News from the IAB (caveat, I am on the Board)...

The Interactive Advertising Bureau (IAB ) and PricewaterhouseCoopers LLP (PwC) today announced that Internet advertising revenues reached almost $5.9 billion for the third quarter of 2008, representing an 11 percent increase over the same period in 2007. While double-digit annual growth continues, the quarter-to-quarter curve remains relatively flat compared to recent past performance....

...The Q3 2008 figures, published in the IAB Internet Advertising Revenue Report, are 2 percent higher than the Q2 2008 results. Set against strong economic headwinds in the U.S. economy, Q3 '08's $5.9 billion represents nonetheless the second-highest quarter results ever. For the first nine months of 2008, revenues totaled $17.3 billion, up from $15.2 billion in the same period a year ago and surpassing the record set in the first nine months of 2007 by nearly 14 percent.

The one everyone will be watching, and most expect will be very bad news, is the Q4 spend. It feels like there is a pause in the market as advertisers rethinking how they are spending, and what ROI means in a world of engaged media. Long term, this is a good thing, I think.

Yahoo–which has stuck to its guns by staying in the search business, even though many think it is a losing game and should be sold off to Microsoft–has lost a key engineer in that arena to, uh-oh, Microsoft.

Sean Suchter, the VP of Search Technology at Yahoo, was also deeply involved in Yahoo’s efforts to open up its search platform, initiatives the company has touted aggressively as a bright spot in its not-so-lustrous landscape.

I think all these are fine candidates, and Forbes called me today asking me for more. As I chatted with journalist Elizabeth Corcoran, some themes came out. It seems there might be three types of CEO candidates - leaders from "orthogonal" companies - not media or direct Internet, for example, but folks who grok the overall technology and business space. My candidate from here is Bruce Chizen, former CEO of Adobe, who has successfully competed with Microsoft and gets the B2C software/Internet as platform space (at left, and in conversation at Web 2 last year).

Another type of candidate might be folks from major ad platforms. David Rosenblatt falls in that category, but he's got a very big job at Google, and I'm not sure he'd want to go boil another ocean. But what about Brian McAndrews, who sold aQuantive to Microsoft? (Web 2 video).

A third type of candidate might be a visionary in the space of open platforms, where Jerry - rightfully I believe - has pushed Yahoo in the past year. It's harder to find easy candidates for this category, because most leaders in the world of "open" are more visionaries than operators. But it led to to wonder about folks who might be inside great companies like Dell, HP or IBM, leading huge divisions. After all, those companies have seen the impact of open - Linux in particular - and closed - Microsoft - and have learned lessons that could really guide a maturing Internet world.

That's when another name struck me - Vyomesh Joshi, EVP of HP's Imaging and Printing Group (at left and in conversation with me here). Widely seen inside HP as visionary, VJ (as he is known) is also an accomplished operator - he runs a $30 billion business, after all. But does he have knowledge of Yahoo? Yep - he's on the Board.

Whoever ends up running Yahoo, I think, will not be someone to come in, fix it, and sell it. Why? Because honestly, besides Microsoft, which has declared it's not interested, who else is a buyer of *anything* right now? And I may be showing some bias here, but I believe Yahoo is a great company that has lost its way, not an asset to be packaged and sold to the highest bidder in a low market. The right person can come in and prove that. I wish whoever it is good fortune.

The search collaboration that Ballmer referred to would presumably be similar to the search (as opposed to acquisition) deal previously offered to Yahoo — essentially to have Yahoo outsource search and SEM to Microsoft in exchange for guaranteed revenues over a several year period. Danny did a detailed post on the prior Microsoft search offer to Yahoo (compared with the now defunct Google deal).

That offer, as with the larger acquisition offer itself, was previously rejected by Yahoo as undervaluing the business. It was also rejected because it was seen by Yahoo as removing a strategic component of the company’s larger suite of advertising capabilities.

Circumstances have dramatically changed since Yahoo rejected Microsoft’s offer.

I have believed in a deal like this for a long time. I think it may well come to pass now. But I think the key is how to integrate the two offerings (Yahoo's is generally seen as more battle tested and robust, and has a far longer history of monetization) and how to tie both companies' massive traffic to the engine.

If you're based in the U.S. you may already have spotted or clicked on the different text and image ads we’re testing on the results pages of Google Image Search. And last week you may have noticed we launched Sponsored Videos on YouTube — a great example of matching ads to content.

In addition, we are today launching text ads on Google Finance in the United States. We're also looking at how best to show display ads on Google Finance. And later, in the very near future, we will start testing text ads on a small number of news refinements within Google Search — so if, for example, you type "iPod" into Google.com and then click on the news link on the upper left-hand side, you might see text ads alongside those results.

The new voice-activated Google Mobile app for the iPhone is finally here. Whatever the reason for the delay, it was worth the wait. As we wrote last week, the search app knows when you bring the phone to your face to speak into it. It beeps, you talk, and it executes a Google search on what you said.

Previous coverage of voice search on Searchblog.

"What can't we do that we wish we could? IE, before YouTube/Flickr, we wished we could upload/share our video/photos easily."

Recall that earlier Google announced it was crawling PDFs and then Flash, this is one more step toward what I think may come - Google and Adobe uniting as a company against Microsoft. Yes, you heard that right. But on a meta level, it makes a lot of sense.

From announcement:
Today, at the Adobe MAX Conference in San Francisco, in a joint collaboration with our friends at Adobe and a few ace third party developers, we announced a simplified solution for tracking Flash content for everyone, called Google Analytics Tracking For Adobe Flash.

Working at Google over the past couple of years, I've had the opportunity to work with with many of our top clients to implement Google Analytics, who have found the power to identify and analyze trends on their web sites highly useful. But, one of the most common implementation challenges has been tracking Flash content on their pages. In the past, Flash tracking was not provided out of the box, and every implementation had to be customized. Moreover, there was a lack of standards, and new developers who tracked Flash had to create their own processes to get it working. With this launch, tracking your Flash content has never been simpler

Adobe market cap: $12.1bb
Google market cap: $94.5bb

The part that people don't yet fully understand is that "vertical ad networks," at the end of the day, are still ad networks. Ad networks are a vital part of the online media ecosystem. They provide publishers with additional revenue on inventory that isn't otherwise fulfilling higher CPM sponsorship programs, and they provide direct-response marketers with additional reach at cost-efficient rates. Vertical ad networks offer a bit better targeting because they focus on a smaller set of sites.

While vertical ad networks may improve efficiency for direct-response advertisers, who determine success based on some variation of cost-per-click, they are not solving the needs of brand advertisers. Ultimately, vertical ad networks serve advertisers and will compete with everyone else who serves DR advertisers, from Google to the other ad networks. The excitement over "vertical" ad networks will erode as CPMs on those networks chase the DR metrics.