of being able to search for whatever they wanted, they had to choose from a list of five queries at a time. The list could be refreshed if they didn’t like any of the options.

“We wanted queries that matched what people typically searched for, so we finally settled on using terms from Google’s Zeitgeist 2012, because while we could have used our own Top Searches of 2012, we figured the right thing to do was to go with our competitor’s terms,” explains Bing behavioral scientist Matt Wallaert in a blog post. “After all, you’d think Google would be better at their own top queries, right?”

“Wrong,” he adds. “In a blind test, people preferred Bing to Google for the web’s top searches. And that is just based on pure web results, so no ads, no Bing Snapshot and Social Search, no Google Knowledge Graph. Even taking away some of our most innovative features and with the handicap of using Google’s top search queries, Bing still comes out on top, with 52% of people preferring Bing’s results over Google’s, 36% preferring Google’s, and 12% choosing Bing and Google equally (for those that favor discarding ties, that’s 60% Bing, 40% Google when people had a clear preference). For the especially geeky, all those numbers are +/- 3% at a 95% confidence level.”

As is the case with Bing’s previous test, and with the concept of the Bing It On site, the test is still hardly representative of the true search experience, given the absence of the key features that were left out (Bing’s social features and Google’s Knowledge Graph). These features have both become important parts of each search engine’s respective user experience. The trend in search is moving away from the “ten blue links”.

Since Google first unveiled Google Glass, many have wondered if people will buy into the device, simply from the fashion perspective. In other words, will people be worried about looking ridiculous in order to use these hi-tech smart devices that could potentially enrich the physical world around them?

Well, that’s probably why Google Glass has already been featured in a fashion show. Good thinking, Google.

I was watching this Eric Schmidt interview from 2010 (to find out how out of context Schimdt’s comments were with regard to their use in a new Microsoft commercial). Schmidt also happened to touch on what would eventually become Google Glass (you can start about 16 minutes in). Remember, this video is from nearly two years before Google unveiled the project.

It seems as though the fashion obstacle has been one Google has been considering for quite some time.

“I’m not sure you really want to walk through town with these odd glasses on, you know, looking like an airforce jetfighter or something,” Schmidt says, adding, “But I’m sure people will. I mean, as I was driving by here, I saw people riding their Segways, you know, looking like normal pedestrians.”

This guy doesn’t seem to mind the look:

Granted, I wouldn’t say he quite looks like a jetfighter.

It’s funny, because now that Google Glass is being spotted out in the wild, this is becoming an actual conversation, and an important issue that Google is going to have to deal with if it’s really serious about Project Glass leading to something meaningful for the company.

Last week, The Atlantic ran an article about a bar owner, who said this on Facebook:

Last night around 9:45 two people walked into the bar. Looked me square in the eye, and acting as if everything was normal they ordered beers.. Oh did I mention they were wearing Google Glasses! In public! In A BAR!

The point of Google Glass is that it’s supposed to enhance your world by bringing the digital to the physical. That means wearing the device pretty much everywhere you would carry your smartphone. That means bars. That means restaurants (I wonder what the anti-Instagram restaurants will think of that). That means subways.

Of course, it’s very possible (and perhaps likely) that this whole endeavor will lead to a contact lens version. When that happens (and if people are willing to physically attach these devices to their eyeballs), Google may just have that problem solved.

If it doesn’t happen, there’s always the smart watch (or maybe the brain implant discussed earlier in the Schmidt video).

[Sergey Brin image: Noah Zerkin]

What a difference three years make. In April 2010 I asked “Will iPad cannibalize Mac sales?” and a month later PC sales. Fast-forward 12 months, NPD answered a definitive “No“. I disagreed: “Call me cynical and skeptical, but I’m convinced that changing behavior will cause many smartphone buyers, and many more tablet adopters, to delay PC upgrades”.

Today, NPD sees things a little differently, based on fresh survey data that puts context behind two years of declining PC sales — that despite Windows 8’s release little more than three months ago. The firm finds that 37 percent of US consumers now access content on smartphones or tablets they used to on PCs. Changing behavior like this affects computer sales, as consumers shift behavior and delay PC upgrades or don’t buy ever.

NPD finds general Internet access and Facebook to be the primary activities replaced by cloud-connected devices. Twenty-seven percent of tablet owners use their PCs less for the Web, and 20 percent for Facebook. The number is 27 percent for both activities among smartphone users.

Not surprisingly, Internet and Facebook usage are higher on PCs (75 percent and 63 percent, respectively) than smartphones (61 percent and 55 percent, respectively) and tablets (53 percent and 39 percent, respectively).

Yesterday, IDC forecast dramatic increases in US consumers printing — or at least wanting to — from smartphones and tablets, which says much about changing computing habits, and how connected devices displace or replace traditional PC behavior.

“Total U.S. mobile pages are expected to grow at a compound annual rate of 12 percent during the 2012-16 forecast period”, and “non-mobile pages will decline 5 percent”, Angèle Boyd, IDC Group vice president, says. Looked at differently, the number of smartphone and tablet users who don’t or don’t want to print will decline from 50 percent to 25 percent from last year to 2015. Mmmm, that reads to me like 50 percent do print, or at least want to, from these devices.

Not Content, But Context

However, NPD’s pro-PC stance is strong as ever. “Despite these shifts in behavior, computers will remain the fundamental content creation device in consumer’s tool box for many years to come”, John Buffone, NPD’s director of devices research, says. He draws a line many other analysts do between consumption (smartphones and tablets) and creation (PCs). I disagree.

These devices aren’t about creation or consumption but context. NPD’s metrics, like most analyst firms, are wrong. There is no post-PC era, but one of contextual cloud computing. Context defines content or creation, which will change as smartphone and tablet capabilities expand.

The cloud is all about context. Content follows users everywhere, independent of device. Your music is available anytime, anywhere, on anything. You watch a movie in one context, sitting in a man chair at the mall on a smartphone and resume on the big-screen TV at home. You shoot a photo on the phone, edit and post or Instagram. That is content creation, by the way, as is posting anything to Facebook.

Regarding content creation, often the definitions are all wrong. People create content every day on smartphones and tablets, just the context is different. For that matter, so is the content, with Facebook being easiest example. Profile posts, photos and pretty much anything else is content.

During Comic-Con last year, I replaced digital camera and camcorder with Galaxy Nexus smartphone. I shot and edited photos and videos on the phone and then posted them to Google+ and YouTube. How is that not content creation? I produce content on mobile devices every day. Don’t you? At least weekly?

Does the smartphone or tablet replace PC for content creation, or even consumption? Not today for most people, but the devices displace PC activities and do things personal computers don’t. So where five years ago most people primarily used PCs for content creation and consumption, now they do so with something else. How often must I state the obvious?

Photo Credit: Poprotskiy Alexey/Shutterstock

Back in August, Evernote announced Evernote Business, then launched it in December. Here’s an introductory look at the offering:

“We’re really excited to bring this solution to small and medium businesses around the world. It’s the same Evernote that’s used by nearly 40 million people around the world, but with additional features that make it great for companies like yours and ours,” said Evernote’s Andrew Sinkov at the time.

