AdBrite, which runs an ad network of around 85,000 relatively small sites, has begun selling banner ads on those sites on a pay-per-click (CPC) basis.

AdBrite serves around 800 million ad impressions per day which reach 90 million people in the U.S. The company expects that half of its ads will be sold on a pay-per-click basis within six months.

Display ads have traditionally been used for brand advertising, so, if successful, the move may further entrench the Internet as more of a direct response medium than a brand awareness medium.

Source: Erick Schonfeld, “As Demand For Display Ads Soften, AdBrite Introduces Cost-Per-Click Banners”, TechCrunch, November 24, 2008

One of the highlights at the Web 2.0 Summit last week was the presentation given by Mary Meeker, uber-analyst at Morgan Stanley.

You can check out her video presentation at TechCrunch (see link below), but let me give you a very high level summary of her ’state of the Internet’ address:

E-commerce sales growth is flattening out, while general retail sales growth has declined sharply;

Growth in all forms of advertising - including online advertising – has dropped; and

Online ad inventory is growing… while CPM rates (cost per thousand impressions) are declining (a classic case of prices going down due to supply outweighing demand).

Source: Erick Schonfeld, “Mary Meeker’s View Of The World In 50 Slides”, TechCrunch, November 6, 2008

On the surface, Nathan Myhrvold’s Intellectual Ventures fund appears to invest in inventions and make money by licensing those inventions to other companies.

Indeed, the fund has apparently bought over 20,000 patents from universities, inventors and bankrupt companies, many of which it has subsequently licensed to some of the biggest companies in the world. And, like any smart investor, it has specifically aimed to ‘buy cheap, license expensive’.

But there are some who view the fund’s business practices as bordering on extortion. TechCrunch reports that, in reality, some companies effectively agree to pay patent-licensing fees to protect themselves against Intellectual Ventures bringing an action against them.

Moreover, as part of a typical licensing deal, these same companies also agree to invest in the fund so that it may buy more patents. Meanwhile, Mr. Myhrvold’s company commands a 2 percent p.a. management fee and also keeps a percentage of any gains.

Sure, by investing in the fund, such companies get an equity stake… but as Erick Schonfeld of TechCrunch indicates, the upshot is a business built on a patent system that rewards litigation rather than invention.

Source: Erick Schonfeld, “Nathan Myhrvold’s Patent Extortion Fund Is Reaping Hundreds Of Millions of Dollars”, TechCrunch, September 17, 2008

Print advertising expenditure in the U.S. declined by 16 percent in the second quarter of 2008, dropping to $8.8 billion. According to Erick Schonfeld of TechCrunch, this marks the ninth consecutive quarter in which print revenues have declined, and at an-ever accelerating rate at that.

As a whole, the U.S. newspaper industry earned $1.7 billion LESS in print ad sales in the second quarter of 2008 than it earned in the second quarter of 2007. In terms of the first half of the year, the industry earned $3.1 billion less. In fact, revenue levels are down to 1995 levels.

To make matters worse, online newspaper ad sales were just $777 million in the second quarter, representing a decline of 2.4 percent compared with the year before.

TechCrunch points out that bundling print and online ad sales isn’t likely to be doing newspapers any favors. Advertisers used to buying bundles will typically drop the entire bundle when making budget cuts, rather than carve off print or online (as the case may be).

Actually, the bundling itself is surely another reason for lower revenues, since bundles typically involve a discount on the combined off-line and online offering.

Source: Erick Schonfeld, “Negative Momentum: Newspaper Ad Revenues Gaining Downhill Speed (Even Online Is Declining)”, TechCrunch, September 5, 2008

Looks like Microsoft’s ploy to let advertisers offer rebates to customers who buy after searching on Microsoft Live has bombed.

Microsoft launched its Live Search Cashback promotion in May, and while its share of search temporarily rose from 8.5 percent in May to 9.2 percent in June, by July its share was down to 8.9 percent, according to comScore.

All up, the Cashback offer is having pretty much no impact on the search market. Back to trying to build a better search engine…

Source: Erick Schonfeld, “Microsoft’s Live Search Cashback Scheme Fails To Move The Market Share Needle”, TechCrunch, August 28, 2008

Amazon is introducing a payment service for other online marketers and retailers to use.

Called “Checkout by Amazon” the service will let other websites use Amazon’s one-click ordering system, calculate sales tax and shipping costs, and let their customers track the shipment of their purchases.

Checkout by Amazon, along with the more basic, Amazon Simple Pay, which was launched on Tuesday, will compete with PayPal and Google Checkout, among other payment services. For both services, Amazon will charge a transaction fee that starts at 2.9 percent of the order amount, plus 30 cents per order (the fee goes down to 1.9 percent for sites doing more than $100,000 a month in sales). For transactions less than $10, Amazon charges 5 percent plus 5 cents.

While large retailers – likely to regard Amazon as a major competitor - may be reluctant to adopt the service, Checkout by Amazon (or Amazon Simple Pay), may appeal to plenty of small sites eager to provide customers with more payment options.

Sources: Brad Stone, “Amazon Offers Other Sites Use of Its Payment Service”, The New York Times, July 30, 2008, Erick Schonfeld, “Amazon Outsources Its Checkout Cart”, Tech Crunch, July 30, 2008

Great news for Flash lovers. Adobe is working with Google and Yahoo to enable the search engines to index Flash (SWF) files and the information - such as text and links - they contain.

Google has already incorporated the Flash reading technology into its search engine and has begun indexing Flash content across the web. Yahoo is currently working with Adobe to determine the best possible implementation. The new indexing will apply to all existing Flash (SwF) content - so developers need not modify or upgrade their SWF files in any way.

Of course, as Erick Schonfeld from TechCrunch points out, making Flash content indexable is one thing… improving search engine rankings is another.

Since so much depends on authoritative back-links - which, as Google has admitted, is the MOST important consideration when Google ranks sites - the outstanding issue is to make it easy for webmasters, bloggers and others to deep-link into those Flash files. Until this happens, don’t expect all those Flash-heavy pages to leap up the SERPs just yet!

Even so, the indexing of Flash content is a great step forward for Adobe, Google, Yahoo, Flash developers, webmasters and search engine users alike.

So… what is Microsoft doing about it?

Sources: Adobe, “SWF searchability FAQ”, Adobe, July 1, 2008, Erick Schonfeld, TechCrunch, “Once Nearly Invisible To Search Engines, Flash Files Can Now Be Found And Indexed”, June 30, 2008