May 27, 2005
The Changing Landscape of Search
There has been much speculation over the past year or so as to what the Search industry will look like when it all shakes out. The real answer is that no one knows for sure what the landscape will look like 12-24 months down the road.
So rather than take a guess --yes I have an opinion, just like everybody else-- let's take a look at the pro's and con's for each of The Big Three.
Google
Google is of course still the reigning leader in search engine traffic, though they are nowhere near the dominating force they were less than 18 months ago.
Pro's: Google had a large head start while they were the only major search engine for years. Their name is basically synonymous with Search for many users. After their IPO they are cash rich, especially the employee's, who all had stock options as part of their compensation package.
Con's: The vast majority of Google's income is produced by selling advertisements via Adwords. Right now they hold an even more dominant position in this area than they do/did in Search. Yahoo! is trying to catch up with their Overture ownership and Site Submit, but the general sense is that Google owns the pay per click (PPC) market for the time being.
The problem with being so dependent on a single source of income is two-fold.
First, there is beginning to be a more generally recognized perception that Click Fraud is rampant in PPC advertising. My sense and experience agrees with this perception. Click Fraud is very difficult to detect unless the fraud is being done on a massive scale by an individual or oganization who doesn't understand how to hide themselves. Small time Click Fraud is almost impossible to detect unless you already suspect it. However a lot of small time Click Fraud --ala AdSense advertisers click on their own ads or having others click on them so that their own cash register rings up a princely sum-- is still a very large ghost in the closet to deal with.
Second, being so very dependent on a single source of income has a very definite potential for disaster. This is true of any business, not just Google and not just on the Internet. Remember the old axiom about not putting all of ones eggs in a single basket?
Whether this potential disaster comes from mainstream news organizations finally publicizing the scope of the Click Fraud problem; or if it comes from some competitor with deep pockets deciding that it's worth a short term sacrifice in order to put a major dent in Google's ability to maneuver in the longer term.
Simply put, a bidding war for their Adwords business has the potential to have an effect on a lot of the flexibility that Google now has.
Another con for Google was formerly a big pro. Being the only game in town for so many years ended up painting a huge target on their collective backs. This issue of being the sole focus gave the less-than-scrupulous folks out there plenty of time to figure out ways to fool Google and scam Google users. Google has been struggling to rid their index of these scammers and spammers, and to regain their once renowned search relevancy for well over a year now. Frankly, by all outward appearances, they don't seem to be gaining much ground.
Yahoo!
Since getting back into the Search game Yahoo! has been making some pretty significant strides. Not only is their Search relevancy much better than it was a year ago, but they're also making some inroads into the percentage of searchers who use Yahoo! as compared to Google. Based upon all of the sites that I watch the stats on, Yahoo! is up a good 10% on the Traffic Delivered scale from February 2004 when they re-launched their own search product.
Pro's: Though not many seem to realize it, Yahoo! makes a lot more money on Internet endeavors than Google, and has for years. In fact, they even make more on Internet Advertising than Google does by a large margin according to a Wired magazine article I read some months back.
They've got a good portal and are a respected brand. They also have strategic alliances all over the place that none of their competitors can currently dream of matching. Additionally, with the growing perception that Yahoo! is much more Webmaster-friendly than the standoffish Google; and with new releases like their MyYahoo! RSS feeds and their API back end, Yahoo! stands to gain a lot of favorable reaction and word-of-mouth advertising from those who have to deal with them the most: Webmasters and other Internet Professionals.
Yahoo! is old school. They're a huge corporation with deeper pockets than Google, and they simply go about their business quietly and effectively. Better yet they don't seem very interested in getting into hand-to-hand combat with either of the other major players.
Con's: Being a Portal is both a good and bad thing. I honestly don't think it's true, but there seems to be a perception out there that Yahoo! doesn't care about Search as much as Google does. I don't personally find that to be the case. In fact, I've found Yahoo! to be easier to work with when something goes wrong (by error, not by design) simply because they don't seem to have the same "You need us -- We don't need you" attitude that many report as infecting the Googleplex.
