Cashing Out: Week of May 22 – 28 2011 in Online Marketing News

PayPal sues Google and former employees over theft of trade secrets

On May 26, Google unveiled its new mobile payment service, Google Wallet, and it only took a few hours for the public announcement to backfire.

In direct response to the new mobile wallet, PayPal has filed a lawsuit concerning the theft of trade secrets by Google and two of its employees, Stephanie Tilenius and Osama Bedier, both former executives at PayPal.

Tilenius, currently Google’s VP of Commerce and Payments, is accused of violating her contract by recruiting Bedier during recent negotiations over a mobile payment partnership between Google and PayPal.

Bedier, who had knowledge of PayPal’s future strategies for mobile payments, is accused of stealing trade secrets, as well as storing “confidential eBay information in locations such as his non-PayPal computers, non-PayPal e-mail account, and an account on the remote computing service called ‘DropBox.’”

PayPal has also accused Bedier of “ improperly comparing Google’s products and services with PayPal’s products and services in discussions with customers that both PayPal and Google are courting,” stating those “comparisons incorporate PayPal trade secrets, including PayPal’s schedule for deployment, anticipated features, and back-end approach to mobile payment, point of sale, and the benefits of a wallet in the cloud.”

The lawsuit claims the recruitment of Bedier directly bears on the failure of a partnership deal between the two companies regarding mobile payments:

“PayPal and Google had a deal finalized and signature-ready on October 26, 2010,” but, after “Google’s leadership had interviewed Bedier […] Rather than inking the October 26 deal, Google instead at the last minute professed a shift in mindset on the entire structure of the deal.”

Google’s meager response has merely been that they “respect trade secrets” and that they’ll defend themselves against PayPal’s claims, adding that “Silicon Valley was built on the ability of individuals to use their knowledge and expertise to seek better employment opportunities.”

Online ad revenues hit new records with 23 percent boost to $7.3 billion

According to a May 26 report from The Internet Advertising Bureau and PricewaterhouseCoopers (PwC), revenue from internet advertising hit a new record of $7.3 billion in the first quarter of 2011, jumping 23 percent since last year.

2010 had also seen a record high, with its own 23 percent increase from the previous year. PwC’s David Silverman says of this “year-on-year” increase that “these numbers indicate that the interactive advertising field hasn’t simply bounced back since the recession; it’s growing with dynamic energy.”

After LinkedIn, get ready for a Zynga IPO

A May 24 post on The Wall Street Journal‘s All Things Digital blog claims that Zynga, the maker of popular social games, “is poised to file for its initial public offering” within the next two weeks.

Zynga’s current valuation on private markets is roughly $10 billion, with an annual revenue estimated between $500 million and $1 billion. Considering LinkedIn’s successful debut on the markets last week, no less should be expected from Zynga, if and when they do go public.

Mashable has speculated about who will be involved in the filing, suggesting that “Goldman Sachs could be one of the lead bankers in the deal, but Morgan Stanley, T. Rowe Price and Fidelity Investments also have investments in Zynga,” and are likely players.

Square’s iPad payment system could be the end of the register

A new payments product released May 23 could see mobile payments service Square replacing cash registers soon.

The company has launched a new version of their iPad app, Square Register. The app allows merchants to process credit cards but also offers better customer engagement than the original version.

Businesses can invite their customers to download the Square Card Case, a sort of mobile wallet. Clicking on a particular merchant’s card in the case gives the customer information on the business, like location and hours as well as what purchases others are making there. For return customers, the “use tab” button allows preferred clients to make purchases by putting them on a virtual tab.

The app also offers a feature similar to Google Analytics, where merchants can track their sales and get a better overview of who is buying what, and when.

According to a TechCrunch article, Square could “become the default way to run a business and a payments platform,” because, aside from its analytics feature, the service “allows local businesses to connect to customers in a way they couldn’t with traditional point of sale systems and cash registers.”

California affiliates continue fight against nexus tax

ReveNews’ Britt Raybould reported May 26 that California is in the midst of deciding on legislation that, if passed, “will create a broad mandate to establish nexus,” and “will then require that any individual or business who falls under its terms to collect sales tax at the point of purchase.”

The article warned that passing the proposed bills might not just spell bad news for California affiliates, but for the state itself, which could see the loss of $124 million in income tax “if those affiliate marketers move out of state so they can maintain their businesses.”

The Performance Marketing Association reported on this week’s “grassroots effort” by California affiliates seeking to stop the legislation in its tracks. On May 24, a group of them gathered at the capitol in Sacramento to speak with legislators and explain the negative impact passing the nexus bills could have.

The participants in this show of opposition spoke for a variety of businesses, from single entrepreneurs to large business employing over 50 affiliates, and represented the widespread impact passing the nexus legislation could have on Californian businesses in general.

Yahoo plays second fiddle to Google in display ad sales

A report released this week by the International Data Corporation (IDC) shows that, during the first quarter of 2011, Google replaced Yahoo as the number one seller of search and display advertising in the U.S.

Google’s display ad revenue during that period is estimated at $396 million, with their share of the market for display ads rising to 14.7 percent in that time. Yahoo, whose revenue during the first quarter was estimated at $330 million, actually saw a decline in their share of the market since last year, from 13.6 percent to 12.3 percent.

The figures show Google’s recent focus on display advertising, with its ad exchange, YouTube, and acquisition of DoubleClick, have paid off.

However, Google’s success in this arena does not necessarily come at the expense of Yahoo’s. IDC analyst Karsten Weide writes “so far we see minimal impact on Yahoo,” adding “most of the display advertisers on Google are small and medium business that used to run search ads and are now trying out display. That’s not the clientele that Yahoo is after.”

ReveNews’ roundup from TechCrunch Disrupt NYC

This year’s TechCrunch Disrupt start-up competition, May 23 to 25 in New York City, has wrapped up, leaving us with a few notable highlights and one winner among the 30-plus participants vying for first place.

This year’s winner, Getaround, was also the event’s audience choice winner, with its innovative car rental concept. With no sign-up fee, the service lets users rent a car or put one up for rent in their local area by the week, day or hour.

Other start-ups that caught our attention included Sonar, a location-based mobile app that alerts you to relevant people in your vicinity based on data they’ve volunteered on social media, like friends you have in common, which school they attended, or what their favorite band is.

The start-up plans to monetize by using their “real-time geo-demographic data to help brands and SMBs identify, in real time, who and where their audience is.”

A new social shopping site participating in disrupt, SneakPeeq combines features of the retail shopping experience with a new e-commerce angle. The site promotes deals, but, as in a regular store, the price of an item is only shown when the user chooses to “sneak a peek” at the price tag. Every time they check the price tag, the price drops, until someone has bought the item and the deal is no longer offered.

As for honorable mentions, we also like Do@, a search engine that uses mobile apps rather than the web to come up with search results. SpotOn, a location recommendation service that uses data from social media to tell you where to go, and Foretuit, a start-up that tracks and maps sales for project collaborations, were our other honorable mentions.

About Emily Wilkinson

Emily Wilkinson is a Montreal writer and editor who recently joined ReveNews.com. Her experience comes largely from her work at print publications like La Scena Musicale, where she alternated between positions as content manager, copy editor and journalist.
She believes in the importance of strong writing, be it in journalism or in other media, like blogging or even social networking. Her prerogative: though language will and ought to evolve, a good writer need never sacrifice the communicative power of text that is written with thought and care, whatever the venue.
Find Emily on Twitter @EditorWilkinson