Even as we wait for a Microsoft buyout of Yahoo to create some semblance of competition for the search giant, I came across an interesting analysis of the long term weaknesses of the Google model of search and advertising.
Sramana Mitra writes on her blog and in her book – Entrepreneur Journeys (which btw is an excellent read if you are excited about technology businesses, and I’ll be posting a review soon) that Google’s main weakness is it’s rigidness on the one-search-bar-for-the-world interface. She says that verticalization of search domains, and subsequently of advertizing networks could prove to be a big challenge to Google 5-7 years down the road.
To illustrate, she takes the example of the Travel industry. 15% of Google’s ad revenue comes from travel related advertisements. But a search engine like Kayak.com makes the user search experience much more comprehensive by allowing the user to specify advanced search parameters which the one single search bar on Google doesn’t (at least not in a user friendly way). Because the user experience is much better, more users go to Kayak for their travel requirements. Advertising in this vertical can also lead to better returns and targeting for the advertiser and the publisher. For example, an airlines like British Airways buys ad-words on Google, say “flight” and “Paris”. A user search of “flight Paris to Mumbai” might show the British Airlines ad even though they may not fly on that segment. Whereas on a vertical search engine like Kayak, the context of the search can be better used (because it’s a single vertical) to give more relevant ads. Such a vertical Ad network would be valued much higher in terms of targeting and context.
This seems like a very interesting argument, and as of now, I tend to agree with Sramana that the future would see more verticalization. We’ve seen the growth of verticals like Travel and Hospitality, Job Search, Matrimony etcetera and even some vertical ad networks like that of LinkedIn and DivaNation, Tonic Tag closer to home in India. The future holds exciting promise!
What do you think?
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3 comments:
Here's a wiki excerpt to put my comment into perspective:
"There are three broad categories that cover most web search queries[1]:
* Informational queries – Queries that cover a broad topic (e.g., colorado or trucks) for which there may be thousands of relevant results.
* Navigational queries – Queries that seek a single website or web page of a single entity (e.g., youtube or delta airlines).
* Transactional queries – Queries that reflect the intent of the user to perform a particular action, like purchasing a car or downloading a screen saver."
All queries in verticals are the transactional queries. It is highly debatable as to whether the percentage of transactional queries has been increasing as opposed to the other two. Although transaction on the web, in general, is increasing, so is the total query rate. Thus, I feel that informational queries are increasing in the same proportion. That said, the only way to answer information queries ("find out about mad cow disease") is via a one search box interface. Also, there are a million technical reasons (most related to speed of search results and thus, user happiness and satisfaction) that make a single textbox interface attractive. Think about it: although google has such a powerful query parsing engine such that someone who actually know HOW to form queries can get much better resullts, why doesn't google advertise it by appending the textbox with other options?
I agree with the categorization of search queries. Although I don't have numbers, I feel transactional queries would be generating a substantial chunk of the revenue.
That aside, I think this debate of generic versus verticals transcends the search industry and is a debate applicable to any industry. And both approaches have their target audiences. A market tends to be horizontal and generic while maturing and verticalization becomes more tenable once scale and stability set in. But both can co-exist. So I feel Google will still be a leader 5 years from now, but it won't be the fearful monster it is today!
Interesting argument...but what prevents Google from buying out other Vertical search engines in the future... or perhaps building their own?
They have done so with Local...are building a Real Estate section...have Fropper which caters to the retail segment etc.
Infact, but for the Travel segment they are pretty much hedged of this risk of most other segments.
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