The service launched in seven countries, including the U.S., Canada, France, Germany, Switzerland, Japan, and the U.K. Today, the company announced that Evernote Business is now available in 33 countries with the addition of 26 new European countries. They will also launch it in New Zealand and Australia next week, and in 50 additional countries, including Latin America and Asia Pacific by mid-year.

“In just over two months, Evernote Business has gone from a small closed beta to helping thousands of individuals get more done at work,” says Evernote’s Ken Gullicksen in a blog post. “We’ve received great feedback from our user community, which has inspired many new features and refinements, including easier user account management and improved knowledge discovery. In addition, we have been growing the size of our Global Customer Success teams to ensure that we are delivering the highest, most responsive level of customer support possible.”

More than 40% of the initial sign-ups for Evernote Business came from outside the United States.

It’s been a huge week of news in the online maketing industry, particularly when it comes to Google. For one, Yahoo announced that it has signed a contextual ad agreement with Google, which will see Google display ads appear on various Yahoo properties, and even some co-branded sites. Before that, Google announced the launch of enhanced campaigns for AdWords, which is a huge evolutionary step for Google’s ad product, and by default, that makes it a huge evolutionary step for online advertising.

What impact do you see Google’s changes having on your online marketing efforts? Let us know in the comments.

WordStream was one of three companies outside of Google that worked with the company on the enhanced campaigns project over the last few months. Founder/CTO Larry Kim reached out to WebProNews with some perspective about what the offering brings to the table for businesses.

“Enhanced Campaigns represent the biggest single change to the basic structure of AdWords campaigns in the past 10 years,” he says. “The new campaign structure will greatly simplify targeting and bidding for different devices and locations. It’s a win-win for both Google and advertisers.”

One key feature is bid adjustments to help advertisers manage bids across devices, locations, time of day, etc. from a single campaign. “A breakfast cafe wants to reach people nearby searching for ‘coffee’ or ‘breakfast’ on a smartphone,” explains Google SVP of engineering, Sridhar Ramaswamy, giving an example. “Using bid adjustments, with three simple entries, they can bid 25% higher for people searching a half-mile away, 20% lower for searches after 11am, and 50% higher for searches on smartphones. These bid adjustments can apply to all ads and all keywords in one single campaign.”

Enhanced campaigns will show ads across devices with the right ad text, sitelink, app or extension, without advertisers having to edit each campaign for every combination of devices, location and time of day. “A national retailer with both physical locations and a website can show ads with click-to-call and location extensions for people searching on their smartphones, while showing an ad for their e-commerce website to people searching on a PC — all within a single campaign,” explains Ramaswamy.

The enhanced campaigns also come with advanced reports to measure new conversion types. For example, you can count calls and app downloads as conversions in your AdWords reports.

“Mobile search has been growing incredibly quickly – it’s actually expected to outpace desktop search by next year,” says Kim. “But Google has had a big problem monetizing that traffic. For one, setting up mobile campaigns was too complicated. Making matters worse, mobile CPC’s tended to be much lower. Enhanced Campaigns are a strategic effort to solve both those problems.”

“Enhanced Campaigns are great news for advertisers at small and medium-sized businesses,” he adds. “Previously, mobile campaign management was too complicated and time-consuming for all but the biggest-budget, most sophisticated advertisers. Now even small companies can take advantage of the exciting opportunities in mobile search.”

“With Enhanced Campaigns, you not only have more bidding options, but your ads are actually much smarter,” he explains. “Google will be able to choose and adjust your ads and settings based on user context, so mobile users will get an optimized ad experience, without you having to build out separate campaigns.”

“There has always been a big gap between the cost per click (CPC) on mobile versus desktop. For obvious reasons, Google wants to close that gap, and these changes will help it accomplish that. I believe that mobile CPCs will be similar to desktop CPCs by the time campaigns are auto-upgraded later this year.”

Adobe’s Bill Mungovan explores how Google’s changes will impact advertisers in terms of tablets being considered mobile devices.

“A 2012 Google study showed that the most pop­u­lar places to use tablets are, in order, on the couch, in bed, in the home, at the table, and in the kitchen,” he writes. “Indeed, the first out-of-home loca­tion to make the list was the car, which occurred only 3% of the time. So tablets appear to be closer to lap­tops than mobile phones, at least in terms of con­sumer usage.”

WIth Google’s offering, tablet users will be lumped in with desktop users, while smartphone users will be targeted through the enhanced campaign functionality. “Adver­tis­ers can no longer cre­ate sep­a­rate cam­paigns for desk­top, smart­phone and tablet tar­get­ing, but will instead be able to add a mobile mod­i­fier at the cam­paign level to mod­ify bids on smart­phone traf­fic,” says Mungovan. “Google has made a clear state­ment to its adver­tis­ers: tablets aren’t mobile. But they’ve taken it a step fur­ther and effec­tively said that tablets are desktops.”

“Cur­rently, CPCs are lower for tablets given that com­pe­ti­tion for tablet traf­fic is still rel­a­tively low (but increas­ing),” he says. “By lump­ing the higher per­form­ing tablet traf­fic in with desk­top traf­fic, rev­enue per search (RPS) will increase for Google as CPCs increase on the com­bined desk­top and tablet traf­fic. This, pre­sum­ably, will address Google’s mobile mon­e­ti­za­tion gap as an increas­ing share of searches is com­ing from tablets and smartphones.”

“The down­side for adver­tis­ers in the long run is they may see lower over­all ROI as these CPCs creep up,” he adds.

Either way, small businesses could be big winners with Google’s changes.

“Small businesses in particular have never been able to fully take advantage of the potential ROI in mobile search,” says Kim. “Not only was the setup and maintenance process prohibitively complex, but conversion tracking was much more challenging, and the reporting costs were being offloaded onto the advertiser. All of these factors acted as disincentives. With Enhanced Campaigns, Google is making it much simpler and more attractive for even small businesses to get ROI from mobile advertising.”

You can read more of Kim’s analysis here.

Apparently some advertisers aren’t thrilled with the direction Google is taking, expressing concerns with a loss of control.

Neil Sorenson, the head of PPC at ZAGG.com, says enhanced campaigns “aren’t really an upgrade or improvement’”. He writes, “What can we expect? Some advertisers might welcome Enhanced Campaigns with outstretched arms. It is entirely possible that these advertisers will see continued success using the new campaigns. That’s fantastic for them! Search marketers who have noted varying conversion rates across devices and taken steps to reduce or eliminate unprofitable traffic sources are likely worried. At this point it is for good reason.”

Enhanced campaigns will roll out to advertisers as an option over the coming weeks. All campaigns will be upgraded in mid-2013.

What do you think about Google’s changes? Game changer? Good or bad for advertisers?Share your thoughts in the comments.

The Wikipad lives! After several delays, the company is ready to bring its gaming contraption to the market. The final model is different from the concepts, but it’s more portable, cheaper and much more slick. I want it.

The Wikipad’s messages is still the same. With controls wrapping around a 7-inch screen, the Wikipad attempts to be Android’s Game Boy — it looks more like a Sega Game Gear. The company hasn’t announced an exact ship date but it’s coming this Spring.

The original Wikipad used a 10.1-inch, 1280 x 800 screen and a Tegra 3 chip. It was to cost $500 and would probably have failed. Hard.

