Category Archives: Online Trends

Rashtchy’s Golden Search turns Platinum

First published on Feb 3, 2005 in Mediapost’s Search Insider

On November 9, 2004, Piper Jaffray analyst Safa Rashtchy dropped a bombshell on a small handful of people at the New York Ad:Tech show. He doubled his search revenue projections for the next five years. And, he bumped these projections less than two years after they originally came out.

Back then, Rashtchy’s $7 billion by 2007 revenue projection was quoted everywhere. You couldn’t turn around without seeing a reference to these amazing growth predictions. And now, he nonchalantly walked up to the podium and said search revenue in 2007 will be more like $13.5 billion! I was sitting in the audience and my jaw dropped.

But a strange thing happened this time. Nobody seemed to care. In preparing for this column, I scoured the Internet for any mention of Rashtchy’s exciting announcement. I found nothing. While it’s not surprising that the announcement missed the mainstream press, I can’t believe our own industry didn’t pick up on it. I finally had to resort to contacting Rashtchy’s team and getting a copy of his presentation.

In the process, I asked Rashtchy why the announcement didn’t seem to gain attention. His response indicates that the lack of attention means search is now accepted with more credibility: “I think search is now accepted as a big business. You have a $60 billion company on the market doing only search, so people are saying that with these valuations, we expect that you will up your estimates significantly.”

Sorry Rashtchy, Better Late than Never…. I think the readers of this column would be well served to get the high points of Rashtchy’s announcement, so let me share them with you.

First of all, the growth numbers. In March 2003, Rashtchy estimated that worldwide search revenues would hit $7 billion by 2007. Just a few months later he was quoted as saying that these numbers are likely too conservative. With last November’s presentation, he had the opportunity to bump those numbers up.

Rashtchy now feels we’ll not only hit that target, but surpass the 2007 – $7 billion mark this year. Next year, he predicts search revenues to top $10 billion, and then hit $13.5 billion in 2007, $16.2 billion in 2008, $19.8 billion in 2009 and top $23 billion in 2010.

Factors of Growth Rashtchy feels there are a number of revenue drivers fueling the growth: • The increasing use of search by big business

  • A second wave of small business just discovering search
  • The international growth of search
  • Discovery of the branding value of search
  • The growth of contextual search, with local search perhaps poised to take over

 

In addition, he sees four immediate and fundamental drivers of search growth. He collectively refers to them as T.C.P.C.

Traffic – More people doing more searches, especially commercial searches Coverage – Expansion of keyword baskets, monetizing more search terms Price – Increasing prices per click Conversion – As we get better at converting clicks to buyers, advertisers are willing to bid more

Local Search Rashtchy feels that local search could become a significant driver of new search revenue. I know there are mixed opinions about this (I for one agree with Rashtchy on this one and have said so in previous columns), but I think the salient point here is that local search, if successful, dramatically increases the market size for Google and Overture.

It takes search from a global consumer activity and brings it back home. It ties the Internet much closer to our day-to-day shopping activities. It will take a few years for local search to make much of a difference in overall search revenues, but once felt, the impact will be significant.

Search Efficiency – It Still Can’t be Beat In comparing methods for customer acquisition, search still comes out far ahead. Piper Jaffray estimates the average customer acquisition cost for search to be between $7 and $10, compared to $15 and $25 for Yellow Pages, $40 to 80 for e-mail and $60 to 80 for direct mail. Search is growing because it works.

Bottom Line Rashtchy summed up with five conclusions that state the future potential of search in no uncertain terms: – Search is likely to become the most successful marketing method for all businesses

  • Local search is a huge force that could change the dynamics of search for online-only merchants, putting them at a big disadvantage
  • Concepts like broad match could make search an effective soft sell, suggestive advertising mechanism
  • Merchants should focus on customer conversion and extending the customer life cycles
  • Search providers should focus more on merchant conversion rates and offer lower charges for broad match and contextual search. They should also focus heavily on local and international expansion.

 

Of Serendipity and Search Engines

First published in Mediapost’s Search Insider on Dec 13, 2004

I love the word serendipity. It’s like an entire poem in one word. Just saying it out loud makes you feel… well… serendipitous.

So, this week, with the holidays approaching, I was in a serendipitous mood and started noodling (another favorite word) with my Google toolbar. “Hmm” I said to myself, “I wonder how Google ranks on Google for the words “search engine.” Google’s whole promise is to bring the best to the top, right? So which search engine is Google giving its all-powerful vote of confidence?

