[House Hearing, 110 Congress]
[From the U.S. Government Publishing Office]
SUBCOMMITTEE HEARING ON THE
IMPACT OF ONLINE ADVERTISING
ON SMALL FIRMS
=======================================================================
SUBCOMMITTEE ON REGULATIONS, HEALTH CARE AND TRADE
COMMITTEE ON SMALL BUSINESS
UNITED STATES HOUSE OF REPRESENTATIVES
ONE HUNDRED TENTH CONGRESS
SECOND SESSION
__________
JUNE 25, 2008
__________
Serial Number 110-102
__________
Printed for the use of the Committee on Small Business
Available via the World Wide Web: http://www.access.gpo.gov/congress/
house
----------
U.S. GOVERNMENT PRINTING OFFICE
42-688 PDF WASHINGTON : 2008
For sale by the Superintendent of Documents, U.S. Government Printing
Office Internet: bookstore.gpo.gov Phone: toll free (866) 512-1800;
DC area (202) 512-1800 Fax: (202) 512-2104 Mail: Stop IDCC,
Washington, DC 20402-0001
HOUSE COMMITTEE ON SMALL BUSINESS
NYDIA M. VELAZQUEZ, New York, Chairwoman
HEATH SHULER, North Carolina STEVE CHABOT, Ohio, Ranking Member
CHARLIE GONZALEZ, Texas ROSCOE BARTLETT, Maryland
RICK LARSEN, Washington SAM GRAVES, Missouri
RAUL GRIJALVA, Arizona TODD AKIN, Missouri
MICHAEL MICHAUD, Maine BILL SHUSTER, Pennsylvania
MELISSA BEAN, Illinois MARILYN MUSGRAVE, Colorado
HENRY CUELLAR, Texas STEVE KING, Iowa
DAN LIPINSKI, Illinois JEFF FORTENBERRY, Nebraska
GWEN MOORE, Wisconsin LYNN WESTMORELAND, Georgia
JASON ALTMIRE, Pennsylvania LOUIE GOHMERT, Texas
BRUCE BRALEY, Iowa DAVID DAVIS, Tennessee
YVETTE CLARKE, New York MARY FALLIN, Oklahoma
BRAD ELLSWORTH, Indiana VERN BUCHANAN, Florida
HANK JOHNSON, Georgia
JOE SESTAK, Pennsylvania
BRIAN HIGGINS, New York
MAZIE HIRONO, Hawaii
Michael Day, Majority Staff Director
Adam Minehardt, Deputy Staff Director
Tim Slattery, Chief Counsel
Kevin Fitzpatrick, Minority Staff Director
______
Subcommittee on Regulations, Health Care and Trade
CHARLES GONZALEZ, Texas, Chairman
RICK LARSEN, Washington LYNN WESTMORELAND, Georgia,
DAN LIPINSKI, Illinois Ranking
MELISSA BEAN, Illinois BILL SHUSTER, Pennsylvania
GWEN MOORE, Wisconsin STEVE KING, Iowa
JASON ALTMIRE, Pennsylvania MARILYN MUSGRAVE, Colorado
JOE SESTAK, Pennsylvania MARY FALLIN, Oklahoma
VERN BUCHANAN, Florida
(ii)
C O N T E N T S
----------
OPENING STATEMENTS
Page
Gonzalez, Hon. Charles........................................... 1
Westmoreland, Hon. Lynn.......................................... 3
WITNESSES
PANEL I:
Carter, Mr. Tim, Founder, Askthebuilder.com, Cincinnati, OH...... 5
Sanar, Mr. Paul, Founder & CEO, SkyFacet.com, New York, NY....... 7
Snell, Mr. Rob, Co-owner, GunDogSupply.com, Starkville, MS....... 8
Rothenberg, Mr. Randall, President & CEO, Interactive Advertising
Bureau, New York, NY........................................... 10
Lent, Mr. Richard, Founder and CEO, AgencyNet, New York, NY...... 12
APPENDIX
Prepared Statements:
Gonzalez, Hon. Charles........................................... 40
Westmoreland, Hon. Lynn.......................................... 42
Carter, Mr. Tim, Founder, Askthebuilder.com, Cincinnati, OH...... 43
Sanar, Mr. Paul, Founder & CEO, SkyFacet.com, New York, NY....... 49
Snell, Mr. Rob, Co-owner, GunDogSupply.com, Starkville, MS....... 50
Rothenberg, Mr. Randall, President & CEO, Interactive Advertising
Bureau, New York, NY........................................... 58
Lent, Mr. Richard, Founder and CEO, AgencyNet, New York, NY...... 66
(iii)
SUBCOMMITTEE HEARING ON THE IMPACT
OF ONLINE ADVERTISING ON SMALL FIRMS
----------
Wednesday, June 25, 2008
U.S. House of Representatives,
Committee on Small Business,
Washington, DC.
The Subcommittee met, pursuant to call, at 10:03 a.m., in
Room 1539, Longworth House Office Building, Hon. Charlie
Gonzalez [chairman of the Subcommittee] Presiding.
Present: Representatives Gonzalez, Lipinski, Altmire,
Westmoreland and Chabot.
OPENING STATEMENT OF CHAIRMAN GONZALEZ
Chairman Gonzalez. I call this hearing to order.
I would preface my opening statement by thanking certain
individuals that have been instrumental in our ability to
actually look into this particular subject matter, which I
think looms large for every businessman and woman in the United
States, big or small.
First, of course, to our Chairwoman, Nydia Velazquez, who
has allowed the committee and every member, majority and
minority party members, to not only express an interest in what
we believe are timely issues but to allow us to address them in
a hearing setting, which means everything that is being said
gets recorded. And this basically will allow us a resource,
which we can then move on to the issues that confront Congress
and what we are going to do regarding, again, certain
challenges that are being faced in today's modern business
world.
Secondly, committee staff, can't say enough about them. The
amount of work that they put in, in just the preparation of the
memorandum, just quality work. Again, this is information that
we make reference to with our clients when individuals ask us
to describe the issue in general terms. It is because the hard
work of the members of the committee staff that we are able to
put something together.
My own staff, special thanks because I cause them so many
headaches on this particular subject.
And this is only the first step, and I am hoping that we
will develop something more comprehensive and that we take the
ideas and the recommendations of those in the real world before
we fashion any kind of regulatory relief.
Dawn Rivers Baker, who actually has an online publication,
"MicroEnterprise Journal," I want to thank Dawn for alerting me
to what really is perplexing to many businesses that are
definitely not big, may not even be small but truly are micro
businesses. And they even have different challenges from what
we refer to as small businesses.
And last but not least, to the author of the book "The
Search," John Battelle, for his ideas in the conversation we
had the other day, but more for the fine work--the book is over
2 years old, but I still recommend it. I think it is kind of
basic text if you want to try to understand where all this is
going as far as the Internet.
This morning the subcommittee will examine the increasing
value of online marketing to the small business community. The
speed and interactivity of the Internet have helped millions of
entrepreneurs identify and attract new customers. But,
unfortunately, not all small firms have been able to capitalize
on its power. Even today, many small businesses face
significant roadblocks to optimizing their online presence.
In today's hearing, the subcommittee will hear from
entrepreneurs who have launched successful Web marketing
campaigns as well as from content providers who support display
ads and use the pay-per-click platform. We will also listen to
testimony from small business owners who have both benefited
from and have been challenged by search engine technology.
These witnesses will testify not only to the advantages of
online advertising but also to its limitations and its demands.
More and more consumers are using the Internet to shop and
research products prior to purchase. In fact, the National
Retail Federation reports that over 92 percent of adults
conduct Web inquiries before buying products in stores. And
studies show that these shoppers are doing more than just their
homework. They are buying. In 2007, online retail sales grew 16
percent to reach $116 billion. Forecasts by JupiterResearch
show this trend to be on the rise with online sales expected to
reach $171 million by 2011.
In keeping with Internet sales, the online advertising
industry is rapidly growing as well. Indeed, Web ad revenues
totaled $21 billion last year. The entire industry expanded by
45 percent annually between 2003 and 2006, and is expected to
exceed $50 billion in 2011. By 2007, profits from online
advertising had already eclipsed those for radio advertising.
Needless to say, Web ads present significant revenue
opportunities that small businesses cannot afford to ignore.
What distinguishes online marketing from more traditional means
is its abilities to micro target potential customers based on
browsing histories. According to WebVisible-Nielsen, an
estimated 74 percent of consumers use services like Yahoo! or
Google when shopping online. For small businesses hoping to
identify and appeal to new clients, these systems offer a
refined approach to tailoring ads and generating revenue. As
people increasingly look to search engines as a jumping-off
point for commerce, small firms must learn to embrace and
effectively utilize this particular method of advertising.
But even with this potential, many entrepreneurs are unable
to fully take advantage of these tools. In order for them to
reap the rewards of search engine marketing, small businesses
must first and foremost design their home pages with Web
browsers and search engines in mind. While many entrepreneurs
are already doing so, millions more don't have the resources to
build such search-engine-friendly Web sites.
In examining the state of online advertising, it is
important that we keep an eye towards the industry's future.
This way, we can assure that small businesses have the kind of
diversification that will allow them to get the most out of
their often limited budgets. We must keep in mind that unlike
their corporate counterparts, small businesses don't always
have the funds to pay for ad spots on prime time television.
Rather, they need to be more strategic in their approach and
seek out ways to make their dollars stretch further. Online
marketing is a great way for them to do this. And it is crucial
that the industry remain a viable, accessible, and affordable
option.
For small businesses, technology has been a remarkable
field leveler. It has allowed many firms to compete on equal
level basis with companies 10 times their size, but as with any
technology, entrepreneurs must learn to evolve alongside the
Web and industry, because in a world that increasingly revolves
around e-commerce, small businesses that cannot compete on the
Internet, will not compete anywhere. And this is a disadvantage
our entrepreneurs cannot afford.
I look forward to today's testimony, and I thank all the
witnesses for participating here today.
I now recognize Ranking Member Westmoreland for his opening
statement.
OPENING STATEMENT OF MR. WESTMORELAND
Mr. Westmoreland. Thank you, Mr. Chairman.
And thank you for holding the hearing today.
And I would also like to thank all the witnesses for coming
and participating.
Mr. Chairman, I think it is safe to say that the Internet
has changed the way we all live our lives.
Everything from how we eat to how we dress to how we
receive our medical care has evolved since the arrival of the
Internet age.
Of particular significance is how the nature of business
has been forever changed by this technology. The speed at which
we gather large amounts of information has made us more
informed customers, but even more importantly, it has changed
the relationship between retailers and consumers.
This change in the commercial landscape is providing a more
advantageous environment for small businesses to advertise
their services to potential customers. The basic techniques of
Internet advertising mirror those of the more conventional
advertising. However, conventional advertising, such as
listings in the Yellow Pages, is not cost-effective due to the
low response rate that those ads generate. On the opposite end
of the spectrum are radio, television and cable ads, which are
very effective. But as all of us know that have run a campaign,
they are also very expensive.
Internet advertising provides benefits to small businesses
by helping them to effectively target customers on a more cost-
effective basis than conventional means. This means that a
small business that was once limited by geography is now able
to advertise their products to a customer thousands of miles
away for the same cost as advertising their products to his
next door neighbor. Through the use of media forms of Internet
advertising like rich media, lead generation and keyword
searches, small businesses are in a position to compete
globally.
As a former small business owner, I understand the many
barriers that prohibit businesses from entering the
marketplace. While I am looking forward to hearing about how
the utilization of these tools have helped small businesses
succeed, I am also interested to hear what we in Congress
should be or should not be doing to help more small firms
achieve success.
Again, I welcome the distinguished witnesses, and I thank
you again, Mr. Chairman, for having the hearing.
And I especially look forward to hearing from the builder
over here because I spent all my adult life in the building
business.
But thank you again.
Chairman Gonzalez. Thank you, Mr. Westmoreland. Thank you
for your participation and a special thanks to your staff for
working so well with the majority staff.
I am going to instruct the witnesses of how we operate. You
have 5 minutes basically for your testimony. Now I realize you
have submitted written statements. Those are made part of the
record. I know 5 minutes goes by really quickly, but please
understand that you probably will be able to expand on your
remarks when we go into the question and answer. Depending on
how many members filter out today, I may be very fortunate and
Mr. Westmoreland may be very fortunate that we will have you to
ourselves because we have plenty of things to ask you about.
I first would ask you to please observe the timer. In
essence, you have 5 minutes. When yellow comes on, you have 1
minute; and of course red, time is up. And then I will remind
you, I think Mr. Chabot was going to be introducing the first
witness, but he is not present.
