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If you’re a business owner, chances are you’ve been cold-called by an IT boffin pitching to fine-tune your Google Adwords. You don’t use Adwords? Tsk, tsk, tsk.So, what’s this Adwords caper all about and does your little business really need it? Most importantly, can you afford it? On the surface it looks expensive and complicated. Well, it’s not. It’s also likely to outperform your traditional advertising methods and in future may well become the mainstay of your promotional activity.

Adwords is a web-based advertising service operated by Google. It’s “pay-per-click” advertising – that is, you pay nothing unless someone clicks on your ad. The ads appear either under “Sponsored links” on the right-hand side of the Google search page or maybe under “Ads by Google” on other web pages.

The clever thing about Adwords is that they appear on web pages or search pages with keywords you have specified. So if someone searches for “roof repairs” and you have chosen “roof repairs” as a key phrase, your ad appears next to Google’s search results. Hopefully someone then clicks on the link and you score a customer.

The closer your ad is to the top of the list, the more likely the searcher is to click on it. The position in this list depends on how many advertisers pay for the same keyword and how much they are willing to pay. If you type in “home mortgage” you’ll get a lot of paid ads and should you click through to one of those advertisers’ sites, that advertiser will pay Google handsomely. However, if by chance you are interested in purchasing an “Outer Mongolian rock rabbit” and enter that phrase instead, you’ll most likely see there are no paid advertisements at all. It means no one is prepared to pay Google for those keywords.

All paid ads take a form Google specifies. This includes a headline, two lines for a “call to action” and your web address. When you sign up to Google Adwords, you make up these ads. In fact, you can have many such ads all running at the same time using different keywords.

The way ads are selected to be shown is based on keywords and phrases and, to some degree, your budget. Think of the keywords you think customers would type in to find you. These may include product names, services and processes. And here’s a secret: include common misspellings of those words.

Be as specific as possible using two- or three-keyword phrases. Avoid generic terms such as just “rabbits” if you breed Outer Mongolian rock rabbits. Otherwise, every time a customer looks for just any old rabbit he might get your ad and you waste your advertising budget. Provide a more accurate phrase such as “Outer Mongolian rock rabbits” or “exotic pets”.

Now the money bit. You choose how much you spend per month. You also choose geographically where you want your ads to appear; city, state, country. While this is not an exact science, it works pretty well. But how much should you spend and how much does each ad impression cost you? If your ad appears but is not clicked on, you pay nothing. This is called an “impression” and Google tells you how many of those you have each month.

However, if the searcher (your future customer) clicks on your ad and gets forwarded to your website, you pay based on the amount you offered for that word or phrase.

This action is called a “click” or “click through”.

And how much do you offer for that word or phrase? Paying more will bump you closer to the top of the display list but you will use up your budget faster. While experienced users can set a maximum figure for each word or phrase, to get the hang of this process simply choose Google’s Starter Edition. This relies on Google’s advanced black magic to take your budget, whether $5 or $5000 a month, and calculates the likely cost of your keywords based on what other companies are bidding. It then pitches as many impressions of your ad as possible through the month.

A typical click-through costs 20 cents to $2 but keywords for high-ticket sales such as mortgages can cost many dollars per click. Don’t panic – you cannot be charged more than the budget you set. A small business might start with a budget of $100 a month and see how it goes. You pay by registering a credit card.

Importantly, monitor the results from time to time. The statistics Google provides are excellent. They tell you how each word is performing along with the number of impressions and click-throughs. This allows you to fine-tune your campaign by tweaking the keywords. Try offering a wickedly good special that can only been accessed via a special web page your Google ad goes to. That way you can track the actual number of customers you get from your campaign.

So give it a go. Sign up for Adwords by following the “Advertising Programmes” link from www.google.com. It won’t take you more than an hour or so and the knowledge you’ll have gained will be invaluable in understanding this very cool and effective way of advertising.

Duncan Ross, May 2009

This story was first published in The Age.

The High Court has ruled that the electronic program guide created by IceTV does not infringe Nine Networks’ copyright.

The full judgment of French CJ,Gummow, Hayne, Heydon, Crennan and Kiefel JJ (73 pages) is available here.

In summary, the court found that, in terms of the Copyright Act,  IceTV did not copy a “substantial” part of Nine’s weekly schedule.

