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July 15, 2008
Testimony of Tim Carter - AsktheBuilder.comto the U.S. Senate Judiciary Subcommittee on Antitrust, Competition Policy and Consumer Rights
"The Google-Yahoo Agreement and the Future of Internet Advertising"
July 15, 2008
I sincerely appreciate the opportunity to submit this testimony to the members of the USSenate. It is my hope that my comments will aid you in making an informed decisionabout this very important topic.
In the most basic sense, this transaction is about real estate and eyeballs. Those of us who own and operate websites possess pieces of virtual real estate. In the physicalworld we live in, location, location and location are the three most important axioms inreal estate. In the case of Internet websites, great location can be de?ned as a websitethat gets a substantial amount of traf?c. A number of Internet-traf?c-analysis companies,as of July 12, 2008, show Yahoo.com as being the number one website in the USA with respect to traf?c or eyeballs.
Advertising Solves Problems
People like you and me have problems each day. We seek out solutions to those problems, and with the advent of the Internet, it has never been easier or faster todiscover precise and accurate solutions to those problems.
In my opinion, one of the reasons for Google?s success stems from the fact they are anexcellent matchmaker. They created a streamlined search engine that displays search results as well as contextual advertising that matches the exact search term typed bytens of millions of consumers each day, many of whom are your constituents. Google is not the sole search engine that does this. Many, if not all, of the other search engines such as Yahoo, MSN Search, etc. do the exact same thing.
The advertising that is part of the search results is purchased by small and largecompanies alike. To the best of my knowledge, this method of displaying a highly targeted ad is quite possibly the key component to the paradigm shift that is happeningright now in the advertising industry. Never before could companies be in front of so many consumers who needed their product or service at that exact instant in time. The old methods of advertising usually had some type of delay built in.
But it gets better. A business like mine can buy these contextual ads with ease and a small budget. I have done it for years to market some of my own products. UsingGoogle?s system, and similar ones at other search engines like Yahoo, Microsoft Searchand Ask.com, I can set my own ad rates, set my own daily budget, determine exactly who can see my ads, when they see my ads and track in real time the performance ofmy advertising dollars. No wonder growing numbers of businesses large and small arespending their money on Internet ads. They work, and they work very well.
Several weeks ago I testi?ed in front of a US House of Representatives Subcommitteeabout online advertising and small businesses. One of my newsletter subscriberssummarized how powerful online advertising is.
Ms. Rachael Kahne from Nashville, TN wrote, ".....I work for a small business whose bread and butter comes from online advertising. There's simply no other better, more viral way to get in touch with a targeted audience. Online marketing allows a business totrack and target what is working, and what isn't. It's certainly one of the most costeffective solutions out there today."
Billions of dollars are being spent on Internet advertising, and the market is growing. It isgrowing because it is a win-win-win-win situation. Consumers who quickly solve theirproblems win. The company selling the solution to the consumer wins. The Internet company that sold the ad wins. And ?nally, a website that displays a syndicated ad wins.
Syndication of Advertising
I happen to write a syndicated newspaper column called Ask the Builder. Syndicationis a highly productive method of distribution. I write my column just once, yet it appears
The real magic of the syndicated ads is they help me and many other websites todramatically increase productivity. I don?t have to worry about running a huge ad-salesteam, creating programming infrastructure to display the ads and expanding myaccounts payable and receivables department. That is all done by the company serving the ads. I can focus my talents on what I do best, which is create content. I?m not alone. Hundreds of thousands of websites can and do display syndicated ads fromGoogle,Yahoo or a host of other companies that sell these online ads.
Maximizing Revenues and Returns
Yahoo has valuable real estate on their website pages that is seen by tens of millions of people each day. They can sell or lease that virtual real estate to whomever they pleaseor even ?ll the space with things they create. I do the exact same thing at AsktheBuilder.com. I ?ll my pages with my written or video content, ads sold by others or ads I sell myself.
Yahoo is a public corporation. They need to do, in my opinion, what is best for their stockholders. If they can lease space on their website to some other company andderive revenue for doing virtually nothing, why would you or anyone stop them? Who isgetting harmed? Surely not the people who are clicking the ads! They willingly clicked them hoping to discover a solution to the problem they have.
Let?s take this one more step down the anti-trust pathway. When and where will you stop sliding down this slippery slope? I had a discussion with a fellow Internetentrepreneur about this topic. His name is Dan Gray, and he is a writer / Internet publisher like me. He said, "Tim, are you next? When you become the most powerful home-improvement website on the Internet, will the government come in and tell youthat you can?t display Google ads? If that were to happen, it would be the most un-American thing I could imagine."
Summary and Conclusion
This hearing is being held in front of a Subcommittee that considers anti-trust issues.My recollection of what my grade and high-school history teachers taught me is stillfresh in my mind. If memory serves me right, anti-trust actions were initiated when somecompany or a small group of companies enriched themselves at the expense of manyothers who were harmed ?nancially by the actions of the company or companies. The subject is no doubt far more complex than that, but I feel my explanation is the lowestcommon denominator of anti-trust.
That can?t be said about the proposed deal between Google and Yahoo. The tens of millions of consumers each day who visit the Yahoo website are going to see ads that solve their problems. Many will click those ads. Hundreds of thousands of businesseswho sell the products and services to these consumers will increase their revenueswhen those ads are clicked. Those companies end up paying more taxes, and our economy grows.
Who is harmed in this transaction? Perhaps some other company or companies thatdecided to follow a different pathway in the business jungle. My father-in-law taught me long ago that there is no substitute for brains. Furthermore, during my own journey inthe business world over the past 34 years, I?ve discovered that healthy competition is agreat thing. I personally love to compete against other home-improvement websites as ithelps keep me focused and in the zone.
This proposed deal has the potential to increase the revenues of Yahoo by hundreds of millions of dollars each year. The ad revenue that Yahoo receives from Google will ?ow into Yahoo with virtually no expenses. If the management of Yahoo is wise, they will reinvest this money back into their company to provide the healthy competition that weas consumers want and need. The deal may also force other companies in the Internet business world to work a little harder. My experience as a builder is that a little hard work never really hurt anyone.
Thank you again for taking the time to consider my opinions in this very important issue.