Okay. They tell me that he is on his way so we are going to
go ahead and kind of reverse the order and pull that on you
real quick so that Mr. Chabot will have the privilege of
introducing what I believe is maybe a constituent.
I know you are from the Cincinnati area, so I am just
assuming that you are one of Steve's constituents.
So I am going to start at the other end with Mr. Richard
Lent. And Mr. Richard Lent is founder and CEO of AgencyNet in
New York. AgencyNet is a full service award-winning interactive
shop that specializes on all aspects of digital marketing. The
creative shop has 47 employees and an annual revenue of $6
million. Mr. Lent is chairman of the board of the Society of
Digital Agencies.
Mr. Lent, if I change one more thing on you in the space of
30 seconds--that is the way we operate. But Mr. Chabot is here.
And I know that Mr. Chabot is the ranking member of the entire
committee, but he has taken the time to be here to introduce
the first witness. So I am going to go ahead and defer to Mr.
Chabot because I believe that he probably--not the fact that he
is just the ranking member of the entire committee but, again,
just because I know that he has other scheduling conflicts.
And at this time, the Chair will recognize Mr. Chabot for
the purpose of introducing Mr. Carter.
Mr. Chabot. I thank the gentleman from Texas for his kind
remarks.
And he is a great American, by the way. I really like Mr.
Gonzalez.
But in any event, I do appreciate the opportunity to
introduce--Mr. Westmoreland is a great American as well.
Mr. Westmoreland. I was wondering.
Mr. Chabot. But I wanted to introduce another great
American, and this gentleman happens to be from my district,
from Cincinnati. And I am very, very pleased to be able to
welcome him here. And his name is Mr. Tim Carter.
And when Tim left the University of Cincinnati with his
geology degree in hand, he declined a scholarship to graduate
school, and choosing instead to indulge his entrepreneurial
spirit and go into the home remodeling business. An eventual
master carpenter and plumber and roof cutter, his array of
knowledge taught him that there were more cost-efficient ways
to handle jobs.
At the urging of his wife, Tim began writing a syndicated
newspaper column called "Ask the Builder" that found a home
online all the way back in 1995. AsktheBuilder.com, just as it
sounds, that is the way it is spelled, and that is what it is,
AsktheBuilder.com, was early into the online advertising fray,
and it is an excellent example of how an entrepreneur with a
good idea can utilize the Internet and be successful and
prosper and help people all over the country in a particular
area that they have substantial knowledge in.
I am sure Tim will be able to provide the subcommittee with
an interesting perspective on the evolution and direction of
Internet advertising. It has been very successful for him and
those who have utilized his services, and I think will be very
revealing to many of us this morning.
I want to thank the chairman and the ranking member, and I
continue to think they are both great Americans.
Chairman Gonzalez. Thank you very much, Mr. Chabot.
We are going to then resume in the order in which the
witnesses are set up. So we will start with Mr. Carter.
STATEMENT OF MR. TIM CARTER, FOUNDER, ASKTHEBUILDER.COM,
CINCINNATI, OHIO
Mr. Carter. Chairman Gonzalez, Ranking Member Westmoreland
and Ranking Member Chabot and other members of the committee, I
sincerely thank you for granting me this opportunity to address
you and, perhaps more importantly, answer any and all questions
you might have concerning the impact of online advertising on
small businesses and here in America.
I have been a small business person my entire life. Within
months of graduating from college in 1974, I was operating my
one-person remodeling and building company. When I started, I
had so little capital, I had to borrow some of my dad's tools
and make others out of scrap lumber. But diligence,
determination, and discipline have allowed me, with the help of
my wife, Kathy, to build that small business into a sizable
Internet publishing company that has discovered quite by
accident what appears to be the true sweet spot of online
advertising.
In the 13 years I have been operating AsktheBuilder.com, I
have accumulated strong evidence to prove that online
advertising, when presented in the correct format and in the
right context, is a powerful tool that solves the millions of
problems consumers have each day. Tens of thousands of the
small businesses like AsktheBuilder.com are making a positive
impact economically from the ability to reach customers with
online ads. Their combined success helps contribute to our
gross national product. Small businesses that have an online
presence are an important and growing part of our economy.
The transition from a hands-on remodeler to Internet
publisher has been fascinating. When I was still working in the
field as a builder, I was solving problems for my customers.
They had leaking roofs, peeling paint, sticking doors and
countless other issues that needed attention. Because I was
just a one-person company, it was only possible for me to
complete perhaps 20 or 30 jobs a year.
But the Internet has changed all of this. Now I can share
my nearly 35 years of accumulated home improvement knowledge
via my articles and videos with millions of consumers at one
time. Each day, 40,000 people on average come to
AsktheBuilder.com for this help, and they get it for free.
I am able to provide this service because of the revenue I
receive each day from online ads. Not only do the visitors to
my Web site get my advice, but through the ads that are
displayed within my content, my visitors connect with companies
that provide them with the exact materials and services to
repair, remodel, and build their homes. Not only do I sell my
own ads, but I also serve ads that are delivered to my visitors
by Google, Kontera, Taboola, and Amazon.com. It is fast and
easy to create the small amounts of code to insert on my Web
site so these ads appear. Any small business publisher can do
what I have done. And hundreds of thousands of them are
displaying these ads, even now as I address you.
I am fortunate to be a charter member of a group of small
business Internet entrepreneurs. Many in this group are
thriving businesses that in one way or another directly benefit
from online advertising. Ravenwood Marketing, based in Boulder,
Colorado, is one. This small business specializes in
performance-based search engine marketing and was ranked the
number one fastest-growing Denver-area private company by the
Denver Business Journal in 2006. Ravenwood is a three-person
small business that purchases online ads in search engines and
gets paid when it delivers high-quality leads and actual sales
to other small and large businesses.
The dynamic growth of this small business would not have
been possible were it not for online ads. Prior to the
Internet, it took days, weeks, or months to reach the same
audience that can now be reached in seconds with a click of a
button. This blazing productivity is indeed an advertising
paradigm shift of epic proportions.
When I announced to my AsktheBuilder.com newsletter
subscribers that I would be testifying today, I heard from many
who were small business owners. Ms. Rachael Kahne is a
community development coordinator in Nashville, Tennessee. Her
pithy comment did a great job of summarizing the power of
online advertising. Rachael said, "I can certainly attest to
the fact that online marketing is basically the only way to go.
I work for a small business whose bread and butter comes from
online advertising. There is simply no other better more viral
way to get in touch with a targeted audience. Online marketing
allows a business to track and target what is working and what
isn't. It is certainly one of the most cost-effective solutions
out there today."
In closing, I think it is important to realize that I am
not unique. If we surf the Internet right now, I could readily
show you thousands of small businesses that are satisfying
their visitors with great content that solves problems.
Allowing this open sharing of information should be a high
priority. This allows someone like me to better educate people
who make informed buying decisions. When they do this, the end
result is higher productivity and more commerce. These are just
two of the things that have helped make America a great Nation
to live, work, and raise a family.
Thank you for allowing me to share my success story. It
would be my pleasure to answer any questions you may have.
[The prepared statement of Mr. Carter may be found in the
Appendix on page 43.]
Chairman Gonzalez. Thank you very much, Mr. Carter.
Our next witness is Paul Sanar. Mr. Sanar is founder and
CEO of SkyFacet.com, headquartered in New York. Mr. Sanar
started his online company when he was only 20 years old.
SkyFacet.com was founded in 2004 which means he is still very
young and he is currently expecting sales of $55 million in
2008. The firm distinguishes itself by donating 5 percent of
the company's revenue to charity.
Mr. Sanar.
STATEMENT OF MR. PAUL SANAR, FOUNDER AND CEO, SKYFACET.COM, NEW
YORK, NEW YORK
Mr. Sanar. Chairman Gonzalez, everybody else on the
committee, thank you for having me here today.
Chairman Gonzalez. You may have to get closer to it.
Mr. Sanar. My name is Paul Sanar. I started SkyFacet.com
when I was 18 years of age in 2004. I am currently 23 years
old. We have been featured in numerous wedding magazines,
bridal shows, and we do a lot of Internet advertising. I
started SkyFacet at 18 when I had a factory--I had a family
factory that was about to be bankrupt because of overseas
pressures of--I am sorry. I am a little bit nervous.
Okay. I first started advertising on Google in 2004, and I
have learned the importance of profitable advertising using
Google's AdWord system. What I admire most about Google and of
Internet advertising is that it really gives all companies a
level playing field. When I first started SkyFacet.com.com, I
had $5 in my pocket, and today we are a $55 million company.
By now, most businesses have heard of Google and Internet
advertising but most small firms don't understand the
difference between profitable advertising and nonprofitable
advertising. If this concept is understood by the advertiser
upon creation of their advertising program, I think they are
going to be a very successful company. But most small companies
don't understand that. Most of them will try to make a
marketing plan based solely on Google, which can end up costing
a company a lot of money if Google does not seem to work out
for it. I myself had an experience with Google when I had hired
somebody to do national listings on Google, which is free
advertisement, not paying for a click. And I had paid $35,000
for that fee, for that advertising for 1 year. And it got my
site banned by Google national listings. Forbes did an article
on us. And I helped--it really helped us when people found out
that we got pretty much banned by Google. And I turned the
$35,000 loss into a $500,000 profit by letting people know that
we were out there and that we were actually a Forbes major
company or featured in Forbes, should I say.
In conclusion, I would like to thank everybody for their
time and the opportunity to be here. Just remember SkyFacet.com
for all your jewelry needs.
[The prepared statement of Mr. Sanar may be found in the
Appendix on page 49.]
Chairman Gonzalez. Thank you, Mr. Sanar.
I don't think there is a father here that doesn't wish
their son had the success at such an early age as you have
had--if you are still co-signing the notes, the student loans--
for a lot of reasons.
Anyway, our next witness is Rob Snell.
Mr. Snell is co-owner of GunDogSupply.com, a company based
in Starkville, Mississippi. In addition, Mr. Snell is managing
partner of Snell Brothers, a consultancy that helps small
businesses succeed online and is the author of the book,
"Starting a Yahoo! Business For Dummies." As a consultant, Mr.
Snell has designed, developed, and marketed hundreds of Yahoo!
stores that have generated millions of dollars in online sales.
Mr. Snell.
STATEMENT OF MR. ROB SNELL, CO-OWNER, GUNDOGSUPPLY.COM,
STARKVILLE, MISSISSIPPI
Mr. Snell. Chairman Gonzalez, Ranking Member Westmoreland,
members of the subcommittee, good morning. Thank you for asking
me to appear on this panel.
My name is Rob Snell. I am from Starkville, Mississippi,
and I am here to today to talk about how search engine
marketing has transformed my family's business, my clients'
businesses, and to show how other small businesses can take
advantage of this effective and affordable way to drive
visitors to their Web sites. These days I wear quite a few
hats. I am co-owner of Gun Dog Supply, our family retail
business that sells supplies for hunting dogs. I am also the
managing partner of Snell Brothers, and we help some of the
45,000 Yahoo! stores with their online marketing.
And like you said, a couple of years ago, I wrote my
dummies book on Yahoo! Store, "Starting a Yahoo! Business for
Dummies," based upon experiences we have had in the past 10 or
11 years selling online. I have included information from a few
of the marketing chapters at the end of my written testimony
for your review. Today I am going to share some real numbers
with you so you can see the impact of search marketing on a
real small business in dollars and cents.
Every year our Yahoo! stores get millions of visitors from
the search engines. Most of that traffic is free. A lot of the
traffic is from paid search ads. Tens of thousands of those
visitors convert into paying customers. This year we will sell
over $10 million worth of product through several different
Yahoo! stores. The Internet levels the playing field for small
business folks like us.
As a consultant and a speaker, my job is to teach the
little guys how to compete with the big guys. We use the
Internet to leverage the strengths of the small business
retailers. We have unparalleled product knowledge, enthusiasm
for what we sell and what we do and we give outstanding
customer service and support. Bigger retailers cannot compete
when we go head to head, product to product. They sell too many
things.
A little background on the company. My parents, Warner and
Anne Snell, started Gun Dog Supply back in 1972 on their
kitchen table in Jackson, Mississippi. They ran tiny display
ads in hunting dog magazines and went full time in the business
in the late 1970s. Slowly the business changed to a retail
store with less emphasis on mail-order sales, but business was
good.
In 1996, we had a problem: PetSmart opened across the
street; 50 percent of our competitors went out of business
overnight, and our sales dropped, too. We dusted off our
mailing list and put together a new catalog. Unfortunately, we
lost money every time we sent a catalog in the mail.
