Rising Search Tide Lifting Several Boats
In the wake of its $343 million acquisition of Interactive Search Holdings, which includes Excite and iWon, Ask Jeeves' Steve Berkowitz astutely notes that although the company is "still a little fish in a big pond," it is after all "a big pond."
The value of this acquisition certainly bears that out. Even tiny fish like Mamma.com have polished themselves up and changed their ticker symbols to try to take advantage of the growth of search at this time. Part of what's creating higher valuations is sheer metrics (real revenues, real profits), but it's hard not to notice the inflated stock values of companies like Yahoo and Ask Jeeves, too. As the sector heats up, the paper of smaller players like Mamma.com inflates based mostly on speculators' hopes that they'll be acquired for the rather more liquid paper of a Yahoo or an Infospace.
It would be easy to scoff at the Jeeves acquisition as minor, but for the fact that it doubles its market share in a hot and growing market, seeming to guarantee continued profitability while allowing it to take the albeit belated step of eliminating paid inclusion for its Teoma/Ask.com search property.
This sort of stability, I believe, buys Jeeves the time and comfort needed to assess not just survival or divestiture of curiosities like Excite and iWon, but actual growth strategies for these properties. When the consortium that owned it decided to keep the Excite brand alive in the first place, they made some audacious-sounding and half-tongue-in-cheek claim that their ultimate goal was to restore the Excite brand to its "former glory."
That's actually not as crazy as it sounds.
Recent developments seem to have shown that the portal space still has legs -- that consumers are now searching out improved news search, email, social networking, and various other daily navigation and workflow functions that were being sought by early adopters back in 1999. Savvier users, meanwhile, would never be caught dead using the lowest-common-denominator offerings of MSN and AOL.
That essentially leaves but one major portal in operation: Yahoo. The dearth of portalness has been so unexpected and so incremental that we woke up one day and found Google tacitly admitting that it has grown and gravitated towards being a portal almost by default. If you're big and you're about navigation, and you have ambitious plans to grow with online consumers' needs to find things and interact with one another, it's portal city.
In our minds, Excite was for quite some time the potential Pepsi to Yahoo's Coke in the portal space. Although none of what they did had staying power mainly due to the clumsy way the @Home merger came off, and also due to outrageously wasteful acquisitions (Blue Mountain Arts greeting cards for $750+ million), Excite's features were never developed or promoted long enough to find a stable consumer base. But they did, at certain points, offer high-quality search, e-mail, and various other features like an Intranet-like function called Excite Communities that was better than comparable offerings from competitors. Plus, they built a strong brand that faced little marketplace resistance. With relative ease, Excite was able to gain a wide footprint in the UK by partnering with the government to offer email in schools.
It's easy to forget that in many ways, Excite was the real #2 portal. Insofar as a company like Ask Jeeves can stay independent long enough to allow the development of search tech like Teoma's and breathe life into alternative portal brands like iWon, MyWay, and Excite, I can only cheer them on. No doubt much of what's happening here is pragmatic positioning for more favorable terms in negotiations with potential partners and suitors like Google. But there may be more to this than meets the eye. If all goes well, consumers may soon enjoy a wider diversity of search and portal options. One can hope that a wider range of "cool functionality" will be made available to today's more sophisticated online user -- not for free, but at a reasonable fee or in the context of a sensible, nonintrusive, highly targeted ad model.
In a climate of growth, we can once again dream.
Thursday, March 04, 2004
Would You Like Some Hypocrisy with your Tea, Good Chap?
So now that Yahoo has made a pay-for-inclusion / pay-per-click deal with the devil (and thus bedeviling all pious, god-fearing marketers everywhere), scrappy search engine Ask Jeeves has upped the ante of righteousness by shedding its PFI program, sacrificing millions in revenue for the search industry's PFI sins.
From CNET: "After much testing of paid inclusion the company found that it can negatively sway search results -- producing more commercial and irrelevant lists of Web sites, [Jim] Lanzone said. Ultimately, that hampers the search experience, he said.
"We're never going to mix church and state again," Lanzone said.
Now, don't get me wrong. I've spoken to Jim, and he's a really great guy. But, this is a bit hypocritical, I think. I don't blame Jeeves for taking advantage of the market timing to make their announcement. But come on! If they were making tons of cash with their PFI program, as Yahoo likely will, do you really think they would dump it?
The only revenue Jeeves has now is the cash they split with Google for partnering on Google's wildly successful AdWords PPC program. Just imagine if Google decides to pull out of Jeeves. Oh, good heavens, no revenue!