That said, Yahoo! is still seen as something "less" by most search marketers, mainly those who haven't been paying attention. But they're still thought to be less of a threat to Google than MSN, for what are fairly obvious reasons.
MSN is truly the sleeping giant. Not only do they have basically an unlimited warchest to throw at their entry into Search, but they are under a mandate from Bill Gates to catch up, and catch up quickly. When Bill sends out something like that, everyone in Redmond is said to feel the hair on the back of their necks stand at attention.
In the relatively short time they've been running their own search engine they've made some pretty significant strides. They're certainly not there yet, but are getting better pretty much every week.
Pro's: Money, and lots of it. And the willingness to spend lavishly if need be. MSN also has a lot of talent to draw upon, both in house inside Microsoft and via outsourcing or purchasing smaller companies if need be.
Additionally, MSN seems to be taking what can best be termed an Anti-Google approach to others who have a vested interest in Search. Early on in the creation of MSN Search they started out listening to Webmasters, Marketers and users. Amazingly they have continued to keep these lines of communication open.
No matter how you look at it, MSN has an ace-in-the-hole that frankly no one else can begin to trump. Their parent, Microsoft, just happens to be the Operating System of choice on a crushingly large majority of the world's PCs. Anybody who is under estimating this single fact should move to another universe.
The basic premise goes like this...
When Microsoft releases their new Windows update (known as Longhorn and expected sometime in late 2005) it has already been announced that Windows will integrate search boxes into everything. Certainly all of those often used MS Applications like Outlook, Word, Office, Excel, etc will have a search box.
Ostensibly these search boxes will connect to MSN Search. The Convenience factor alone stands to pump up the volume at MSN a good deal, likely bringing them into striking range of both Yahoo! and Google.
Now, the nay sayers will tell you that this will never fly and that Microsoft will be sued by Google, etal. Which is absolutely true.
The problem with the premise that getting sued is going to stop MS from doing exactly what they've stated they're going to do is that all of the folks who think it will evidently missed their Internet History lessons.
When MS introduced and integrated IE into Windows, making it the default browser for every Windows user, Netscape owned a solid 85% + of the browser market. By the time Netscape had (sort of) won their suit, the percentage was exactly the opposite, with IE owning 85% of the market. Netscape may have won that battle. But at the same time they were winning the battle the lost the war. Big time.
Expect something of a repeat. No, Google isn't Netscape, but Google also has a very soft underbelly that MSN can attack at the same time they're hitting them on the OS ownership side of things. Remember Google's reliance on Adwords dollars I mentioned above? Do you think for a moment that Gates & Co won't be going after that business, knowing how crucial it is to Google?
I have no doubt they'll go after it and go after it with gusto. Probably keeping less for themselves just to drive Google nuts. MSN's Adwords/Adsense clones can actually be a loss leader for them, which is something that Google simply can't afford to to for long.
Con's: MSN got a very late start in the Search game. They also have some baggage coming into it that they need to dispel, namely being Big Bad Microsoft. Many also have what could turn out to be very unrealistic expectations concerning what MSN can do with all of their talent, technology and sheer dominance of the PC market. The unrealistic expectations could cause some to think that MSN is failing, when in fact they're simply doing things on their own time table.
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So there's our short(?) look at the pro's and con's of the each major players.
What does it all mean?
I'll let you decide for yourself. Each of the Big Three has a lot of work to do, each in different areas.
Personally I would like to see it all end up with there being three engines that have roughly the same traffic base to work with. I kind of doubt it'll end up that way though.
Two of the three players seem to really have it in for each other, so it could easily turn into a blood feud. I would almost like to see what their advertising departments could come up with if it ends up getting into something like the beer ad wars between Budweiser and Miller. That would be a hoot IMO!
Take your pick as to who is going to win the all-out war between Google and MSN. Then try to figure out what happens with good old Yahoo! as who simply keeps plodding along, staying above the fray and out of harm's way.