Where Is The Search Industry Headed?
Where Is The Search Industry Headed?
With all of what happened in the search industry in the last 9 to 10 months, one cannot neglect the fact that this industry is in for a lot of changes. Independently of the hypothesis that Google becomes a public company or not is irrelevant. The industry is facing major changes on its own.
For example, Yahoo is now the world’s second largest search property. After having acquired Overture a few months ago, it is now trying to battle a ‘level ground’ with Google. Competition will be fierce. Expect more mergers, buyouts and acquisitions in the coming months.
For example, late on November 20, Yahoo made a firm proposal to acquire a Beijing-based Web company for about $120 million in cash and stock. The company, with the unusual name of 3721, if acquired, would in effect benefit Yahoo of a new business for selling domain names in China. Yahoo would still maintain its strong search position in that country, for which many consider a rapidly growing market for Internet companies. Domain names’ Well, let’s call this a diversification away from Yahoo’s normal search operations. Still, such moves will be less uncommon in the near future.
Will the search market continue to grow in 2004? Yes, very much so. Depending to whom you talk to, estimates range anywhere from 10 to 30% growth. Some even expect higher numbers than that. What’s important is analyzing the trend. I am of those that think this growth trend is definitely on the increase and I expect it to continue well into 2004.
The Google ‘Wildcard’
A few weeks ago, Google stirred up a lot of news when it was widely reported in the press that it would probably come out with an IPO (Initial Public Offering) in February or March of 2004, effectively becoming a public company, joining its Wall Street rivals such as Yahoo, Overture and even LookSmart for that matter. On top of all that, Google hinted that, if there is an IPO, it would probably be of the auction type, in other words, it would probably bypass the large investment bankers, which as some observers have quoted such a gesture to be “uncommon”.
There were even some reports and articles in the press hinting that Bill Gates and Microsoft were in talks with Google, discussing a possible merger or acquisition of the Number One search engine. Bill Gates then categorically denied those allegations on November 17. The situation is in fact getting a bit cloudy.
Speaking of Microsoft, its no secret to nobody that Microsoft has been very busy lately, quietly developing its own search engine in the background. It even has a beta version already online in the United Kingdom, France, Italy and Spain. It’s only a question of time before Microsoft comes out with a full-fledged search engine that will probably make Google even more nervous that it is.
Then again, will it simply integrate its secret search engine as an overall component of its long-talked about Longhorn new operating system slated for late 2004, early 2005? As we have witnessed in 1995, when Netscape became a public company, it then saw its Navigator browser being overtaken by Microsoft’s Internet Explorer browser, which Microsoft had conveniently integrated into its Windows operating system. Could something similar happen again with Longhorn, this time the victim being Google? Again, only time will tell.
2004 And Beyond
Developments similar to what we are currently seeing will be extremely important to determine the exact course of action the search industry will probably take next. It promises to be very exciting. One thing is certain: the stakes are getting much higher as time goes by. Expect to see more PPC and PFP (Pay-for-Performance) advertising models. The field of search engines is certainly transforming certain parts of the advertising industry as we used to know it less than ten years ago.
It is my prediction that the following twelve months will be extremely critical to many of the largest and even the smallest players in the search industry. Coming back to Google, there are some that think it could probably raise between $ 10 and $ 15 billion with an IPO. It is estimated that, privately owned Google’s revenues will approximate between 700 million to 950 million for fiscal 2003. Others are wondering what Google would do with all that new money in its coffers. If all that money would be used to continue the development of its current search engine and initiate new R&D into other search-related technology, then many think it would be a good thing in deed.
Conclusion
There is no conclusion to any of this, as nobody can safely predict the outcome. However, buckle up your safety belts, since I think we could be into a few air pockets in the coming months.
Expect Google to continue to ‘fine-tune’ its PageRank algorithm in the coming weeks and months. Additionally, expect some of the other major search engines to do the same, in the never-ending battle for quality and relevancy in the search results.
What IS important and what I can safely predict here is the fact that, more than ever, companies, businesses, website owners and Webmasters alike continue to optimize their sites as much as they can. The ones that do will continue to reap the benefits of their efforts and should be amply rewarded in the search results and, hopefully in the conversion rates of their websites.
Author:
Serge Thibodeau of Rank For Sales
