At the beginning of the year, Safa Rashtchy, senior research analyst for Internet and media marketing and managing director of Piper Jaffray, made the bold prediction that Google would hit $600 a share in 2006. At the time we wrote, "The primary reason Mr. Rashtchy is so enthusiastic about the stock is that he expects Google will continue to increase its share of the rapidly growing Internet search market."
Safa is right about that in that Google's market share of the search business is increasing at the expense of Yahoo! and MSN. In fact, he predicts that the number of advertisers using local search will grow from 500,000 to 2 million - 4 million. That's a pretty safe bet.
Fortunately, we're not in the stock price predicting business, but we do dabble in forecasting the growth of advertising overall and the types of advertising. Like Safa, The Kelsey Group believes that local search is going to continue to take a growing share of the increasing global online advertising business. But this man is evangelical. "Search will become a central element in a highly fragmented media mix," he told the 470 people in the audience at this week's Interactive Local Media conference, Drilling Down on Local.
"Search is now the trusted medium and local search is an integral part of the growing virtuous circle." A major reason for Google's success, he believes, is that "advertisers want to be associated with Google." If Google is able to take on the same kind of panache that used to exist for companies that advertised on NBC in the '50s or The Wall Street Journal in the '80s, Google could still see $600 by year-end.
Judy's Book and Local.com announced a partnership earlier in the week to syndicate the former's local reviews and user blogs on the latter's local search site. Since Judy's Book was already syndicating blog content of its users’ existing blogs (rather than creating its own platform), this is a syndication of a syndication (Oodle has done something similar with online classifieds).
Knocking down content walls and syndicating data also seems to be a trend lately, especially in social media. The thought is that you can drive more traffic to your listings (and back to your site) by syndicating content to affiliate sites, rather than fighting to get users to show up at your doorstep. The deal will bring Judy's Book more traffic to its own advertisers, while Local.com will enrich its listings with value-added user ratings, reviews and blog content. Serving as the reviews engine for Local.com, Judy's Book will also have more reach with which to build its library of reviews (Local.com customers will now be prompted to write reviews which will be syndicated on both sites).
The syndication and increased business activity around social search is interesting to watch and we expect to see more as the medium shows no signs of slowing (it's "the new black" as Greg sometimes jokingly says). Judy’s Book COO Chris DeVore sat on a social media panel at Drilling Down on Monday and said as much. Also on the panel was Eurekster CEO Steven Marder, who is equally bullish on the partnering opportunities with other online media channels to build a social media layer on top of their own content to create incremental value in more relevant search.
Yahoo!, as we all know, is leading this charge with lots of technology development and acquisitions of companies built on social media, including Flickr and del.icio.us. Earlier this week Yahoo! added a del.icio.us button to its toolbar, which will make it easier for users to tag, share and save content from wherever they are on the Web. It already has a similar button on its toolbar for MyWeb 2.0
Needless to say, social search is hot. We'll explore the space further on the blog, as there are developments, and in a White Paper currently in the pipeline.
President of Verizon's Internet division Eric Chandler announced a partnership between SuperPages and Google on Day 1 of Drilling Down On Local, as mentioned earlier by Greg.
The deal will position Verizon as an authorized AdWords reseller and give it an additional platform to offer its SME customers part of a bundled ad strategy it hopes will appeal to more local businesses. Given Google's own traffic and it's relationships with AOL and ASK.com to distribute its ads, this deal will also greatly extend SuperPages online reach. It already has a deal with MSN Local to provide listings.
Google meanwhile gains an additional sales channel (Verizon reps) into the local marketplace. It hopes to use this to bring in more AdWords customers among the majority of local businesses that aren't technically inclined to sign up for, and manage, their own AdWords campaigns.
Introducing the vast reaches of small businesses in this camp to the web is also behind Google's strategy with Page Creator. The free website building and hosting tool will be like training wheels for small businesses to get on the web where they are hoped to then transition to AdWords customers.