As Engadget explains, the company delayed the 10.1-inch model for refinement, but as it was approaching launch, the screen manufacturer discounted the Wikipad’s panel. So Wikipad charged forward towards making a smaller model, which was apparently already on the roadmap.

The 7-inch Wikipad still rocks a 1280 x 800 screen, just in a 7-inch form. The gaming controls still backpack onto the tablet, which, still uses a Tegra 3 chip. And now at $249, the tablet actually has a chance to make it in the market. The Wikipad has a chance to be what the PS Vita should have been.

The portable gaming world is missing a device like the $249 Wikipad: A serious, but still affordable gaming platform that can multitask. Sony missed a big opportunity with the PS Vita. The hardware on Sony’s latest portable is fantastic. It’s a powerhouse of computing, but the user experience, and reliance on physical media, stifles its ability to be something other than a gaming machine. And at $249, the PS Vita should be able to browse the web with ease and support a rich, even if it’s limited, ecosystem of apps.

Android gaming could be the next big thing. With dedicated gaming devices like the OUYA, Game Stick and the Wikipad, there will suddenly, almost overnight, be a whole batch of devices craving new games.

The 10-inch Wattpad is still coming, per the company’s president of sales. Look for it by Christmas 2013 and expect Tegra 4 power.

Microsoft is at it again with a new “Scroogled” campaign (you know, the ads where Microsoft attacks Google for things). The whole thing is a promotion for Microsoft’s Outlook.com.

The basic premise is that Google serves you ads in Gmail based on the content of your messages. Google has been doing this since Gmail launched in 2004. It’s been well known. They are doing nothing new or different than what they’ve done all this time. It’s completely algorithmic, and they have no humans reading emails and deciding what ads to serve. Google serves ads. It’s how they make money to keep providing users with products like Gmail.

Microsoft, on the “Scroogled” site, says, “Think Google respects your privacy? Think again. Google goes through every Gmail that’s sent or received, looking for keywords so they can target Gmail users with paid ads. And there’s no way to opt out of this invasion of your privacy.”

Of course, there is the option of not using Gmail, which is what Microsoft wants you to do, obviously. What Microsoft doesn’t tell you in the Scroogled campaign (which search industry vet Danny Sullivan does), is that Microsoft does go through your messages (also algorithmically) to help filter out spam and phishing attacks (which Google also does). The difference is that Google is also able to serve targeted ads as well – something that Microsoft has evidently chosen not to do.

Sullivan spoke with Microsoft senior director of Online Services, Stefan Weitz, who says that for security, the practice makes sense, and it’s the scanning for contextual targeting of ads that Microsoft objects to (again, this is after nearly a decade that they’re suddenly objecting). This is essentially the basis for MIcrosoft’s new ads.

Check out the natural dialogue in this one:

The next one asks, “Who wants a free pet exam coupon when the family cat has been put down?”

The cat thing is a fair point. It is always possible that ad targeting will go wrong, but that really just says to me that Google could get better at targeting.

An opt out option is certainly not a terrible idea for consumers, but it would be interesting to know how big a concern the privacy thing this really is to consumers to begin with. Gmail has become very popular over the last decade, and this ad targeting thing has always been a well known part of the system. Does every user realize it’s happening. Probably not, but this was a story that was covered in the media back when it was relevant, and it did little to stop Gmail’s popularity from growing. Here are the Microsoft-commissioned polling numbers the company is throwing around about consumer reaction:

• 88 percent of Americans disapprove of email service providers scanning the content of their personal emails in order to target ads, and 52 percent disapprove strongly.
• 89 percent of Americans agree that email service providers should not be allowed to scan the content of personal emails in order to target ads.
• 83 percent of Americans agree that email service providers scanning the content of their personal emails to target ads is an invasion of privacy.
• 70 percent of Americans didn’t believe or didn’t know that any major email service provider scans the content of personal emails in order to target ads.
• 88 percent of email users believe that email service providers should allow users to “opt out” if they prefer that the content of their emails not be scanned in order to target ads.

That second ad also pulls out some old footage of Google Executive Chairman Eric Schmidt smiling and saying, “There’s what I call the creepy line and the Google policy about a lot of these things is to get right up to the creepy line, but not cross it.”

Of course, that clip is completely out of context here. It’s from a 2010 interview with The Atlantic (which Google itself has posted to YouTube):

You can start about 14 minutes in. The line comes at a part where Schimdt and the interviewer are joking about brain implants, which Schmidt says would in fact cross the “creepy line”. Granted, he does follow up with “at least for the moment…until the technology gets better”. I’m eager to see the Scroogled ad about brain implants, for sure, but Schmidt was not talking about the algorithmic ad serving that takes place within Gmail. He does talk about Google Instant and the type of technology that would pretty much become the basis for Google Now (neither of which is being attacked in this Scroogled campaign).

So what does Google think about the latest attack from Microsoft? Here’s the statement they’ve been sending around:

“Advertising keeps Google and many of the websites and services Google offers free of charge. We work hard to make sure that ads are safe, unobtrusive and relevant. No humans read your email or Google Account information in order to show you advertisements or related information. An automated algorithm — similar to that used for features like Priority Inbox or spam filtering — determines which ads are shown.”

If you want a more in depth explanation from Google, here’s an old help center article about Gmail and privacy. Here’s the entirety of the ad-related section:

All major free webmail services carry advertising, and most of it is irrelevant to the people who see it. Google believes that showing relevant advertising offers more value to users than displaying random pop-ups or untargeted banner ads. In Gmail, users will see text ads and links to related pages that are relevant to the content of their messages. The links to related pages are similar to Google search results, and are culled from Google’s extensive index of web pages. They are selected solely for their helpfulness and are not paid advertisements.

In Gmail, ads appear alongside messages, in the same way that ads appear next to search results on Google. Ads are clearly identified as ‘Sponsored Links.’ They are displayed in a way that doesn’t interrupt users as they read their messages and ads are never inserted into the body text of either incoming or outgoing Gmail messages.

Ads and links to related pages only appear alongside the message that they are targeted to, and are only shown when the Gmail user, whether sender or recipient, is viewing that particular message. No email content or other personally identifiable information is ever shared with advertisers. In fact, advertisers do not even know how often their ads are shown in Gmail, as this data is aggregated across thousands of sites in the Google Network.

By offering Gmail users relevant ads and information related to the content of their messages, we aim to offer users a better webmail experience. For example, if you and your friends are planning a vacation, you may want to see news items or travel ads about the destination you’re considering.

To ensure a quality user experience for all Gmail users, we avoid showing ads reflecting sensitive or inappropriate content by only showing ads that have been classified as “Family-Safe.” Gmail’s filters also block ads from running next to messages about catastrophic events or tragedies, erring on the side of not displaying an ad if the content is questionable.

Many people have found that the search-related ads on Google.com can be valuable–not merely a necessary evil, but a welcome feature. We believe that users will also find Gmail’s ads and related pages to be helpful, because the information reflects their interests. In fact, we have already received positive feedback from Gmail users about the quality and usefulness of our ads and related pages.

