Among the “Gang of Four” tech giants that Google Chairman Eric Schmidt says are driving consumer technology innovation, two iconic companies—Google and Facebook—are battling for an important title: Who will dominate the means of accessing, sorting, and connecting to the Internet’s flood of information.

With Facebook on the rise, and Google’s self-professed stumbles in seizing its own pipeline of social data, there’s been a fair amount of speculation about Google’s prospects for holding onto its position.

Here in Seattle, we happen to have two entrepreneurs who know a boatload about the ways that consumers and businesses are navigating the 21st century playing field for information. They have informed and sometimes sharply opposing views. And they happen to be friends. I figured this would make for an interesting discussion.

Ben Elowitz is one of the many people who have declared search engine optimization dead. With the rise of social networks as a primary homebase for consumers online, he says, the days of using a complex portfolio of tactics to rank higher in Google results is going the way of the dinosaurs.

As the head of Seattle-based online media startup Wetpaint, Elowitz says this development is just great—he sees the fragmentation of content in a search-dominated world as divisive for publishers.

Rand Fishkin, however, would have to object. As the CEO of Seattle’s SEOmoz, a search-marketing software company, Fishkin has made a career (and many international speaking engagements) of mastering search engine optimization.

He’s an expert on Google’s ever-changing algorithm, including its attempts to corral social media data. He’s also a leading advocate for “white-hat” SEO tactics—growing genuine prominence and relevance without trying to game the system.

In a busy downtown coffee shop recently, I set up the broad topics and mostly tried to stay out of the way as Elowitz and Fishkin covered all kinds of fascinating territory: When Facebook will get into search, and whether Microsoft is effectively blocking the effort; why Google (NASDAQ: GOOG) should buy Color and Quora right away, at any price; and whether it’s scarier for society to have Google or Facebook holding the master keys to the way we sift the Web.

At one point, we jokingly decided that in this debate, Fishkin was basically just standing for Google while Elowitz was the champion for Facebook:

Fishkin: “I have 30 times your revenue.”

Elowitz: “I’m growing at 69 percent and you’re growing at 3 percent.”

Fishkin: “Dammit!”

What follows are lightly edited excerpts of their conversation, broken into several topics. I’ll start with Elowitz contrasting today’s searches with a fond memory of the dawn of Google as a force … Next Page »

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If you’ve noticed a recent change when you do an Internet search using Google, you’re not alone. Google is trying to improve the quality of the results it delivers to Web searchers and in a major way.

Google is so focused on search result quality that they’re paying extra attention to items they believe negatively impact search results, including so-called “content farms” like Associated Content and eHow, as well as the practice of paying for links to help a site boost its Google rankings. So while people won’t necessarily change how they use Google to search the Web, if Google has its way, what users get back from Google is going to be markedly different.

In the search field, there is a term known as the “long tail,” which is somewhat subjective. But let’s say for a moment that we’re talking about searches with three or more words in the query. Such searches have been steadily rising in frequency and often generate results from content farms that are able to churn out lots of content of questionable quality.

Content farms typically leverage user-generated content, non-paid content contributors, or outsource content creation to low-cost producers. The result is often vapid and poorly produced. Very often searchers see these content farms ranking prominently for long tail searches, but Google would argue that searchers aren’t necessarily finding what they’re looking for when they select these results.

For Google, the solution to this problem was to rewrite its search algorithm to lower the relevance of these large content farms, and allow smaller niche sites to flourish on many of these long-tail searches. This change affected 12 percent of Google’s U.S. search results, and although searchers may not easily recognize these changes, they are certain to have a significant impact on the user experience.

Among online marketers it’s common knowledge that links are the gold standard for getting a site to rank high on the non-sponsored Google listings. This is the reason that many online marketers spend so much time and money trying to acquire links to content from other sites. To simplify a major part of Google’s strategy in revising its algorithm, a page with a lot of links from other sites and pages around the Web must be relevant to users.

Links have become so important that companies will pay … Next Page »

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BrightEdge, a San Mateo, CA, company that introduced its Web-based search engine optimization platform for businesses last summer, said today that it has brought on Ming Lei, chief architect at leading Chinese search engine Baidu, as a strategic advisor. Lei is expected to help the company expand its platform so that customers can increase incoming traffic from multiple search engines in multiple languages around the world. “Our clients asked us to extend the platform’s reach so they can drive the same ROI globally that they are seeing in the U.S.,” BrightEdge CEO Jim Yu said in a statement.

