Petitioner Microsoft Coporation - Ex. 1032, Cover
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`Petitioner Microsoft Coporation - Ex. 1032, (cid:83)(cid:17)(cid:76)
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`Petitioner Microsoft Coporation - Ex. 1032, (cid:83)(cid:17)(cid:76)(cid:76)
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`Petitioner Microsoft Coporation - Ex. 1032, (cid:83)(cid:17)(cid:76)(cid:76)(cid:76)
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`Petitioner Microsoft Coporation - Ex. 1032, (cid:83)(cid:17)(cid:76)(cid:89)
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`Petitioner Microsoft Coporation - Ex. 1032, (cid:83)(cid:17)(cid:89)
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`Petitioner Microsoft Coporation - Ex. 1032, (cid:83)(cid:17)(cid:89)(cid:76)
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`Mass Broadband Market Emerges" in this chapter).
`and advertisers large and small have made the
`Internet a significant part of their advertising
`strategies. According to advertising and media
`experts at Universal McCanrt. 10% to 18% of
`consumer media viewing time is spent on the
`internet. Microsoft estimates that the current online
`advertising market (2006} is about 5 15 billion. and
`may grow to $150 billion by 2015. Major advertisers
`are expanding their online advertising budgets
`exponentially. General Electric. for example.
`increased its online advertising budget by 97% from
`2004 to 2005.
`
`While online, consumers are often hunting for
`deals and ready to buy. Boring. cluttered banner ads
`are the least of the tools in the online advertiser‘s
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`see how online ads are performing in real time.
`Many web sites have agreed to standardize the
`reporting of ad-viewership numbers. thereby calming
`many ad agency fears about the medium. The result
`is an upswing in online ads placed by major
`advertisers.
`The search engines provide targeted search result
`placement, also known as “paid search results in the
`form of links to a client’s site. The practice was
`pioneered by Overture Services. Inc. which is now
`owned by Yahoot. Yahool‘s competitor Google has
`been selling the AdWords paid search results service
`since 2000. These ads appear near the "natural"
`search results whenever a search is performed. What
`is innovative about these ads is that they are
`generated by the key words a user enters in his or her
`search. Advertisers pay search engines to have their
`arsenal today. To take advantage of the growing base
`links appear whenever certain words or collections of
`of online consumers. as well as the increases in
`words are typed in. For example. an paid search
`connection and computing Speeds. advertisers have
`result for a light fixture cornpany might appear
`developed rich media techniques. such as
`whenever "fighting" or “lamp” is typed in as part of a
`Menomedia Flash-based and interactive ads. targeted
`search. Advertisers pay for each user click on their
`ads and web radio advertising. to name a few.
`ads. Google and other search engine sites generally
`Only a few years ago. during the Internet bubble
`sell keyword placements to the highest bidder.
`of 1998-2000. major Internet sites such as Yahoo!
`Another popular online advertising method is
`were having trouble selling ads. Today. Yahoo!.
`Google. Microsoft and AOL are all booking online
`“pay—per-click" advertising. For example. Google's
`ads months in advance. Advertising prices have risen
`extremely successful AdSense program enables an
`advertiser to upload a text- or image~based ad into
`accordingly. In late 2005. Microsoft's MSN.com
`Google’s system. Google automatically places the ad
`- was-chargingup to $1 million for a prime location.
`on third-party sites that are targeted to the advertiser.
`24rhiiun'adspot on its home page. in 2001. the same
`Every time that a consumer clicks on the ad. he or
`ad-icostibettveen'$25.000 and $50,000. So popular
`she is taken to the advertiser's own web site, which
`arcttbese top spots. that Internet sites are holding
`results in a small payuper-click fee being charged to
`_' auctionswhere advertisers bidding the highest gain
`the advertiser. This fee is shared between Google
`_ the-fnosttcovetedes'pots.
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`ilnanaeffortatoatttact even more attention and to
`and the owner of the third-party site where the click
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`- more?iiilly'erigage consumers on their web sites.
`originated.
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`However. pay—per-click is not without its
`_Severa1:-firrn5:have;creatod online “playgrounds,”
`vies-for: download. interactive
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`problems. According to the Search Engine
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`band-sweepstakes. Greater
`Marketing Professional Organization, 40% of online
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`y:zi:_onsudlers=means that
`advertisers claim that they have been subject to click
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`i sophisticated video, animation
`fraud Technologically savvy scammers are setting
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`up fraudulent web sites and then contracting with
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`semi! engines such as Google and Yahoo! to display
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`online misplaced by legitimate businesses.-
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`Automated mfiware can generate a dizzying umber
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`to-centice.-__- ..