The part about the scanning of email content is particularly relevant here as well:

All email services scan your email. They do this routinely to provide such popular features as spam filtering, virus detection, search, spellchecking, forwarding, auto-responding, flagging urgent messages, converting incoming email into mobile phone text messages, automatic saving and sorting into folders, converting text URLs to clickable links, and reading messages to the blind. These features are widely accepted, trusted, and used by hundreds of millions of people every day.

Google scans the text of Gmail messages in order to filter spam and detect viruses, just as all major webmail services do. Google also uses this scanning technology to deliver targeted text ads and other related information. This is completely automated and involves no humans.

When a user opens an email message, computers scan the text and then instantaneously display relevant information that is matched to the text of the message. Once the message is closed, ads are no longer displayed. It is important to note that the ads generated by this matching process are dynamically generated each time a message is opened by the user–in other words, Google does not attach particular ads to individual messages or to users’ accounts.

We recognise that seeing ads based on the content of an email message can be unsettling at first. Our experience has been that this feeling recedes as users become more familiar with Gmail. However, some people, many of whom have not used Gmail, have reacted by condemning all automatic scanning of email content, on the grounds that it amounts to a violation of privacy. We think this criticism is misplaced. All major email services, including Hotmail and Yahoo! Mail, automatically scan email content for the benefit of users. When email messages are fully protected from unwanted disclosure, the automatic scanning of email does not amount to a violation of privacy.

On the other hand, delivering information gathered through email scanning to a third party would be a violation of privacy. Google does not do this. Neither email content nor any personal information is ever shared with other parties as a result of our ad-targeting process.

Emphasis in both sections is Google’s.

“Emails are personal — and people feel that reading through their emails to sell ads is out of bounds,” says Weitz. “We honor the privacy of our Outlook.com users, and we are concerned that Google violates that privacy every time an Outlook.com user exchanges messages with someone on Gmail. This campaign is as much about protecting Outlook.com users from Gmail as it is about making sure Gmail users know what Google’s doing.”

Around the holidays, Microsoft started its Scroogled campaign against Google Shopping. Last week, we learned that Microsoft will be launching its own product listing ads (the ad format on which Google Shopping is based) later this year. Microsoft’s David Pann tells us, however, that the Bing Shopping experience will keep free listings alongside the paid ones.

We should have more on this latest Scroogled campaign from Weitz in the near future.

Yelp released its Q4 and full-year 2012 earnings report on Wednesday after market close. The company posted net revenue of $41.2 million for the quarter, a 65% year-over-year increase. Yelp also posted a $5.3 million net loss for Q4.

Cumulative reviews grew 45% year-over-year to over 36 million by the end of the year. Average unique monthly visitors grew 31% year over year to about 86 million. Active local business accounts grew 68% year-over-year to approximately 39,800.

Yelp also announced that in January, it surpassed 100 million uniques for the first time, and put out an infographic about it.

CEO Jeremy Stoppelman said, “2012 was a tremendous year for Yelp. We completed a successful IPO, launched new products to improve the Yelp experience for consumers and business owners, expanded into new markets while increasing our presence in existing ones, and completed our first acquisition. We believe 2013 will be a tipping point for our brand in Europe as Yelp continues to become a trusted local resource. Our mobile strategy will remain a top priority as engagement increases, and we will continue to focus on the business owner, creating more ways to measure the value of Yelp leads.”

Here’s the release in its entirety:

SAN FRANCISCO, Feb. 6, 2013 /PRNewswire/ – Yelp Inc. (NYSE: YELP), the company that connects consumers with great local businesses, today announced financial results for the fourth quarter and full year ended December 31, 2012.

(Logo: http://photos.prnewswire.com/prnh/20050511/SFW134LOGO)

• Net revenue was $41.2 million in the fourth quarter of 2012, reflecting 65% growth in net revenue from the fourth quarter of 2011
• Cumulative reviews grew 45% year over year to more than 36 million at the end of 2012
• Average monthly unique visitors grew 31% year over year to approximately 86 million*
• Active local business accounts grew 68% year over year to approximately 39,800

Net loss in the fourth quarter of 2012 was $5.3 million, or $0.08 per share, compared to a net loss of $9.1 million, or $0.56 per share, in the fourth quarter of 2011.  Adjusted EBITDA for the fourth quarter of 2012 was approximately $1.8 million, compared to an Adjusted EBITDA loss of $15,000 for the fourth quarter of 2011.

Net revenue for the full year ended December 31, 2012 was $137.6 million, an increase of 65% compared to $83.3 million in the same period last year.  Net loss for the full year ended December 31, 2012 was $19.1 million, or $0.35 per share, compared to a net loss of $16.9 million, or $1.10 per share, for the comparable period in 2011. Adjusted EBITDA for the full year 2012 was approximately $4.6 million compared to an Adjusted EBITDA loss of $1.1 million for the prior year.

“2012 was a tremendous year for Yelp,” said Jeremy Stoppelman, Yelp’s chief executive officer. “We completed a successful IPO, launched new products to improve the Yelp experience for consumers and business owners, expanded into new markets while increasing our presence in existing ones, and completed our first acquisition.  We believe 2013 will be a tipping point for our brand inEurope as Yelp continues to become a trusted local resource.  Our mobile strategy will remain a top priority as engagement increases, and we will continue to focus on the business owner, creating more ways to measure the value of Yelp leads.”

“Yelp continued to deliver growth and scale in 2012 with both revenue and Adjusted EBITDA ahead of our expectations,” added Rob Krolik, Yelp’s chief financial officer.  “These results, along with our strong operating metrics, demonstrate that our playbook continues to deliver growth across Yelp markets.”

2012 Business Highlights

• New market expansion: Yelp continued to launch new markets globally, accelerated its presence in Germany and U.K with the acquisition of Qype and opened its first international sales office in London. In the fourth quarter Yelp launched Poland andTurkey, bringing the total number of worldwide Yelp countries to 20.
• Yelp mobile:  Yelp focused on enhancing the mobile experience, including the launch of local ads on apps. In the fourth quarter, 25% of local ads were shown on mobile devices and the mobile app was used on approximately 9.2 million unique mobile devices on a monthly average basis.
• Increased brand distribution: Yelp branded content was integrated into the new Apple ”Maps” application on iOS 6. Yelp also partnered with Bing to power their local business pages, and was incorporated into Mercedes and Lexus in-vehicle infotainment systems.
• New products: Yelp introduced new features and enhancements throughout the year including dashboard metrics for business owners and a redesigned homepage placing a greater emphasis on the social graph and mobile activity. Yelp also introduced new products such as gift certificates and Yelp Menus.

Business Outlook

As of today, Yelp is providing guidance for the first quarter and full year of 2013.

• For the first quarter of 2013, net revenue is expected to be in the range of $44.0 million – $44.5 million representing growth of approximately 62% compared to the first quarter of 2012. Adjusted EBITDA is expected to be in the range of $1.25 million -$1.50 million.
• For the full year of 2013, net revenue is expected to be in the range of $210 million – $212 million, representing growth of approximately 53% compared to the full year of 2012. Adjusted EBITDA is expected to be in the range of $20 million to $22 million.