In 1997, I built a 5-page Web site. I wrote a killer Yahoo!
directory listing, and we started getting tons of visitors. We
had to figure out how to sell online and fast. Fortunately, we
found an online store builder which is now Yahoo! Store.
For my family, selling on the Internet has literally
changed our world. We went from a retail company doing $400,000
a year and struggling to make payroll to becoming a
multimillion dollar retailer in a few short years. How did we
do that? Ninety-five percent of our marketing is online
advertising, and 95 percent of that is search marketing.
Search marketing is the one-two punch of getting free
traffic and then buying paid ads. To get more free traffic, you
write good content and perform search engine optimization or
SCO on your Web site to rank better and get more clicks. For
even more traffic, you can buy paid search ads to ensure you
control your advertising message.
The secret to our initial success with the search engines
back in 1997 was using all the content from our print catalog
in our online catalog. Those 50 pages of text covering hundreds
of products would help us sell everything from dog training
collars to retriever training dummies. Originally, half of our
traffic came from banners, and the other half was free traffic
from search engines.
But I like search traffic better. With search engine
visitors, I can tell where the traffic came from and what
keywords folks are searching for, especially the buyers. This
information was gold. For example, someone would buy a leather
dog collar, and the source of that order would show the sale
coming on a search on Yahoo! for leather dog collars. Another
order would come in with a search for retriever training
videos, and they would buy some training dummies or a video on
training retrievers. I caught on pretty quick that converting
keywords were important. People buy the things they search for.
So I started to obsess over our keywords to improve our
free search engine rankings. For example, say I wanted to rank
better in the free search results for orange dog collars.
First, I would choose a page on my store that is about orange
dog collars. Then I would put the words "orange dog collars" in
the title of the page and in the text on the page. Finally, I
link to that page from other pages with the words "orange dog
collars" in the linked text.
If research is good, paid search is even better. With an
online store, a small retailer can instantly have access to
millions of potential customers with as little as $5 deposited
in a Google AdWords account. Retailers can run national ad
campaigns targeted only to folks searching for what they sell.
Imagine doing that with TV spots. With paid search, you can buy
ads but only for keywords relevant to your product mix. And
retailers with physical stores can target their ads to only run
in specific geographic markets that they serve.
Search marketing is extremely efficient because you are
only marketing to those interested in your products. In my
experience, no other marketing method can touch search engine
marketing for targeting the right prospects in the right places
at the right time, which is when folks are ready to buy.
Thank you for the opportunity to appear before this
committee. I look forward to answering any questions you may
have.
[The prepared statement of Mr. Snell may be found in the
Appendix on page 50.]
Chairman Gonzalez. Thank you very much, Mr. Snell.
Our next witness is Randall Rothenberg. Mr. Rothenberg is
president and CEO of Interactive Advertising Bureau in New
York. Prior to leading the IAB, Mr. Rothenberg worked as
director for intellectual capital for Booz Allen Hamilton. The
Interactive Advertising Bureau is the trade association for
interactive marketing in the United States.
Mr. Rothenberg.
STATEMENT OF MR. RANDALL ROTHENBERG, PRESIDENT AND CEO,
INTERACTIVE ADVERTISING BUREAU, NEW YORK, NEW YORK
Mr. Rothenberg. Thank you, Chairman Gonzalez.
Thank you, Ranking Member Westmoreland.
And thank you to the members of the subcommittee for
inviting me to testify on the impact of online advertising on
small firms. I am very honored to be here. I am the president
and chief executive officer of the Interactive Advertising
Bureau, the trade association for ad-supported interactive
media in the U.S. We have 350 members, companies that account
for 86 percent of the interactive advertising sold in the U.S.
Our members include the great names of the online and offline
media world, Google, Yahoo!, AOL, MSN, New York Times, CBS, and
Walt Disney among them. But 61 percent of our members are small
businesses earning between nothing and $8 million a year in
advertising revenue.
Last year, together, all these businesses sold $21 billion
in interactive ads. To put that in perspective, as the chairman
said, that means that interactive as an advertising medium
rivals not only radio but outdoor and magazines. Evidence
suggests that much of this advertising comes from small
businesses.
Interactive advertising provides consumers with significant
benefits in the form of cost-free access to content and
services.
Among the things interactive advertising underwrites are
quality online content, news, business, entertainment, the maps
that help you get from place to place, education and
information-gathering tools, competitive pricing and product
comparison tools, online safety tools, such as anti-spam and
anti-virus protection, social networking and professional
networking environments and, very obviously, communications and
other online services, including, for example, e-mail, chat,
telephone services, resume services, job banks, enhanced
classified services, video, photo storage, and sharing.
And then there is just pure communication through blogs.
The Pew Center estimated that, in July 2006, some 12 million
American adults, 8 percent of our population, were writing
blogs. Some untold thousands of these are supported by
advertising. The consumer benefits have also created benefits
for business, with a disproportionately positive impact on
small business. Thousands of businesses of all size have
achieved more efficient marketing of goods and services through
targeted online advertising.
According to Pew, 32 million American adults have used
online classified ads for selling or buying. Online advertising
has created regional markets out of local markets, and national
markets out of regional markets. Items once sold in local
garage sales and pawn shops are now available nationally and
internationally via advertised interactive auctions, in which
some 40 million Americans participate annually. eBay says more
than 768,000 small businesses across the U.S. use its online
marketplace as their primary or secondary marketing channel.
More than 1.3 million people supplement their income by selling
materials on eBay.Many of the small sites exist in large part
because of online advertising networks consisting of hundreds,
thousands, even tens of thousands of independently owned sites.
These networks are the Internet version of the broadcast radio
and television networks with which we grew up. They deliver
content and ads across a network of affiliates. No one knows
how many small publishers are supported by these networks. But
let me give you a sample. The 24/7 Real Media network sells and
places ads for 1,000 Web sites. The Blue Lithium network
reaches 119 million unique U.S. users, also through 1,000
publisher sites. The AdBright, auction-based ad marketplace
represents 19,000 Web publishers.
How diverse are they? We don't have a census. I would love
to do one. But let me give you a sample that came in when I
asked my staff for some of their favorites:
Baristanet.com is a community site started by three local
women from the area of Northern New Jersey where I grew up. Its
advertisers include a local hospital, Montclaire Family
Dentistry and Dial Pest Control of Roseland.
Then there is womenslacrosse.com. It is the central meeting
place for women who participate in the oldest American sport.
It is a family business run by Cathy Samaras of Annapolis,
Maryland. Its advertisers include the Kaplan test preparation
company and the Bowie Baysox Class AA Minor League baseball
team.
And then there is Africansisters.com, formed in 1999 in
Garland, Texas, by a group of black women to help women like
themselves increase employment and build revenue. Its
advertisers include the iGourmet.com Tea-of-the-Month Club,
Crockpot cookery and Kmart.
In summary, I want to thank you again for considering the
IAB's views on these issues. The success of the Internet has
helped fuel this country's economy. It is important to ensure
that this medium can continue to grow and thrive. No segment of
our economy will reap greater benefits from a robust Internet
advertising industry than small businesses. The Internet in no
small part is the primary engine driving small business growth
in the United States. And a lot of that has to do with the
ability to advertise. Thank you very much.
[The prepared statement of Mr. Rothenberg may be found in
the Appendix on page 58.]
Chairman Gonzalez. Thank you, Mr. Rothenberg.
And I have already introduced Mr. Lent. I want to remind
individuals, though, he is chairman of the board of the Society
of Digital Agencies, which says a lot just in the very title of
the society.
Mr. Lent, your testimony.
STATEMENT OF MR. RICHARD LENT, FOUNDER AND CEO, AGENCYNET, NEW
YORK, NEW YORK
Mr. Lent. I like getting introduced twice. That was nice.
Chairman Gonzalez, Ranking Member Westmoreland and members
of the subcommittee, thank you for inviting me to testify on
the impact of online advertising on small firms.
As Chairman Gonzalez stated, I am the founder and chief
executive officer of AgencyNet. I have 14 years of experience
producing strategic digital campaigns, content and marketing
initiatives for startup companies, small businesses, medium-
sized businesses, and some of the world's most recognized
companies. As the CEO of AgencyNet, I charter over all
strategic vision and growth plans, run high-level client and
partner relationships and oversee our A person executive team.
I started AgencyNet in 1994 as a single-person company
managing a team of global freelancers and have since shepherded
its evolution to the 50-person agency it is today with offices
in New York City and Florida. As such, I have unique insight
into the marketplace and its effects on businesses of all sizes
in America. I have witnessed and withstood the dot-com bubble
at the turn of the millennium as well as thousands upon
thousands of technical innovations that have driven and changed
the way consumers and brands interact and commerce is
exchanged.
I have attached a copy of my full biography for additional
information on my background and career if you find it
interesting.
I would like to take this opportunity to articulate to the
subcommittee my personal opinion on some issues relating to
potential government regulations within the digital ecosystem.
Being from the agency side, I have a little bit broader
perspective, and I can speak on a number of different issues. I
tried to look at four in particular that I think need to be
discussed.
First is search engine dominance. I assume with Yahoo!,
Microsoft, Google, and their discussions ongoing, the
subcommittee has a particular interest in this topic. It is my
opinion that Google has achieved a dominant position in the
search marketplace by creating a culture of innovation and
maintaining core market intelligence. Their search engine,
coupled with their simplistic and consumer-focused user
experience is superior to anything else in the marketplace.
Their arsenal of Web-based tools are far reaching, well beyond
just search, and they are all of a high quality and
consistently improving. And oftentimes, they are free to
consumers and small businesses alike. They have consistently
hired some of the most intellectual and forward-thinking
engineers and technologists in our industry and that collective
intellect has empowered them to their market-leading position.
Their technology empowers companies of all sizes, especially
small firms, to engage, operate, and prosper in this new
marketplace.
While their potential allegiance with Yahoo! will certainly
advance Google's dominance within the search arena, it does not
ensure that they will utilize that advantage to control pricing
structures or to gain an unfair market advantage. Until
something is proven to the contrary, I would personally deem
any government obstruction as premature. With today's economic
state, America needs innovative and astute corporations to
support a dynamic and fast-changing global economy. And to
date, Google has proven to me that it will not rest on its
laurels.
It is important to note that neither I nor my company have
a prior working relationship with Google. My testimony is from
my personal perspective and as a user of their products and
knowledge of their reputation within the industry.
The second topic that I feel is important to discuss is
privacy and how it relates to interactive advertising. The
digital medium, while limitless in terms of interactivity,
entertainment and educational value, also presents inherent
privacy concerns that can be directly attributed to what makes
an extraordinary communication medium in the first place, two-
way data flow.
I believe the government should continue to do its part to
protect the privacy of the American consumer, as it always has.
Clearly there is a fine line between involved and overinvolved.
I will attempt to draw the line where it negatively affects the
consumer. Direct mail presents similar data concerns, and
obviously credit card companies are privy to a plethora of
personal information on consumers. Internet data protection
should be no different:
Consumers need to be able to opt out of their personal
information being stored.
Minors need to be protected and should not be marketed to.
Annoyances like spam, phishing scams and proactive display
of objectionable material should be controlled and regulated.
Data should have a shelf life and should not be sold or
shared without a user's consent.
That said, though, thanks to this great conduit of
information, advertisers have valuable data at their disposal
that, if used correctly, would surely lead to a more positive,
relevant and engaging two-way communication and a better
consumer experience. Passive mediums like traditional
television, radio, and print do not offer that same level of
sophistication. And as a byproduct, brands have little tangible
evidence of their campaign's true performance directly
attributable to their advertising.
The digital medium and its inherent trackability provides
the insight that they need to shift their budgets to
destinations where the audience actually cares about what they
have to say. This understanding of the return on investment is
especially relevant to small firms whose limited budgets do not
allow for the cushion of fiscal mistakes.
Intelligent brands will use this data to serve advertising
that is potentially germane to a consumer. Advertising by its
very nature has historically been intrusive. Digital allows for
relevancy in advertising and marketing that has traditionally
been interruptive, irrelevant and emotionally underwhelming,
and that market shift should not be stifled.
Again I would like to thank the members of the subcommittee
for this opportunity to share my thoughts on the digital
ecosystem and the necessity for regulation. I have also touched
on Net neutrality and portability of content in my written
testimony. And if I can be of further assistance, please feel
free to contact me at any time. I look forward to answering any
additional questions you may have.
[The prepared statement of Ms. Moore may be found in the
Appendix on page 66.]
Chairman Gonzalez. Thank you, Mr. Lent and thank you to all
the witnesses.
I am going to start off with the questioning.
