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• Meanwhile, the New York Times reports Microsoft has signed a nondisclosure agreement with Yahoo, thus positioning itself as a potential bidder on the search granddaddy. Microsoft has reportedly been talking with a number of possible partners about the details of any investment or buyout. As Yahoo sells ads against queries entered into Microsoft’s Bing, Microsoft already has a vested interest in Yahoo’s future.

• According to a study conducted by Sociable Labs, about half of all shoppers browsing e-commerce sites are simultaneously logged into Facebook. This isn’t to say they’re necessarily on Facebook, but whether they have a browser tab open to the social network or not, they at least haven’t logged out, which is a meaningful gauge of e-shoppers’ proximity to social media. Sociable Labs, which develops apps for e-commerce companies, collected data from visitors to its clients’ sites over the month of October; a daily breakdown of the stats shows anywhere from 49.4 (on a Thursday) to 53.7 (Sunday) percent were logged into Facebook.

• Universal Music Group, the largest record label in the music industry,  is suing streaming music service Grooveshark to the tune of (we’re almost sorry for that pun) roughly $150,000 per purportedly-pirated recording. While Grooveshark users who post tracks for other users to share are protected by the Digital Millennium Copyright Act, the UMG lawsuit is aimed at Grooveshark employees themselves, whom the suit accuses of personally uploading songs illegally, en masse. Media outlets today have claimed various estimates for what the total sum might be of the damages UMG seeks, but $15 to $17 billion is a popular ballpark.

• Business Insider reports Angie’s List really isn’t making money. The website (where users can rate their experiences with plumbers, electricians, roofers and other contractors),which claims to be supported by membership fees, hasn’t earned nearly as much from its users as it has from advertisers — and its earnings are out of step with its expenses. Prior to Nov. 17, Angie’s List had taken in $24 million from subscriptions and $38 from advertisers. Meanwhile, it had spent $48 million on its own advertising and $22 million to support the sales team. Business Insider has some graphs and a comparison to the similar plight of Yelp.

Google has also been making advertising efforts all year with emotional ads for the Chrome browser. Both companies are pulling out all the stops for the holiday season as more shopping is going online, which affects advertising views – the bread and butter of the search empires. Also, advertisers are willing to pay a premium for ads as their ROI will be higher than any other time of the year.

Peter Daboll, CEO of Ace Metrix, made an observation to the AP about the effectiveness of well-done commercials, saying, “It’s instructive that these companies who are all about the internet and doing things in real time are actually doing these emotive ads on TV.”

Google still dominates the local search advertising market, with an 88 percent revenue market share. Microsoft’s Bing, in partnership with Yahoo Search Marketing, has shown slow but steady growth since its launch in 2009. AdLux, an Australian independent search network, has also successfully established itself as an alternative to Google and YSM/Bing in the Australian market.

• Speaking of reports, in its Global Search Advertising Spend Analysis for Q3 2011, independent search marketing agency Covario noticed an impressive rebound in paid search spend during the third quarter, up 26% quarter over quarter and 24% over the same period last year. Study author and Adotas contributor Craig Macdonald, Covario senior vice president and chief marketing officer, attributed the rebound to strong back-to-school spending and increased investment in the Asia-Pacific region.

• Underdog Media announced that Jeff Hirsch is its new chief executive officer. Most recently Hirsch served as president of AudienceScience, but before that co-founded Fastclick and had multiple executive roles at ValueClick.

• Exchange operator adBrite has added Rick Cotton as its chief revenue officer. A 20-year veteran of digital sales, Cotton was last seen holding down the senior vice president role at Monster.com while simultaneously serving as general manager of the FastWeb.com division. Before his Monster stint, Cotton served as general sales manager for CBS radio.

• Former Gracenote President and CEO Craig Palmer will take the CEO’s chair at collaborative content network Wikia. Palmer has named Jennifer Betka senior vice president of marketing. Betka boasts experience developing brand and audience at AOL, Time Warner, Veoh, SIRIUS XM and The Los Angeles Times.

• Guess who’s got two G in its name and still accounts for 65% to 66% of all searches (depending on who is counting)? comScore has search “rivals” (in the loosest meaning of the term) Yahoo! at 15.5% and Bing at 14.7% for September 2011, while Experian Hitwise puts them at 15.2% and 12.8%, respectively.