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At a press event in San Francisco this week, Google introduced Google Instant, an overhaul of its core search engine that brings up location- and history-sensitive search results even before you’ve finished typing your query. If you live in San Francisco and you type “s-a-u,” for example, Google Instant will make an educated guess that you’re searching for Sausalito, and will bring up a whole page of results about the picturesque waterfront community. If you lived in Napa, I imagine that it would bring up “sauvignon blanc,” and if you lived in Chicago, it would probably be “sausage.”

Google claims that the new feature is designed to make Web searches more efficient, by offering interactive feedback for partial queries—”faster than the speed of type,” as the company puts it. If you really were searching for Sausalito or sauvignon blanc or sausage, after all, you’d be done.

But I have my suspicions. I’ve been testing the new feature and talking to people in the search engine optimization business—folks who spend their whole day advising Web publishers and e-retailers on how people react to search result rankings, and how to elicit free traffic from Google and other search engines. They have some interesting thoughts about the probable repercussions from this latest change in the way Google presents search results.

One of the outcomes—and I think it’s likely—could be that you’ll actually spend more time using Google than before. Another could be a huge increase in competition among users of Google’s AdWords search advertising platform for common keywords—leading inevitably to more revenue for Google, but not necessarily to more traffic for the majority of advertisers.

As a caveat, I should say that none of these effects are likely to set in right away. For one thing, the Instant feature is being rolled out gradually, so it’s not available in all regions yet. It doesn’t work for searches from mobile devices. And most importantly, it doesn’t work for searches from the browser toolbar, where more and more people enter search terms. In my own case, I never actually go to Google.com, because Google lets me initiate searches directly from the Chrome “Omnibox,” the same place where I type in URLs. People who use the search boxes on Firefox or other browsers are in the same boat. Google would have to rebuild Chrome or come up with Instant plugins for Firefox and other browsers in order to make instant search available from these locations. (Google’s Marissa Mayer said at the Google Instant launch event that the feature would be coming to browser toolbars “in the next few months.”)

So it’s too early to get all worked up about Google Instant. But it is fun to speculate about the forces at work here, and which way they might be pushing. In this business, the stakes are so large—to wit, Google’s 70-plus-percent share of the search market, and its $23 billion in advertising revenue in 2009—that nothing happens by accident, and even seemingly small changes in the way the search engine works can have outsize effects.

1. The Wikipedia-Facebook Theory

There’s a great edition of the geek webcomic XKCD called “The Problem with Wikipedia.” It shows a diagram starting with the query “Tacoma Narrows Bridge.” This leads to the articles on “Suspension Bridge” and “Structural Collapse,” which, after “Three Hours of Fascinated Clicking,” leads—naturally—to “William Howard Taft,” “Lesbianism in Erotica,” and “Batman.”

The point being that the Web is a magical garden of enticing distractions. Google has said that when Google Instant is switched on, each query results in the delivery of five to seven times as many result pages. (On their way from “S” to “Sausage,” for example, San Franciscans will see … Next Page »

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There’s not much distance, in the minds of many Web merchants and publishers, between the terms “search engine optimization consultant” and “snake oil salesman.” That’s partly because SEO—the attempt to bring more traffic to a website by improving its ranking in the unpaid section of a search results list—is a messy art with many complex variables. It’s also because so many “black hat” SEO consultants prey on gullible clients, and try to game the search engines through underhanded tactics like keyword stuffing and invisible text.

Now there’s a new SEO gun in town—San Mateo, CA-based BrightEdge. Through better measurement and what it calls “pure white-hat SEO” techniques alone, the company can vastly increase the revenue its customers earn through traffic from unpaid search results, according to founder and CEO Jim Yu. (Also called “organic” results, these are the links that appear in the central column of a Google, Bing, or Yahoo search page. Which implies, I guess, that the pay-per-click ads in the margins are “inorganic.”)

BrightEdge announced the general availability of its Web-based SEO platform today, after three years in stealth mode and closed beta testing with a handful of customers like VMware, MySpace, and Branders, a marketer of brand-customized promotional products. BrightEdge’s service, designed for large enterprises managing extended Web properties, can provide a precise understanding of the return companies are getting for their SEO efforts, not unlike the statistics provided by paid-search platforms such as Google’s AdSense, Yu says.

There’s certainly room for improvement in what passes for SEO today. One study by Boston-based search engine marketing firm iProspect shows that AdSense ads on Google pages attract only 28 percent of users’ total clicks, while the other 72 percent go to organic results. “If organic search is driving three or four times the value of paid search, why do marketers focus first on the paid side? It’s because you can’t manage what you can’t measure,” Yu says. “Google has done a great job of helping marketers measure the return-on-investment of paid search…but to do the same thing in organic search is nearly impossible. Our goal at BrightEdge is to make [organic] SEO as simple as pay-per-click.”