Quarterly Conference Call

To access the call, please dial (866) 770-7120, or outside the U.S. (617) 213-8065, with Passcode 89233749, at least five minutes prior to the 1:30 p.m. PT start time.  A live webcast of the call will also be available at http://www.yelp-ir.com under the Events & Presentations menu.  An audio replay will be available between 3:30 p.m. PT February 6, 2013 and 11:59 p.m. PT February 20, 2013by calling (888) 286-8010 or (617) 801-6888, with Passcode 31161883. The replay will also be available on the Company’s website at http://www.yelp-ir.com.

About Yelp

Yelp Inc. (http://www.yelp.com) connects people with great local businesses. Yelp was founded in San Francisco in July 2004. Since then, Yelp communities have taken root in major metros across the US, Canada, UK, Ireland, France, Germany, Austria, The Netherlands, Spain, Italy, Switzerland, Belgium, Australia, Sweden, Denmark, Norway, Finland, Singapore, Poland and Turkey. Yelp had a monthly average of approximately 86 million unique visitors in the fourth quarter 2012*. By the end of the same quarter, Yelpers had written more than 36 million rich, local reviews, making Yelp the leading local guide for real word-of-mouth on everything from boutiques and mechanics to restaurants and dentists. Yelp’s mobile applications were used on approximately 9.2 million unique mobile devices on a monthly average basis during the fourth quarter 2012.

* Source: Google Analytics

Non-GAAP Financial Measures

This press release includes information relating to Adjusted EBITDA, which the Securities and Exchange Commission has defined as a “non-GAAP financial measure.” Adjusted EBITDA has been included in this press release because it is a key measure used by the Company’s management and board of directors to understand and evaluate core operating performance and trends, to prepare and approve its annual budget and to develop short- and long-term operational plans. The presentation of this financial information, which is not prepared under any comprehensive set of accounting rules or principles, is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with generally accepted accounting principles.

Adjusted EBITDA has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of the Company’s results as reported under GAAP. Some of these limitations are:

• although depreciation and amortization are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future, and adjusted EBITDA does not reflect cash capital expenditure requirements for such replacements or for new capital expenditure requirements;
• adjusted EBITDA does not reflect changes in, or cash requirements for, the Company’s working capital needs;
• adjusted EBITDA does not consider the potentially dilutive impact of equity-based compensation;
• adjusted EBITDA does not reflect tax payments that may represent a reduction in cash available to us;
• adjusted EBITDA does not consider any dilutive impact of our contribution to The Yelp Foundation;
• adjusted EBITDA does not take into account any restructuring and integration costs associated with our acquisition of Qype;  and
• other companies, including those in the Company’s industry, may calculate adjusted EBITDA differently, which reduces its usefulness as a comparative measure.

Because of these limitations, you should consider adjusted EBITDA alongside other financial performance measures, including various cash flow metrics, net income (loss) and the Company’s other GAAP results. Additionally, the Company has not reconciled adjusted EBITDA guidance to net income (loss) guidance because it does not provide guidance for other income (expense) and provision for income taxes, which are reconciling items between net income (loss) and adjusted EBITDA. As items that impact net income (loss) are out of the Company’s control and/or cannot be reasonably predicted, the Company is unable to provide such guidance. Accordingly, reconciliation to net income (loss) outlook for the first quarter of and full year 2013 is not available without unreasonable effort.  For a reconciliation of historical non-GAAP financial measures to the nearest comparable GAAP measures, see “Reconciliation of Net Loss to Adjusted EBITDA” included in this press release.

Forward-Looking Statements

This press release contains forward-looking statements relating to, among other things, the future performance of Yelp and its consolidated subsidiaries that are based on the Company’s current expectations, forecasts and assumptions and involve risks and uncertainties. These statements include, but are not limited to, statements regarding expected financial results for the first quarter and full year 2013, the future growth in Company revenue and continued investing by the Company in its future growth and the Company’s ability to build Yelp communities internationally and expand its markets and presence in existing markets. The Company’s actual results could differ materially from those predicted or implied and reported results should not be considered as an indication of future performance. Factors that could cause or contribute to such differences include, but are not limited to: the Company’s short operating history in an evolving industry; the Company’s ability to generate sufficient revenue to achieve or maintain profitability, particularly in light of its significant ongoing sales and marketing expenses; the Company’s ability to successfully manage acquisitions of new businesses, solutions or technologies, including Qype; the Company’s reliance on traffic to its website from search engines like Google, Bing and Yahoo!; the Company’s ability to generate and maintain sufficient high quality content from its users; maintaining a strong brand and managing negative publicity that may arise; maintaining and expanding the Company’s base of advertisers; changes in political, business and economic conditions, including any European or general economic downturn or crisis and any conditions that affect ecommerce growth; fluctuations in foreign currency exchange rates;  the Company’s ability to deal with the increasingly competitive local search environment; the Company’s need and ability to manage other regulatory, tax and litigation risks as its services are offered in more jurisdictions and applicable laws become more restrictive; the competitive and regulatory environment while the Company continues to expand geographically and introduce new products and as new laws and regulations related to Internet companies come into effect; and the Company’s ability to timely upgrade and develop its systems, infrastructure and customer service capabilities. The forward-looking statements in this release do not include the potential impact of any acquisitions or divestitures that may be announced and/or completed after the date hereof.

More information about factors that could affect the Company’s operating results is included under the captions “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Company’s most recent Quarterly Report on Form 10-Q at http://www.yelp-ir.com or the SEC’s website at www.sec.gov. Undue reliance should not be placed on the forward-looking statements in this release, which are based on information available to the Company on the date hereof. Yelp assumes no obligation to update such statements. The results we report in our Annual Report on Form 10-K for the twelve months ended December 31, 2012 could differ from the preliminary results we have announced in this press release.

Media Contact Information
Yelp Press Office
Stephanie Ichinose
(415) 908-3679
[email protected]

Investor Relations Contact Information
The Blueshirt Group
Stacie Bosinoff, Nicole Gunderson
(415) 217-7722
[email protected]

Yelp Inc.
Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited)
		December 31,			December 31,
		2012			2011
Assets
Current assets:
Cash and cash equivalents		$          95,124			$          21,736
Accounts receivable, net		11,474			8,257
Prepaid expenses and other current assets		4,912			1,733
Total current assets		111,510			31,726
Property, equipment and software, net		14,799			9,881
Goodwill		48,735			–
Intangibles, net		5,942			–
Restricted cash		6,400			365
Other assets		310			1,849
Total assets		$        187,696			$          43,821
Liabilities, redeemable convertible preferred stock, and stockholders’ equity (deficit)
Current liabilities:
Accounts payable		$            2,284			$            2,973
Accrued liabilities		16,367			7,685
Deferred revenue		2,856			2,072
Total current liabilities		21,507			12,730
Long-term liabilities		527			3
Total liabilities		22,034			12,733
Commitments and contingencies
Redeemable preferred stock		–			55,435
Stockholders’ equity (deficit)
Common stock		–			–
Additional paid-in capital		225,245			16,625
Accumulated other comprehensive  income		805			271
Accumulated deficit		(60,388)			(41,243)
Total stockholders’ equity (deficit)		165,662			(24,347)
Total liabilities, redeemable convertible preferred stock, and stockholders’ equity (deficit)		$         187,696			$           43,821