And please understand that this particular committee, we
share some jurisdiction, obviously, with the other committees,
but our prime focus is going to be small businesses.
Small businesses can accomplish many things. I indicated
earlier, I have to be reminded that there are micro businesses
out there which are obviously even smaller than small but
nevertheless probably constitute the majority of businessmen
and women out there in the business world. So we can always
think in terms of small businesses in whatever context that we
may be discussing. It will be very interesting.
The other thing I want to preface some of my questions with
is that I think, whether you are a Republican or a Democrat,
truly I think that we need to be governed by basically what
governs the actions of physicians, and that is: First do no
harm. And I think you probably would agree with that. In the
regulatory scheme, what do we do? Should we do anything? Do we
allow market forces to play out? And I am a strong believer in
that. And I think my Republican colleagues would join me in
that particular sentiment up until the point where we do feel
there is a disadvantage and either the consumer or a business
person is no longer on a level playing field or treated fairly.
And that is part of the technology out there in business
relationships and such.
But my first question to Mr. Carter, there is an article
today, Mr. Carter, that appeared in The Washington Post, and it
was very, very interesting, about an individual, I think in New
York, in his basement, and he would not give his full name, but
allows you basically to download an application that blocks
advertisements. I don't know if you have had a chance to read
the article. And I will quote from it a little later.
But first things first, if you go to your site, obviously,
you have a small business that utilizes the Internet. You have
a column. You give advice. People come to you and so on. And
that is supported through advertising dollars. So you really
have an online business.
But also the other aspect of it would be small businesses
that would like to appear on your Web site for all the obvious
reasons. The credibility of your column, obviously, spills over
to those that advertise on your Web site and such.
Two things, how do you promote your Web site? How do you
promote your online business? And secondly, how do small
business advertisers fare at your site? How do they get on? Do
you have any control over who ends up appearing on your Web
site? And what is that business relationship with individuals
that may advertise on your site?
Mr. Carter. Great questions, Chairman. I.
Promote AsktheBuilder.com primarily just through writing
abundant content as frequently as I can. And because of the
years of doing that, and because the content is higher quality,
I also--I tend to rank very high on the search engines, you
know, both Google, Yahoo! and even MSN. And I do about an hour
a day of research on how I think that someone gets on page 1.
And so that is--so I think that that is the way that I do it
because I have decided it is a key part of my business. So I
have taught myself my own--what many people call search engine
optimization.
I do very little advertising of my own about
AsktheBuilder.com. The newspapers that do run my syndicated
column at the bottom of my column do publish my URL, but I
consider that incestuous advertising because the subscribers to
any given newspaper, once they see that URL, they know it. So I
don't have a growing base from that.
With respect to small businesses that advertise on
AsktheBuilder, you might be surprised to discover that most of
the advertising that I sell myself is actually small
businesses. I have found that when I approach these small
businesses, I get a more rapid response, a more favorable
response and a quicker decision. And more importantly, they
understand the benefits.
As far as me controlling if they want to be on Ask the
Builder, they have complete control of that. It is their buying
decision. It is very easy to do. And my rate card is actually
published for the entire world to see. If you and I were to go
online right now, you could see right at the top there is a
little advertise button, click it, and you see what it costs to
get there. And it is very affordable, and it is highly
effective. I have click-through rates on some of my advertising
that I sell myself that are as high as 35 percent. That means
that 35 percent of the people who actually see the ad, they
actually click it because they know that that ad or that ad is
communicating to them. I can solve your problem. I can clean
your deck. I have got the right sealer, whatever the product
might be. So it is highly effective. And because of those high
clicker rates, as you can imagine, the companies that are
buying it are very happy.
Chairman Gonzalez. Thank you very much.
Mr. Sanar, let me ask a question that is--you have
indicated that--we were talking about organic search and such.
And Mr. Carter being out there for such a long period of time
that maybe certain keywords, he has identified, he has
mentioned. So he may have an advantage maybe a startup business
would not. And I look to you as a very young person out there.
And you said something about, not to confine all of your effort
on search engine or the relationship with Google. Did I hear
you right? In other words, if you are a small business person,
there is more than just basically a search engine organic type
search-based promotion of your business. Is that right?
Mr. Sanar. Yeah. That is correct. I mean, it is not just
small business. I guess all businesses should diversify their
marketing plan. But especially with small businesses that are
going to get impacted a lot more than a big business would.
Like if his Web site went down on Google, like mine did, where
I lost about $400,000, $500,000 with the national listings, I
don't know what he would do, what would other--where would the
people find them if they weren't just number one on Google for
free?
Chairman Gonzalez. Now when you say your site went down, my
understanding of course is the way a search engine--and I will
use Google as an example--is that they don't want their system
manipulated. In other words, legitimate inquiries, legitimate
clicks and not some that may be created, and they are not a
real inquiry, they are not--there is not a consumer out there
hitting on that. So I think that is legitimate for any search
engine, Google or anyone else, to make sure because part of how
they place someone or rank somebody is based on the number of
clicks. And so the legitimacy of those clicks is really the
basic DNA of what we have as far as credibility. When you say
your Web site was shut down, what do you mean by that?
Mr. Sanar. Well, we were actually--we went down on our
national listings. We went from like number one for diamond
engagement, say, and then we went to 100 because of a third
party that I had hired that said he was--he was getting more
number one positions on Google for different keywords.
Chairman Gonzalez. So, I mean, the lesson to the small
business person is you know that you want prominence, you want
your name out there, but there is a legitimate way of doing it
and an illegitimate way of doing it. There are so many lessons
out there, and I will refer to it now.
In our memorandum, on page 7, that was prepared by my
staff, they point out something--I believe it is on page 7. Let
me make sure. And some of the things that we are going over
here, and that was in essence that 60 percent of the
respondents in a survey found that they don't have the
resources or expertise to grow their companies through an
Internet presence. So what we are talking about here, to many
small businesses, is really a very daunting task. And you know
there are minefields out there, and one of them of course is
who you establish a third party relationship to promote your
Internet presence, which I think I had Mr. Snell, Mr.
Rothenberg and Mr. Lent, they probably have opinions on how to
make sure that you have a legitimate relationship with a
legitimate party.
Mr. Snell, your story is very interesting. I understand
that people bid on words. You buy words. And there was an
article in the Post a couple of weeks ago. And they were
talking, I think the University of Phoenix, it is kind of an
interesting story of how they are involved. But they were
talking to someone from GM. And I think the quote was, we buy
millions of words, millions. How does a small business person
compete in that particular role, number one? The other thing,
too, if you are pretty well established, people seem to really
like you. And it is gun dog. And I am wondering, Gun Dog
Supply--
Mr. Snell. Correct.
Chairman Gonzalez. Could I buy Gonzo's Gun Dog Supply?
Could I play off of your name? Is there somehow that I can
actually buy--I don't know if you have a copyrighted name, what
protections do you have?
Mr. Snell. We have trademark protections. You can infringe
on my trademark and find out what happens.
Chairman Gonzalez. I wish Steve Chabot was here because
then I would say, you have good lawyers. Steve and I disagree
on the role of the legal profession in society.
But regardless, so you had trademark protections and such.
So let's say trade--and I am trying to make sure that I get
your site down, Gun Dog Supply and such. You are pretty well
protected. What about people that are just buying millions of
words, thousands of words, how does that work?
Mr. Snell. Compare GM to GunDogSupply.com okay in terms of
revenues, in terms of employees, in terms of the different
number of skews that we have, the different number of products
that we have. I mean, we have 1,200 products, and you know, our
average sale is going to be, you know, between $100 and $200,
where GM--how many different kinds of things are they into? So
a huge conglomerate like a GM would have millions of keywords
like they have millions of customers and thousands of
employees. But with a small business--usually small businesses
that are successful on the Internet are so much focused and so
you have a much smaller group of keywords. You know, in our
business, like I said, we have 1,200 products, but I have got
14,000 unique converting keywords that I have been tracking the
past 4 years. Some people collect stamps. Some people collect
comic books. I collect keywords. That has the difference
between us making it and not making it.
You raised the point earlier, what would a new business do?
I have 4 years worth of information in my index tools, which is
my statistics or analytical package. It tells me what keywords
folks searched on, on what engine, and when they came to my
site, and what, if anything, did they buy, so it tells me the
value of each individual keyword.
With paid search, I am only buying about 10,000 of those
words to send traffic to my site. But if I look in deep, deep,
deep into my stats, I have got over 200,000 unique keywords
that send traffic to my Web site. So, basically, what I am
saying with keywords, you want to have a very small subset of
keywords that are driving most of your business, and you kind
of keep those as your best keywords.
You raised a point earlier about somebody who is new, who
is getting into the business. They don't know what keywords are
going to convert for them. It is really easy. There are all
these free keyword tools on the Internet. The search engines
actually provide research tools so you can put in if you are
selling, you know, pet doors, you can go put in "pet doors" on
Google or Yahoo! search marketing, and it will give you
suggestions on some phrases like "cheap pet doors" or
"automatic pet doors." And these tools are available to
anybody. And there are also paid keyword tools like,
WordTracker and Keyword Discovery. If you look online, you can
do a search for keyword tools, all these sites will come up. So
it is pretty easy to get a list of the keywords that you want
to learn about.
Chairman Gonzalez. Thank you.
I will reserve the other questions, Mr. Rothenberg and Mr.
Lent, since I have exceeded my time.
There are very few of us. I will give the others a chance,
and then I will come back.
Mr. Lent, remember exactly how you want to comment on
keywords because I--
Mr. Lent. I have a question for you. A definition question,
that you prefaced the conversation on saying we were focused on
small business. I was wondering if you could define that for
us.
Chairman Gonzalez. We are talking about 50 employees or
less and such. But the truth is, it is one of those things
depending, the setting determines what is small business is.
You know, what are your revenues per year? How many employees
and such? But I really do think this committee--I mean, I know
how we view small businesses. But as I said it earlier, I was
reminded that the micro businesses out there and the Internet
opportunities that should be there, because I think the
Internet is probably something that is as accessible and
affordable if we keep it in a way that they can still use it.
I mean, and I am going to get into particular questions
about Amazon, eBay, search engine dominance and such and the
more global stuff in a minute. But at this time, I would like
to recognize the ranking member, Mr. Westmoreland, and thank
him for his patience.
Mr. Westmoreland. Thank you, Mr. Chairman.
First of all, I want to congratulate all you guys for that
entrepreneurial spirit. It is what makes this country great,
and the fact that the Internet is so new--I forgot how long it
has been since Al Gore discovered it. But it is amazing how
creative people have become to be able to make money on it.
Mr. Lent and Mr. Snell, I want you to pay close attention
to this because you wrote the book about dummies. And this is
all new to me, for my generation really, that aren't really
that computer literate in how to do these things. But Mr. Lent,
you are an agency, an advertising agency. Is that correct?
Mr. Lent. That is correct.
Mr. Westmoreland. So would any of these small business
owners contact you about how to go about this advertising or
what would make Gun Dog Supply sell better or--and then, would
you go purchase these keywords for them? I mean, what kind of
package does your agency offer?
Mr. Lent. It is a wide net right now. There are so many
options in terms of marketing online that searches is a very
effective methodology but coupled with--and I think Mr. Sanar
said it best, you really have to have a diverse media plan. You
have to look at all the different opportunities, whether it is
display advertising that we referenced or keyword search, a
combination of all of those things.
I really liked what Mr. Carter said about developing new
content on a regular basis to drive traffic. So as an agency,
first and foremost, we will sit down and we will talk to our
potential clients or existing clients about what their
objectives are, and then we will put together a strategic plan
to accomplish those objectives, and all of these different
touch points more than likely would be a part of that overall
media mix.
Mr. Westmoreland. Okay. Let me ask, Mr. Carter mentioned
that he sells some of his own advertising, I guess.
Mr. Carter. Yes.
Mr. Westmoreland. How does that correlate to you? The small
business guy comes in, talks to you, you set him up, he starts
catching on to this, and then starts selling his own
advertising. How does that work?
Mr. Lent. There are a number of what is referred to as
advertising networks that essentially represent destinations,
destination Web sites. And they will own that advertising and
sell it for them on their behalf as if they were a broker
selling that traffic. I don't know if Mr. Carter is using a
third-party advertising serving network or doing it direct. But
usually, you will get a much larger audience if you bring on an
agency that does that as their sole focus.
That said, there is obviously a very loyal fan base to
AsktheBuilder.com, and certainly I am sure that there are
unsolicited requests for sponsorship and advertising that Mr.
Carter receives. And based on those requests, he can strike up
individual deals with the individual advertisers.
Mr. Westmoreland. Okay.