BrightEdge isn’t the first company on the enterprise SEO scene. Xconomy’s San Diego editor Bruce Bigelow has chronicled the rise of San Diego-based Covario, for example, as it helps giant customers like Intel, Adobe, and Procter & Gamble track the success of both their paid-search spending and their organic SEO efforts. But Yu, who formerly helped to run Salesforce.com’s AppExchange directory, says that his 25-employee startup, which has raised $8.5 million in financing from Battery Ventures, Altos Ventures, and Illuminate Ventures, offers truly different methods for quantifying and improving revenues from organic search.

One element in BrightEdge’s offering is what it calls “closed-loop analytics.” That’s really about the ability to track the impact of specific SEO-driven changes in a website’s content. BrightEdge’s servers constantly poll the search engines to see where a given page ranks for hundreds of key search terms. Importantly, they monitor incoming traffic to see how … Next Page »

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It has been a busy week for little bits of technology news, amidst some more prominent deals. Here are three items in particular that caught my eye. The common theme among them, I would say, is the importance of relationship building in business.

—Microsoft’s Bing search engine, one year old this month, has been in the news a lot. Besides the strange Google experiment of adding dramatic background images, which drew obvious comparisons to Bing’s visual interface, there were other parallels made between the sites. Rand Fishkin of SEOmoz posted a detailed analysis of search engine optimization and ranking elements between the two search giants and concluded that “Google and Bing are remarkably similar,” so that building separate sites to target the two engines separately is “a waste of energy.”

Bing also distinguished itself in terms of “social search” this week, rolling out a new search page that grabs public and shared updates directly from Facebook and Twitter. Social and real-time search has been a consistent point of effort for Bing, which first included some tweets in its search results last July, and formed early strategic partnerships with Twitter and Facebook to include real-time status updates last October. Google has similar efforts in the works, of course.

—Facebook, the Palo Alto, CA-based social networking giant, announced it has settled on office space for its Seattle engineering outpost. There had been much speculation about which neighborhood the office would be located in, ever since the company announced it was coming to town last month. Facebook’s office will be at 101 Stewart Street in Seattle, near Pike Place Market. It is slated to open in late July and could eventually house around 30 workers. (Interesting post here on the personal story behind the Seattle office.)

—A Shanghai real estate mogul named Jiang Zhaobai is visiting Seattle next week to scout out promising companies who want to do business in China in green tech, clean energy, new media, mobile, and biotech, according to a feature in the Seattle Times. Jiang has a new venture, called the Shanghai American Enterprise Center, which aims to invest in small and medium-sized U.S. companies and incubate them in Shanghai, helping them grow into the Chinese market.

I first got wind of Jiang’s local efforts from Rogers Weed, the director of the Washington state Department of Commerce, at an MIT Enterprise Forum event back in January. “We’ll make sure that guy gets a bang-up tour of Washington when he starts looking for investments,” Weed said at the time. Sounds like it’s going well so far, despite rising economic tensions between the U.S. and China.

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Neil Patel claims he doesn’t know much about the world. “There’s only one thing I’m good at,” he says, “and that is getting traffic from Yahoo and Google.”

It’s a peculiar skill, but it has definitely paid off. Patel taught himself the art of search engine optimization about nine years ago, after he had started his first company (at age 16). He has since co-founded a number of Internet marketing firms—including ACS, Crazy Egg, and KISSmetrics—and is one of the up-and-coming tech angel investors in Seattle. He has invested in a number of Web companies around town, and has served as an advisor to startups like BuddyTV, Cheezburger Network, and LiquidPlanner.

Patel, who moved to town last year from Orange County, CA, gave a tutorial on Internet marketing last night at Twiistup’s “startup session” at Fenwick & West in downtown Seattle. The focus was on how entrepreneurs could optimize their company’s website to rank higher on Google and other search engines’ result pages. But it was the stuff in between the basic SEO lessons that I found the most enlightening. I’ll give a quick summary of it all here.

First of all, everyone wants to know how this 25-year-old whiz kid investor made his money originally. It’s been a well-kept secret for long enough. Suffice to say that doing search engine optimization, especially for online poker companies, was pretty lucrative back in the day (like five years ago). If you want to know more, you’ll have to ask him about it.

In his talk, Patel emphasized the importance of ranking in the top three results in Google (not just the first page), and about choosing “descriptive keywords with few competitors” for your website, rather than focusing just on words that a lot of people will search for. “It’s the long tail that will drive traffic, and conversions,” he said.