 

Yelp Inc.
Condensed Consolidated Statements of Operations
(In thousands, except per share amounts)
(Unaudited)
		Three Months Ended				Twelve Months Ended
		December 31,				December 31,
		2012		2011		2012		2011
Net revenue		$ 41,157		$ 24,905		$ 137,567		$  83,285
Cost and expenses
Cost of revenue (1)		3,003		1,833		9,928		5,931
Sales and marketing (1)		25,511		16,024		85,915		54,539
Product development (1)		6,244		3,162		20,473		11,586
General and administrative (1)		7,852		5,267		31,531		17,234
Depreciation and amortization		2,421		1,448		7,223		4,238
Restructuring and integration costs		1,262		–		1,262		–
Contribution to The Yelp Foundation		–		5,928		–		5,928
Total cost and expenses		46,293		33,662		156,332		99,456
Loss from operations		(5,136)		(8,757)		(18,765)		(16,171)
Other expense, net		(203)		(252)		(226)		(395)
Loss before provision for income taxes		(5,339)		(9,009)		(18,991)		(16,566)
(Provision)/Benefit for income taxes		20		(37)		(122)		(102)
Net loss		(5,319)		(9,046)		(19,113)		(16,668)
Accretion of redeemable convertible preferred stock		–		(48)		(31)		(189)
Net loss attributable to common stockholders		$ (5,319)		$ (9,094)		$ (19,144)		$ (16,857)
Net loss per share attributable to common stockholders:
Basic		$   (0.08)		$   (0.56)		$     (0.35)		$     (1.10)
Diluted		$   (0.08)		$   (0.56)		$     (0.35)		$     (1.10)
Weighted-average shares used to compute net loss per share attributable to common stockholders:
Basic		63,015		16,097		54,151		15,291
Diluted		63,015		16,097		54,151		15,291
(1) Includes stock-based compensation expense as follows:
		Three Months Ended				Twelve Months Ended
		December 31,				December 31,
		2012		2011		2012		2011
Cost of revenue		$        38		$        17		$        122		$         50
Sales and marketing		1,746		496		4,917		1,607
Research and development		696		164		1,705		721
General and administrative		778		689		8,134		2,499
Total stock-based compensation		$   3,258		$   1,366		$   14,878		$    4,877

 

Yelp Inc.
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
		Twelve Months Ended
		December 31,
		2012		2011
Operating activities
Net loss		$ (19,113)		$ (16,668)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Depreciation and amortization		7,223		4,238
Provision for doubtful accounts		599		35
Stock-based compensation		14,878		4,877
Contribution to The Yelp Foundation		–		5,928
Loss on disposal of assets and web-site development costs		64		13
Changes in operating assets and liabilities:
Accounts receivable		(2,017)		(1,682)
Prepaid expenses and other assets		(2,384)		(1,099)
Accounts payable and accrued expenses		70		3,975
Deferred revenue		(443)		633
Net cash (used in) provided by operating activities		(1,123)		250
Investing activities
Acquisition of Qype GmbH, net of cash received		(24,125)		–
Purchases of property, equipment and software		(7,524)		(4,798)
Capitalized website and software development costs		(2,930)		(2,506)
Change in restricted cash		(6,013)		(149)
Cash used in investing activities		(40,592)		(7,453)
Financing activities
Proceeds from initial public offering, net of underwriter fees		114,006		–
Payments for deferred offering costs		(1,749)		(456)
Proceeds from issuance of common stock		3,675		2,038
Repayment of acquired debt		(1,308)		–
Net cash provided by financing activities		114,624		1,582
Effect of exchange rate changes on cash		479		283
Net increase in cash and cash equivalents		73,388		(5,338)
Cash and cash equivalents at beginning of period		21,736		27,074
Cash and cash equivalents at end of period		$95,124		$21,736

 

Yelp Inc.
Reconciliation of Net Loss to Adjusted EBITDA
(In thousands)
(Unaudited)
		Three Months Ended				Twelve Months Ended
		December 31,				December 31,
		2012		2011		2012		2011
Net loss		$ (5,319)		$ (9,046)		$ (19,113)		$ (16,668)
Provision for income taxes		(20)		37		122		102
Other income (expense), net		203		252		226		395
Depreciation and amortization		2,421		1,448		7,223		4,238
Stock-based compensation		3,258		1,366		14,878		4,877
Restructuring and integration costs		1,262		–		1,262		–
Contribution to Yelp Foundation		–		5,928		–		5,928
Adjusted EBITDA		$  1,805		$      (15)		$    4,598		$   (1,128)

 

SOURCE Yelp Inc.

Apparently, there were many more iPhones and Android handsets under the Christmas tree in 2012, which isn’t a holiday gift for the other smartphone platforms. On Thursday, ComScore released its smartphone subscriber share numbers for the U.S. and in the last quarter of the year, iOS and Android phones continued to rise over the prior quarter. Unfortunately for Microsoft, it got a lump of coal.

I’m not surprised by the growth in iOS and Android devices; combined these two accounted for 89.7 percent of U.S. smartphones used in the quarter, per ComScore’s research. What is surprising, not to mention disappointing, is Microsoft’s decline from the prior three-month period. BlackBerry’s share fell also, but that was to be expected: The company’s new BlackBerry 10 devices are only just now becoming available.

Although it didn’t have a full quarter to work with — Windows Phone 8 devices launched in early November — Microsoft actually introduced the new operating system in the last quarter of 2012 and Nokia, arguably Microsoft’s most important smartphone partner, debuted a line of new Lumia phones during the same period.

I subscribe to the “smartphone race is a marathon, not a sprint” theory, but when the gun goes off, you need to jump from the starting line. That didn’t appear to happen last quarter; at least not in the U.S.

For its part, Nokia said it moved 4.4 million Lumia handsets in the final quarter of 2012. I don’t doubt that figure. However, even with competitive pricing that puts a Lumia in your pocket for less than the cost of an iPhone 5 or comparable Android device, the percent of Lumia’s sold is surely a small bit of that 4.4 million sales figure. With fewer Windows Phone models from HTC, Samsung and others, this may be a case of “as Nokia goes in the U.S. smartphone market, so too does Microsoft.”

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Yahoo and Google are now working together on ads. Yahoo announced in a post on its corporate blog that it has teamed up with the search giant on contextual advertising.

The two companies have signed a global, non-exclusive agreement for Yahoo to display contextual display ads from Google on various Yahoo properties and “certain co-branded sites” using Google’s AdSense for Content and AdMob advertising offerings.

“By adding Google to our list of world-class contextual ads partners, we’ll be able to expand our network, which means we can serve users with ads that are even more meaningful,” says Yahoo in the post. “For our users, there won’t be a noticeable difference in how or where ads appear. More options simply mean greater flexibility. We look forward to working with all of our contextual ads partners to ensure we’re delivering the right ad to the right user at the right time.”

It wasn’t that long ago that Google Executive Chairman Eric Schmidt expressed interest in partnering with Yahoo, years after the companies tried to partner on a search advertising deal, which was shut down by regulators. Yahoo ended up partnering with BIng in that space, and so far, this new announcement will do nothing to change that.