Well, no one, as it turns out. SearchEngineWatch.com, Jupiter’s portal for search marketing and optimization, grabs the coveted top spot. So, surely, Google must be second. Nope, that would be Lycos. Now, as far as I can remember, Lycos is dying a long and lingering death, but according to Google, they’re No. 1. Well, actually No. 2, behind the site that isn’t a search engine.

In fact, Google ranks itself fifth, behind Dogpile and AltaVista. Can it be? Does Google have a secret inferiority complex? Is the cockiness of every Google employee I’ve ever met just a front for a shuddering mass of vulnerability? I dig further.

What if I refine my search? Let’s try “smartest search engine”. Oops, no search engine I recognize makes it to the top 10.

Okay, how about “best search engine”? Again, there aren’t too many familiar names in the top 10, although Dogpile does manage to sneak in at No. 8.

I’m getting desperate now, and serendipity is hanging by a thread, in mortal danger of giving way to unhealthy obsession. I type in “Larry and Sergei’s search engine,” figuring it’s time to get really specific. The strategy is lost on Google, which again serves up a list of unfamiliar sites, with the exception of Go.com in the No. 10 spot. Well, at least the first two letters are right.

One last stab in the dark: “Search engine with recent IPO that’s aiming for world domination.” Nada.

Maybe I’m using the wrong engine. I switch to Yahoo! And sure enough, there’s no identity crisis here. Yahoo! proudly ranks itself No. 1 for “search engine” and in a concession to the competition, throws the No. 2 spot to Google. Apparently, Yahoo! thinks more of Google than Google thinks of itself.

Let’s take Microsoft’s new algorithm for a spin. Again, MSN thinks a lot of SearchEngineWatch and gives them the top spot. And guess who gets No. 2? Google. Looking down the page, I see Search.com, AltaVista, Dogpile, Lycos, Northern Light (are they still around?), Webcrawler, and… no MSN. Didn’t even break the top 10. Well, maybe they haven’t gotten around to spidering themselves yet.

It’s time to Ask Jeeves. First, I had to scroll down past a zillion sponsored ads that pushed the real results off the page. And when I finally got to the results, they did a pretty good job of nailing the top engines. Like Yahoo!, Jeeves doesn’t mind blowing his own horn. Ask Jeeves is No. 1, Teoma (owned by Jeeves) is second, AltaVista third, Lycos fourth, AlltheWeb fifth, and Google comes in a distant sixth. Webcrawler, Dogpile, Yahoo!, and Excite round out the top 10.

All relevant, and all search engines, although the one-two finish of Ask.com properties smacks of a little judicious human intervention. Seems that Jeeves might know his stuff, even if he is a little egocentric. Google thinks Lycos is a search engine powerhouse, so how does Lycos feel about itself?

Well, Lycos apparently has no idea what a search engine actually is, because the only two search engines to break the top 10 are Overture and AOL. HotJobs is No. 1 and an eBay page for Thomas the Tank Engine is firmly embedded in the No. 3 spot. At least the HotJobs link might come in handy for the engineers currently working on the Lycos search algorithms.

There seems to be a building ground swell for AltaVista. Could this be a dark horse? I went to Yahoo!-owned AltaVista and found out that once again, the portal SearchEngineWatch takes the top spot. Is it coincidence that a portal for search engine optimization consistently takes the top spot, beating the engines at their own game? It’s deliciously ironic, if you ask me.

The irony continues with the fact that Google takes the No. 2 spot on the competitor’s engine, with hometown favorite AltaVista in No. 4, Yahoo in No. 5 and Dogpile in No. 6.

Survey Says…

And so, in a serendipitous, non-scientific poll, using GordRank, a sophisticated algorithm of my own invention, here are the top search engines, as ranked by the search engines themselves

1. Google (ranked higher by almost all the competitors than Google ranked themselves)
2. AltaVista
3. Yahoo!
4. Dogpile (yes, Dogpile)
5. Lycos
6. Teoma
7. All the Web
8. Webcrawler
9. Hotbot
10. Metacrawler

There are a couple of points that have to be said. Perhaps Larry and Sergei could hire a search optimization firm to help them rank better on Google. I know they have the money and it seems to be a challenge for them.

And despite Bill Gate’s bravado and bank account, no one seems to know that Microsoft has a search engine. Not even MSN!

Til next year, Happy Holidays!

Google Does It Right, and Still Makes Money

We’ve done three studies now on how people react with search engines, and one finding that has been consistent across all three studies still amazes me.

All other things being equal, Google dominates as the search engine of choice. In the latest survey, Google was picked as the favorite engine by a walloping 82.9 percent of respondents. Nobody else even came close. Yahoo! limped into second place with a scarce 7.5 percent of the vote.

