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back to article Yahoo! economist rebuilds ad empire with 'Magic Formula'

Yahoo! CEO Carol Bartz owns a sweatshirt emblazoned with Preston McAfee's math. McAfee is an economist, but he's the sort of economist who's actually useful. In the early-90s, he helped build the simultaneous ascending auction, a mathematical contraption that governments across the globe have since used to license over $100 …

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Obviously the YGroups Aren't Part of the Equation..

Though God knows why.

I'm seeing nothing but negative replies on the YahooGroups blog and the Groups' suggestion forum to their new 'facebook' web 2.0 upgrade.

When this shakes down AFTER the full roll out, (the initial release has been such an unmitigated shambles, it's painful to see, when you consider that there are groups going back 11 and 12 years that have lost their entire archives - the numbers of users asking to have their groups returned to the 'classic' mode so they can download and archive their data is heartbreaking in some cases.) and the YG team tasked to 'rebuild' the property hasn't addressed the message retrieval and viewing snafu, the stream of list owners and subscribers leaving for less 'facebook' like listservs is going to become a full on exodus.

It's NEVER been this bad, and some of the things Yahoo did to the E-groups in the past were pretty hair-raising.

Get thee to the YahooGroups blogs (when it's serving, it's been down intermittently most of the day) and read the countless complaints. Even the yahoogroups suggestion board is running about 98% in opposition.

Where Web 2.0, and the "Look at me!" Attention Deficit Disorder 'tweet' crowd meets the Web 1.0, topic-dominated world of listserv users is a spectacular clash of cultures.

I'm betting on the list owners with hundreds of thousands of subscribers being the mathematical monkey-wrench to McAfee's math, once they take their lists of eyeballs for advertisers and go to GoogleGroups.

I already have my GoogleGroup ready if the re-build isn't completely as functional as the original group offerings.. and it's NOT looking good so far.

Ermmm.

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Priceless

>> Where Web 2.0, and the "Look at me!" Attention Deficit Disorder 'tweet'

>> crowd meets the Web 1.0, topic-dominated world of listserv users is a

>> spectacular clash of cultures

This is so, so true. But so beutifully said, I will have to quote you.

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Re: YGroups

I don't quite see how that little lot would have any simian spanner effects on McAfee's equations.

The maths still manages pricing and distribution of advertising. The fact that nobody's bloody looking at the ads 'cos some "me too" Web 2.0 fixated arsehat chased away all the eyeballs is an entirely different matter.

"I already have my GoogleGroup ready....". I'd try again there, looking for somewhere less bleedin' edge focussed. Otherwise you're bound to get to do it all over again when Google decides that folding Groups into Buzz or something equally as daft is the next obvious step.

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Storage is the key..

TeeCee, many have pointed out that Yahoo often takes it's users for granted as it supposedly has 100 million. ANY calculations you'll see for it's expected growth in ad revenue is based on that golden number. Read through some of their advertising blogs. I do. Besides, I am really not worried about Google Groups getting streamlined into a web 2.0 upgrade anytime soon. The offerings are FAR too scant for building enormous databases under that service. I'll use it if I have to, but believe me, I'll be looking for other backups as well. 100MB of files and message storage space for everything in a Google Group? YGroups offer 100 gigabytes storage in Photos alone.

Regards,

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Unhappy

There goes another patent

Jobs must be kicking himself. At one cent per transaction ...

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WTF?

How many shoppers only want to see ads from the biggest advertisers?

That's how many will use Yahoo at all. And those won't be the best and brightest consumers, with the most money--but they'll be suckers that a certain type of business can make a lot of money with a big ad budget. That's why Yahoo has, last time I looked, under 20% of the search market, and falling. Bing doesn't seem to make much difference, judging from my access logs.

I run a small local business with local customers, in the U.S.. The national firms in my field, with the big ad budgets, are almost without exception solid sleaze, and many consumers in my price range know it.

I don't at all like having the bulk of my publicity dependent on Google, with its unpredictable ad rotations. So I tried, I really tried, to make use of Yahoo, both their local ads and the pay-per-click. Result--wasted money and no business. I couldn't even get listed in their local pages. And their PPC ads are directed to low quality audiences that eat up my PPC budget without result. The advertiser has no way to opt out of that, as one can with Google. (Yahoo were sued successfully for that practice last year, but only got a slap on the wrist.) The one or two calls I got through Yahoo were decided low-enders, and the Yahoo search strings that showed up in my access logs were clearly written by people with lower IQs than those who search on Google.

I don't know who's spending all that money on Yahoo's ad auctions. My guess is that it's organized con games trolling for suckers, or (more) legitimate firms that are still throwing ad money around in the grand old fashion. (Advertising firms know how to troll for suckers too.)

At least the word of mouth is finally kicking in for my own business.

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Joke

@"If you look at the humor of economics"

oO

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Pirate

$100Million?

In UK 23 Billion?

http://en.wikipedia.org/wiki/Spectrum_auction#United_Kingdom

Should the Million not be Billion?

