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RealTime IT News

Is The Internet Becoming A Commercial Directory?

Paid listings are increasingly becoming the norm for search engines. With growing consumer acceptance, what steps must search engines take to further consolidate this goodwill? What changes to existing listings products must be made?

In 1998, Bill Gross from Idea(-a-minute-)Lab introduced GoTo.com - an unashamed paid listings search engine that would return listings based on how much the web site was willing to pay for each click. The model was widely ridiculed from industry analysts over doubts that the editorial integrity of the search results would be compromised. Three years on and GoTo.com is being heralded a success - seeing it's stock price rise four fold in the past few months.

GoTo.com's growth and continuing development has seen the majority of its search counterparts follow suit and implement paid inclusion programmes. For instance, Inktomi - one of the web's original crawlers - is increasingly relying on its paid inclusion products to grow its revenue base. Similarly, Looksmart's quarterly earning calls last week re-iterated that the future of the company was in paid listings.

Paid search engine inclusion has come about through the disenchantment of online marketers with other forms of Internet advertising. Advertisers are no longer prepared to pay for contextual advertising around a search query and they are now in a position to demand prime real estate within the search results. Furthermore, advertisers need only pay when the search engine delivers a user.

This status quo is quite an attractive proposition for merchants and vendors, however the majority of searches on the Internet are not of a product nature. Indeed, Evan Thornley, CEO and Chairman of Looksmart, estimates that only 40% of all searches have a commercial relevance.

With a smaller pool of resources and a vigilant focus on profitability, can search engines cater for non-commercial searches?

Bill Gross sees GoTo.com's role as simply that of a product catalogue or Yellow Pages directory. Indeed, Gross even conceded that GoTo.com was not appropriate for some types of searches, saying that he himself used Google when looking for information.

From a consumer perspective the longer term is concerning - with the degradation of non-commercial searches seemingly inevitable. The key remains with search engines like Google, whose indexing techniques and results have remained independent. Co-founder Sergey Brin expects the company to become profitable this calendar year, which enforces some form of confidence in its longer term prospects.

A theory recently published by Jupiter Media Metrix argues that user satisfaction with search engines is inversely proportional to the amount of time they spend on them (i.e. the less time the happier). The research report noted that users spent an average of 56 minutes a month on GoTo.com and 269 minutes on Google.

Although the statement has valid principles, the proof is somewhat suspect. Most obviously, the conclusion assumes that a user performs an equal number of searches across each search engine.

The trend toward commercial directories is inevitable. Sadly, for the quality of non-commercial searches to remain, Google must demonstrate that it is indeed a financially viable avenue for advertisers.