So, why does Google dominate to this extent? Is it the best search engine? Well, it’s good, but arguably there are others at least as good. The brand has certainly become a household word, but Yahoo! was there first, and look how their market share has dropped.

Google’s success with users comes primarily from an unwavering respect for those users. Google has always put the user experience front and center, and this commitment to has bought them fierce loyalty.

Sometimes the Bottom Line Isn’t Always About Money

Search engines make money when people click on the sponsored listings. Except for some paid inclusion revenue, minimal compared to the paid placement streams, search engines make no money from organic listings.

Following that line of reasoning, it seems to make sense to encourage as many people to click on sponsored listings as possible. Every click puts more money in the bank account.

This line of reasoning has been used at most of the other engines. MSN, Yahoo!, Ask Jeeves and others have all tried to maximize the amount of sponsored real estate on their results page. Ask Jeeves won’t usually show an organic listing without the user having to scroll.

The engines love to see more click-throughs on sponsored listings. The advertisers love it. So why not? Everybody wins, right?

Not the user. We go to search engines for organic results. Sure, we’ll click on a sponsored listing about 30 percent of the time if it appears relevant, but that’s not why we go to the search engine. We go for the unpaid listings. If we can’t find them on one engine, we’ll go to another where we can.

Tale of Two Engines

Google gets this. They have the lowest sponsored click-through rates of any of the major engines. While sponsored listings have been given prominent placement, the organic listings always have center stage. They’ve never tried to trick us with vague labeling of sponsored results or tried to push organic off the page by increasing the number of sponsored ads on top.

Short-term, that strategy would certainly boost Google’s revenues, but what would happen in the long term? Well, perhaps we have to look no further than Ask Jeeves. They’ve played games with their organic rankings, trying to boost their sponsored revenue. And if you look at click-through percentages as recorded in our surveys, it’s worked.

About half the click-throughs on Ask Jeeves occur on sponsored listings. Google only captures 23.3 percent click-through on sponsored ads. But 82.9 percent of our 1,500 respondents said they use Google and only o.6 percent said they use Ask Jeeves.

When you slice the pie that way, you’re going to end up with a lot more revenue, no matter what your click-through percentage is.

The User Giveth and the User Taketh Away

Online loyalty is a fickle thing. Google has never forgotten where it came from. It emerged from nowhere and gained leading market share because it focused on one thing: the user. Then, it found ways to create revenue from that model without jeopardizing the delicate balance between profit and the user experience.

Google has realized that user traffic is a privilege, and you can never lose sight of that fact. If you treat them right, you will be rewarded. Fail to do so, and you’ll end up with a very small slice of the pie.

Search Innovation: Looking for the Average Joe

First published Oct 27, 2004 in Mediapost’s Search Insider

Google’s beta release of their desktop search tool was their shot across the bow of the USS Microsoft Search. Following hard on the heels of promising technology releases from Blinkx and Copernic, Google is staking their claim to the desktop search space.

And Microsoft seems to have been caught flat-footed, as they continue to push back the deadline for the release of Longhorn, which will integrate desktop search with the operating system. Many seem to think a search related announcement out of Redmond, Wash. is imminent.

So, if one looks at what’s come out of the major search engine labs lately, you’ll see a rush of new technologies centered on the ideas of desktop search, local search, indexing of rich media, and personalized search. It seems that everything we’ve been talking about in the past three years is suddenly coming on the market in one fell swoop.

This has prompted a number of analysts to start asking where search is going. I’ve been firmly seated on that particular bandwagon, adding my own prognostications to the many that are out there. But sometime last week, I slapped my forehead and pronounced myself an idiot (beating several others to the punch).

It really isn’t the release of technology that will dictate where search is going. It’s the public’s acceptance of that technology. And I’m not speaking about a few techno geeks huddled in the cool blue glow of a LCD flat screen. I’m talking about the masses.

Innovation Only Makes a Difference When It’s Accepted

There is a dilemma that is inherent in technical innovation. As the innovators, we tend to get caught up in the possibilities of technology and base our business decisions on it. But the fact is that the success of technology only takes place with widespread adoption by the general public.

In the high tech business, we tend to be surrounded with others like ourselves. We are the classic early adopters, looking for the latest technological gizmo. We tweak our computers and other various electronic gadgets, spend hours tracking down problems with drivers, and happily put up with bug after bug to gain an edge over the less technically savvy.