Now, Mr. Carter, how do you get paid?
Mr. Carter. That is a great question, Congressman
Westmoreland.
It is really--what I am going to tell you, you might not
even believe. It is so simple that I actually can't believe it
happens. I am serious about this. When I started
AsktheBuilder.com back in 1995, it was actually a huge Web site
at the time. I had already at that point in time written 100
columns, and I had 100 other supplemental columns that went
with the other 100. So I had 200 pages on my Web site, which
was enormous at the time. And I started selling my own ads
right away.
But the magic happened--and why we are here today gathered
in this room--in 2003, when the people at Google--and I think
they were the first. I am not positive on this. But one of the
founders I believe Sergey Brin, he saw how successful their ads
were on their own Web site. And he thought, he thought, "you
know what"--I think this is how it happened. I don't know for a
fact. "Why don't we take these same ads and put them out on
hundreds of thousands of other Web sites, and if that Web site
delivers us a customer or a click, we will share some of the
advertising revenue with them." Because if you go to Google.com
right now or Yahoo! or MSN and you are seeing that on their Web
page and you click it, Google or those Web sites, they get all
the money because they are doing everything.
But those ads that are on my Web site, if someone clicks
one of those ads, I get paid money that day by Google.
Actually, I get the money at the end of the month. It is wired
into my business checking account. But that is the transaction.
In other words, it is really no different--I am also a real
estate broker on hire. Basically, I am just brokering the
transaction. I am getting paid a brokerage fee.
Mr. Westmoreland. I understand that from Google.
But when you said you sell your own ads--
Mr. Carter. Yes. Oh, how I get paid that way?
Mr. Westmoreland. Yeah.
Mr. Carter. Oh sure. It is really kind of cool. I get the
money up front. I make the people pay up front for the entire
term of the advertising run. I do not do--I do not have any
sophisticated tracking--well, I have tracking software that
allows that customer to know how many times their ad is
displayed and clicked. But I can't do the sophisticated work
like Google and Yahoo! does where--I have this live auction
happening. They just pay me the money up front. And I have been
doing it since 1995. And in fact, I actually got--my first
customer was Pella Windows and they actually paid me money up
front before the Web site was launched; they wanted the
advertising spot.
Mr. Lent. Congressman Westmoreland, just to add on, I just
want to make a distinction between two different types of
display advertising in Google's model and Yahoo!'s model, as
well.
You pay per click, so when a consumer actually clicks on an
ad or a search listing, you pay for that click. In the case
where you are selling sponsorship on your site, sometimes it is
a CPM methodology, a cost-per-thousand methodology. But as Mr.
Carter just explained, there is a fixed fee for a duration. And
what that ad shows up for is a period of time. So for the month
of July, when we visit AsktheBuilder.com, you will see the ad
for those windows. Whereas, in Google's case, you don't pay
unless they click. I just want to make that distinction.
Mr. Westmoreland. Mr. Snell, just one quick question for
you now. You said you have got all these collections of
keywords and different things. Do you market those for other
people? And I mean, could you actually--
Mr. Snell. Yes.
Mr. Westmoreland. That information would be useful to other
people.
Mr. Snell. You mean my keywords?
Mr. Westmoreland. Yes.
Mr. Snell. No, I am closing my notebook. I would not share
that information with--because keywords, I have a friend of
mine who competes with me at another space. He sells the exact
same thing we do on one of our sites. It is baseball bats. And
the keywords that convert for him and the keywords that convert
for us are actually pretty different even though we sell
similar products. Because one of the retailers is more of a
like new product and certain brands and another is more of like
a closeouts or a discounts. And so based on the tone of your
site, different sites selling the exact same things are going
to have like a slightly different keyword universe. Does that
make sense?
Mr. Westmoreland. Yeah.
Mr. Snell. I had a comment on the pay-per-click side. On
the agencies, like most of the folks who come to us cannot
afford to hire an ad agency to do, you know, a lot of fancy
stuff and hopefully after we get through with them, they grow
to the size that they can. But there are a lot of smaller
consultants that do pay-per-click advertising, paid search
advertising, and there are like three or four different models.
One is the, you know, you pay for an audit. They kind of look
at your account, and they help suggest keywords, that kind of
thing. It is more like an advertising agency where they charge
you--or you spent $10,000 on your pay-per-click, this campaign,
this month, they would charge you like 15 percent of your spam
like your traditional advertising agency model. A lot of folks
have an hourly model; you know, 75 bucks an hour to do whatever
you want. I recommend that most small retailers--and I don't
know what the definition of a micro retailer would be. But most
folks that I run across, they start off doing maybe $100,000 a
year, and we try to get them into the million dollar club as
fast as we can because at that point, they can hire consultants
to come out and do stuff. Small business folks can actually get
in there. These tools are really easy to use.
I mean, I bought--just as an example, I bought an ad last
night in about 5 minutes that is now running on Google, right
now, just to use as an example. If anybody wants to play along
at home, if you search on Google on your BlackBerry right now
for "orange dog collars," I will be in the number one spot--I
hope--unless one of my competitors decided, you know, I am
going to outbid him. I ratcheted my bid up to $2. If everybody
in America were to go to Google and search online and click on
that, what will happen is, I set a budget of $100. So if
everybody clicks on it, after I get, you know, like 50 clicks,
my ad is going to shut off. There are these advertising things
in pay-per-click marketing to protect me and my account.
Mr. Westmoreland. So you bid $2 a click.
Mr. Snell. As a maximum. And then you think about search
engine, paid search engine advertising is, it is an auction-
based system. They charge me as little as they possibly can.
Mr. Westmoreland. Thank you.
Mr. Rothenberg. Thank you, Congressman.
Just to put a headline over what they have all been saying
is that there now exists in the United States an ecosystem of
small businesses, of micro businesses that simply did not exist
10 years ago. And to simply shape this for you, any individual
can go online with the tools built into his or her laptop
computer and create a Web site. That same individual, again for
free, or for $10 a month or a small hosting fee, could go
online and get a set of free services from numerous companies,
some you have never heard of, that will support advertising on
the site. Other companies will act as rep firms, the same way
they acted for rep firms for radio stations or television
stations, and place ads on the site. There are thousands and
thousands of interactive advertising agencies, some of them are
just individuals, some of them are small shops, that will help
you optimize the site.
And so what we have is a situation where you have people
starting blogs in their dens, listing recipes, who are using
free tools to start those blogs, using free tools to take ads.
They are getting ads from national marketers on there from the
Procter & Gambles, Unilevers and Perdue chickens. And they are
making an income out of their hobbies. That grows, and then
they can afford to hire independent consultants. That is the
ecosystem. We simply don't know how many, but there are
hundreds of thousands to millions of them out there based on
the statistics that we look at from various sources.
Chairman Gonzalez. Thank you very much, Mr. Westmoreland.
And if you still want to stick around, we are going to have
another round.
First of all, I want to give Mr. Snell some good news. As
of 2 minutes ago, you are number one in "orange dog collar." My
staff just e-mailed me that, using our government BlackBerry.
I now would like to recognize Mr. Altmire at this time for
any questions he may have.
Mr. Altmire. Thank you, Mr. Chairman.
I would like to thank the panel. Many of us have had the
opportunity to talk with the folks at Google and to hear about
what they do and to hear the real-world examples here in front
of us of how you utilize that technology really helps put that
in perspective for me. And I want to thank you.
And I have a question about that in particular, that if
Google holds such a dominance in the market in the search
engine capacity, and obviously it is such an important
component of your business, do you have a fear of the dominance
of Google moving forward with regard to search engines?
Mr. Carter. Who are you asking that to?
Mr. Altmire. Let's start with Mr. Snell.
Mr. Snell. Google has done such a good job, it is kind of
like with Elvis when he got into the record business. He did
such a good job of making records that everybody wanted to buy
his records. And Elvis said, "hey, I think I am going to get
into movies." Oh, no, Elvis is getting into movies. He is
taking over. I think Google--I mean, they are like light years
ahead of everybody else. The thing that--I sleep well at night
knowing that there are so many people watching Google right
now, I could not imagine the scrutiny that they are under from
you guys, from their advertisers, you know, from their
customers, you know, who run their ads on their Web sites. I
mean, I don't really have a problem. I would like to see less
consolidation in the industry from a--more search partners. But
at the same time, it is like Google could be evil. You want to
talk about, you know, maximizing their revenue; they could
immediately double their revenues. Do you know any other
multibillion dollar company that could press a button and go
completely to a pay-per-click model, totally eliminate the
organic, and just like have a killer quarter and go out of
business the next quarter because everybody would go out of
business and go someplace else. But it is in their business not
to be evil.
Mr. Lent. Not to mention, that is not their only business
line. They are into a number of different digital tools that
are oftentimes free to use for small businesses and for
consumers alike, and they have really created their company on
a model of innovation. And innovation is what we need in this
country right now.
Mr. Altmire. Mr. Carter.
Mr. Carter. That is a great question. Probably of anyone
here on the panel that would have a fear or should have that
fear would be me because the other members on the panel here
are actually buying their traffic. And my traffic, every bit of
it is for free. I have no fear whatsoever. And I would say, I
had fear 5 years ago or maybe a little bit longer because I
didn't totally understand the system. But as maybe you were not
here when I said it before, I spent about an hour each day
doing my own internal research on how the search engines, not
just Google, just search engines, work. And what I have
discovered--and I really do hope many small businesses are
listening to this right now because I would be more than happy
to help them. It is not as hard as you might think. What my
research has shown me is that if you want to rank really well
in the search engines, you just have to do a good job on your
Web site. Think about this for a minute. Here is how simple it
really probably is: If you were Google right now or Yahoo! and
on your front page, when someone types in "orange dog collars"
in the case of, you know, Mr. Smell, those top results, if they
aren't really good Web pages about orange dog collars, if you
do that three or four or five times, you go, you know what,
this search engine is not very good. I am not using it anymore.
So I think what the search engines have done is they have
developed sophisticated algorithms. They actually are able to
recognize those Web sites that are working hard, that are doing
it the right way, that are not selfish, that are actually
thinking of the common good, and they reward those Web sites
with a higher presence. I think another thing that can happen
is that the Web--I know this from my own log files, that I know
how much time someone spends on a page before they go to
another page. And if all of a sudden the search engines see
that a particular Web site that people go to this page, that
they are engaged, like, wow, this is a good video or this is
good content or whatever, their search engines go wow, that
person, whoever they are, they must really like that. That must
be a good thing. I think that is how simple it is. So there
should be no fear. The only fear that I think any small
business should have out there should be, am I working hard
enough to produce really good content that engages the people
that need the help, whose problems have to be solved.
Mr. Lent. There is also consumer benefit to it in that the
advertising is relevant, the advertising is relevant to their
interests. We live in a world where advertising historically
has been interruptive. It has been a billboard on the street or
an interruptive ad; while you are watching a television
program, you see a 30 second interruptive ad. It very well
could be something you are interested in or it could have
absolutely no interest to you at all. The technology allows for
relevancy. And that is a new dynamic that has been introduced
to the new digital ecosystem, and that is valuable to the
consumer.
Mr. Snell. Could I add something really quick?
Mr. Altmire. Sure.
Mr. Snell. I don't want to put all my eggs in one basket.
And we are starting to talk about Google. Let's just talk about
search engines. I don't want to be dependent on search engines
in general. Let's just say you guys decided that people are
spending too long much of their free time and too much time at
work on the Internet, so we are going to cut search engines
off, and we will take a search engine vacation for a week.
Okay? I don't want to go out of business. And so we have
basically come up with several different ways to make sure that
we are not only getting traffic from paid search and free
search on Google and Yahoo! and MSN. I recommend to my clients
and other retailers and the small guys, the micro guys, you
build a customer list, you have an e-mail marketing campaign
where you communicate both information and product specials to
your existing customers both through snail mail and through e-
mail. You can also sponsor Web sites. Like I have a site called
BobtheJanitor.com that sells janitorial supplies.
We need to hook up. Unbeknownst to me, I am probably
running ads on his site if they are contextual because like,
how to unclog a toilet, I probably have janitorial supply ads
running on that site.
Mr. Carter. Let me interrupt.
Congressman, one thing that is really interesting there, is
that the small--let me tell you how sophisticated that
advertising really is. Small businesses can go out right now--I
know they can do it at least through Google, maybe Yahoo! and
some other ones. They can actually target specific sites,
meaning I have in my account at Google, where I am displaying
my ads, I am actually telling companies in the world: Here is
the type of ad you will get. Here is where it will be. This is
the positioning of the ad, and these are the type of people
that are coming. I mean, that is unparalleled communication
back downstream to the advertisers, so that Mr. Snell would
know exactly where his ad is going to appear, and he can buy a
specific spot on my Web site. That is powerful.