Again, this is a non-exclusive agreement, and Yahoo is still partners with Microsoft (in addition to others) in this area too.

“Every day, people turn to Yahoo! for their daily habits — like search, weather, news or more. At Yahoo!, we’re focused on doing everything we can to make the user experience inspiring and engaging. One way we do that is by providing relevant and well-targeted content — whether that be editorial or advertising content,” says Yahoo. “Say you’ve been shopping for boots. If you see an ad for boots, that’s instantly going to pique your attention more than an ad for, say, a car battery. That’s better for users. This is why contextual advertising is such a powerful tool.”

According to the company, users won’t see much of a noticeable difference in how and where ads appear.

While this isn’t the huge news that an exclusive Google/Yahoo search advertising deal would be, it’s very interesting to see the companies working together, especially considering the rivalry between Microsoft and Google. It’s also interesting given the fact that Yahoo is now run by longtime Googler Marissa Mayer, who has brought other Googlers along for the ride at Yahoo. Will this relationship blossom into something more between Yahoo and Google? Time will tell.

For the 64 percent of Americans whose internet service provider imposes a broadband cap, and for those lucky enough to have a meter, I have some bad news. The president of the firm who audits many of the country’s broadband meters says that he can’t certify the measurements produced by five out of seven of his clients’ meters because they don’t count your bits correctly.

Peter Sevcik, president of NetForecast, told GigaOM that seven clients have hired his firm to audit their broadband meters over the last few years, but of those seven only one — Comcast — has published a report on the NetForecast certification. Sevcik is only willing to certify one other client in a public report.

Meters are a black box

The other five clients — which Sevcik would not name — have meters that Sevcik views as inaccurate, although not all of them have publicly rolled out their meters. And not all of those clients impose a broadband cap. Sevcik usually expects accuracy on the meters of between plus or minus one percent, but so far these don’t measure up.

“They are wrong by missing numbers by one way or another — sometimes it’s over reporting, but more frequently the error is under reporting,” he said. Under reporting should be a relief to those facing overage charges or service termination for going over their meters, but if the meters aren’t counting the data properly, it is still a problem.

Also disturbing is the attitude that Sevcik has encountered at some clients with malfunctioning meters. “There’s a general sense by some people, ‘Eh, we under report so we give them a free pass, so why worry about that?’” Sevcik says. “I think one does need to worry because it ruins the overall veracity of the meter. It derails trust in the meter.”

Sevcik wouldn’t name those clients, but his website lists Time Warner Cable, Cox, Comcast, AT&T, Bell Canada, Verizon and France Telecom as customers. Time Warner Cable and Cox have both confirmed to me that they have used NetForecast to certify their meters. AT&T’s spokesman says it has a team of engineers that certifies the accuracy of its meters but that it hasn’t worked with NetForecast to certify its wireline meters. Sevcik clarified that the seven clients he’s speaking of are all U.S.-based and all are testing wireline meters.

Last November, AT&T customer Ken Stox drew attention to AT&T’s meters when he couldn’t replicate the ISP’s byte count with his own home testing. For Stox, who is technically astute, the questions he had about the meter were less about fairness and more about understanding what, when and how AT&T was counting.

Building a broadband meter is tough

Those same questions are ones that Sevcik hopes ISPs will answer as part of an overall effort to improve their meters. He notes that whatever you think about the fairness of data caps, if meters are to serve some kind of public purpose, the public has to understand what the ISPs are counting and how they are counting it.

As for problems that lead to inaccurate meters, there are several. The first is that many of these meters are bolt-on afterthoughts. A telco or a cable company often uses measurement gear that sits on the subscriber side of the network. The ISPs has to allocate enough resources at that point to track the bits properly, but networks become congested. Then the ISP faces a choice. Does it count all the bits and risk slowing down the network, or does it let the bit count slide and let the rush of packets through?

Most ISPs err on the side of letting them rush through and a better user experience. But to solve the problem they could dedicate more resources to the counters so they can keep up with peak traffic. More resources would also solve the next problem ISPs face — once they have the bit counts, they need to add them up. As Sevcik describes it, many of these counters drop the bits into an Internet Protocol Detail Report format. Those reports are generated every 15 minutes.

Spread that across 10 million subscribers with a goal of doing hourly updates, and suddenly you have 40 million records to process in that hour. That takes servers — in some cases more than the ISP anticipated.

And while Sevcik said that while some ISPs had used decimal counting as opposed to binary counting of bytes in the past, most used binary counting today. That’s good because a binary count adds about 7 percent to the total number of bytes. But as Sevcik points out, if a consumer streams 3 HD movies on Saturday night and expects to see that jump in data consumed on his usage meter, then it needs to be there, or the consumer needs to know why.

Are meters worth it?

It’s clear that building a meter takes work. A Time Warner Cable spokesman notes that development of its meter took several years — other ISPs said it took at least a year of effort from multiple engineering teams.

If building a meter is so much work and consumes so many resources, why have them? For example, Comcast, which delayed the rollout of its meters while it struggled to get it right (and still runs monthly accuracy checks) has defended its meter as a customer education tool and as a means to manage network consumption. Critics point out that at 300 GB, Comcast’s cap is suspiciously close to the 288 GB figure that Comcast has said would be the amount of data consumed by someone using their broadband to replace cable. Those critics generally call caps a way for ISPs to protect their pay TV businesses.

What we do know is that Comcast has spent a lot of money and effort making sure its meter is accurate, because as Charlie Douglas, a Comcast spokesman notes, “We knew it would be in the spotlight.” I imagine also because it knew a meter would be the first step in how it could change the pricing dynamic from all-you-can-eat to something that’s a little bit more metered. And as I have pointed out in previous articles, if meters become the basis for charging subscribers overage fees or even terminating their service, then someone needs to monitor those meters to ensure that they are accurate.

I’ve called on the FCC to wake up and start gathering more data on how meters affect consumers and whether or not they are accurate, but the agency has so far been content to let this experiment in caps pay out without much oversight. With these accusations maybe the FCC will finally step up. Clearly, as a country we’re moving toward capped and metered broadband.

Sevcik, whose experience goes back to the days of the ARPANET and the first routing systems, believes if that’s the case, then those meters should be accurate.

“I’ve been in the internet business for quite some time … and in that time I’ve had my hand in the design of more than 100 networks and seen a lot in network technology. And what I’ve realized is, as the industry has matured there is an awful lot of talk and decisions made by people — consumers, policy advocates in DC and big companies — that is often based on hype,” he said. “my goal in a small way in this world of hype is to shed a light of real data and make a little piece of it really right.”

In short; If we’re going to accept meters on our broadband, then let’s make sure they are accurate.

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For years little has been known about what stealthy energy data startup C3, founded by Siebel Systems bazillionaire Tom Siebel, has actually been up to. The company has been like a Will Smith summer blockbuster that’s supposed to come out three years from now and will only hint at its plot through artsy abstract trailers. Well, turns out, school is finally out for the summer for C3 — the company has just completed some major milestones for its newly emerged big data energy product, according to Siebel during a talk at the Cleantech Investor Summit on Wednesday.