• The legacy online portal world is a total soap opera: while Yahoo! cofounder and former CEO Jerry Yang is trying to raise the cash to take that company private, AOL CEO Tim Armstrong is apparently pushing AOL stockholders on selling the company to Yahoo!.

• Virtual goods inventivizer Ifeelgoods has teamed up with Universal Pictures to promote caper comedy “Tower Heist” with a scavenger hunt for 1 million Facebook Credits. Facebook users receive Credits for discovering “Heist” buttons around the network and are incentivized for sharing the game on Facebook or inviting friends to play.

• Social media dashboard HootSuite has acquired location-based marketing tool Geotoko. According to HootSuite’s blog, “The Geotoko technology reports on geo-based social media interactions like key influencers, customer sentiment, and demographic patterns to help businesses draw conclusions about audience behavior, as well as help brands reward customers for checking-in via Foursquare and Facebook Places.”

• Digital video advertiser Brightroll has expanded into Germany, naming former FOX Networks executive Patrick Edlefsen as head of the just-opened Hamburg office.

• Thanks to a new partnership, eBay will integrate Facebook’s Open Graph protocol into the X.commerce, Magento and GSI e-commerce platforms, allowing merchants to incorporate not just “Like” buttons, but also the new “Want” and “Own” buttons introduced with Open Graph tags.

Of course, Google knows that the web is a slightly better place if there’s a result crafted for every significant long-tail query. But they don’t want it to be easy to arbitrage their traffic that way.

Let’s look at some other signals search engines consider positive:

• Having a unique physical location listed on your site.
• Registering a domain for five or ten years, rather than one or two.
• Having a local phone number.
• Having the kind of brand name mentions and searches that indicate lots of brand advertising.

What do these actions have in common?

1. They’re great indicators of site quality: any time you find out that a site is doing one of these things, it’s a good sign that they expect to stick around (and stand to lose a lot if they don’t).
2. They cost money.

Search engines are in an interesting situation, here. They like to make sure that the marginal dollar spent on search traffic goes to them, not to, say, someone selling links (or even someone building links the old-fashioned way, by pestering people). And yet, these signals are too valuable to give up.

One way to look at this is to argue that search egines essentially earn a royalty on the value of the Internet as a whole, and these activities wildly increase the value of the Internet, to the point that Google profits more from this than it does from an extra few dollars in AdWords revenue. Or search engines might (correctly) assume that what they’re subsidizing is putting your address on the web, not getting an office. (They are technically subsidizing both equally, but the former is far cheaper.)

But what happens when more of the economy goes virtual? Does anyone refuse to buy from Amazon because their office’s address and phone number aren’t prominently displayed on the site? Hardly.

In the short term, search engines can use these branding signals. But in the longer term, they have a strategic interest in ignoring the signals that correspond to a physical location, and promoting the ones that imply a stronger virtual presence (e.g. brand queries, expensive web infrastructure, long-term web registrations).

Because all-virtual businesses are more beholden to search engines. A company like Target would certainly miss Google if Google stopped delivering traffic to their site—but an all-online business would probably have to come up with a completely new business model, or face liquidation.

Google in particular is willing to take the long view: the few sacrifices they make to user experience involve making it hard to have an online and offline experience when you could have one solely online. And Bing is an expression of the long view: Microsoft is willing to lose a whole lot of money to make sure search is still competitive.

In the future, don’t be surprised if search engines look for all-digital signals that a non-physical business is in it for the long haul. Imagine a world where raising a VC round rockets your site up in the search results because there’s suddenly a lot more money at stake if you do something short-sighted. That’s not necessarily where we’re headed, but we’ll be getting close.

Reprinted from the Digital Due Diligence newsletter.

The unsuspecting Bartz was given her walking papers via phone call by a board of directors that had finally grown tired of Yahoo!’s lack of forward movement. We’re surprised that the board didn’t just wait for her contract to expire, which was in less than a year. We also would have thought her ouster would have come on the heels of Yahoo! second quarter earnings, which showed U.S. display sales taking a dive due to “unforeseen” turnover after a major sales overhaul.

Although Yahoo! lost its spot on top of the online display ad heap to both Facebook and Google before the earnings came out, display was one of Yahoo!’s remaining bright spots, especially as search revenue is still dwindling following the Microsoft deal. The display sales screwup pointed to management being out of control.

Granted, the blunt-tongued — she actually told Mike Arrington to “f*** off” on stage, in contrast to Arianna Huffington who did the equivalent in private — former AutoDesk CEO was dealt a losing hand from the beginning, trying to sort out the bloated beached whale Yahoo had become under former CEO and cofounder Jerry Yang.