He also stressed the need for having compelling, fresh, yet evergreen content on the site that will attract incoming links. As good examples, he mentioned Zappos (now part of Amazon) and Cheezburger Network. Things to avoid: duplicating content from other sites, letting content get old, and adding lots of content and pages all at once. (It turns out search engines track websites’ content-to-links ratio.)

Probably the most interesting comment he made was about how micro-blogging and URL-shortening services like Bit.ly and TinyURL are reshaping the way Web content is linked together. “Twitter and URL shorteners are killing the blogosphere slowly,” Patel said. “Tweets are killing how many links are going to [original content] sites, making it harder to get ranked than before. URL shorteners are getting credit for the links rather than the sites.”

Nevertheless, the key to ranking high on Google is link building—getting relevant, authoritative sites to link to your content. And that’s nothing new. “Links is the thing you want more than anything else,” Patel says. Though people do buy links, they’re still the hardest thing to manipulate in the whole page-ranking scheme of things.

To that end, Patel urges companies to create “buzz in the blogosphere.” Although Twitter and other services may be eroding some of its power, more people will hear about the content on your site, he says. Lastly, he suggests contacting owners of relevant websites and providing constructive feedback about their content, while also asking them to link to your site in a friendly way; expect about a 5 percent hit rate, he says. That last bit feels like downright old-fashioned salesmanship—which is probably something not even Twitter can kill.

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Event season is in full swing here in Seattle. I thought it’d be useful to give a quick rundown of some of the gatherings our readers might want to attend in the next few weeks. If you want to know the secret to surviving as a startup (or a big company, for that matter), or want to schmooze with the top tech entrepreneurs and investors in town, or learn about how to market your startup, check out the following events, starting today:

—Technology Alliance’s annual “State of Technology” Luncheon in downtown Seattle today features a keynote by Clay Christensen, a professor at Harvard Business School and the author of such business books as The Innovator’s Dilemma, Disrupting Class, and The Innovator’s Prescription. One of Christensen’s big ideas is that “disruptive” strategies are about entering a market at the low end (with a cheaper and worse product) and gradually working your way up—which goes against the mindset of most startups, which try to develop a better product or service than their competition, and especially the big players. I wrote about an interesting Northwest connection to Christensen’s work on innovation strategy here.

—Seattle 2.0’s annual awards show is this Wednesday evening. If it’s anything like last year’s inaugural bash, it’ll be packed with tech entrepreneurs, software developers, angel investors, venture capitalists, and media. Jonathan Sposato, the former CEO of Picnik (recently acquired by Google), will give the keynote. Sposato and Picnik were the big winners at last year’s event.

—Northwest Entrepreneur Network (NWEN) is hosting an event focused on “brand strategy in the digital age” on May 25. The distinguished speakers will represent the marketing agencies and brand strategy firms Spring Creek Group, Corhouse Branding, Dry Soda, and Jelvetica.

—The Washington Biotechnology & Biomedical Association is featuring the latest installment of its series of events about how life science innovations can be applied to both domestic and global health problems. On May 25, Lisa Cohen of the Washington Global Health Alliance will moderate a panel with John Kaestle of HaloSource, Karen Hedine of Micronics, and Anne Bugge of SonoSite.

—Twiistup is hosting its second Seattle event on June 2, around “marketing your Internet company.” Neil Patel from Crazy Egg, KISSmetrics, and KISSinsights will go over strategies for boosting your company’s Web traffic through search engine optimization. Listen to the man. Ask him questions. He knows what he’s doing.

—Washington Technology Industry Association (WTIA) is organizing a program on smart fuels on the morning of June 3. It’s part of a series on cleantech and energy, and will feature talks from the Pacific Northwest National Laboratory, Washington State University, Blue Marble Energy, and Farm Power Northwest.

—A bit further out, TechFlash is putting on an event around VC, entrepreneurship, and financing strategies for startups on June 15. The summit will bring together venture capitalists, angel investors, and tech entrepreneurs to debate the pros and cons of taking outside capital and to explore the future of tech startups.

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WordStream, a Boston-based maker of software for improving search engine optimization and pay-per-click online marketing, has raised $6 million in Series B funding from Egan-Managed Capital and Sigma Partners. The startup, which also added Egan-Managed Capital partner Frank Andrasco to its board, says it will use the funding for growth and expansion of its products. Xconomy profiled WordStream in January 2009, when the company announced it had raised $4 million in venture funding.

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Lead generation. B2B marketing. SEO. Fuh fuh fuh.

Forget all these buzzwords. You want more customers? Talk to Optify. This Seattle startup, which came out of stealth mode yesterday, doesn’t have all the answers, but it does have what looks to be a pretty useful software product for marketers who want to track, organize, and improve their sales leads and results in a new way. Especially their results.