The judgment notes that IceTV did not copy any of the broadcasters’ program synopses, and that:

IceTV’s synopses had a different commercial purpose from that of Nine, as evidenced by the use of humour or criticism.  For example, the IceGuide synopsis for the Nine programme The Footy Show (AFL) on 28 September 2006 read
“From the Rod Laver Arena comes this extra long torture session.  Apologies for not bringing you the ‘entertainment’ line up, it’s not through lack of research.  Unfortunately, the only way to have truly known was to be watching The Footy Show last week and frankly, not for love or money will the IceMan do that.  So, those of you who enjoy the ‘humour’ and baffling ego inflation.  Enjoy.”

Having found that  IceTV did not copy a substantial part, it was not necessary for the Court to consider the issue of “indirect copying” which was one of the main reasons previously given for the contrary finding in the Federal Court of Appeal. I discuss that subject in an earlier post.

I was pleased to see the Court took into account the balance between the public interest issues of this case.  They said:
“The Full Court approached the issue of substantiality at too high a level of abstraction, and in doing so tipped the balance too far against the interest of viewers of digital free to air television in the dissemination by means of new technology of programme listings.  The Full Court did so by treating the issue of substantiality as dominated by an “interest” in the protection of Nine against perceived competition by Ice.”

The history of this litigation is explored further in this category of our blog. It has its roots with my idea, back in 1988, that an electronic program guide could be used to overcome the difficulty people were then having setting their VCRs to record the correct program. When I approached the TV networks to buy their data, they said they would not sell it for that use. When I came up with the idea of creating an EPG independently, without breaching copyright, TV industry representatives said “we’ll sue you”.

The rest is history.

Peter Vogel (Shareholder but no longer employed by IceTV)

The decision in the case of Nine Networks v IceTV  will be handed down at the High Court in Canberra at 10.15 tooday.

From the hammering that Nine got from the bench at the hearing of the appeal last year, I’d say IceTV will romp home. However a decision in IceTV’s favour would signifcantly change the course Australian copyright law has taken, so I’d reduce the odds to 60% in Ice’s favour.

Stay tuned!

Last week I attended a public consultation on the government’s proposed $1.3 billion Green Car Innovation Fund. The fund is part of the “New car plan for a greener future” which provides $6.2 billion to support Australia’s automotive industry.

In summary, the fund is a grant scheme which offers $1 for every $3 funding provided by the applicant. To qualify for a grant, the project must be aimed at developing ways to significantly reduce the greenhouse gas emission of passenger vehicles. It covers R&D, proof-of-concept, early-stage commercialisation and pre-production activities. Full details of the fund cab be downloaded from the Department of Innovation, Industry, Science and Research website.

This initiative is basically a good thing, as it recognises that with the right policies, going green can be a boost to Australia’s economy, rather than a drain on it. However there are a couple of glaring problems that I suggest the government should look at before the fund kicks off.

Size of the fund

The Fund will provide $1.3 billion over ten years from 2009, or an average of $130m per year.

This is not a lot of money to support the greening of Australia’s biggest export earning manufacturer. To put the size of the Fund in perspective, this represents about 1% of fuel excise collected.

In the light of the present world economic situation the total fund should be significantly increased, perhaps drawing on part of the government’s recently announced economic stimulus package.

Merit critera
The key criterion is reduction of greenhouse gas emissions. But at the public consultation in Sydney, it was stated that only the emission of the vehicle itself are relevant to this criterion,  factors such as embodied energy of the vehicle would not be taken into account in assessing the merit of an application.

This is clearly a fundamental oversight. To be consistent with the stated objective of greening the industry, the total greenhouse gas emissions must be reduced by the proposed technology, including for example the carbon footprint of fuel production and transportation. I fear, however, that because this fund is part of an automotive industry package, and not a climate change initiative, this is unlikley to change. Expecting the car industry to put the environment before profits is akin to asking the tobacco companies to remove the addictive chemicals from cigarettes.

Funding formula
The proposed funding ratio of 1:3 is the fund’s biggest problem. It was explained at the consultation that the rationale for this low ratio is that this will result in a multiplier effect for the government’s investment – $1 of grant resulting in a total of $4 worth of innovation.

This logic is seriously flawed.

Only companies with existing revenues or a strong capital base will be able to find the matching funding, and these companies would carry out the project whether or not they receive a grant. For them, the fund will just represent a nice 25% “icing on the cake”.