Siebel, now CEO of the four-year-old startup, said that in September 2012, C3 launched a data grid analytics project for PG&E, which crunched a whole lot of data about commercial and industrial buildings (the kind owned and leased in California by the likes of Cisco, Kaiser Permanente, Safeway and Best Buy). C3′s platform collected disparate data about a half a million buildings, from places like publicly-available data found via Google, to energy consumption data from utilities, to weather data from weather information companies.

The entire project required 28 billion rows of data (at least 8 terabytes) that C3 aggregated, normalized and loaded at 5 million records an hour said Siebel, adding, “this is really hard stuff.” PG&E used this data analytics tool to work with building owners to perform energy efficiency audits in real time for all of the commercial and industrial buildings in its footprint. It was a major success, said Siebel, and in the first few weeks of January of this year PG&E exceeded their energy auditing goal for the entire year.

C3 was also quietly involved in a more high profile big data energy project with GE, which I profiled last week when it launched at Distributech, although at the time I didn’t know C3 was involved. Siebel described the project with GE as “a joint development deal” at grid-scale, trying to solve “petabyte type of problems.” As I reported last week, GE’s Grid IQ Insight software can pull in disparate data from a variety of sources like grid sensors, utility databases and even social media sources on a per second interval basis, and utilities can use the software to peer into their grids, and combat blackouts, in real time.

Siebel says C3 has three of these types of projects live with customers, that combine a big data layer, an analytics layer and a customer presentation layer. The company plans to launch another five projects in 2013 and another five in 2014. Other customers include Entergy, Northeast Utilities, Constellation Energy, NYSEG, Integrys Energy Group, Southern California Edison, ComEd, Rochester Gas & Electric, DTE Energy, as well as GE and McKinsey.

In addition to C3′s commercial and industrial platform it built for PG&E, the company also has developed a residential energy efficiency program, which launched last week, said Siebel. The service, which is in development with Detroit Edison and Entergy, is a loyalty program that gets customers to engage in energy efficiency behaviors in exchange for coupons and points at retailers like Amazon. I’m assuming that this platform has incorporated the technology from the startup Efficiency 2.0 that C3 acquired last Spring. Mailed marketing has long been considered the cutting edge in the utility sector, and “I don’t know if we even get mail at my house,” joked Siebel.

C3 has spent four years, and on the order of $100 million, building the software platform that it is now aggressively selling to utilities and energy vendors. At its core, the C3 platforms use Cassandra for database management system, and all of the applications store all of this data in the cloud, which is a relatively new phenomenon for many utilities to deal with. The company also has some big names as directors, including former Secretary of State Condoleezza Rice, and former Senator and Secretary of Energy Spencer Abraham.

Grid analytics is a sector that is growing 24 percent a year, said Siebel, and C3 intends to be the software layer that sits on top of the grid. He compared the opportunity to “the Internet in 1993.” Siebel, who sold Siebel Systems to Oracle in 2006 for close to $6 billion, is one of the few entrepreneurs in cleantech that would know what that looks like.

Lastly, Siebel said his latest startup endeavor isn’t about saving the world from climate change or reducing carbon emissions, despite the company’s three C’s moniker, and despite the fact that that’s important. Ultimately, he says, “It’s about making money.”

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There has been something of a data backlash happening lately, and I think I’ve figured out why: Data for the sake of data has a tendency to sanitize experiences we’d rather leave a little bit dirty. But there’s a big, meaningful difference that’s worth knowing between big data and just plain data.

David Brooks’s recent column in the New York Times is a good example of this. He coined the term “data-ism” (which is quite apt) to describe a newfound penchant for reducing everything in our worlds into a number or statistic. Skeptical of this data worship, he is — rightfully — inclined to rebel.

But everything Brooks mentions in his article is really just statistics, the stuff academicians and businesspeople have been doing for years. It doesn’t take any revolutionary technological advances to measure the effect of political spending on campaign results or the idiosyncrasies in how a president speaks. At the best, these types of analyses are enlightening; at the worst, they’re overkill.

Data can be an unwelcome disinfectant

Like Brooks’ pointer to a study about whether there’s such a thing as hot hand in basketball. Or a recent debate (that got an incredible amount of undeserved digital ink from Deadspin and Nick Carr) about whether to adjust the points and frequency of Scrabble tiles based on what letters actually appear most in the English language. Right or wrong, who cares?

Unless you’re a professional gambler or in the sports business, sports are supposed to be fun; an escape from reality. Buying into things like hot hands, sweet spots, ancient curses and concern rays (thanks, Dave Barry) are part of the rooting experience. If it wasn’t for coaches’ insistence on punting on fourth down, I could watch an entire football game and not think about probabilites once.

As for Scrabble, well, it’s a game and it’s fun. People like it as it is. What’s next, lobbying to change the distribution of resource cards in Settlers of Catan to account for the relative value of each given recent drought conditions?

Likewise, while Max Levchin’s vision of the future recently had Nick Carr concerned about big brother (read my colleague Mathew Ingram’s take on it here) my takeaway from Carr’s blog post was more about the threat of a sterilized world. Human beings are not rational actors, and many of us don’t want to be — regardless of what the data says. We buy enormous sodas even though we don’t finish them, we demand all-you-can-eat data plans even though we don’t consume that much data and, directly addressing one of Levchin’s predictions, I bet many of us would willingly pay more for flat-rate auto insurance even if utility-style billing based on our real-time driving behavior would save us money.

Reducing the things we like — watching sports, eating, web surfing, driving — to data points ruins the experience of living carefree and exposes our optimistic anything-can-happen attitudes to a cold, surgical light. If I thought these were the pinnacle of data’s achievements, I’d rebel, too.

Data’s real promise is innovation

Thankfully, however, I’ve been lucky enough to spend my days speaking with some of the smartest data minds around and covering some truly revolutionary technologies. If there’s one thing I’ve learned, it’s that the real value of data isn’t just in uncovering statistical realities, but in finding methods for doing so where it was hitherto impossible and in creating entirely new products that change the way we interact with our world.

Big data is a technological revolution centered around collecting, storing and processing more data of more types than ever before. It’s also about doing all this stuff faster than ever before as data streams in from sensors, servers, Twitter, web surfing and however else we’re generating data. Data scientists are thinking up clever ways to stitch this data together, apply statistical techniques and do all sorts of things. They’re optimizing commerce, clearing traffic, insuring against inclement weather and even detecting genetic markers that might lead to a cure for cancer.

If you want to hear a lot more about what’s possible, come to our Structure: Data conference March 20-21 in New York.

Yes, there’s some value to what David Brooks calls data-ism — there’s a lot to be learned simply from monitoring new data sources, and a renewed focus on visualization means interesting data is now presented in ways that anyone can and might actually want to digest. But the real reason people are, or should be, excited about data is the promise of doing important things faster and better than previously possible (where those things were even possible before).

Talk to me when you’re able to predict a flu outbreak in real time based on automobile traffic patterns, smart grid data on heater usage and an uptick in illness references on Twitter. If you just wanna tell me that, statistically speaking, chicken soup doesn’t actually appear to affect the longevity of the common cold, well, I think I’ll pass. Chicken soup makes me feel better.

Feature image courtesy of Shutterstock user Jirsak.

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