Optify is the brainchild of Brian Goffman, a former venture partner at Madrona Venture Group in Seattle, and Erez Barak, a veteran of Hewlett-Packard and Mercury Interactive. Optify’s customers so far include the Wall Street Journal, LexisNexis, Microsoft, and a slew of other companies, including Seattle-area stalwarts Bocada, Concur, Marchex, and SonoSite, and up-and-comers like AdReady, Smartsheet, and Skytap. Optify began in 2008 and was funded by Madrona and angel investors to the tune of $2.75 million last July. The company has 20 employees—and a few open positions in its own sales and marketing department.

Goffman and Barak have built a sophisticated software engine that helps corporate marketers tell, for example, which visitors to their website are most likely to buy their products—so their marketing team can focus on those potential customers, and better align themselves with the sales team. Optify’s software and dashboard interface weaves in technologies like search engine optimization, social media and e-mail features, and precise, real-time Web analytics.

Optify is seizing on the Web-based trend to gather data and measure everything that wasn’t possible in the old days when print publications and broadcast television ruled the media landscape. Those operations are struggling to show exactly how many people are getting exposed to advertising content, and how many are acting on it. Not so on the Web—and across many industries. “Marketers need to be able to show results,” Goffman says.

That means if they’re running promotions on Twitter, or blogging, or pursuing various customer leads, they want to be able to report exactly how that is translating into new sales. Barak echoes the sentiment, which makes a lot of sense. He says customers are telling him that things like search engine optimization are important, but “make sure you’re connecting it to the business impact. Get me more high-quality leads, and connect it to [sales] performance.”

It’s certainly a crowded field, but Goffman says Optify’s main competition to this point has been manual work, marketing consultants, and companies that focus on smaller pieces of the puzzle, like e-mail campaigns or small businesses. A unified marketing platform has “not been done with the simplicity we’ve done it, and with our out-of-the-box capability,” he says.

Which is not to say all the marketing problems have been solved. “There are things marketers do that we don’t manage. But we can track all their traffic sources. Long term, marketers want one application to do everything,” Goffman says. “That’s where we’re heading.”

One surprise is that Optify is selling to bigger companies than it originally expected to this early. Goffman says he thought they would sell to a larger number of small companies. But Optify has adjusted to building its software for big websites that get lots of traffic. He says the key challenges are to keep getting great people to work for the company, and to stay focused—pretty standard stuff for a young startup.

“In a fast moving market, you have to really pick your spots,” Goffman says. “And the fundraising environment is still tough. It’s a haves and have-nots world.”

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A new generation of corporate marketing executives was in attendance last week when San Diego-based Covario convened its fourth annual corporate partners conference at the downtown Hard Rock Hotel. As a rock band jammed onstage, the gathering crowd included JP Morgan Chase’s vice president of search governance, Amgen’s senior marketing manager for oncology, and the consumer insight manager for Sony Online Entertainment.

Search governance? Consumer insight? Welcome to the world of corporate search engine marketing.

Covario, a startup backed by Seattle-based Voyager Capital, Dubilier & Co., and FT Ventures, specializes in interactive marketing technologies and services. It holds the meeting each year to discuss the latest trends in the highly specific world of search engine marketing and online advertising.

Search engine marketing, which promotes websites in search engine results by paying to ensure certain search terms are displayed (and by other techniques), is a highly profitable business dominated by Google, Yahoo, and Microsoft. Covario operates in a different segment,  providing Web-based tools, analytical software, and other technologies that enable companies to optimize their websites and to measure just how much bang they get for each search-term buck they pay to Google and the other big boys.

Search engine marketing is growing much faster than traditional advertising. For all its precision, however, search marketing remains a … Next Page »

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Deal activity picked up a bit in the Northwest this week. But most of the action was in two or three big deals in the software and Internet sectors, with a smattering of deals in biotech and clean IT.

—Portland, OR-based Coaxis raised $10 million in growth capital from Updata Partners, based in Virginia and New Jersey. The money will be used to help Coaxis’s business, Viewpoint Construction Software, expand internationally. Viewpoint’s software, which is built on Microsoft’s .NET platform, is used by construction firms in the U.S., Canada, and Australia.

—SinglePoint, the wireless software firm based in Bellevue, WA, sold off its mobile aggregation business to Swedish giant Ericsson (NASDAQ: ERIC) for an undisclosed amount. SinglePoint makes mobile marketing software, and its service will help Ericsson expand its reach in text messaging.