Most of her two years was seemed to be spent trimming down the Y! beast, slashing initiatives both liked and disliked — few all that popular, and none of them relating to Yahoo!’s push to simply become a media-focused online portal. There were still glimmers of innovation during her tenure, notably on the front-end of the search offering, but the Search Direct solution still seems like it hasn’t been rolled out to the masses.

We were placing our bets on former Fox Interactive exec Ross Levinsohn, who joined Yahoo! as executive vice president of the Americas in October 2010 following the abrupt departure of Hilary Schneider, as Bartz’s most likely replacement. A few months ago, Yahoo! acquired supply side platform 5to1, which was reportedly light on the technology but featured a bench full of Levinsohn’s former Fox Interactive team. Then Yahoo! seemed to be showing him off to the media following an AdAge interview.

But Mike Shields over at DigiDay makes a good point — since Yahoo! has long been redefining itself as an online media company, the next CEO should be a New Yorker, someone from the media or agency business.

Bartz did one part of her job well, which was trimming the bloat that had accumulated under Yang, but she couldn’t do much more than keep Yahoo! afloat. The former champion of the Internet seas is not a sinking ship, but one stuck in dry dock, waiting on repairs as other luxury lines speed off to undiscovered waters. The bigger fear should be that it rusts too much while being fixed to go back to sea.

They’re both wrong: public perception of SEO is, by nature, a few years behind the industry most of the time. Why?

1. People are usually aware of SEO when it’s done badly: most people think of news as “news” and not a smart SEO play; most people think of keyword-stuffed articles as SEO, not as an obsolete SEO strategy.

2. The people who try to rank for SEO-related terms are usually selling high-margin, low price-point products, which tend to be scalable and commoditized.

So it’s understandable that the average person who thinks about SEO thinks of it as a set of strategies for making a site search engines will like, at the expense of making a site humans would like instead. But that’s not an accurate description. Due to some forces that are intrinsic to the practice of SEO, and some that have emerged from the way the industry is structured, SEO isn’t just about gaming: it’s word of mouth marketing, rethought as a science.

At SEO conferences (like this one, where DDD will be part of a panel), there are still a few talks about the back-end technical issues. But that’s not what gets people excited. Hot topics now are:

• How to write content that convinces people to share it.
• How social sharing signals impact search.
• How search engines are adapting to different kinds of queries—the default schema for product search is completely different from the default for people search, discussion search, or local search.

Other kinds of marketing consider these factors, but SEO focuses on them more than pretty much anyone else. People practicing explicit “word of mouth” marketing or social media marketing are aware of these factors, but they don’t have the numbers to back them up.

This wasn’t part of some long-term plan; SEO used to be almost entirely a matter of gaming search engines, not catering to users. A few forces have caused this change:

1. Search plus social monetizes better than social alone: so far, Bing and Google have done very well with socially-enhanced ads—per pageview, they’ve probably benefited far more than any of the social media sites whose data they use. Meanwhile, social media sites haven’t managed to turn search into a major income stream.

2. Search is an oligopoly at the high end and anarchy at the low end. There are a couple big search companies with basically limitless appetite for experimentation. And then there are the independent search engines, the vertical-specific search engines, etc.

The larger search engines innovate glacially but precisely—every change they make has been bucket-tested against every possible alternative. The smaller search engines change more experimentally.

Basically, it’s an environment where every search engine is evolving towards better reflecting user psychology. The optimal SEO strategy is to optimize for the search engine of the future.

3. SEO as a career only makes sense if it’s not commoditized. Very few people can make a living as SEO copywriters; the market wage is enough to pay costs of living overseas, but not in the U.S. So American SEOs are gradually transitioning into SEO-sensitive web development or SEO-sensitive general online marketing. Since search engines are relentlessly expanding their use of nontraditional signals, every online marketing field is gradually bleeding into search.

This is visible if you’re in the SEO industry, but it’s invisible to almost everyone else. Facebook marketers didn’t see the Facebook/Bing deal as paradigm-shattering; SEOs didn’t, either, because they saw that general trend coming.

In lots of fields, an article that starts with “People are wrong about X…” has to end with “…and here’s what to do about it!” But in a comparatively efficient market, that’s pretty much pointless: what you do about other people’s mistakes is that you profit from not making them.

