Internet Retailer.com reports that Costco Wholesale has reached a billion in online sales. This year their online sales grew by about 39% to $1.22 billion. Last year they were at $880 million. They reported net income of $1.08 billion on revenue of $64.4 billion for the 2007 fiscal year. Overall the web accounted for about 2% of total sales.

What is working for the retailer? They credit ongoing marketing strategies implemented since 2005. That includes marketing to Costco club members via e-mail, direct mail, a monthly magazine, as well as in-store programs, flyers, and kiosks.

It was just a few weeks ago that Microsoft CEO Steve Ballmer was downplaying Facebook’s originality and value—but now he’s bowing to a ‘higher power.’

He told WebWatch that:

In world search and advertising, Google is the leader, we’re an aspirant. We have a lot of work to do in search and advertising.

Of course, this does come a long time (okay, two weeks) after the New York Times slammed Microsoft only to highlight how far they have to go to catch up to Google in the online advertising arena.

But really, let’s put this in perspective. it’s quite a bit better than what he was saying about Facebook recently, even as rumors flew that they were in M&A talks:

You might have noticed a few changes to Marketing Pilgrim today. Last night, I signed-up for a sneak peak of the new ADSDAQ self serve advertising platform (from ContextWeb) and decided to test it out on the site.

What is ADSDAQ?  It’s basically an exchange that lets advertisers and publishers come together in an open market inventory platform. The new self service ADSDAQ Exchange Selling Desk lets bloggers and publishers:

• Name their CPM price. When your inventory clears the ADSDAQ exchange, you will be paid the CPM price you set. No revenue share. No blind revenue share. No guessing.
• Serve ad tags from other exchanges and ad networks. When ADSDAQ cannot clear inventory at your set CPM “AskPrice” it will serve tags from your backup networks and exchanges such as Google Adsense, Advertising.com and RightMedia.

As Google’s popularity grows, they rely less on advertising partners than ever. Here’s a case in point. CNNMoney.com reports that the advertising deal between Ask.com and Google is about to expire. Ask.com has Google’s sponsored links on its site but the contract will end at the beginning of next year. At first the company was confident they could renew the contract, but it hasn’t happened yet.

How things change. Google used to pay Ask.com and others to be their partner. Now Ask.com is doing the asking and Ask.com has more to gain than Google does on the deal. Here’s the data: in the second quarter, Google earned $997 million from ads on “partner sites.” Ask.com was responsible for about 10% of that, according to Barry Diller, CEO of IAC. That’s about $100 million. Google’s own sites brought in more than that—with $1.43 billion. Google shares in that revenue, maybe 80 to 85% of it. So the profit margins aren’t that thick—perhaps near 1%.