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Websites and virtual communities suffer from the digital equivalent.  Spam, Sock Puppets, Bot Attack, Slogs and Advertorial mix with aggressive affiliate programs, ads for debt consolidation, pay day lenders, porn, casino’s and pharmaceuticals without a prescription –   everything you encounter online that makes the web feel like a bad neighborhood have been given a name along with an interesting new site that wants to create a discussion about how to combat it- Virtual Blight .

Like it’s real world counterpart, blight left unchecked it will chase away the  inhabitants of a community and destroy the value of the site and the brand.

Microsoft Corporation (Nasdaq: MSFT) will announce on Monday that it has reached an agreement to acquire Digg, Inc. for an undisclosed sum.

The deal has been in the works for several weeks, according to Microsoft spokesman Mario Nette, who noted that, “Digg is a pioneer in crowd sourcing, the Web 2.0 way of discovering what is important to a new generation of technology-friendly consumers. The Digg community is our natural consumer base and this acquisition is a great opportunity to connect with them. We know Digg users are passionate about Microsoft products and we are anxious to engage them through this new channel.”

Stories posted on Digg are submitted by community members, who currently number over 1 million accounts. After a user submits a story, other members read the submission and “Digg” what they like best. If a story receives enough votes, it is promoted to the front page for the millions of visitors to see.

The acquisition of Digg is a significant advance in Microsoft’s promise to improve Live Search as well as an important an important step towards developing social media platforms.

“This deal is not about buying our way into the hearts of a million Digg members; it brings together two important players in the battle to improve the relevance of online content,” said Pierre Calzino, Director of User Feedback at Live Search. “Web users waste too much time searching for what’s important. Microsoft has been involved with this problem for years and Digg has clearly become a factor to be reckoned with.”

“The natural synergies between the two companies are really exciting. Digg has created a user validation model for determining the significance of online content – a system that is almost impossible to manipulate. Combining Digg’s crowd-sourcing methodology and validation infrastructure with Live Search’s leading technology will allow us to remove the last vestiges of SPAM from our search results.”

“Improving Live Search is just the beginning,” Calzino continued, “We see enormous opportunities for electronic voting. Digg’s online voting platform inspires confidence. Add Microsoft’s track record for building secure systems and you can envision the voting system of the 21st Century. No one will have to wonder if the vote could be hacked or stolen. This deal represents the future platform of our Democracy.”

Digg founder Kevin Rose could not be reached for comment, but according to spokesman Morceau De Bouche, he was delighted with the deal. “Microsoft has an enormous tradition of excellence in engineering and we are all excited about the prospect of learning from them. They have set the standards for technology innovation very high and we know we will benefit from their ability to develop innovative applications on-time and on-budget.”

The acquisition of Digg technologies and brand will help Microsoft maximize shareholder value. “We’ve had our eye on Digg for some time,” said Lavage Green, Environmental Communications Director for Spuhn Associates, “Kevin and his team have created a compelling success story by providing a forum for discussing important social issues such as climate change, the impact of globalization and the Xbox versus the Wii without ever doing anything about it. They have effectively created a committee of millions; everyone can agonize over the problem and feel good about being globally aware without being inconvenienced by committing to any quantifiable action. This shows the depth of thinking and skill they will bring to Microsoft. The addition of Digg’s street credibility and perceived expertise to their existing talent will provide the ability to continue not addressing fundamental global issues for another decade – without fear of repercussions.”

Financial terms of the deal have not yet been released, but company sources indicate that the purchase price is somewhere between .1% and .01% of the total market capitalization for Microsoft as of 5/1/2007.

Founded in 1975, Microsoft (Nasdaq “MSFT”) is the worldwide leader in software, services and solutions that help people and businesses realize their full potential.

Microsoft and Windows are either registered trademarks or trademarks of Microsoft Corp. in the United States and/or other countries.

The names of actual companies and products mentioned herein may be the trademarks of their respective owners.

Nielsen’s intent is laudable. He contends that the vast majority of users are consumers of content instead of creators and is urging site operators to make participation easier.

User participation often more or less follows a 90-9-1 rule:
* 90% of users are lurkers (i.e., read or observe, but don’t contribute).
* 9% of users contribute from time to time, but other priorities dominate their time.
* 1% of users participate a lot and account for most contributions: it can seem as if they don’t have lives because they often post just minutes after whatever event they’re commenting on occurs.

Nielsen goes afoul when he talks about blogs, “There are about 1.1 billion Internet users, yet only 55 million users (5%) have weblogs according to Technorati. Worse, there are only 1.6 million postings per day; because some people post multiple times per day, only 0.1% of users post daily.”

“There are about 1.1 billion Internet users, yet only 55 million users (5%) have weblogs according to Technorati. This analysis has three fundamental flaws.

1. Nielsen takes the broadest measurement of internet users and the narrowest definition of a blog, posts using one of the popular blog publishing platforms such as WordPress that happen to report postings to Technorati. The total number of internet users is not the same as the number of blog readers. To assume that even half of that 1.1 billion “users” would recognize a blog as being a blog defies credibility so it makes no sense to count them when measuring participation. Does someone who has never been to a site count as a lurker or passive participant?

2. Comparing measurements of different values from two different systems is unreliable. It is perfectly reasonable to compare the measurement of the same value from two different measurement systems to compare the measurement approach. You can’t do analysis with measurements tfrom two different system without normalizing the data.

