littleman
11-22-2004, 04:15 PM
the product:
categorizing and defining the web and serving up results which are relevant to the search term
(free, spiderred search results)
profit model:
exploiting the gaps between how a web page is classified and what the site owner wishes it to be.
(sem, paid submit)
This makes for some interesting opposing forces in the market place:
1) The crappier the search results the more a search engine can exploit the gap between the index results and the webmasters who are willing to pay to fill it.
2) If all else stays equal, a search engine will lose revenue if it improves its indexing ability.
3) All else will not stay equal. With competition an improved index will bring in a larger user base which will also increase revenue potential.
4) The search engines are not as much in competition with their previous results as they are with each other. In theory a popular search engine may increase its 'results gap' and not lose market share if it is still more appealing to its consumer base.
projectphp
11-22-2004, 09:11 PM
I love this sort of Discussion,a nd it is always a pleasure to hear yor perspective, Daniel.
1) The crappier the search results the more a search engine can exploit the gap between the index results and the webmasters who are willing to pay to fill it.
Hmmmmm... I am not sure this follws on from the very well written explaination of the revenue stream: "..exploiting the gaps between how a web page is classified and what the site owner wishes it to be." Site owners may wish to be associated with certain terms, but objectively not be the best result. That isn't a crappy result, but rather an excellent result for the user, but bad for site owners. Crappier search results may actually be better for the SEs target advertiser base. A search for "ipod battery problem" that returned all ads to buy an ipod is a crappy result, but won't help te SE generate more revenue.
This statement simply doesn't hold either absolutely or even in general. It may in a minority of cases, but then virtually everything does :)
2) If all else stays equal, a search engine will lose revenue if it improves its indexing ability.
Can you pelase explain this? To me, you offer this statement with no proof. I can make this case simply: indexing improves, more content from large, quality sites is indexed (e.g. ye olde Uncle Sam sites) and as such, commercial sites that previously ranked well would be forced to buy CPC. The assumption that better indexing is a positive for the SEs revenue producing streams, in exclusion of a subsequent increase in usage, is not true as an absolute.
3) All else will not stay equal. With competition an improved index will bring in a larger user base which will also increase revenue potential.
Again, not true. The success of a search engine depeneds upon teh same factor as any other business: Marketing. Woill an improved database be noticed by anyone? Is that the better marketing tool than, say, partnering with Apple to Make the Safari default SE yours? Overly simplistic statements are rarely true, and this one is particularly so.
4) The search engines are not as much in competition with their previous results as they are with each other. In theory a popular search engine may increase its 'results gap' and not lose market share if it is still more appealing to its consumer base.
That I don't get. I woudl actually say the opposite: "The search engines are in competition more with their previous results as they are with each other". The reason being that maintaining a user base is vital. To large a change in design is great cause for a change in SE. The cost of change for consumers from one SE to another is $0. As such, user retention is vital, especially as your users looking to change in major numbers will not be accompanied by an increase in other SEs userbase looking to do likewise.
I think the SE model is simple:
1) Capture and maintain a loyal userbase.
2) Keep said user base by minimising changes to UI and slowly adding features by evolution not revolution.
3) Utilise said user base to generate clicks on Ads, being mindful that free clicks are part and parcel of the game.
4) If running own Ad programme, syndicate ads to other sites. This is the best method of increasing market share.
5) If not, shop for the best rev share deal.