Small companies, individuals, university researchers and the like, simply cannot raise the money required. To make matters worse, the fund pays retrospectively, so the grantee actually needs to find 100% of at least the first few months of the project cost themselves. This represents a significant practical cash flow barrier for small innovative and efficient developers.

The government says it has fixed the funding at 1:3 because it wants to get the best bang for its buck. However the exact opposite will result. The biggest returns will come from the small research projects, not the big ones. With the minimum grant being $100,000, it also dictates that the minimum project size is therefore $400,000. We are aware that some of the most innovative work being carried out in Australia at the moment in the field of electric vehicles is by small companies who would have neither the management bandwidth nor the cash flow to execute a project of that size.

Giving a hundred inspired individuals $100,000 each with no strings attached is much more likely to produce some new groundbreaking technology than giving a car manufacturer a $10m cashback on a $40m project.

A better solution would be to calculate the funding ratio on a sliding scale, so that small projects receive 100% funding (removing the impossible matching funding barrier) and large ones be funded at 1:4.

Funding should also be paid in advance, tranched against a projected cashflow.

Otherwise, the scheme will, by its very design, eliminate the target organisations it seeks to support.

This post was also published by the Sydney Morning Herald.

2009 UPDATE: ICETV WINS HIGH COURT APPEAL

2008 post follows:

The transcripts of the IceTV vs Nine Networks appeal to the High Court of Australia have now been published.

The first day 16th Oct 2008
Second day 17th Oct 2008

My comments on each day’s arguments are presented in previous entries in my blog.

Going by last year’s High Court Annual Report, a judgment can be expected within 3-6 months.

Yesterday’s announcement that AGL and Macquarie Bank are planning to spend $1 billion to build an electric-vehicle charging network in Melbourne, Sydney and Brisbane is yet another indicator that the carbon crunch could be the saviour of Australia’s automotive industry (see my previous post on this subject).

The car companies are slowly tooling up for all-electric vehicles, although progress is being hampered by the temporary insanity of hybrids. Meanwhile, many early adopters are taking matters into their own hands and building their own electric cars.

Last weekend I had a look at some examples at the Field Day organised by the Sydney branch of the Australian Electric Vehicle Association.

Most of the vehicles on display were conversions done by dedicated owners. The process is quite straight forward. Take a car of your choice, take out the petrol engine and everything associated with it (cooling system, fuel tank, starter, alternator etc) and install an electric motor, batteries and controller.

A typical conversion

 Engine compartment gutted and a small electric motor installed.

The performance of the converted car can be whatever you want, it only depends on budget. Acceleration and top speed is determined mainly by motor size and range by battery type and capacity. The battery is the Achilles heel and the most expensive part. Traditionally, various styles of lead-acid battery have been used, but these are very heavy and lose efficiency after only a couple of hundred charges. The newer Lithium iron phosphate (LiFEPO4) batteries are dramatically lighter for equivalent powerm, and should last ten times longer. They are, of course, many times the price, although this will no doubt change once production volumes rise.

Cost of the materials to convert a typical car is roughly $2000 for the motor, $2000 for the controller and $5,000-10,000 for LiFEPO4 batteries. There is a useful collection of links to Australian EV component suppliers on the Zero Emission Vehicles Australia website.

A classic VW beetle conversion

Typical scene under the hood of a homebrew EV

The owner of the bike below built the whole thing for under $2000, including the bike. The motor is small and nearly silent. You’d be able to drive this bike into an apartment building for parking. Top speed is 70km/h which is quite adequate for getting around town.

As I explained in my article published recently on Crikey, The Great Hybrid Swindle, fully electric cars are much more environmentally friendly than hybrids, and also very much cheaper to drive. Even if they are recharged using coal-fired electricity, they have a better carbon footprint. I calculate that for average city driving, the daily energy required can be captured from a modest solar array on the roof of your house, resulting in absolutely cost-free and emission-free driving for most people. If you drive somewhere that does not a powerpoint for recharging, the solar panels pump electricity into the grid during the day, and you charge the car overnight.

The Rudd Government has made a strong commitment that Australia will play a leading role in development and application of green car technology. They have issued the Green Car Challenge, pledging to purchase environmentally-friendly vehicles for the Commonwealth fleet if they are produced in Australia.