Regulation isn't supposed to raise revenue. It's meant to ensure the best use to benefit the Infrastructure and Economy, also ensure no Interference between services.

Ofcom thinks the way to do this is purely consider "efficiency" (a doubtful but partially true measure) and then make the mistake of thinking highest bidder will make most efficient use of the Spectrum. The reverse can be proved to be true as a very "Good" (benefit in Spectrum efficiency and Infrastructure quality ) likely has a much higher per user install cost.

I have no idea how this relates to making money from advertisers, or the effectiveness of advertisers other than that the application of this formula to Spectrum Regulation, in particular Auctions may maximise Revenue but is otherwise " A Bad Thing".

Is pure maximisation of Revenue or Profit today the best aim? The Banking Crisis and the Irish Celtic Tiger that was really a Ponzi scheme (Anglo Irish Bank) and Property Bubble (everything else) suggests that simply maximising today's revenue or profit might be too narrow a view.

Maybe Magic is only in Books. If it seems too good to be true, it probably is.

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It may be on other grounds

Economic models of markets and the theory behind them show that in a market that is aligned to a particular model there is always a niche for doing something contrary.

Google showed that to everyone by going long term versus the short-termist crowd and going end-consumer and ignoring middlemen interests. However, it is now the dominant force in the ad market. This means that it is the owner of the dominant model - long term, end-user and not middlemen oriented.

As a result there is a niche for a contrarian approach - middlemen oriented and short term. I am not surprised that Yahoo is following it. What I find surprising is that it has finally learned the lesson that "moving R&D" to low cost economies does not pay. It is now happy to pay top dollar for top brain to the point of showing top-brain products on the CEO T-shirt. It is nice to see yet another company learning the lessons from the outsoucing and cost reduction frenzy of the naughties.

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Irreducible Complexity

I can just imagine the dramatic monologue that created this contraption:

"We have a scheduling problem. It's really hard *sadeface*. NP-hard. What ever are we going to do? Let's invent a magic formula which greedily prioritizes clients we value most, and hope that everyone else doesn't notice. Also let's publish a meaningless formula everywhere and define absolutely nothing about it. *happyface*"

*facepalm*

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Joke

I'm just reading your T-shirt

Not looking at your chest

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Boffin

Magic Formulas?

Aye, they have worked so well for the stock market it has got to be a winner I tell ya!

Have I ever told you about my super duper compression algorithm that recursively reduces all data to 1 bit.... it's magic! show me the money!

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can't go wrong with a bit of math!

this guy McAfee , seem to forget that the current banking crisis is also a product of math engineering

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@can't go wrongwith a bit of mat!

"the current banking crisis is also a product of math engineering"

blaming the current banking crisis on derivatives is like blaming arithmetic for accounting fraud. Sure it has a factor but it's not the whole story!

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Joke

@Mage

The most efficient use of the Spectrum is to play Spy vs Spy.

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What about

Manic Miner?

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WTF?

$100 million in wireless spectrum???

I thought the UK 3G auction was based on his scheme. From memory I though that spectrum went for something in the region of £20 Billion. If I'm right (and its your job to check facts not mine) you have serious understated the number (by a factor of 200). Of course you may just have replaced billion with million and be including lots of other auctions.

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Coffee/keyboard

That's full-fat-fail then.

"Economists go to Washington just so they can stop Washington from doing the silly things it would otherwise do."

(On the other hand, Greenspan was a showman/clown, nowhere near an economist and what came after ain't better either.)

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Impressions? Yahoo really is stuck in the 1990s

"If one of our advertisers is not getting enough impressions, we turn the dial and increase their bids, to make sure we fulfill the contract"

This is the crux of the problem right here. Without measured actions, advertisers might as well be flinging poop at shadows on a wall. Yahoo is still unnaturally hot on selling *impressions*, which is a pre-web technique shoehorned into an interactive, monitored medium. Throwing all this fancy vector parameterisation maths at *impressions* really is like putting incredibly fine, detailed lipstick on a pig. Yahoo has bigger issues, such as the way every few years it manages to erase or mangle its existing user content and media so that all its "communities" are fecked (see Yahoo Groups discussion above) and leave Yahoo in despair. Yahoo is nearly 20 years old and has utterly failed to build any durable community beyond a few isolated silos such as Flickr. Instead of concentrating on maintaining and expanding its human web (with all the added value of peer-reviewed networks and content and pricy lucrative ad opportunities), it's focussed on selling *impressions*. It's the WW2 Polish Cavalry Charge of the Interwebs: magnificent, but not webby.

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WTF?

Interesting logic

"If we expose the inventory to the exchange, we allow somebody else to buy the really good stuff, and that's a threat to our best advertisers.""

No, what it does is foist off useless crap inventory to your advertisers, and rips off your best content providers. If I ran a top500 web site, exactly why wouldn't I be calling my doubleclick rep?

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Coat

Re: Interesting logic

"If I ran a top500 web site, exactly why wouldn't I be calling my doubleclick rep?"

Er, because the groupings of "smart people with cash to spend" and "people who have their hosts file redirecting doubleclick to 127.0.0.1" have a large overlap?

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