Wednesday, March 03, 2004
Contextual Ads, Bidding, and Market Inefficiency
Open Letter to Tim Armstrong, VP of Advertising, Google:
Yesterday, at a session at SES, you reportedly claimed that Google has been studying conversion rates on contextual ads for over a year, that they are "about the same" as search ads, and that you have no plans to change the bidding process to allow advertisers to bid separately on the content targeting.
With all due respect, your research is wrong, but more to the point, your principle is wrong. We and our clients know that we want the contextual inventory. We also know that, on average, we can afford to bid only 20-30% as high on these ads. That's simple economics based on *our* conversion data. Until we can bid separately, we either lose money or we shut the ads off. It's unsatisfying and runs counter our usual way of running campaigns. Campaigns that run on the "spend too much, then freak out and turn off" model do not run as well as the "happy consistent spend" sorts of campaigns. What I'm telling you is that we can't get any good momentum going with this program, as much as we'd love to use it more often.
If this is a feature (bidding differently on content targeting) that advertisers shouldn't bother with, then why would your competitor, Overture, have gone ahead and offered it? Because it's what advertisers want, of course. And it's what the market dictates. The market always tells us what to bid. That's why we love AdWords.
I might be just the "bad boy of search" howling in the wilderness, but the other chaps mentioned in the article, my friends Nate Elliott, Brad Byrd, Joshua Stylman, Lance Podell, and audiences full of murmuring SES attendees, seem to agree. Sounds like an advertiser consensus to me.
Tuesday, March 02, 2004
Portals Big & Important, Claims Forrester
Today's commentary ("Google's Soft Spot") by Charlene Li of Forrester Research suggests that Yahoo and MSN are about to eat Google's lunch.
Not so fast, says Traffick Research. While we certainly feel vindicated in finally having convinced someone that portal power is a force to be reckoned with, Li makes a few points we'd dispute.
Li outlines various search features that Google is supposedly ill-suited to offer. It may be true that portals have considerable data that will help them research things like user intent, but Google, too, has heaps of user data at its disposal.
In case someone forgot, Google's search market share -- the number of search queries it processes in a day -- still outstrips the portals by a significant margin. In terms of discerning user intent, all search engines are working on such problems. Arguably Google is doing more advanced research on semantic technology (behind the scenes) than the portals are. Who's to say? In rolling out Orkut social networking, and perhaps free email, Google may be able to gather even more information about its users. Perhaps, as some have suggested, Google is turning into a bit of a, well, portal.
And then there is Li's comment that Google has some work to do to "overcome a deep-seated cultural focus on search." Wha-? Fortunately for Google, the planet has a deep-seated cultural focus on search. And in spite of their grandeur, clever use of punctuation, and recent profitability, the public has retained a deep-seated suspicion of portals while being quite happy to make use of the portal services that prove most useful. Like e-mail. The portal service that is going to lose big market share to Google next quarter.
And in other breaking news, the Thai premier has eaten an entire bucket of chicken.
More on the Yahoo and Overture Developments: It's Almost All Good?
After hearing a fuller briefing, it sounds as it Yahoo's new initiative has a lot going for it. Consider:
At a certain point, of course, there remain unanswered questions. The fact that Yahoo is supposedly aggressively spidering the web may bear little relationship to how prominently these "free crawl" pages will be displayed. Perhaps many such pages will only be there in spirit.
The other possibility is that spammy sites will make short work of Yahoo's algo so that unusual queries display spammy results. The implicit message sent to users may be that if you type in common commercial search queries, you'll get high-quality, quality-tested results from advertisers who are paying to be listed, but if you type in strange and unusual queries, it might be a crapshoot.
On the whole, Yahoo's initiative offers clarity and convenience to advertisers, which might be enough to offset the higher prices many will now be paying for visibility in Yahoo's index (15 or 30 cents per click after the initial inclusion fee). As for how well the user performing non-commercial searches will fare here, we'll just have to wait and see. We've heard this tune before, notably from MSN, and for many users, the "heavily-managed" style of big-portal search has worked out OK. "OK" doesn't seem interesting enough to grab significant market share away from Google, but it does seem likely to provide a decent user experience, make plenty of money for Yahoo, and above all, sharply reduce the number of uncertainties and headaches that have thus far faced content providers, advertisers, and the agencies that serve them when it comes to the index inclusion relationship.
Completely Uncalled-For SES Free Stuff Dig [see also: Gift Horse, Mouth]
Got a cute round mouse pad in my goodie bag: "Lycos Insite: Search Marketing Made Easy." Hmm, I could swear that my mouse worked better just a minute ago when I was using it on a bare desk. Sometimes you can't win for losing.
Yahoo/Overture's New Initiative Largely as Expected; Holes Remain in the Story
The official press release on Yahoo's Content Acquisition and Site Match programs, looking very much like yesterday's CNET story, is out.