—Bellevue, WA-based BlueKai raised a $21 million Series C round led by new investor GGV Capital, as Erin reported. Existing investors Battery Ventures and Redpoint Ventures also participated in the deal. BlueKai is a data exchange firm that enables websites to sell data on consumer demographics or buying behavior to companies that want to target their advertising more directly and efficiently. The company has raised about $35 million in venture capital dating back to March 2008.

—Seattle-based Hemaquest Pharmaceuticals raised $6 million in equity financing from undisclosed investors, as Luke reported. Hemaquest is developing experimental treatments for sickle cell anemia and viral-related blood cancers. The company was founded in 2007 and is backed by Forward Ventures, De Novo Ventures, and Lilly Ventures.

—Seattle-based SEOmoz has formed a partnership with U.K.-based Distilled to hand off its consulting business, which will be worth an estimated $1 million in the first year. As part of the deal, Distilled is opening a small office in Seattle. SEOmoz is now focusing solely on its search engine optimization and Web analysis tools and software.

—Seattle-based Voyager Capital co-led a $14 million Series B investment in Coulomb Technologies, a startup focused on electric vehicle infrastructure, based in Campbell, CA. Rho Ventures is the other main investor in the round. Voyager Capital seems to be making a push in the “clean IT” sector.

—Microsoft said that German giant Siemens has licensed its HealthVault technology platform, as Ryan reported. Financial details weren’t given. Germany will be the third country (after the U.S. and Canada) to adopt HealthVault, which enables people to store their personal health records in a secure online account and to share information with their doctors. Microsoft (NASDAQ: MSFT) released the technology in the U.S. in 2007.

—Bellevue, WA-based Intellectual Ventures, the invention firm led by CEO Nathan Myhrvold, acquired the majority of the patent portfolio of Avistar, a video-conferencing technology firm in San Mateo, CA. The deal is worth $11 million upfront, with Avistar also to receive a full grant back license that protects its products under these patents.

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Don’t think of Seattle-based SEOmoz as a consulting firm. It’s all about software and tools now—and pretty much has been for a couple of years.

That’s the message from founder and CEO Rand Fishkin, who spoke with me last week about the search engine optimization company’s strategy. SEOmoz announced today it is officially handing over its consulting business and existing consulting customers to Distilled, a small search marketing firm based in London, U.K. As part of the deal, Distilled is setting up a Seattle office in the next few weeks, its first in the U.S. The estimated revenue from the consulting business for the first year is $1 million, according to the companies. Meanwhile, the former SEOmoz consulting team is switching over to marketing within the company.

SEOmoz and Distilled have worked together informally since 2007. Their mutual customers include Microsoft, RealNetworks, Avvo, Evogear, Etsy, and Scribd. The new partnership will allow SEOmoz to focus solely on its core software products, which should please its investors. “We have an impetus to maximize the shareholder return and investor value,” Fishkin says. He adds that the move is being made, at least in part, to “maximize the multiplier on an exit.” (Since consulting is essentially a steady fee-for-service business, it has less growth potential than software, which can tap into a much bigger market and therefore command a premium from investors.)

Some quick background on SEOmoz: The company was founded in 2004, originally as a consulting shop, and is backed locally by Ignition Partners and Curious Office. It has 21 employees and generated just over $4 million in revenue last year, up from $1.4 million in 2008. And it has been generating more than 85 percent of its business from its software and tools, which it offers primarily to small and medium-sized businesses to help improve their marketing and Web traffic. (One differentiation from companies like Seattle’s Optify and San Diego’s Covario is that those firms … Next Page »

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—Personalization based on predicted intent instead of past behavior (based on cookie).

—More robust “universal search:” Better results for text and descriptive searches on videos, pictures, inside games, and applications.

—GPS-based hyper-targeting of search results and advertising on smartphones.

—Ubiquitous and non-text search: Search as an integrated activity rather than a separate activity into videos, music, etc. Search on images, tones, smells, and not just text-based phrases and descriptions.

—3-D search: Search will have new display and navigation metaphors beyond text and html links on a flat white background.

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San Diego’s Covario, a venture-backed startup in Web-based search engine optimization (SEO) and interactive marketing analytics for big companies, says it has acquired Netconcepts, a Madison, WI-based specialist in SEO for retailers and e-commerce websites. Financial terms were not disclosed. In a joint statement issued by the two companies, Covario CEO Russ Mann says by combining Covario’s Organic Search Insight software with NetConcepts’ GravityStream technology, “advertisers will be able to identify the SEO actions that drive better rankings, and also deploy those strategies quickly, and in a highly scalable way to achieve their ROI [return on investment] goals.” Covario investors include Dubilier & Co. FTV Capital and Voyager Capital.

