Shopping Search: Right on the Money
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SAN JOSE -- Follow the money is as good a rule in search as it is in politics. That's why Smarter.com thinks it's a smart move to focus on shopping.
Three-year-old Smarter.com began as Coupon Mountain, letting consumers search for discount coupons they could use at e-commerce sites. It's grown to become a comparison shopping site that helps users through the decision process then sends them off to e-tailers when they're ready to buy -- with a coupon, if one is available.
It turns out that general Web search tends to follow the 80/20 rule: A small proportion of all Web searches generate most of the ad revenue, according to Smarter.com co-founder Harry Tsao, who helped create Overture's pay-per-click marketing service.
"The search marketing industry today is $6 billion, but the ad revenue for [comparison shopping sites] probably doesn't even equate to $400 million," he said. "Yet we all play in an area that represents [about 80 percent] of the monetization."
Because of that, Tsao said, "Vertical search is set to explode."
Vertical search is a hot trend here at Search Engine Strategies, a conference in San Jose this week, with vertical search engines looking for partners, advertisers, traffic and buzz.
Advertisers on Smarter.com pay per click, but they bid on product SKUs, rather than on keywords. The site launched with product information, gained from several sources including merchants' structured data and third-party info, focused on consumer electronics and computers. It's expanded to include books, music, video and apparel.
The company already serves localized versions in 10 different countries, and it's about to go big in China. The infrastructure was built capable of displaying Chinese- and Japanese-language information, because moving into Asia was always part of the strategy, Tsao said.
"Everyone else was going to Europe," he said. "But China and Japan are the most difficult, because of the language and cultural barriers, and the level of development of the e-commerce industry."
He pointed out that, despite low consumer Internet penetration, China has the world's second largest Internet industry. "China is going crazy," he said.
Smarter.com will operate as a stand-alone shopping search engine in China, he said, probably buying traffic from Chinese search service Baidu.com. Baidu.com had a red hot IPO last week. While Tsao only knew what he had read in news reports about a potential acquisition by Yahoo, he scoffed at its valuation.
"They had a great PR message, as 'the Chinese Google,' but if you look at the numbers, it's not viable," he said. "Six months from now, we'll all laugh about it."
Tsao said the Chinese market is highly competitive, so Smarter.com is in heavy R&D mode. "We're different because of the integration of coupons, and because we understand the search market space," he said. "Whereas other comparison shopping engines are mature, we're still trying to evolve to create the best experience."