• Technorati is an American-centric company that doesn’t claim to have an even global penetration.
• Blogging is a new phenomenon that has only been in the public eye since 2003. According to Technorati sources, the number of blogs doubles every six months. The August figure of 55 million will be around 110 million by February of 2007. It is approaching 70 or 75 million as of the middle of October.

3. The biggest problem is the definition of “blog”? Blogging is a term that embraces much more than the enabling technology. It isn’t about posting your opinion in Word Press; it is about adding your thoughts, opinions and analysis into the public discussion. Nielsen’s AlertBox, for example, is an opt-in electronic newsletter that is also posted to his site. The content he writes is widely discussed in blogs and gets its share of links from the blogosphere. The only reason AlertBox is not a “blog” is that the technology he uses to publish. It shouldn’t surprise anyone that mixing a broad definition of users and a limited definition of participants produces lopsided results.

Worse, there are only 1.6 million postings per day; because some people post multiple times per day, only 0.1% of users post daily.” Nielsen disappoints again on this point in three ways.

4. Nielsen defines daily participation as the threshold for determining whether someone is a regular contributor to the discussion. His definition stipulates that quantity of posts is the only thing worth analysis. Take Alertbox as an example again. Since 1995, Nielsen has published his column roughly twice a week or about 260 times over 11 years. By his definition of participation, one of the most widely read column on User Interface and Design, written by one of the leading experts on the topic, counts as an occasional contributor.

5. He ignores comments as a form of participation in the blogosphere. Most blogs have at least a few comments and many have hundreds or even thousands. It is hard to justify not including these as participation.

6. The last issue is how he crunches the numbers. Technorati’s measurements are “ancient” as judged by the historical rate of change. Still, if we accept 55 million blogs and 1.6 million posts/day, 2.9% of bloggers post EVERY DAY. If we use a more reasonable threshold like posting once a week or even once a month, participation in the blogosphere may be as high as 10 or 15%.

The final issue in this 90-9-1 analysis is that users are in multiple communities. A user who is a devoted participant in the Amazon community for example, one who has read thousands of books and posted reviews for each, can hardly be expected to be a daily blogger as well, but do you count him as a lurker?

You can prove almost any point with statistics and measurements tailored to your definition. If you want data for reliable decision making, you need to be more thoughtful in your approach.

ROI metrics and the sense of accountability they provide are addictive. Decision making is reduced to how much you are willing to spend for every dollar or customer you get back. It appears to take the risk out of marketing investments. Dave is absolutely correct…as far as he takes it.

Marketers who believe they can accurately quantify the impact of their online advertising, whether SEM or Brand, do so at there own risk. Every analytic system I have ever used is flawed; The assumptions and methodologies inherent in each approach creates measurement error. Managing campaigns on a strict ROI basis demands that you have at least two analytic systems and a detailed understanding of how each works and what they actually measure.

Determining ROI for search marketing requires you to understand user behavior. One very common issue to watch out for is how you treat keyword search and a brand search. Marketers will frequently separate ROI for their brand terms from keyword search. If a customer converts after searching for “red widgets,” that ROI is credited to keyword search for the term red widgets. If a customer converts after searching for “brandxxx widgets,” the ROI is credited to a brand search.

The problem is that customers may visit your site during the interest phase, the research phase and the purchase phase. Most analytic systems are not configured to track multiple visits through CPC and/or SEO channels, so the return doesn’t appear to make the investment.

• Customers will find you searching for keywords and then return searching for your brand or some variation/misspelling of the brand.
• Customers will find you on one computer and return via direct navigation or brand search from another computer to purchase.
• Customers will enter the URL’s in the search box instead of the address bar (perhaps as high as 15% of users) so direct navigation shows as brand search.
• Brand searches are frequently latent conversions from keyword searches.
• Depending on the cookie setting of your analytics system, you may or may not preserve each customer touch source. You also may not credit the touch with the conversion.
• Referrer data isn’t always preserved through caches and browsers. Firefox users on MSN, for example, will show up as direct searches instead of tagged with a natural search keyword.

I just finished a three month contract for a startup. Despite deploying sophisticated, redundant analytic systems (Google Analytics and ClickShift’s Statistical Bid Management, only 60% of the orders in the first three months were tracked and many were reported as direct navigation or searches for the brand.

You might expect this for a mature brand with a large repeat customer base, but it defies logic for a startup that was still only using CPC for marketing. Since we had a small data set, I was able to research the orders individually and attribute the source and term for each record in the customer table.

You wouldn’t want to try to repeat that method with 10,000 orders, but the result was a 160% increase in the reported ROI for the CPC campaign. Individually or combined, the analytics systems didn’t produce accurate enough data for decision making.

The only way to really understand ROI from each channel and search term is to find ways to induce customers to login as quickly as possible, while the referral data is as fresh and accurate as possible. Incorporate that referral/source data directly into the Customer table and import all sales information into internal systems to produce the ROI measurement.

If you do not have an initial source associated with a customer record, make it a goal in every customer interaction (survey, customer service call, etc.) to obtain that information. This allows you to accurately attribute revenue to the marketing investment and track every additional touch point that generates a visit regardless of source, medium or computer. With that kind of data on hand, you have a baseline to begin to understand the value of each advertising channel. Then your ROI based decisions can be good ones.