The 2008 Review of Australia’s Automotive Industry recommended bringing forward the Green Car Innovation Fund to 2009 and doubling the grants to $1bn. It also proposed the inclusion of transportation in the new emissions trading scheme. This carrot-and-stick approach will be a huge boost to local green car initiatives.

The future of driving does not involve petrol. AGL and Macquarie have obviously caught on to that idea.

Perhaps the Australian car industry, being quite tiny by world standards, will be able to change course more quickly than their global counterparts.

The High Court appeal in Nine vs IceTV concluded yesterday. Mr Bannon SC completed Nine’s submission, which was focussed largely on showing that Nine’s weekly schedule does fall within the Copyright Act’s definition of a compilation. The judges continued their questions about who the authors are, and when their authorial work started and ended. They were also interested to know exactly which copyright work Nine claimed to own. Gummow J said that the statement of claim talks about program guides which are ‘up there’, with a gesture to the heavens.

A compilation requires selection and arrangement of elements and the process needs to require skill. Mr Bannon had said the day before, that the process of selection started months earlier, when Nine’s executives visited the producers in Hollywood and so on. On the second day, when Justice Hayne pointed out that the selection process must be made from existing stock, Mr Bannon said “I am beating a full-scale retreat from Hollywood – and that it was “via Damascus”.

The Judges continued questioning whether Nine’s activities were a part of the selection process for making the compilation, or a series of commercial decisions for optimising their broadcasting business. Mr Bannon accepted Justice Hayne’s suggestion that “a root proposition you will have to make is that a decision about a business decision, once recorded in a material form, is a compilation”.

Justice Crennan posed a number of hypothetical scenarios, such as: if a competitor shows the same show as Nine at the same time, would they breach Nine’s copyright by putting that in their guide?

Mr Catterns QC then spoke for Telstra. He argued that the policy that compilation copyright protects commercial considerations has long been decided, and that is a question for the legislature, not the courts. Once again, Justice Crennan questioned whether making commercial decisions is an act of compilation. She also explored the question of originality “You can’t say a trademark is original just because you spent $10 million coming up with it”.

IceTV’s Mr Ireland QC then argued that the people who made the programming decisions were not the authors of the Nine guide, the author is an un-named person who prints out the selection of fields from their large database to create the guide which is sent to the aggregators.

To me, the most striking feature of this appeal was that the goalposts seem to have shifted dramatically since the case began. Initially, there was little discussion about the nature of Nine’s copyright work, it was all about whether IceTV copied it and, if so, whether it was a substantial part. The High Court seemed primarily interested in whether Nine’s guide is actually a copyright work within the definitions of the Act, and if so how much protection it should get.

There was also the question of whether IceTV’s activities cause Nine any harm. Nine were asked “what are the damages if somebody else informs the public about your programs? Nine said that they did not get paid for their schedule by the aggregators, but they had control over what they did with it. The relevance of this is discussed in Benedict Atkinson and Professor Brian Fitzgerald’s recent publication described in my last blog entry.

As Atkinson and Fitzgerald say:
Ice TV v Nine Network is a seminal copyright case because of its potential to restrict information flow. Access to information is a human right, and while it might be thought that the public is not much harmed if prevented from extracting data from unexpressive information compilations, over time the oppressive exercise of proprietary rights in information could radically undermine our freedom to inform ourselves without cost or restriction.

An interesting analysis of the social issues underlying the IceTV vs Nine case has just been published by Benedict Atkinson and Professor Brian Fitzgerald (QUT Law Faculty): Copyright as an Instrument of Information Flow and Dissemination: the case of ICE TV Pty Ltd v Nine Network Australia Pty Ltd.

The abstract says: “This article outlines and critically evaluates the case of Ice TV v National Nine Network. This case which is being heard before the High Court of Australia in October 2008 considers the boundaries of copyright protection for compilations…”
“The convening of all seven judges of the High Court is a rare occasion and reserved for cases of special significance. The court’s decision in this case has the very real potential to influence the shape of innovation and productivity in Australia over the next decade. It will be asked to determine a legal issue that invites the court to provide guidance on the underlying purpose of copyright law and its role in promoting information dissemination and information flows: variables that (evolutionary) economists see as foundational to innovation.To this end we believe the outcome of this case may substantially determine the extent to which commercial information compilers control the use of non-expressive compilations. The underlying concern of many observers is that if substantial reproduction is said to result from appropriation of investment, and investment is said to be a legitimate simulacrum of expressive originality, most unauthorised copying of compiled information will constitute breach of copyright. The adverse social and economic consequences of so-called ‘copyright in information’ may be great.”