Cross-published at the Digital Due Diligence blog. Sign up for the Digital Due Diligence newsletter here.

While interested in the direct correlation, we felt that that the larger story was really the potential of Facebook becoming an individual’s (and a corporation’s) go-to social network hub and search engine. With approximately 2.5 billion searches per day, most people were leaving Facebook to search with Google, but with the Bing integration, leaving Facebook and choosing another search provider would no longer be needed.

Now, several months later, we are asking another question: Do pages with a lot of shares and likes from Facebook really rank better in Google? To verify this, in April, Rand Fishkin of SEOmoz analyzed various data points that did show an existing correlation between Facebook Shares, Likes and Comments; leading him to the conclusion, that yes, there is an impact of Facebook on the Google ranking.

Using this finding, we checked it against our own Searchmetrics data from the U.S. and Germany. Using the first 30 URL results of 20,000 German keywords with the biggest search volume in the German Google index, we found some additional interesting correlations.

Let’s first take a look at the correlation between Facebook Activities and the Google Ranking data:

For the x-axis, we took the top keywords and their corresponding URLs to show keyword positions on Google. The y-axis shows the percentage of Facebook activities, including all likes, shares and comments, coming from those URLs with keywords in positions 1 through 30.

What is pretty obvious is the direct correlation. You can see that most of the keywords in top positions also have the highest numbers of shares or likes. Keywords in the top 10 positions actually have 50% of all of the shares, likes and comments and this significantly drops for keywords in lower Google positions.

If you drill deeper into the differences between the number of likes compared to shares and comments, you find even larger differentiations. Keywords in position 1 have 93% of shares and comments with approximately 76% of likes.

We ‘Like’ the Short-Tail

Most of the likes are based on short tail keywords, but this is not all. As you can see in the first chart, the graphs of the Top 100, top 1,000 and up to the top 20,000 keywords do differ.

Since we usually find in the top 100 keyword list short-tail keywords like “car” or “iphone,” usually brand homepages rank on the first position and they usually attract the most shares on Facebook. In the German index you also find the U.S. homepages of the brands, mostly a few pages lower than the German versions, but they are also included in the graph.

What is very obvious is the drop of the Facebook activities with less popular keywords. The more we move into the long-tail, the less shares, likes and comments can be found corresponding to those words on Facebook. In the short tail, you also find more homepages and less subpages. This could also lead to the assumption that people tend to share homepages rather than subpages.

Not Everyone ‘Likes’

We were surprised to find that although Facebook can be found on a lot of pages, there are still many website pages without Facebook Like buttons. For example, on Wikipedia you won’t find like or share buttons for Facebook. In addition, for a lot of major newspapers you can find the like button below the articles, but not on the homepage. Since the figures state that 93% of shares mostly include homepages, this means that users share the homepage on their own, without the need of a Facebook button on it.

It’s the Chicken! No, It’s the Egg!

But even a result close to 100% is not concrete evidence that Facebook impacts the Google ranking. It can still be a correlation, or it can mean that Google is already taking Facebook activities into their algorithm.

At SMX in Seattle, Matt Cutts answered this question of Facebook correlation with the argument that Facebook won’t let Google get their data; an answer that does not really say no, but leaves a lot of room for discussion.

For one, could Google get hold of Facebook data via the use of their Google Chrome browser or the Google toolbar? This is just one of many questions concerning the dynamic between Google and Facebook, what we know and what is possible.

So the question remains: Is Facebook influencing Google or vice versa? Does a keyword rank highly because it was shared, liked or commented on frequently or was it shared, liked and commented on frequently because it ranks highly on Google?

It’s clear that this will be an ongoing discussion and with so many variables, the answers will continuously change. We all know that sooner or later the “search machines” need to take the user behavior into consideration, and this has to include Facebook shares, likes and comments.

And of course, this will always be just one of the many ranking factors for Google.

I was excited by this launch because I always root for the underdog/newcomer to challenge the incumbent (if you can really call Google an underdog). In a column around the launch of Bing, I called for Adotas readers to move to Bing (if you can call Microsoft an underdog).

With search, the move from Google.com to Bing.com is a simple click. Sure, habits are hard to change, but the search engine habit is a relatively easy one to break (if someone is inclined to do so).

Moving from Facebook to Google+ is a far more difficult habit to break. To make that happen, Google+ would have to offer something truly amazing.