More on the conference later, and we'll provide a more comprehensive recap in next week's Local Media Journal, and in upcoming advisories.
When Greg and I were up at Microsoft a few weeks ago, we discussed the integration of search macros into the company’s Live Search Product, which will power MSN Search and Windows Live.
Yesterday, search macros were introduced on the MSN Search blog. Macros allow users to build advanced search queries and save them in a toolbar for future use. This includes the ability to give preference to certain sites, exclude sites and search for certain page characteristics.
Along with a handful of other new features, Windows Live is attempting to differentiate itself to gain market share on Google and Yahoo!. One challenge will be maintaining the user base and brand identity of MSN, while rolling out a new product and gaining market share with an overall user base that could be fragmented between the two. It will be an uphill battle for Microsoft to gain share on Google and Yahoo! (ComScore market share breakdown here ), but the strategy to create a differentiated set of new and interesting features is the right (or perhaps the only) way to do it.
An interesting feature of Macros is that once created, they can be published on a blog or elsewhere so others with similar interests can use them or plant them on their own toolbars. This is yet another integration of social media that seems to be happening everywhere. In this case it's smart because it could create new Windows Live users interested in using a macro that someone has created. This can only happen within the context of a social or community interaction where info is being shared within a community of similar interests, professional tracks or geographies.
More on social media to come, including some highlights from the social search panel at Drilling Down.
Great shower here at the Fairmont Hotel in San Jose. And lots of good stuff yesterday at the show and in the exhibit hall. Safa R. was very good as a keynote speaker (predicting that the further development of local search may actually hurt e-commerce). So was SuperPages President Eric Chandler, who made an announcement about a direct partnership with Google for SME distribution in Google’s paid results.
The National and SME advertiser panels were very interesting. So were most of the other panels. One of my favorites — I didn’t attend them all because I was moderating and couldn’t be at all the breakouts — was the social search panel. "Social media is here to stay" was the overall theme, and figuring out how to implement and integrate advertising are the challenges.
Today, among other things, I look forward to hearing Dan Gillmor discuss newspapers and local search and what he thinks they should be doing online to avoid being marginalized. Also we’ve got online classifieds and a panel on whether the Internet will become a buying platform for traditional media as well as online.
After today I’m going to take some time off, so this may be my last post.
Google appears to have introduced — or more likely be experimenting with — a new AdSense-like format for search results, placing ads in a box above the "organic" Web results. Here’s "Hotels New York." Here’s "Health Insurance." (If you’re seeing what I’m describing, you should see four ads at the top of the page in a blue box.)
This new format would appear to maximize the exposure of the top four advertisers but eliminate ads beyond that (no more ads in the right column). It’s somewhat jarring because the ads dominate the page. The new/experimental presentation may generate more clicks but may not offer the best user experience given how far down the organic results are pushed.
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Update: I can only imagine this is some sort of strange malfunction because the normal links to images, news, local, etc. are not available. Very strange.
Found this press release interesting. One independent publisher is suing another in federal court for allegedly copying ads for a competing publication. This is not such a big deal as a business dispute, but it does offer a small glimpse into how the directory world is changing in the United States.
There was a time when these things didn’t happen between independents (or if so, rarely) because independents did not compete as fiercely with one another as they did with incumbent publishers. I used to hear independent publishers say they would not launch a product in competition with another independent as a matter of principal. They didn’t all say this, of course, but almost no one says it now.
With so many markets having so many competitors, the era of gentlemen’s agreements between independent publishers would appear to be ending, if it isn’t already over. We expect to see more sharp elbows being thrown among independents, and sometimes this may take the form of litigation. Independent publishers got where they are (and where they are is wealthy, at least in many cases) by being tough, aggressive competitors that don’t let themselves get pushed around. That won’t stop because the competition is now another independent instead of the evil empire (i.e., a big phone company publisher).
