Blogging · April 28, 2022

Small Events Spell Seismic Shifts in Search

I am going to step way out on a limb. I suspect, and am willing
to propose; this short period is a major transition point in the
history of search. I’m marking it in my archive, if only because
a niece or nephew of mine might study economics and ask about it
one day. A number of events over the past three weeks have set
in motion a chain of events that will unfold over the remaining
months of 2006, setting the stage for a bizarre and highly fluid
2007.

On or about November 1, 2006, three interesting press releases
found their ways into my inbox. While meditating over them with
Hypertext The Cat (she who watches like vulture) and a cup of
coffee, it occurred to me that Nov 1 was a watershed day in the
history of online advertising.

The first news item is extremely important for organic search
and for information distribution in general. Ask and Lycos
announced an alliance with Ask providing the organic, image and
sponsored search results for Lycos users and Lycos pushing Ask
search products. While the vast majority of search analysts will
likely see this as the least important development in the first
week of November, the combination of up-and-coming Ask with the
old but still popular property Lycos signals a small shift in
the search engine landscape.

“We selected Ask.com over other providers because of its great
search technology and tools like Zoom related search, which
cannot be found on other engines,” said Brian Kalinowski, CEO of
Lycos, in a press statement. “By partnering with Ask.com, we aim
to deliver a world-class search experience to our millions of
Lycos users.”

Ask appears to finally be making its move and actively seeking
partnerships with other smaller search firms. While it is good
to see forward momentum for any search firm whose name does not
begin with the letter G, it is also important that some sense of
competition be re-injected into the organic search market.

In the same press statement, Ask CEO, Jim Lanzone said, “With
stiff competition in the marketplace for syndication deals, we
are pleased that Lycos recognized the merits of our search
technology and advertising products. This new relationship will
enable Ask.com to broaden its search offering to new users while
also increasing the reach of Ask Sponsored Listings inventory.”

Ask.com is, in and of itself, an interesting search engine, and
one whose story could have turned out very differently. It is
never too late to start over and, 2006 has been a time of
renewal at Ask. Owned and operated by the InterActive
Corporation, Ask has new energy, an almost impossible goal its
staff fully believes in, and, ultimately, a new lease on life.
No longer defined by their popular but ineffective butler
mascot, Ask has spent the past ten months reinventing itself by
incorporating the strongest offerings from IAC such as
Citysearch, Ticketmaster and Expedia into the search products it
offers its users.

Things looked very different at this time last year for the
small Oakland CA based company. Then again, things looked very
different in the search engine marketplace at this time last
year. Today, Ask appears to be looking for partners to bolster
themselves as the smallest of the largest search entities. With
the enormous lead Google has over the rest of the pack, these
types of partnerships are both necessary and inevitable.

The second item from November 1st’s news is a story from
British newspaper the Times Online saying Google’s rake of UK
advertising money has surpassed Britain’s second largest
advertising funded TV station. With annual revenues projected to
surpass 900 million -poundUK this year, Google has blasted past
Channel 4’s anticipated revenues of 800 million – poundUK.

Again, this might not seem like much of a surprise to long-term
Internet watchers but it is a massive story for advertisers and
media buyers who continue to spend the majority of their
clients’ monies on traditional outlets like television, radio
and print. The ad-purchase pendulum was already rapidly swinging
away from the traditional media and reports like this only add
momentum to that movement.

Channel 4 CEO Andy Duncan was quoted in the article saying,
“People need to wake up and realise that this is not just a
cyclical issue – there is deep structural change, rather like
global warming.”

Comparing Google’s success in drawing revenues that would
otherwise fund other advertising venues to Global Warming might
seem a bit extreme at first glance however, Mr. Duncan is quite
correct in his observation that the global advertising
environment has altered so significantly that traditional
assumptions no longer necessarily apply to the emerging
realities. The money is not flowing the way it used to,
threatening what was once solid ground with accelerating
submersion.

The biggest thing most of us will have to worry about in regards
to Global Warming is if, not where, we will find lunch.
Similarly, traditional media outlets are struggling to find ways
to survive now that the rivers of wealth have been diverted to
fund the efficiency of the electronic marketplace.

A third news item, a report published in the New York Times
that has certainly been noted by media buyers shows how badly
newspaper subscriptions have declined over last year while, at
the same time, viewership of websites published by those same
newspapers has increased by about 24%.

According to the article, the LATimes has lost 8% of its daily
circulation. The Boston Globe is down by 10% for its Sunday
edition. In 1984, circulation of major daily newspapers in the
United States peaked at 63.3 million. Today, that number has
decreased by about 1/3 to 43.7 million. Clearly, not as many
people are taking delivery or buying newspapers anymore. That
doesn’t mean they are not reading them. According to the
Newspaper Association of America, over 57 million people visited
the websites of American newspapers in the third quarter of
2006.

The mainstream media marketplace is changing rapidly and ad
buyers are having that reality hammered home to them time and
time again. At the same time, the search engine marketplace is
changing quickly as well.

Over the past several weeks, the search engine marketplace has
shifted significantly with the third quarter reports from the
two largest paid search entities, Google and Yahoo. What these
reports revealed is that there is no longer any real competition
in the PPC marketplace with Google literally sucking the profit
away from Yahoo.

While the ceiling is not caving in at Yahoo, a weak fourth
quarter report will not bode well for a revival of competition
in paid search. Yahoo’s weakness however, provides an open
lane-way for other formats and methods of paid-search
advertising, one that Ask is only too happy to start to explore.
Ask is not the only company exploring the paid-search
marketplace. In the last couple of months, Microsoft’s adCenter
has started to look like a serious player with inventory and
interface improvements.

Now, I realize everything I have said above seems, on its own,
either inconsequential or perfectly obvious. The inference I
draw from these three stories, all of which appeared on
November 1st is that these stories are both indicative of and
propelled by, the seismic shifts happening in the search
marketplace right now.

Weakness at Yahoo makes a place for Microsoft, Ask and its new
alliances, and a host of other alternatives at the paid-search
advertising table. On the table is a rapidly growing pile of
money, most of which is likely going to go to Google. What’s
left is a fortune worth fighting over. 2007 is going to be
bizarre and highly fluid.