Mr. Snell. And I can also buy a direct ad, right?
Mr. Carter. Yes.
Mr. Snell. Again, we are going to talk after this thing.
As far as tools to build Web sites, I think there is a
misconception. I mean, I remember one of our manufacturers, we
went out to meet them in Arizona, and they were bragging about
how great their Web site was, and they spent $250,000
developing their Web site. I said, dude, I would have done that
with a couple thousand bucks over the weekend. Why reinvent the
wheel? Why design an internal combustion engine from the ground
up when you can go across the street to the Ford dealer, and
buy a product that works for you? I mean Yahoo! Store, the
platform we use, is great, but it is not the only one. It is
$50 a month. If you want to open up your dog supply store, we
can talk maybe after this thing. But for $50 a month, you can
have an e-commerce shopping cart that works. It is not
$250,000. We are talking about free tools WordPress is free.
Hosting is $10. The 60 percent of small business owners in this
country who say it is too hard to get on the Internet, we can't
compete; that is a cop-out.
Mr. Rothenberg. Also, Congressman, there are many, many
forms of interactive advertising. And they can all be done at
the same time on the same site. There is contextual
advertising, as folks are suggesting. Contextual advertising is
running an ad in a context that is relevant to it, a Gun Dog
Supply ad on a site for hunters. There is behavioral
advertising. That is advertising that is relevant to your
interests as a user. But it may not be on a relevant site. So
let's say you have done some research searching for Florida
vacation spots. You have done that, and you went to Florida
online magazines. Then you go on to someplace else, looking for
recipes, you might get a resort ad there. That is behavioral
because you have exhibited the behavior. Then there are
different formats. Search is only, according to IAB statistics,
search is only about 40 percent of the whole. The other 60
percent is display. It is video. It is rich media.
And that is another part of the cost equation here. If you
were a small business owner and you wanted to do national video
advertising, 15 years ago, it was prohibitively expensive. You
couldn't do it. You as a small business owner, as the owner of
Gun Dog Supply, no way you could do national television
advertising. Today you can do national video advertising
online. It is cheap to do. You can buy a camera. You can
produce it yourself with the free tools, and you can use the
representation and distribution mechanisms to buy the ads and
run them nationally. So it is important to point out the wealth
of opportunity for small businesses now, to employ all the
great tools that in the past were only available to large
national or global marketers.
Mr. Altmire. Great.
Thank you, Mr. Chairman.
Chairman Gonzalez. Thank you, Mr. Altmire.
There are some observations that I am going to follow up
with some questions. We really do appreciate the
entrepreneurial spirit that you represent here, the enthusiasm
and such.
And yet there has to be some sort of regulatory scheme, as
we said, to keep that playing field level and such. Maybe we
don't have to do anything. But I think we have to watch it
carefully. I mean, you have heard the argument about Net
neutrality and maybe those particular principles and the spirit
of Net neutrality may be spilling over to other aspects of the
Internet, which I think is a legitimate concern. If you want it
apply it to one of the aspects of the Internet, maybe it is a
good idea in the other. And I am talking about search engines
and the potential for things that could happen.
I understand where we are today. The question is, where
would we be tomorrow? There is a basic principle here in
Washington that we adhere to, and that is that competition is a
good thing. And I know, at the present time, you know, we do
have some--the contemplated arrangement between Yahoo! and
Google and the concerns that certain Members of Congress have
expressed, some of which I share, maybe not to the degree of
others. But I think it does need to be explored. We have heard
this argument before, that if someone is doing such a great job
and they predominate the market, why not just allow them to
continue? And maybe even reach certain contractual
relationships that perpetuate that particular dominance. We had
this issue with Microsoft not long ago. I still remember a
legal argument being advanced that, yes, monopolies are bad,
but technology is so different today. It is not the same, you
know, it is not your father's Oldsmobile. That is true. It is
not even around anymore.
However, the principles remain. And there is no such thing
as, I believe, temporary monopolies. We have had people in this
particular field in the past advance arguments that we are the
leaders; technology changes so quickly that you are going to
have temporary monopolies. I don't think temporary or permanent
monopolies serve the American public or the business world very
well.
There is a contemplated agreement between Yahoo! and
Google. And in a minute, I want to get into what is organic
search and then what are we talking about as far as the ads
themselves. Can a business subsist, exist through just organic
searches? Or are they going to eventually have to take out some
sort of ads? And how is that controlled? And who dominates in
that particular arena? And regarding that particular--not
merger because this is not a complete merger; it is still
shared services and, such and the potential there of what it
might represent because I am trying to remember exactly if most
searches--67, 68 percent are Google searches. I forget where
Yahoo! may be, another 12 to 16 percent, whatever it is.
When you put it all together, you are probably at 78
percent or more of all searches will be either Google or a
Yahoo! search. But Rob Pegoraro, in his column, fast forward
May 8, in The Washington Post, "Google Still Unchallenged." And
someone has always said it before, and they said it a lot
better, so I am just going to quote it: "It is not that Google
is some tyrannical monopolist that must be brought to justice.
This company has come to dominate the markets for Web search,
advertising and many other services fairly by providing quality
products at a fair price which, for most Web users, is free. It
has moved when others have stood still: Imagine, for instance,
how limited Web mail and online mapping would be if Google
hadn't reinvented each category earlier this decade. But that
doesn't mean that I want it to run away with the rest of the
market. It is fundamentally unhealthy for any one company, even
one that claims to have "don't be evil" stamped on its
corporate DNA, to amount to the crossroads of the Internet."
And I am going to ask, Mr. Rothenberg and Mr. Lent, for
your own opinions. I know, Mr. Lent, you have kind of had
already had an opinion of, "let's see where it all goes."
Should Congress be concerned about the market share that
will be represented as Yahoo! and Google obviously reach this
agreement? Or if Microsoft is successful in acquiring Yahoo!?
Mr. Rothenberg.
Mr. Rothenberg. Mr. Chairman, all these companies are
members of my association.
Chairman Gonzalez. Well, in that case, I should move on to
Mr. Lent.
Mr. Rothenberg. As you might imagine, I love all our
members equally, big and small.
I do think that there are legitimate subjects for Congress
and regulators to look at, and competition is one of them.
The only point that I would like to make is that the
competitiveness of this industry, the dynamism of this industry
is unquestioned and unquestionable. We need to make sure that
anything we do promotes robust development of more content,
more sites, more places that advertising can run. Thus far,
from everything that we have seen, certainly our own membership
statistics, certainly in the growth of interactive advertising,
and certainly in the evidence on this panel, we have a system
that ain't broke at all. So I would be very careful of kind of
going across that bridge - from research, inspection, and
exploration into regulation - without very, very careful
scrutiny. The success of the people on this panel is based
almost entirely on what we call the long tail of the Internet,
the ability of these tens of thousands, hundreds of thousands
of small sites to develop to sell advertising, to take
advertising, either to sell it directly or to take it through
online networks. And that is where I think this committee ought
to spend as much time as possible assuring that that dynamism
continue.
Chairman Gonzalez. Mr. Lent.
Mr. Lent. Chairman Gonzalez, you asked a very pointed
question. Should the committee be concerned? I think the direct
answer to that question is, yes, of course. With any growth
that is that substantial and then any dominance that is that
substantial, of course there should be concerns.
The line for me though draws between concern and action.
And I believe that there should be a high level of scrutiny on
any industry, especially one that is as important as this one
for the future of this country, but this level of dominance
should be scrutinized.
But I have not seen anything in my 14 years and in the 8
years that I have closely been associated with following the
marketplace, especially search and display, that would lead me
to believe that Google is doing anything to take advantage of
their market position.
So I do believe that it should be closely watched, but I
don't think that--I think any action would be premature at this
point. And that said, somebody will build a better mouse trap.
It always happens. This is an innovation-led business. And
someone, some small business will come out of nowhere with some
great insight, some great intellect, and put together a better
mouse trap. And that will happen. It is inevitable. It
continues to happen. Whether Google will buy them or not is
still up for grabs. But that will happen. And you know, very
likely that level of dominance with this fast-paced industry
will not exist at the level it is right now forever.
Chairman Gonzalez. Okay.
Mr. Carter.
Mr. Carter. Yes, Chairman. I have some insight on this. The
analogy between Google, Yahoo! and Microsoft, I don't think it
is too valid. And the reason why is, I distinctly remember the
days when I first started using personal computers back in the
mid 1980s, and what happened is that Microsoft, I believe, got
their dominance because of deals they made with the makers of
the personal computers. So when I got my personal computer, I
didn't have much choice. It had that on there already. The
difference though between Google and Yahoo! and the other
search engines right now, are your constituents, Congressman
Westmoreland's constituents, everybody out there in America,
they are voting themselves by their own action each day as to
what works and what doesn't and what is good for them. And that
is my own experience. And not only that, there are still people
out there who use many of the different search engines. I have
one of my own column editors in Victorville, California, who
still uses Dogpile. I mean, many people in this room might not
even know what Dogpile is. It is a search engine that still
works. She loves it. There are people who still use AltaVista.
There are other search engines out there. People are voting;
consumers in America are voting each day. And they are--just
like you want to get reelected, they are electing each day
right now that Google, for the time being, is the winner. And I
think you should let the people out there do it. And the best
part is that it is free, meaning no one is compelled and no one
is forced to use Google each day. So I think the consumers are
talking to you and speaking to you right now through those
statistics that, just like Mr. Rothenberg said, the system is
not broken right now. It is going along just fine.
Mr. Lent. Also I think it is important to add that never
has there been a time when consumers have had a more active
role in defining the marketplace. This is a world right now
where social media rules communication and conversation.
Consumers have a voice. Blogs are replacing mainstream media,
as you all know, on a regular basis and consumers have the
ability to choose.
And, as Mr. Carter said, they have chosen.
Chairman Gonzalez. And I am going to yield to my colleague
Mr. Westmoreland.
But I am going to come back because I want to take up this
concept of something being free because nothing is free. And I
want to go ahead and explore that because I want to explore
tracking, identifying the consumer, the consumer DNA. I think
your bureau was quoted in today's article regarding an
application that basically blocks all advertising, the
consequences to all businesses big and small.
Mr. Westmoreland.
Mr. Westmoreland. Thank you, Mr. Chairman.
And I think you can tell by our panel of witnesses that
this would be hard to regulate. But let me say this, that you
know this hearing, it has been good for me because I have seen
what an unregulated industry can do, and the fact that the
enormous growth that, because government has not put its little
tentacles in there, has grown at an enormously fast rate and
has been beneficial to many, many, many small businesses.
And according to what Mr. Lent said, and I had written down
the same thing, there is going to be another Google to come
along. If we go into the market right now and start regulating,
what we may ensure is that Google remains the largest search
engine out there because we will, Mr. Chairman, I think what we
will do is keep other people from getting in it. And when so
you start regulating the ones that are at the top of the class
right now will automatically remain top of the class. And so I
think we are really--with all due respect to my friend, I think
we are an answer looking for a problem. And right now, I just
haven't seen it.
And I am sure if anybody knows, Mr. Rothenberg does because
of the difference of his membership and of his organization.
But I see--I see some happy campers out there that have gone
into business, learn more and more about their business. And
because it is an unregulated thing, they are able to do
creative things to expand their business and use their own
ingenuity to make things better, not just for them but for our
whole economy and all of us as a whole. So I think it would be
beneficial for us right now to leave the industry as it is and
hope that they just continue to make more and more and more
money so that they can pay more and more and more taxes. And
give us the ability to do what we do best, and that is expand
government. So, again, I thank you, and I really don't have any
questions, just those comments.
And thank you for the time.
Mr. Snell. Can I make comment?
Chairman Gonzalez. Mr. Snell.
Mr. Snell. My understanding of the Yahoo!-Google deal and
all this is above my pay grade. I don't understand this
acquisition and stuff. But it is kind of like it is an
inventory situation, if I understand things correctly. When I
do a search on Yahoo!, Yahoo! is going to check their own
search marketing engine, Panama, to see if their ads and
display those ads, but Yahoo! will also be able to choose to
display Google's inventory as well.
I have a good analogy, for me anyway: It is like if I went
to Target and I needed a t-shirt, it is like I am going to need
a double extra large tall, okay. And if Target doesn't have my
size, I sure hope that Wal-Mart or Rhe Gap or somebody else is
going to be right there in the store. It would be so awesome to
say, here you go, here is your t-shirt. And I think that is
what the situation is. It is not a merger. It is like they are
not taking over their search engine. I think it is just a
partnership on the advertising. But like I said, it is above my
pay grade. So I may not understand that correctly.