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Noah Auerhahn and Jeff Nobbs knew they were onto a good business idea last year, when they won the fourth annual USC technology plan competition. They were undergraduates after all, competing in a contest that was open to all graduate students, faculty and researchers on campus. Nevertheless, Auerhahn tells me that what happened yesterday was “very unexpected.”

The collegiate business partners moved to San Diego last year (after their graduations) and spent the $25,000 they won in USC prize money to improve and recently re-launch Extrabux, a retailing website that combines comparison shopping with cash back and rebate offers. “We always assumed that Cyber Monday would be a big day for us,” Auerhahn tells me. “But I couldn’t say that I expected we would be the No. 1 search term on Google Trends.”

Noah Auerhahn (left) and Jeff Nobbs

The Extrabux.com website got about 83,000 Internet visitors yesterday, including some 63,000 unique visitors, according to Bob Nascenzi, who recently joined the online retailer as CEO and as a board member. Online searches for “Extrabux” on Google yesterday eclipsed searches that included keywords for such terms as “Tiger Wood accident rumors” and “Chelsea Clinton engagement,” Auerhahn says.

Nascenzi attributes the spike in traffic chiefly to a plug from old media—a televised segment on ABC’s Good Morning America about the latest tools and insider tricks for getting the best online holiday shopping deals. One of the bloggers that ABC consulted, Erin Gifford of Couponcravings.com, recommended Extrabux, describing it as website that enables online consumers to compare prices, get coupon codes, and cash back deals for specific products on their Christmas shopping lists.

Extrabux is able to provide information about … Next Page »

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I’ve been predicting for a while that the marketing agencies and website developers that don’t have deep technical capabilities in search engine optimization will be left by the side of the road. Now we’re seeing it come to pass with Adobe’s $1.8 billion buyout of Omniture. [Adobe Systems announced the acquisition on Sept. 15, and U.S. antitrust regulators recently granted an early termination of their review.]

When Adobe’s chief marketing officer, Ann Lewnes, says marketing is the new finance, she’s not talking Orwellian double-speak. She means the digital age is driving the corporate marketing function to become accountable for spending in a far more rigorous and precise way than the “Mad Men” days of estimating “reach and frequency.” And that’s what Adobe’s Omniture acquisition is really all about.

This merger is intended to develop creative content in a holistic way and to measure the value of that content—whether it is video, web pages, mobile content, or social media content. This deal represents a way to “close the loop” in terms of creating digital content and measuring its impact.

Precisely measuring how people use a website is what we do at San Diego-based Covario. We view this deal as a brilliant strategic move for Adobe—one that could change the rules of the game for digital media, from creation to measurement to monetization. It represents changes in technology that will finally and irreversibly mark the end of an era.

This is what we see coming in the new Adobe media world:

—Video developers and agencies will build Adobe Flash creative content with Omniture tracking codes implanted from the beginning. This will enable them to track online views of that content across the web, and perhaps even begin to … Next Page »

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San Diego’s Covario, which specializes in high-end software analytics that helps customers optimize search engine results for their web sites and products, says it is expanding to offer Internet marketing services capabilities. The company says the move into agency services, which marks a turning point in its technology-focused strategy, came in response to growing advertiser market demand.

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Blogging is about active sharing. I’ve known this on an intellectual level for years, but working for Xconomy has made the idea very real to me. My stories reach far more readers if I take a few extra minutes every day to share the items with my e-mail contacts and Twitter followers, and to submit links to places like Slashdot and Y Combinator’s Hacker News. And after all, if nobody is aware that you posted something, what was the point of writing it?

Of course, it’s not just my own stories and other Xconomy articles that I share. I find loads of cool stuff across the Web every day, and Twitter is a great vehicle for sharing the joy with people who share my tastes.

This week I started using a browser plugin called Shareaholic that makes all of this active sharing much easier, by providing a single button that connects me instantly to more than 60 sharing services including social bookmarking, blogging, publishing, and other tools. Shareaholic isn’t new—in fact, it’s the most widely distributed browser plugin for sharing, with over a million downloads so far. It’s been trendy among the digerati at least since February 2008, when its inventor, Jay Meattle, was one of three grand prize winners in a Mozilla-sponsored contest designed to highlight the coolest new Firefox extensions. But somewhat embarrassingly, I only learned about it recently, when Meattle gave a presentation at the July Web Innovators Group meeting in Cambridge, MA.

Meattle came by Xconomy’s palatial new offices recently to tell me more about Shareaholic, which has grown from a plugin into a full-fledged startup based in Cambridge. He showed me how easy it is to configure the free tool to submit whatever Web page you’re looking at to Digg, Facebook, Reddit, Twitter, Techmeme, Delicious, StumbleUpon, and about three dozen other social networking and bookmarking sites and news aggregators. You can also use it to share your discoveries with yourself, by sending them to online notebook services like Posterous or Evernote (my personal favorite) or your blog on LiveJournal, Blogger, or Tumblr.