Small businesses just got the latest in a string of "uh oh" moments from Yahoo! The beginning of the end, as many small businesses see it, was when Yahoo began charging a one-time-only fee to list in the directory. The second major "uh oh" was when Yahoo de-emphasized their directory in the listings, even though advertisers were now paying $299/yr. to be listed. The latest is a multi-faceted "uh-oh." Yahoo's index may de-emphasize commercial content on terms deemed to be non-commercial, while forcing small businesses to pay twice (once for inclusion, then per click) to generate customers on their core business terms. Meanwhile, the worry that there are different classes of inclusion has come to pass with the "Site Match Xchange" program, dubbed "a full-service program for larger commercial content providers." If you like, you can also buy visibility by buying Overture sponsored listings, which is probably going to be the best deal for many. What you won't be enjoying anytime soon is any free traffic from Yahoo, unless you work for NPR.
The public/educational component of Yahoo's announcement is a bit baffling, too, seeming to go against the concept of what the Internet (and indexing it) really is all about.
Check out this excerpt from the release:
"Yahoo! is thinking innovatively about how to bring content to the broader Web search audience while changing and improving the way search engines interact with content providers," said Maria Thomas, vice president and general manager for NPR Online. "Through Yahoo!'s CAP program, NPR's daily news, information and entertainment content will be searchable by and accessible to audiences we might not otherwise reach."
By picking and choosing which info providers to make "deals" with, Yahoo forgoes an alternative path, which could have been to, well, index the web. We know there is a high degree of difficulty to this, which is why Inktomi (and now Yahoo) make no promises that they can accomplish the task.
In the NPR example, then, what seems to be a helpful contribution to public life may just contribute to more confusion. Other public bodies and quasi-educational sites will be hoping that they, too, could get their stuff included in Yahoo's index as opposed to just optimizing the site and waiting for the spider. But surely Yahoo won't be able to accommodate them all.
This, then, is what we are really holding our breath waiting for: what is this new spider, Yahoo Slurp, going to be doing, and what will become of the many pages it adds to the Yahoo Index? I'll try to get some answers today.
Self-Referential Post About Nothing -- Unless You Want to Try the New Yahoo Search, in Which Case...
Say, see that cool Yahoo! banner up there at the top of the page? It seems to be advertising of some sort. We're being paid to run it, but not by the click. Therefore I have no ethical or moral problem with urging you to actually use that thingy (type in a query if you like) to give the new Yahoo Search a test-drive. Is it old wine in new bottles? Does it kick Google's butt? You be the judge. And remember, all proceeds from running intrusive banner advertising help to defray the cost of me sitting around thinking about the titles of these blogs. (Hmm, there's got to be a better way.)
SES Scoop #1: Yahoo Paid Inclusion
Placing a drinking cup on a random door at the New York Hilton has resulted in our first Search Engine Strategies conference scoop today. OK, actually, I read it on CNET. If you can manage to steer past the announcement of a new version of WordPerfect (and Quattro Pro!), there is a story on something called the Content Aggregation Program as well as an apparently pricy new paid inclusion program called Site Match. Similar to a model that LookSmart tried in the past, Site Match will ask webmasters to pay for inclusion of each individual URL ($49, $29, then $10 depending on how many included), and then also on a per-click basis.
Emails are circulating and posts are speculating about various pieces of news possibly coming down from Yahoo/Overture, but what precisely is it? Or is is several announcements?
At this point it looks like Yahoo may not be done with its announcement flurry and that Overture will have separate news of its own to share.
Back to the CNET item, though: interesting how Yahoo has chosen to couple the announcement of a "deeper inclusion" of disparate sources of content (including so-called 'invisible web' material) with the paid inclusion announcement. So what's the real story here? That depends on who you are. Do users win? It certainly sounds like they do on the surface, but it remains to be seen whether the public will appreciate the inclusion of material from NPR and the Library of Congress, or whether the user's search for a good experience will be overshadowed by the suspicion that the inclusion program privileges paying advertisers.
For in-house search marketers, it's a potential nightmare: pay three or four different ways to appear on Yahoo, and then you might still need to agonize over how to optimize your pages to outdo others in the rankings. It's a byzantine system that will probably leave a lot of work for SEM specialists, especially those who specialize in paid inclusion and optimizing pages within a paid-inclusion environment. (Did someone say byzantine? Did someone say 'the rebirth of a metatag'? Did someone say "Bruce Clay looks really good in this month's issue of Wired"?)
Enough of this nonsense, it's back to checking up on some good old pay-per-click accounts. Only a googolplex of permutations to ponder there... phew.