The main reason that I am interested in it is that with
some of my retailers, with paid search, there is not enough
inventory for me to buy. I have keywords, and there are only
3,000 clicks a month on this keyword, one specific keyword, I
am not going to say what it is. I want 10,000 clicks, you know,
and so I am on Yahoo!, I am on MSN. But sometimes really
specific on the long tail, like "orange dog collars" is a good
example of a pretty specific keyword. It is not that
competitive. Anybody in this room could rank for it if they
created a little bit of content. But what happens is when you
go to Yahoo! and do a search, sometimes the ads just doesn't
show up. So I see this being a good thing from an inventory
perspective. Because how many $5 bills would you buy for $3?
All of them. And there is a limited number that I can buy for
my retailers when I am sending them traffic. And that is what
the Yahoo!-Google deal is to me.
The other thing I want to say about it is it is a lot
easier to do to switch to a different Web site than it is to
change to a different operating system. I think that is what
Tim was saying. I switched from a PC to a MacIntosh. And it is
tough. Man, I switched from Google to whoever the best search
engine is, and talking about new innovators in the space--
search, okay, Google has search locked up. They are great. But
they have been doing search for, what, 10 years now. If you
look in the social space, I mean, Google had orkut. Yahoo! had
Yahoo! Groups and 360. These startups came up. MySpace was the
hot thing. Now Facebook is the hot thing. I mean, video, Google
had Google video. They had to buy You Tube because You Tube
came out of nowhere; 18 or 24 months ago they didn't exist.
Google had to buy You Tube because they did such a better job
at video than Google did. These big companies are going to have
to innovate or acquire. So I am not worried about--Google is
going to be--there is going to be a paradigm shift coming that
none of us see coming. Maybe somebody watching this has an idea
of what is going on, but it is going to totally change the
game. And it scares the hell out of me because I have to stay
on top of this stuff all the time.
Chairman Gonzalez. To a certain degree, I am going to agree
with you.
However, the fact that is more technology based and such I
don't think really escapes the whole industry or denies the
industry the scrutiny that we would give regardless of the
enterprise. And I have been trying to make that point since the
Microsoft lawsuit years ago. I think those principles have
served us well. And I know that where we are today, there isn't
a problem. The issue is, you may reach a point where there is a
problem, but you just don't have the competition or the players
to do anything about remedying the problem, meaning
competition.
I am not for regulation at this point. I think we do have
to view each and every one of these, if you want to call it a
merger or a partnership or whatever, and the impact on, again,
on the consumer, on competition and whether you have you know
antitrust and monopoly concerns and such. By the same token, I
mean, we have certain individuals that would like to apply a
different standard maybe to another aspect of the Internet. And
I have been saying all along, we don't need a regulatory scheme
in law legislatively enacted. If you don't have a problem,
let's say now with the five principles of Net neutrality. And I
am saying, don't legislate. And I say the same thing here when
it comes, whether it is search engine, advertising, unless you
have a real serious problem that is identifiable and that we
want to correct.
There is one thing we wanted to point out, you know, Mr.
Carter was saying about everything being free, and it just
can't be free because I mean you have to support your business
enterprise. Advertising dollars represent that stream of
revenue that allow the consumers to have all of these "free"
services. Now the consumers I don't believe understand that.
And we are going to start running into issues of privacy and
such. But we will leave privacy aside right now.
And we will talking about the article that appeared in
today's Washington Post in which the bureau here is quoted. And
that was where we have an individual in New York, I believe, in
his basement. He wouldn't give his name or--
Mr. Rothenberg. Ray.
Chairman Gonzalez. Ray "the blocker" or whoever it is, who
has devised basically an application that would block all
advertising. And I was speaking with staff earlier in Energy
and Commerce. I am on the Subcommittee on Telecommunications.
And we had the wonderful inventor, and I am just such a great
fan of this individual, of TiVo. And so, of course, we had
individuals saying, yeah, but you are driving advertising
dollars away because you can basically fast forward them away.
So then we had actors come and say, look, now you are getting
advertisers into our art form. You know, they are placing Coca-
Cola cans in different scenes and everything else. And then
this particular actor--I want to share this with you. I wish I
had taped it, it was so wonderful. He says, "can you imagine
Humphrey Bogart and Lauren Bacall at that last scene, when the
airplane is revving up its engines, and he is saying--you know,
"you are getting on this United flight at a reduced rate today.
I hope you have a return, though. I know you are staying at
Casablanca Inn. I will miss you very much. Let's have one more
Royal Scotch," whatever it is. So he made his point.
But the whole thing is, I think we have to recognize that
advertising revenue is the way that businesses are able to
provide many, many services. What I am wondering, though, is
this thing about--this notion of being free. If I subscribe to
a service that is offered by somebody, generally there are
conditions which I and millions of other Americans don't read.
We just say okay. Most of those conditions allow them to track
me.
And I am going to ask Mr. Rothenberg, and anyone else, but
Mr. Rothenberg and Mr. Lent from the industry may understand
the importance of--what is this they are tracking me? And what
exactly are they tracking that translates to a better way of
advertising, which then means micro targeting, which then means
it is maybe something available to my small business guys?
Mr. Rothenberg. Chairman, let me address the broader
principle first because you have mentioned it a couple of
times. We believe--everybody on this panel believes, the IAB
and all our members believe absolutely- in the principle of
consumer control. The reason this medium, interactive digital
media, has grown so dramatically in traffic, in user audience
and the like is because you can choose what you want, when you
want it, how to get it, what you don't want. You can screen it
out. So we believe in consumer control. Consumer control
improves advertising.
If the advertising is no good and people choose to skip
it--and this is the TiVo principle--then the pressure is on for
the agencies and for the marketers to make better advertising
so that people will want to watch it. So we believe in that.
There are forms of control mechanisms that can be
illegitimately done and that can certainly be illegitimately
marketed. Ray, in the story today, for example, is quoted as
saying that advertising is the same as spyware and malware.
Well, it is not. Spyware and malware are criminal things that
get put on computers illegitimately. Advertising is something
that, as you noted, pays for a wealth of free services.
When the Rays of the world do things that illegitimately
and illegally interfere with the ability of advertisers to
deliver advertisements, the law should be able to go after
them.
However, when consumers are offered legitimate tools, as
they are on every single major Web browser, to screen, then I
think it is incumbent on us as an industry to do two things:
One is, create better ads that people will want to watch, that
people will want to absorb; and the second is to do a lot
better job about educating the public about the trade-offs.
These ads are what pay for the hundreds of millions of free e-
mail accounts, that pay for all the free videos that are
online, that pay for all the financial tools that allow you to
analyze your investments. That is what we need to do a better
job of communicating.
I think the good news in today's Washington Post story was
that very few people, very, very few, are blocking ads. There
does seem to be an intuitive understanding on the part of most
Americans that there is a good trade-off here. And it is a good
trade-off, not an unhappy trade-off. They are recognizing that
these tools and services make the advertising more relevant to
them. And the relevant advertising is as good as the content in
informing them about how to live better lives. So I think we
are in a good position. But we do need to recognize the
importance of education and that, when people are illegally
blocking advertising, we need to be able to go after them.
Chairman Gonzalez. Mr. Lent.
Mr. Lent. It is a new model. We are dealing with an entire
new landscape right now. Consumers ingest media differently
today than they did 5 years ago than they did 10 years ago. We
need to recognize that. The anecdote that you brought forward
on Humphrey Bogart and Casablanca, it is funny, and you know, I
think--again, anecdotally, it makes some sense. The reality of
it is, it would never--the consumers would never stand for it.
They wouldn't ingest that media. In today's world, that analogy
does not hold true. If Paramount Pictures created that movie
today and they said, you are about to board your United flight
on the way to Casablanca Hotel, consumers see right through
that right now. There is too much content available at their
fingertips within two clicks. They are not going to stand for
that kind of blatant integrated advertising. We have to step up
our game dramatically as an agency to build relevancy for our
brands. For our clients who come to us and want to communicate,
have a two-way dialogue with their consumers, we consistently
talking about avoiding the old trap of interruptive
advertising. And the whole relevancy of this data, the data,
the transformation of the model allows for data to give
insights to the consumer.
And as Mr. Rothenberg has said, as Mr. Rothenberg said,
there is content. There is advertising, and sometimes it is
hard to tell which is which. And if the advertising is as
strong and as valuable to the consumer than the content itself,
that it is in fact advertising. And I can give you a very
direct analogy to a project we created for one of our clients
for Bacardi. They don't sell rum online. Obviously, they can't
sell rum online. But they wanted to reach their consumers in a
unique way. We know what their consumers do; they drink rum at
night clubs. And at night clubs, music is the hero. So we
created the most robust online music mixer and hired
professional DJs from all over the world to create content that
consumers then go online and create their own songs, download
them to their iPods, vote on them, send them to their friends.
That is relevancy in a branded communication. There is not an
ad on the site. It doesn't talk about the product. It doesn't
talk about any of that. All it does is add value to the
consumer that leaves behind a positive reflection on the brand.
That is the new model of advertising, and the relevancy of
understanding what consumers' interests are is a natural foray.
This data propagates more relevancy in a conduit, in a
communication conduit.
Chairman Gonzalez. And I am not saying that collecting this
information is not valuable in the terms that you just
described.
The question then is about full disclosure, the consumer
knowing the information that they are being tracked, and it is
very interesting to the degree that they are, because I am not
even aware--and I need to correct myself, and I apologize, but
most of the people in this room are so young, they have never
even seen Casablanca. Ingrid Bergman in that scene and not
Lauren Bacall. That was another leading lady, another movie.
I will yield back to Mr. Westmoreland here. Where we
started was really the concern of the small businesses because,
I mean, we started talking this way. And I am wondering, okay,
where do we plug in the small businesses? So last week or a
couple weeks ago, I brought staff in. I said, you know, let's
Google and let's Yahoo! books and San Antonio, Texas. I want to
see if my little bookstore is still surviving out there. I
don't visit it often enough. But I try to place my orders there
and such. And I am just wondering if y'all could kind of guide
me through what is our--I was able to find. This is the Google
search, and obviously, it is "books San Antonio, Texas." And
then what I ended up with--there are 10 pages of listings. I
didn't go past page 1. And then you can also give me your
opinion how many people go past page 1. And what I wanted to
compare was what I would--what I see organically and what
appears. So I am just assuming, I don't--it says local business
results for books near San Antonio. And then they list A
through J and even have a map. All right. And then off to the
right, they have sponsored links, books at Amazon.com and then
Barnes & Noble, obviously the big guys and such. Then it starts
with some listings, books in San Antonio, Texas, in the Yellow
Pages and such. What is paid for and what is not paid for on
this page?
Mr. Lent. You are looking at three different pieces of
content there on that page.
Chairman Gonzalez. You can see this? You are young. All
right.
Mr. Lent. We talked about the fact that Google doesn't just
search. There are a lot of different components in their
digital arsenal, one of which is their mapping technology. And
that is what you are seeing at the top left corner of the page.
That is a Google map. And those results are essentially the
modern day Yellow Page results set for a particular area. In
this case, you put in San Antonio, Texas, but you could just as
easily put in your zip code. And you see the results of local
businesses that fit that criteria. That is a standardized
Yellow Page model.
Chairman Gonzalez. No one pays extra for this? It just pops
up?
Mr. Lent. That is right. I think there is the ability for
them to monetize that channel, and you can buy sponsorship
within the Google maps platform. I can't see from here whether
any of those particular ads--or whether those listings are ads
or not. Underneath, you are looking at organic. That is
organic. Those are free. That is how Mr. Carter has built his
business, as he said. And that right side, the right column,
those are monetized links, those are sponsored links. That is
where your Google AdWords will come into play.
Chairman Gonzalez. Okay. Then Yahoo! has a variation of it
again. A small map. They only have three listings for books
near San Antonio. And then, of course, over here, sponsored
results rather than links. And Amazon and then San Antonio
books. And Amazon.com again is listed. And again, that would
basically be the same format.
Mr. Lent. Yeah. Same format.
Chairman Gonzalez. And if you are a small business--and
this is to Mr. Carter and Mr. Sanar and Mr. Snell, you guys
know that I am probably not going to go past page 1, right?
There are 11 pages on Yahoo! or 10 with Google and such. But
your experience would be, on the organics, you want to be
somewhere in this first page.
Mr. Snell. You want to be number one; 90 percent of the
folks that are clicking on organic click on the first page, and
about half the clicks are on the first or second position, and
it drops off precipitously after that. You are talking about a
local search there with a local by including a zip code.
