Jul 13, 2006

Search Wars - Google vs. everyone else

Things are really shaping up in the "Search Wars". Looks like Google continues to take share at the expense of Yahoo, MSN and other smaller would-be pretenders. According to Comscore's recent reports - Google now controls 42% of Search queries conducted in the United States. This amounts to a YoY increase of over 5%. While MSN (16% to 14% Y/Y) and Yahoo (31% to 28% Y/Y) are loosing share on a daily basis. Yahoo is betting the farm on their Social Search feature. Frankly - this approach doesn't scale. It's an interesting user engagement mechanism, but it would take the active involvement of thousands or users to improve the relevance of Yahoo results through Yahoo Answers MSN on the other hand, seems to have a more balanced approach to addressing this issue.
Ad words? The launch of ad Center will be an interesting catalyst for the paradigm shift which is undoubtedly coming to the Search Industry. It will take a while for ad centre to develop a user base which is strong enough to trouble Googles' Ad words. Bid Density (frequency of bids placed by ad centre clients) and coverage (% of search queries which feature sponsored, paid links) are still pretty low
Ad Sense? It would be interesting to see what happens once MSN introduces a program which rivals Ad Sense. Ad Center features interesting capabilities for categorizing online user demographics and day parting. It's more than likely that Google will loose some incremental revenue as Ad Words customers divert some of their budgets to a cheaper, more cost effective Ad Centre platform. ROI may be lower, but then so are costs
Syndication: Google is still the best Search Engine out there - bar none, and that perception has helped fuel a remarkable YoY increase in Market share - in most countries World Wide. However, the key to Googles’’ continued growth is in its aggressive Distribution Strategy. That's why they went all out to re-sign AOL as their premier syndication partner. Google understands that most internet users are not loyal to a specific search engine - to the exclusion of others. So - it's very important to keep the Google Search engine generally accessible and “top of mind" to internet users especially in the largest web markets. If MSN can sign a few high-profile distribution deals with market specific portal - look out!
The key point to note here is that Google is like any other dotcom company - I’m sure we all remember what happened back then!! Google's Valuations are clearly inflated - and the Company has benefited from lots of hype. Once the markets start to perceive that MSN or Yahoo is gaining ground, we'll start to see increased speculation regarding GOOG price points. Throw in a few missed revenue estimates and we will certainly see a frenzy of activity. Sure, Google will continue to hold sway with online users - in the short term. Perception is often reality. However - as long as they have not way to monopolize your Search experience - there will always be room for the likes of MSN and Yahoo to make headway. Stay Informed......

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