`of clicks that appear to befrom users around the
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`Worldt-lfilllilheificammem getting revenue from the
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`Petitioner Microsoft Corporation - Ex. 1032, p.12
`1032, p.12
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`Wrath.leL. _
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`search engine marketing specialist. in u t'llt‘k i'rauti
`research project.
`in addition to pay-per click online advertising. a
`new method is etttt‘rglrtg called "pauper-cull." 111
`late 2085. Google started to display green phone
`icons next to selected search results. When a
`consumer clicks the phone icon. a prompt appears
`where the consumer enters his or her telephone
`number. The company that purchased the phone link
`then connects with the consumer. typically via
`Internet—based telephony (VOID). Pay-per~call is
`generally more expensive than pay-per—ciick
`advertising: however. proponents of the new
`technology believe it may provide more effective
`leads that can more easily be converted into sales.
`For example. an advertiser can pay around $1.25 to a
`search engine for each prospective click on a link
`(with perhaps a 5% rate of users who actually end up
`buying something from the advertiser). but pay $4.15
`for each call generated from an ad (with perhaps one-
`third of the calls resulted in sales). California-based
`advertising and marketing firm ingenio
`twww.ingenio.comi has been working on the concept
`since 1999 and now offers its patented technology
`throagh the Pay Per Call Advertising Platform and
`Network.
`Soaring revenues are making online advertising
`one of the fastest growing business sectors in the
`world today. Yahool. for example. saw total
`revenues skyrocket in 2005. to $5.2 billion from
`2004‘s $3.5 billion. while profits soared to $1.89
`billion from $839 million. Coogle had similar
`sizzling results: 2005 total revenues nearly doubled
`to $6.1 billion while profits soared more than three
`fold to $1.4 billion. Fees charged for ad placement
`and paid search results account for a major part of the
`jump in income.
`In DECembar 2005. AOL and Google announced
`an extensive global online advertising partnership.
`As part of the deal. Google invested $1 billion for a
`596 stake in AOL. For several years. Google had
`provide search technology to AOL. This will
`continua: New. Google will also provide search-
`tecimologr to AOL. At the same
`ore AOL content will be accessible to Googie
`' Willem-and other services. such as instant
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`becomeuseabie between Google and
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`'L tumors; Microsoit is getting into the duties
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`well “rill; two. new services that are
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`Live is for businesses. and oi'lt-ts domain name. Web
`site with 3t] Mil of storage spare. live e mail
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`accounts and additional business .‘tltllllt'iilltlllk.
`services display banner ads matched to users' weh
`activities and interesls.
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`6}
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`Google Ventures Beyond ()nline Advertising
`(Jungle is an undisputed leader in the placement
`of ()llllllt‘. advertising. The search engine site has a
`client base. of over 400.000 ctnnparries. large and
`small. that pay (jungle to place their nnline ads on
`any of thousands of web sites in the (iongle AdSense
`program. Powerful algoritlnus enable these ads to
`appear on the most relevant web pages. based on
`content. For example. a web page containing a travel
`story about Jamaica tnay receiw ads about Caribbean
`hotels and airlines. placad by (Jungle.
`Now. it has moved into the placement of radio
`and print ads. and may eventually deal in the
`placement of TV ads as well. Google recently
`acouired dMarc Broadcasting. inc. of Newport
`Beach. California. dMarit has an onllne System that
`enables advertisers to by radio airtime on any of 500
`participating radio stations throughout the US.
`dMarc's automated online system lets advertisers
`select radio stations and airtime. and then upload
`digitized radio ads directly to the broadcaster.
`In a beta test during the fall of 2005. Google
`purchased a handful of ad pages in magazines such as
`PC Magazine and Budget Living. and then sold small
`pieces of those pages to a few of its thousands of
`advertising customers. Google may be able to
`capitalize on its powerful. proprietary software to
`match the advertisers with the most relevant space in
`niche magazines.
`in the test. consumers viewing the
`print ads were encouraged to respond to specific web
`pages and toil-free numbers. giving Googie and its
`clients a way to track advertising effectiveness.
`Meanwhile. watch for Googie to offer localized
`advertising services that will compete effectively
`with yellow pages and online city directories.
`
`7}
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`Last Mile Challenges Tumble; Mass
`Broadband Markets Emerge
`A mass-market “tipping point" of consumer
`broadband access to the Internet occurred during the
`first quarter of 2004. when more than 26 million U.S.
`homes had broadband connections of one type or
`another. These are the affluent homes that
`advertisers and providers of entertainment and
`bifonnation'are-anxious to teach. Thus. a large
`proportion of consumers accessing the Internet will
`be-ustng- broadband methods rather than dial-up. The
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`Petitioner Microsoft Corporation - Ex. 1032, p.13
`Corporation - Ex. 1032, p. 13
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`Petitioner Microsoft Corporation - Ex. 1032, Spine
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