In our biz, we all tend to be members of this relatively small segment of the real world. Unfortunately, we sometimes make decisions that seem valid because everyone we talk to agrees with us. It’s not until the public flatly rejects our innovations that we realize it was never capable of going beyond the research lab.

So, if you ask me, or any of the others who have been writing about this, which of the emerging search innovations will make the difference in the industry, you might be asking the wrong person. I’m a geek. Go ask your Aunt Mildred, but be prepared to spend some time explaining what you’re talking about.

Public Adoption Can’t be Rushed…

As early adopters, we work on a radically different time line than the general public. We tend to leap into new technology before it’s fully tested. We move in a matter of weeks or months to try the latest new thing. The rest of the world takes years. So as we try out local search, desktop search, and personalized search, remember that the latest developments will probably take a long time to trickle down to the average Joe… unless you leave no options!

This opens up a rather interesting advantage for Microsoft in the search game. Because of their domination of so many parts of our interaction with our computers, they can force adoption of a new technology to an extent no one else can. Every other player, including Google, has to convince us that their technological innovations are worth using. Microsoft can leave us with no choice. So Google will continue to roll things out of their search lab, and we will eagerly install the latest beta.

Someday (probably soon) a major development will come out of Redmond about Microsoft Search. We “in the know” will rush to pronounce it a failure, or success, but the judgment isn’t really ours to make. It’s the millions of people who have no idea that Google now has a desktop search tool, or that Microsoft is integrating search into their operating system, that will ultimately make the difference. And they will only bestow that success when they’re good and ready.

The winner of search will be the one who is the shrewdest about controlling that timeline.

Do We Want a Smarter Search Engine?

First published in Mediapost’s Search Insider – September 28, 2004

Search engines are knocking on the door of the future. The 800-pound gorillas of search and brash new upstarts like Blinkx and Gurunet are working to find a way to make search more intuitive, ubiquitous, and intelligent.

Someday, search will be interwoven with everything we do and consequentially, we won’t lift a finger. Links to the sites we’re looking for will suddenly appear in a discrete search pane or a pop-up window. It’s inevitable.

Or is it? Is this what we as search users want? Do we want to hand control over to an omniscient, eerily cheerful search assistant that knows far too much about our user patterns and personal tastes?

Friendly Search Engine Seeking Single Middle Aged Woman

The personalization of search has been bandied about as the next big step forward in the industry. We need (so we are told) search engines that get to know us and what we like. Blinkx is already heading down this road, and Microsoft has a team of engineers busy in their Cambridge, England lab working on making their brand of search more attuned to the user and the job currently at hand. If you look at the type of people Google hires, you’ll find the following interest areas featured prominently: profiling, artificial intelligence, and machine learning.

But to make these search enhancements work to their full potential, we crawl onto the very slippery slope of user profiling. As the search engine observes us, it can create a profile of our interests, usage patterns, and other very personal information. It can then use this information to make its search results more relevant to the individual user.

Marketing Gold, Privacy Dynamite

The question is what happens to this profile? Obviously, each profile is worth its weight in gold to advertisers. With information, they can target their message to exactly the right audience. But even if search technologies offer this capability, the vast majority of providers have resisted the temptation.

The Google Toolbar has been around for four years, and if you install the advanced version, the End User License Agreement says that the toolbar will send information about every URL you visit back to Google.

While this is for the relatively benign purpose of retrieving that site’s page rank and other information, the fact is that Google has the ability to track each and every Web page you visit. At least Google is up front about letting you know. Other search tool bars and spyware apps aren’t quite so ethical.

Suranga Chandratillake, the CTO of Blinkx, indicated that they had the ability to incorporate a fairly basic level of artificial intelligence into the product to make the search suggestions more relevant to the individual user but had chosen not to. “Early users indicated they didn’t like this idea. Privacy is a big concern for them.”

It appears that search providers and contextual advertising providers are setting wheels in motion that will bring an inevitable head on collision between the wishes of advertisers hoping for better targeted vehicles and users concerned about their privacy.

At this point, the more ethical advertisers are standing on the right side of a gray and sketchy line that’s determining what should be done with the mounds of information collected from users.

Either contextual advertising is being served based solely on the nature of the job at hand with no reference to a stored profile, or the information is just sitting there, collecting dust in a data warehouse on some gargantuan hard drive. But no one’s saying they’re throwing that data away. I get the feeling they’re all eyeing each other nervously, waiting for somebody to step over the line.

Search has the ability to become smarter and more helpful. But as anyone old enough to remember “2001: A Space Odyssey” can tell you, an all-knowing, irritatingly polite computer isn’t always mankind’s best friend.