Quoted: I think that's an important part of the economics of the web that are left out of most discussions of Internet business models. Yes, we are turning analog dollars into digital pennies in many cases. But we are also doing the same thing on the cost side, maybe even more so. And I think that "operating leverage" is going to create a lot of value.

Was just talking about this over dinner.

Quoted: So far, he said, the impact has been most noticeable in the market for premium online display advertisements. Companies often place these ads to promote their brands on specialized sections of large internet portals. In a downturn, Lindsay said, companies tend to shift their budgets toward areas that can provide a more immediate and obvious return, such as internet search ads. That could benefit Google Inc., which beat Wall Street expectations with its quarterly earnings last week.

This is a smart move -- both for the newspapers and Zillow.

Quoted: For example, a San Francisco furniture retailer can simultaneously target local and national audiences of consumers searching for San Francisco homes on Zillow, as well as the local online readers of Bay Area papers such as the San Francisco Chronicle, San Jose Mercury News and the Contra Costa Times. A national real estate brokerage could choose to have their ads seen by Zillow’s targeted monthly audience of 5 and a half million homeowners, buyers and sellers, as well as the readership of hundreds of local papers in local markets they want to reach.

Helpful article if you plan on starting a business that intends to make money via advertising.

Quoted: As a result, I believe the vast majority of this ad inventory is being monetized by arbitrageurs via ad exchanges. Ad exchanges such as Right Media differ from ad networks primarily in their pricing model, which works like a stock exchange. This facilitates an arbitrage model where those who know something about your audience will buy your ad inventory at very low rates and resell at higher rates. Of course, this doesn't always work well for you the publisher -- they don't share what they know about your audience with anyone, because the lower their price the more money they make.

A great list of essays, especially if you are involved in anything in the consumer Web space.

On an unrelated note, I like how he includes his name and Twitter id in the blog title.

Quoted: I finally decided to make a page listing all the reasonable essays I've written over the last 2 years on one page, which you can find here.

Microsoft is way down, too.

Quoted: Google announced their Q2 results today after the market had closed. Shares are down by as much as 12% as earnings growth reported was below analysts expectations. Net income for the quarter was $1.25B, up from $925M. The company reported a profit of $4.63 per share, which was slightly below the $4.72 average expectation from Wall Street analysts.

Quoted: Mr. Armstrong, who is 37 years old, describes Project Spaghetti as an effort to fix the plumbing behind all of Google's ad initiatives. The inefficiencies, he says, are a product of Google's rapid growth and its innovation. Streamlining the systems and developing new ad formats, he says, should eventually improve the company's bottom line.

Quoted: "The growth of behaviorally targeted online advertising has been delayed by incomplete development of technology, brand marketers that prefer to have their ads appear with relevant content and concerns over violating consumer privacy," says David Hallerman, senior analyst at eMarketer and author of the new report, Behavioral Targeting: Marketing Trends. "But a number of things are changing."

Some good, albeit depressing-if-you're-a-large-site, data here. These eCPM numbers are much lower than we see.

Quoted: The overall trends you pick up from the report are not that surprising. For instance, the improved monetization of small websites is because they have more focused content, which presents more targeted advertising opportunity.