Chairman Gonzalez. San Antonio.
Mr. Snell. Right. If you were just looking for dog training
books or something that would be more specific and there
probably wouldn't be a store for it, it wouldn't have the local
component. And one thing to add about the local side of things,
that is like a subset of search. It is Yellow Pages-like in
that it is a listing of businesses, but you have to pay to
have--you have to have a commercial phone number. One of the
problems that I have got with my Yahoo! Store owners is there
are a lot times they are not buying Yellow Pages ads. They are
not in that database. So these national retailers, I don't even
know if Gun Dog Supply is for local search. And the results
from local search are not ordered by--like in the Yellow Pages,
if you pay more, you get a bigger ad, and you pay for position
in the physical Yellow Pages. In local search, I think that is
done algorithmically based upon like the proximity of that zip
code and based upon the keywords occurring in the name of the
business and even keywords on the Web site.
With search engine optimizations, you need to be on the
front page. And I was talking about keywords earlier. I have
got 200,000 keywords. I have got 14,000 keywords that actually,
when folks search for them, they end up buying something more
than not. A lot of people get obsessed for ranking number one
for only one or two keywords. You were talking about long tail
earlier. That is basically really obscure specific searches
that result in having--there are not that many people who have
a Web site that have orange dog collars on it. So that would be
an example of like--of a term that we can rank really well for,
and I am not competing with hundreds of millions of other Web
sites.
Chairman Gonzalez. Mr. Westmoreland, do you have any
questions?
Let me ask you one last thing because I am always wondering
exactly.
If it is the free application I am getting, if it is my
Gmail account, if it is anything that is basically offered for
free but I am agreeing that they can track my Internet
activity, whatever that means, what are they exactly tracking?
Are they tracking when I go to the Internet and my searches?
Are they tracking something else?
Mr. Rothenberg. They are not tracking you. I think the word
"tracking" or the phrase "behavioral targeting" sends the wrong
signals. It indicates that they know you, Mr. Gonzalez, where
you live, who you are. People do have that information. Credit
card companies have that information.
Chairman Gonzalez. Sure.
Mr. Rothenberg. Your utilities have that information. So
that information has been used in direct marketing for decades
and decades and decades. That is not the information that is
tracked in interactive. What happens is anonymous
nonidentifying markers are placed that indicate what your
interests are, in ways that allow relevant advertising to be
mechanically, automatically delivered against your interests.
You know, you showed the search page. I am in the market for a
car right now. So I went online out in the east end of Long
Island where our house is, and I plugged in "Ford hybrids." And
I noticed that in the paid search side of it, in addition to
having some national ad, you know, Ford had a paid ad in there,
there were a number of local dealers. The local dealers were
there because, in my computer, based on my ISP, there is an
identification of the geographical area I am in. So I have
actually been able to identify dealers and go to their sites
based on relevant advertising, in this case geographically
relevant, that has been placed.
I think that the terminology has done us ill. You know,
tracking and targeting give the sense of a deer in the gun
sights. And that is not what is being used here. What is being
used are anonymous technological markers that indicate
relevance to you based on your activities.
Another thing that is very important to note is that much
of this tracking activity is essential to the operations, not
just of the interactive media but of all media. For example, I
note some of the proposals that have been floating around to
regulate some of this activity would regulate tracking of user
activities. Well, tracking of user activity is the main way
that Web sites use to set advertising prices. It is the only
way they have to measure their audiences to know how many
people are coming in. That is done through those markers,
through those cookies. Another thing that is essential to the
management of interactive media is the ability to count the
advertising impressions. I mean, did you actually see the ad
that I sent to you?
Did you see it? Well, the only way to count those
deliveries is through the same tracking mechanisms. So it is
very important to understand that so-called tracking is what we
use for assessing audience size, to set prices, what we use to
assess the accurate delivery of ads to know how to charge our
customers and also to be able to deliver things that are
completely, as much as possible, relevant to your interests.
Chairman Gonzalez. It would seem to me, the more
information that we have and the particular taste and behavior
of a consumer, the greater chances it would be that a small
business might be able to provide that particular service or
product with more specificity just because we have this
consumer DNA that we built up. But you said that they don't
really know that it is Charlie Gonzalez. But the truth is--I
will just call it a user ID number. They have got to know who I
am. So I am all these little component parts. Every search that
I have ever--they have got to be compiling this profile on me.
And so they can trace it back to a particular user. I mean, it
wouldn't make any sense otherwise. So they do know who I am. I
mean, it is not a quantum leap here to figure that, based on
all the activities of all these free services, because I have
got a lot of people tracking and--I know people don't like the
word--following my activities. They are compiling this profile.
And so when people say, no, this is anonymous cyberspace,
right, I think people still have that concern, Mr. Rothenberg,
that they do know who you are. And they are looking into all of
your activities. And I am saying that a consumer can agree to
that. And we will be looking at that and exploring it. If you
looked at the story this morning, I think Mr. Markey had his
own comments on it. I think we need to carefully explore it
because of the potential consequences, unintended or otherwise.
Mr. Rothenberg. But let's be careful to separate out what
is possible, because everything that you are identifying is
certainly possible, to what actually goes on as a matter of
consistent practice. As a matter of consistent practice, the
only way someone is going to know who you, Mr. Gonzalez, are,
is if you subscribe to something, if you give your name and
your address. But that is different from you just going around
surfing on sites, looking at San Antonio bookstores and
vacation spots, restaurants, books to buy. They know a lot
about some of your preferences. And based on that, advertising
will be able to be delivered. But that is a mechanized process
that doesn't get at your name or your address or your Social
Security number unless somebody actively tries to put one and
one together to make three.
Chairman Gonzalez. And we have different components of the
Internet that track. I mean, ISP, search engines, applicators,
all of them. I mean, everyone that is out there tracks pretty
much. I mean, that is the way their business model is
formulated. And I know we have been here a long time.
I know, Mr. Carter, I think you have a comment.
Mr. Carter. I think I can summarize and speak to some of
your points, Chairman Gonzalez.
I maintain that there are only two reasons why people get
on the Internet. If you boil down to the lowest common
denominator, you come up with two of them. One is pleasure; the
other one is pain or problems. In that context that you are
talking about with respect to tracking, tagging, following,
whatever, think in your own personal life, and everybody
actually in this room, if you can go back in time just 10 years
ago, I would venture to say that your life was less
complicated. You spent more time doing certain things. And what
has happened is that we have got this compression of
information that is ever-increasing. So your life is busier.
Everyone's life is busier. And what happens is, you want and
need solutions to problems faster because that is--your life is
increasing, just everything is getting faster. So, I maintain,
and I see it on Ask the Builder, that that tracking or that
setting of cookies actually is a beneficial thing. Because it
allows the--whether it is Yahoo! or Google, whomever, even my
own ads that I throw up to throw a solution at you for the
problem you are on the Internet today, whether it is you are
buying an airline ticket, whether your roof is leaking, whether
you may have just found out that you have been diagnosed with
cancer. You need help, and you need it now. So that type of
technology is actually beneficial.
So I ask you, as a legislature, and you, Congressman
Westmoreland, and other members of the committee, that if you
decide to go down that pathway, go down it very slowly because
there has been good and bad with everything I think that we
have had here in America. But at this current time, just think
about this one last thing: Who would have ever imagined that a
guy like me that used to eat lunch on drywall buckets--
seriously, I used to sit on a drywall bucket and eat lunch--can
compete equally with The Chicago Tribune, The Washington Post,
The New York Times? I am a syndicated columnist. But I have an
equal profile on the Internet, maybe in certain respects higher
than some of those publications that have been around for
years, that have millions of dollars of infrastructure. So if
you start to tweak this too much or too rapidly or too fast,
you could actually make everything go backwards. And that would
be a very bad thing for consumers. And I beg you, before you do
that, to really get in touch with your constituents and ask
them personally, have some type of town meetings.
I am an elected official myself actually. I mean, I know
how that works. And get in touch with them. Find out how they
really use the Internet and how it has impacted their life.
Because those people that are buying those things, they are
what have made everybody on this panel successful. So please
talk to them as well.
Chairman Gonzalez. I would just like to add one thing.
I, first of all, agree wholeheartedly with everything you
said. There is one thing that hasn't been brought up. Consumers
do have the right to opt out. They can shut of the cookies on
their machine. Now, granted you may just read a legal document
and just say "I agree" without going through the process. But
that is a decision you made. If you have a concern that your
private data is out there and that is something that you want
to curtail, you have the ability to do that. You may have to do
a little research. You may have to find out what the process is
for you to opt out, you may have to do a quick Google search
and find out how to shut off your cookies, but that is within
your power. You are capable of doing that. And based on that
fact alone, the value supersedes the damage for me.
Mr. Rothenberg. Actually, also just to reinforce, there is
a fair amount of research already out there that says, even
with the paltry amount of consumer education, that something on
the order of 40 percent of consumers clear out their cookie
caches each week. So already people know how to control their
privacy or their identity online. So I think that education is
a far better path to follow, certainly at this point, than
regulation.
But, generally speaking, in fact specifically speaking, I
think the education that this committee is bringing to this
process and also to the benefits that interactive media and
advertising bring to small businesses, that is really the
education that needs to be out there. So we are very pleased
that you held this hearing.
Mr. Snell. Can I add one thing?
Chairman Gonzalez. Sure, Mr. Snell.
Mr. Snell. You guys asked us, what do we want Congress to
do, and what do we want Congress not to do? And one thing that
we haven't talked about, you talked about 60 percent of the
folks, you know, small business folks surveyed said it is hard
to get on the Internet. I think you guys can help with, like
the SBA having an e-commerce czar or somebody who knocks on the
door, you know, metaphorically, and says, hey, it is real easy
to get on the Internet. Talk to any of these guys on the panel
or just surf around on the Internet. But most of the small
businesses that are in your districts are probably not folks
who could open up a Yahoo! Store. I would imagine that they are
not like catalog retailers. And this is where a different kind
of search marketing would apply. In the example that you gave
on the bookstore, if I had a small bookstore, you know, in San
Antonio--and forget the San Antonio part of your query, let's
just say you searched in--you were at home in San Antonio and
you searched for books. Amazon will probably come up first.
But if you were a small business, you could buy a targeted
ad that would only run in San Antonio. So we talk about how
search can get some of us national reach, but it can also get
local businesses generic reach on these really broad keywords
that there is no way a San Antonio bookstore could ever rank on
the first page of Google for books. And we have done it with
our copy shop. I have got one copy shop in Starkville,
Mississippi. I will never rank for color copies on Google, but
I can buy color copies for 10 cents a click and be on the first
page of Google in Starkville, Mississippi. And I think you guys
need to push that.
Chairman Gonzalez. I want to thank all of you.
I know Mr. Westmoreland joins me in just thanking you for
the time, the effort and the expense of coming and enlightening
us.
Let me end, of course, with the last--beginning and the end
of any hearing that we have here. Our concern is small
business, micro businesses in America. We have some
representatives of those businesses here. And we commend and
applaud you. And I think it is a question of education.
Legislate only when totally necessary. I am not sure that is
where we are. I know that on Net neutrality, there may be some
legislation out there. But we surely don't have legislation
elsewhere that is impacting common practices out there that
seem to be working as long as we don't have any abuses and such
at the present time.
Small businesses have to be part of what is going on out
there, and the concern being is, as long as we still have some
sort of a model that allows their entrance into this market and
taking advantage of what is there, that is what is important.
I think, Mr. Snell, your suggestion is well taken on, what
is the Small Business Administration doing and way beyond that,
what can this committee do to enhance and assist small
businesses? As far as technology moving on, it can be used for
a good purpose, and we can have good people. It is in their
hands.
But it reminds me of when I was in college, and I took a
course. It was science for majors. The only thing I remember is
that it started off--I can't remember if it is a Buddhist
saying or not and that is, just like technology, science, that
the keys that unlock the gates to paradise also unlock the
gates to hell. And that is what technology and science is all
about. In the proper hands, it can be a really good thing. If
you do have misuse and you have certain concentrations of
power, bad things can happen.
And I think we have to be ever watchful. But in the
meantime, you know, we have you out there. And I take it that
you will always have the concerns of small businesses at heart,
you know in your own business ventures or personally what you
are doing in your hometowns.
And I want to thank everyone.
And if I forget this, I will get in trouble. I ask
unanimous consent that members will have 5 days to submit a
statement and supporting materials for the record.
And without objection, so ordered.
And this hearing is now adjourned.
[Whereupon, at 12:10 p.m., the subcommittee was adjourned.]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]