And, of course, you can e-mail links to yourself or to others via Gmail, Hotmail, or your default e-mail client. In fact, Meattle says the whole idea for Shareaholic came from conversations with a colleague named David Cancel who, like Meattle, was tired of having to copy URLs from the browser address bar and paste them into e-mails when the pair was sharing Web materials with one another. Cancel is the co-founder and CTO of San Francisco- and Cambridge-based Lookery, a targeting service for online ads where Meattle was, until four months ago, the vice president of products. The pair also worked together on the founding team of Compete.com, a Boston-based Web traffic analysis firm sold last year to marketing giant TNS.

For Meattle, it was a simple matter to write some software that would automatically grab a link from the Firefox URL bar and dump it into a new outgoing e-mail message. And over time (meaning, working nights and weekends until a few months ago) Meattle has been able to make Shareaholic work on multiple browsers—Firefox, IE, Safari, Chrome, Flock, and even Songbird, Mozilla’s open-source answer to iTunes—and communicate with practically every Web 2.0-era sharing service that has a public API, or application programming interface.

But why go to all this trouble to provide a free tool that generates no direct revenue? To answer that, all you have to do is look at Meattle’s recent history as an entrepreneur. At bottom, both Compete.com and Lookery are about collecting and selling data that … Next Page »

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The biggest news by far last week was ExxonMobil’s decision to invest $600 million in biofuels, with half of that going to San Diego’s Synthetic Genomics. A number of companies also launched new technology iniatives. To find out what’s happening, just keep reading.

—ExxonMobil, the world’s largest oil company, said last week it plans to invest $600 million to develop algae-based biofuels, with least $300 million going to fund fundamental work at Synthetic Genomics, the startup co-founded by J. Craig Venter, the human genome pioneer. Venter said Synthetic Genomics plans to begin construction soon on a research and test facility in San Diego. Venter’s wife, Synthetic Genomics spokeswoman Heather Kowalski, told me the ExxonMobil deal won’t affect the startup’s joint venture with BP, where the initial focus has been on coal. Kowalski also said that BP is an equity investor in Synthetic Genomics, but ExxonMobil is not.

—Covario, the San Diego-based software analytics startup, said it has developed a new software-as-a-service program that automates the process of analyzing Web traffic on a customer’s corporate website. Covario says its “D3″ product for search engine optimization replaces the time-consuming work often performed by Web marketing agencies.

—San Diego wireless giant Qualcomm (NASDAQ: QCOM) said it is “reviewing its options” for LifeComm, its virtual mobile network focused on healthcare services. Qualcomm said LifeComm has been unable to raise enough capital from third parties to fully develop its initial launch product. Mobihealthnews, a Boston website focused on the wireless healthcare industry, said Qualcom has decided to pull the plug on LifeComm.

—Aculon, a San Diego startup specializing in nanocoatings for use in a variety of industries, said its proprietary technology replaces hexavalent chromium in paint primers applied to stainless steel, titanium, aluminum, and other metal surfaces. Hexavalent chromium is a toxic, cancer-causing heavy metal used to make anti-corrosion coatings. Aculon CEO Ed Hughes told me Aculon’s technology forms a coating that is just one molecule thick, or 2 to 4 nanometers.

—San Diego’s TelCentris said it is upgrading its VoxOx universal communicator service to include an automated “personal assistant” that can answer your phone calls and route them according to your preferences. A VoxOx user can combine his or her existing phone number with their e-mail service provider, instant messaging service, and social networking sites like Facebook, MySpace, and Twitter.

—Simon Thompson, ESRI’s director of commercial marketing, mapped out some of the innovative trends in Geographic Information Systems, or GIS, when we met amid the hubbub of the 2009 ESRI International User Conference in downtown San Diego. Thompson said one trend stems from creating GIS mapping “masks,” or layers of mapped information, so you can change the underlying data set on your iPhone app from a map of gas stations to a map of restaurants or schools. Another key trend he discussed involves the convergence of GIS mapping technologies with software analytics.

—Quasar Geophysical Technologies of San Diego has developed a new type of electromagnetic sensor that is sensitive enough to detect tiny electrical currents flowing through subsea rock—and variations in the conductivity among different types of geological formations. The company says its technology is sensitive enough to help the oil and gas exploration industry increase its chances of discovering offshore oil and gas deposits. Quasar has designed its sensors to be deployed on the ocean bottom, as deep as 2.5 miles below the surface, for weeks at a time.

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