What Google+ could offer:

1. Better/Easier-to-Use Privacy Settings. privacy has always been a challenging issue online, one that will only get worse as the web migrates to mobile and incorporates a layer of precise location data onto everything we say or do online. Incorporating significantly better and easier to use privacy functionality would have been the kind of functionality which for some users (like parents of kids) would have been truly amazing enough to encourage them to leave Facebook.

From what I have read online (I do have a Google + account but haven’t really played with the privacy settings), Google + doesn’t have the kind of privacy settings that will make parents establish Google + accounts for their kids on mass. (Perhaps it was silly to expect such privacy functionality because Google derives value from Google + because it’s able to mine its social graph alongside the other data the company has from Search, Blogger, Picasa, etc.)

2. Easy Migration/Porting From Facebook. This might be more “wishful thinking” because it would require Facebook’s consent to make it happen, but easy migration from Facebook would definitely help Google+. Facebook seems to be sealing up the migration channels, having just blocked Facebook Friend Importer

Though there is a lot of really great functionality in Google+, including Circles and video chat, I don’t believe there is something here that is so truly amazing that will prompt enough users to forsake Facebook for Google+. Though Google+ might become a sort of home page/portal for heavy users of Google products (and maybe that’s all that Google was hoping for), I don’t see it displacing Facebook. Best put by Robert Scoble, though geeks will have fun playing with Google+, yo mama won’t use Google+.

In my mind, this sets up another question. Maybe the real target is Microsoft and not Facebook. Maybe Google+, when integrated with Google Docs and the rest of the Google’s offerings, is intended to pull users away from Microsoft Office.

What do you think?

Uriah Av-Ron works for Oasis PR and is based in Tel Aviv, Israel. You can contact him at uriah@oasis-pr.com.

TechCrunch’s Mike Arrington, the go-to guy for leaking product details to build buzz before a launch, reports that the “awesome” announcement Facebook CEO Mark Zuckerberg has been talking about since the introduction of Google’s latest stab at a social network (one that actually might be successful!) revolves around the introduction of video chat, filling out the missing component of Messages’ social hub.

While some tech media soothsayers foretold the unveiling of an iPad or a photo-sharing app (which could still come to pass tomorrow), Facebook pretty much gave the game away through the event invitation, which features a chat icon with a person’s silhouette.

Incorporating video chat is more important than ever — arguably the two advantages Google+ has over Facebook are its Circles friend-arranging feature (much more intuitive and easier to use than Facebook’s group function) and the Hangout group video chat functionality.

It’s amazing the way symbiosis appears in the face of a common enemy: Facebook is Microsoft’s last hope in making a dent in Google’s search dominance through integration of its social data into the Bing search engine and now Microsoft wields the weapon Facebook needs to fend off Google’s rival social network.

(In another interesting correlation, Bing inked a search venture with Chinese search giant Baidu to get in on the mainland search action that Google is having trouble grasping. Facebook is also teaming up with Baidu to build its mainland social offering. As Digital Due Diligence recently noted, the Chinese search market is a rough part of town.)

Facebook and Skype have been integrating technology for a while now, and it seems Messages’ video chat feature will have a desktop component, allowing users to chat with Facebook friends without being the site. Of course, I can chat with my Facebook friends and send messages via my social browser Rockmelt without having to go to the site. I wonder if any of the $30 million in funding the company just scored will go toward integrating video into the chat function.

It’s a sweet deal for Facebook as long as Microsoft doesn’t break Skype first — reports of the network going down seem to be more frequent since the acquisition. More important, Facebook is quickly closing the gap between its offering and Google+ — as soon as Facebook introduces a better friend-arranging tool (something that the social network has stumbled over before), the rival social services will be judged on their merits.

And marketers can’t ignore, there’s no real ad product for Google+. A level playing field might be a bitch for Google.

On a Google+ side note, some media people have been having Buzz flashbacks as Social SVP Vic Gundrota admitted that the social network isn’t quite ready for prime time, but it was pretty smart to soft launch Google+ in the summer right before a holiday. Across most of the United States, it’s too hot and sunny to think about work and minds were already turned off prior to a three-day Independence weekend — what better way to kill some time than trying out this new Google toy?

Of course, Google has “run out of invites” because they were swamped with an “unanticipated amount” of requests — limit the supply and demand driven by curiosity will amass. However, I’ve seen some Tweets suggesting Google+ has been a bit hectic to operate… Perhaps Google jumped the gun again.