Bill Pena [01.15.06 01:26 PM]

Hi Tim,

I'm looking forward to the results of this analysis. I was the designer for Safari, working at O'Reilly until late 2001. Now I'm trying to apply a similar model to selling text, audio and video to a different but similarly specialized professional market, as well as redesigning a site that contains hundreds of pages of free content that's given away in order persuade people to buy books and attend conferences. One of the biggest concerns we have as we develop the systems we'll be living with for years to come is "what are the search engines doing?" Every move Google makes has a huge impact on our business, and dealing with their systems is a balancing act that involves capitalizing on the exposure they can provide while trying not to give away the store in free content.

Working with AdWords and Overture advertising in the last year and a half, I've noticed the same trend that Jakob describes. The more competition comes in to any given keyword, the more money goes directly to the search companies rather than the advertiser with the best-performing campaign. Whereas it made sense for my company shoot for the first position for "dog training" a year ago when the top spot went for $1/click, now it has gone up to $5/click, and eats too much of the profit of target products to make the advertising worthwhile. But if we don't at least compete, then we give over the territory to whomever can bid the highest, regardless of their performance. So we end up spending as much for lower placement and less exposure, or shuffling money to multiple, less-often searched keywords in an attempt to catch with a net what we previously caught with an arrow.

So what is this pointing to? What do the last 5 years tell us about the next 5? You do that sort of intelligent prognostication better than anyone, Tim; I hope you discover there's a path for us content providers that doesn't drive us into commoditized irrelevence.

  Anonymous [01.16.06 09:12 AM]

In this aproach it is assumed that by buying a good position in the standings you make yourself seen. This is true. However, for a organisation that is in the business of having the public find information, this can be double edged sword.

Microsoft uses the standings in its search engine to promote its own product. The consequence is that I do not trust its result and consequently I do not and will not use it.

When the adverts that Google shows are only from the highest bidder, the relevance of these ads is slowly deminished when companies cannot have a sustainable business or minimise on their quality due too high advertising / marketing costs.

It is NOT in the interest of Google or any search engine to gauge its advertisers because it leads to dissatisfied customers AND it will mean that customers learn to distrust the top advertisers reducing the value of a good advertising ranking.

Given that Google knows much about both sides of the advertising equation, it is in a position to be clever and make an intelligent use of such knowledge. One of the things that this may do is by giving preference to those companies that pay a fair amount and provide a fair service.

Thanks,
GerardM

  Tony Brice [02.28.06 02:47 PM]

This post really hit home with me. Few businesses are experiencing the pluses and minuses of search as much as travel (it only stands to reason since travel is such a large online revenue producer).

My recent weblog post posed the question of whether travel sellers are in the process of exchanging "the devil they think they know (Global Distribution Systems) for the devil they don't (escalating keyword costs). Sadly, whether they are or they aren't, the point may be moot since the search engines have carved out such a strong position in the shopping "pecking order".