The full article can be downloaded from the QUT website.

I have also previously mentioned an excellent analysis of the case by David Lindsay in a previous blog. David’s Powerpoint presentation can be downloaded from the Copyright Association’s website. Come back tomorrow for a rundown on the final day of the High Court hearing.

I recently enjoyed a business lunch where the guest speaker was Climate Change Minister Penny Wong. I was very impressed by her obvious intelligence and enthusiasm for her job (”My mum was thrilled when I told her my new job is to save the world”).

However Wong is a lawyer, not a scientist, and when asked what she is personally doing for the environment, she said “I drive a hybrid”.

Oh dear, she’s fallen for the hybrid hype. This prompted me to write an article which was published this month by Crikey.

The gist of this article is that hybrid cars:

• Have everything that can go wrong with a petrol car plus everything that can go wrong with electric cars
• Don’t burn much less fuel that a modern turbo-diesel or even small petrol car
• Have a huge carbon footprint in the manufacture of all those extra components
• Are uneconomical to own and operate

Most importantly, fully electric cars are practical today and don’t suffer these drawbacks. Electric car technology presents a massive opportunity for Australian technology, manufacturing and the economy.

I also explain how solar powered cars are a practical reality for many urban commuters.

For those who do not subscribe to Crikey, the article can be downloaded here.

Today I am in Canberra for the High Court appeal of Nine vs IceTV (see my previous posts below). This case has certainly gathered a head of steam. The importance of the outcome of this final appeal is reflected in the fact that leave was granted for Telstra to appear in support of Nine and to the Australian Digital Alliance in support of IceTV. Hence the cast of thousands at the bar table.

Telstra is understandably concerned. If this appeal goes against Nine, it could be a green light for others to use information from their phone book which until now has been protected by copyright laws (Telstra vs Desktop Marketing being the landmark case).

The Australian Digital Alliance is a public interest group which champions the right of access to information, as their website says:

Australia’s copyright laws are the chief means by which we as a society regulate the creation and distribution of knowledge. The effects of a misguided copyright regime would be dire and create enduring harm to our education system, our economy and our culture.

The day kicked off with IceTV’s silk John Ireland explaining how IceTV produces their guide and fielding questions from the bench. IceTV did not accept that copyright subsists in Nine’s weekly schedule. They said it is “Nine’s statement of its present intention as to what is going to be broadcast” when and once these facts are published they are a public resource which can be used as a basis for their research.

There was much discussion about the primary purpose of creating the schedule – is it mainly for meeting commerical objectives or for providing a TV guide for the public?

The judges also asked who the authors of the alleged copyright work are (a company cannot be an author, only people). After much discussion this point is still being argued.

Mr Ireland argued that this case is distinguished from “indirect copying” cases, such as where someone copies house plans by measuring up a house built from the plans. He said that in that case the process recreates the original work, whereas IceTV does not reproduce Nine’s schedule.

Mr Webb, appearing for the Australian Digital Alliance, submitted that the Full Court had lost sight of what was required to constitiute an original work of an author. He also argued that copyright law has always strived to protect the public interest in dissemination of information, and that the public interest must be balanced against the author’s interest. He suggested that Nine was attempting to control information long after it has lost its confidentiality.

Nine’s Mr Bannon was next. He described the process Nine used to create its weekly schedule and stressed that the process of deciding the broadcast schedule cannot be separated from the process of creating the copyright work, the weekly schedule.

The Judges asked many questions which seemed to be aimed at teasing out the distinction between making business decisions, aimed at maximising ratings, and publishing the schedule.

Justice Gummow, for example, asked “Is what you are seeking protection for the substantial business investment in building up the database?”.

There was much discussion about whether the authorship process included all the preparatory work. Justice Haydon said “The expression of those two columns [the time and title] is not the hard bit, thinking them up is the hard bit” and asked whether the work of negotiating purchase of programs is also part of the skill and effort of creating the schedule.
The case resumes tomorrow.  Stay tuned.