Bangalore Real Estate

February 26, 2007

I was in Bangalore recently and could not help but notice the apartments that are popping up everywhere. Real estate prices are at an all-time high. So are the stock market valuations for apartment builders. The IPO of ‘Soba builders’, a local builder, was oversubscribed 108 times.

Finding 5-star hotel rooms is also difficult. There are only 5 such hotels in Bangalore and apparently they get booked a year in advance. The availability of 5-star hotel rooms is also at an all-time low. A silicon valley VC I was chatting with a couple of days ago mentioned that he paid $650/night to stay at the Leela palace (which is close to one of the IT hubs in Bangalore). More than what he pays to stay at the Waldorf! Another bay area company that has a substantial presence in Bangalore pays $350/night for its senior execs to stay at the Leela. The reason they got a better deal?:) They have a long term contract for the rooms with the Leela!

Given this pressure on land prices (and on cost of talent), some of the capital is likely to move (or is already moving) to Tier 2 cities near Bangalore or to Hyderabad, Chennai (Madras), Poona among others. Mysore is likely to benefit from this capital flight. It is about 3 hrs from Bangalore. But with a new multi-lane highway being built between Bangalore and Mysore, the commute time will decrease. Moreover, Infosys already has presence with a large training center in Mysore.


SEMPO Survey

February 22, 2007

A recent SEMPO Survey says that Yahoo is on a solid footing on the SEM front. To substantiate this claim, it cites the survey statistic that 4 out of 5 or 86% of the respondents run SEM ads on Yahoo.
I think this is misleading. Historically speaking, Overture (which was acquired by Yahoo) was the pioneer and advertisers have always run ads on it. Moreover, Yahoo continues to retain approx. 20 – 25% search market share. Given this fact, advertisers have no choice but to advertise on Yahoo, no matter how unweildy the platform. A more relevant question to ask advertisers would be “what % of your SEM spend is on Yahoo?”). Responses to this question will likely show a skew that corroborates Yahoo’s woes in the SEM space (atleast until the Panama launch).

On a positive note though, the new Panama platform will finally give advertisers the flexibility they need and will mean increased SEM revenues for Yahoo. Yahoo is well aware of this and therefore has given an upbeat revenue forecast for Q1.

Survey: $10 Billion Spent on Search Marketing in ’06

Mike Shields

FEBRUARY 08, 2007 –

Advertisers in North America laid out close to 10 billion dollars on search engine marketing in 2006, a year that saw a 62 percent spend increase versus 2005, according to an annual survey conducted by the Search Engine Marketing Professional Organization (SEMPO).

SEMPO found that, based on its survey of 587 search agencies and advertisers, spending in the medium will double by 2011, reaching $18.6 billion (SEMPO counts both paid search advertising and spending on companies’ internal search engine optimization in its dollar estimates, while other firms do not). According to the report, The State of Search Marketing 2006 Executive Summary, that rapid growth will be driven by continued advertiser demand, rising prices and a new wave of small-to-midsize businesses discovering the medium.

Not surprisingly, Google dominates the search advertising business. Among the marketers and agencies surveyed, 96 percent of them report using Google AdWords to promote their brands.

Yet despite its recent urgent push to improve its own search ad technology, Yahoo is on solid footing according to SEMPO respondents. More than four out of five advertisers–86 percent–say they have run ads on Yahoo’s search product.

Meanwhile MSN, which has struggled in a distant third-place position in the search race, even losing some market share in recent months, has made great strides among advertisers, found SEMPO. Sixty-eight percent of advertisers said they used MSN for their search campaigns in 2006, up from just 29 percent in 2005.

The reason for MSN’s surge is that despite low usage, the search engine’s ad environment is less cluttered, and it tends to deliver the right ads to users. “The ROI on MSN is extremely strong,” said Kevin Lee, co-founder of and chair of the SEMPO research committee. “And there is not anywhere near the competition, as it’s a less mature marketplace.”

Another less-than-mature marketplace is that of search advertising for brand advertisers. Despite claims that more and more brands are using the medium for branding, as most respondents reported, just 21 percent of search advertisers actually track or measure the branding impact of search for their campaigns.

Lee said that in practice, more brands are looking at a combination of search and branding metrics. “A lot of search marketers are being more holistic.”