How Wall Street impacts and ruins search

Yesterday I sat in a client’s office discussing strategy and options. When the conversation turned to which search engines matter, he would only speak of Google. “Google is all that matters.”

Hm. I pointed out that Google’s real search market share appears to be about 40%. His jaw nearly hit the floor. “How can you say that?” Well, I explained how search metrics suck because they tend to focus on queries performed, how Yahoo! and Microsoft entertain over 100 million visitors a month, and that there is a phenomenon called search fatigue which appears to afflict Google users considerably (that is, btw, only my own interpretation of the available data — other people may interpret it differently).

So he started to snore and I stopped. “But we see very good results from Google,” he told me. That’s true. People tend to push relevant content up wherever they can monetize it and his field is relatively competitive. Well, the upshot of all this is that the money tends to consolidate in Google’s search results more than anywhere else.

Why that may be is a topic for another series of discussions, but the point is that Google turns the most search-oriented profit for the business world. Yahoo!, Microsoft, and Ask help small businesses more than large businesses in some verticals. Google is where the biggest pile of money is being scooped up for advertising and optimization.

But if Google’s real search market share is only about 40%, what does that mean for search? I mean, what are people searching for across the other search engines that is so poorly monetized (or perhaps I should say, “… that is so resistant to monetization”)?

Monetization occurs at different points in the process. Main search advertisers are seeking direct conversions from search results pages to their shopping carts. They don’t want to wait for secondary conversions where you click through to my page and then click on their ads showing on my page. These guys are impatient. Well, their business plans different from content network advertisers’ business plans.

But it’s all about the money and when business people think of search they think of Google. The latest issue of WOMMA has a column that says “Yahoo would instantly strengthen Microsoft’s search capabilities, and provide a dominant Internet audience for its products and service.” Hm. Apparently people in the word-of-mouth marketing industry don’t study history.

The old adage that those who don’t learn from history are doomed to repeat it applies as much to the business world as to the world of politics and personal relationships. Eight years ago there were between 30 and 40 competitive search brands, although most of them were powered by Inktomi. Altavista was the dominant brand because it had (at the time) the best technology.

Unfortunately for searchers and Altavista employees, DEC gave up the fight and sold Altavista to a business-oriented management company that believed it was buying a valuable brand. However, they believed the name was the brand and in search names mean nothing. It’s the technology, stupid. In Web search your brand is only your technology, always your technology, and nothing but your technology.

Google could rebrand itself today as IgglyWigglyGigglyPoo and it would still be the dominant search partner in the industry because of its technology.

Wall Street doesn’t get this.

At the end of the 1990s search technologies were less mature than today. A lot of people could take Inktomi’s database, put a different facade on it, and mix up the ranking criteria to produce relatively distinct but useful results. Today we have four brands (technologies): Ask, Google, Live, and Yahoo!. Although they all appear to share similar concepts they produce radically different results.

When Yahoo! gobbled up other search companies those brands vanished. Altavista exists as a Web site but the Altavista brand (technology) is dead.

The same thing is going to happen if Microsoft absorbs Yahoo!. One of those two brands will die and searchers will be left with fewer options for finding what they want. The monetized search verticals will continue to be dominated by Google because people who are ready and willing to spend their money are already being satisfied by Google’s optimized monetized results.

Most of what’s left in search dominance is less easily monetized. Ask could become a more popular service with better marketing (IAC should have branded Ask search across all their Web properties, for example — but you can’t even get to Ask Web search from AskCity). Ask provides the technically best results of all the major brands but because it’s virtually invisible people won’t use it.

Microsoft has an opportunity to chip away at Google’s market share by building its own brand — but that brand is the technology, not the name. Unfortunately for searchers and Web marketers alike, Microsoft thinks like Wall Street. They wrongly believe that the brand is in the name. If Microsoft acquires Yahoo! Google’s market share will grow because Google’s brand (technology) will deliver more results than either Microsoft or Yahoo!’s.

Financial analysts and marketers clearly don’t understand search. That is why we’re stuck with the lame market share estimates provides by Compete, comScore, Hitwise, and Nielsen. None of them track user engagement or satisfaction. None of them separate core audience from hybrid audience participation. None of them provide us with any reliable data about why people choose one search engine over another.

Ultimately, search marketers will have to redefine their strategies if we lose one of the four major search brands. Although there are startups waiting in the wings none of them seems to offer anything truly useful (social media search is a non-starting joke). We’ll just have to wait and see who can throw enough resources into their buildup phase to create multiple data centers and indexes that capture 10-20 billion Web documents. You won’t take market share away from Google with anything less than that.

In today’s search market if you cannot get into Google you still have 60% of the market to work with in Ask, Live, and Yahoo!. They may not collectively drive as many converting sales to Web-based business as Google but if you shrink that 60% to something less than 50% then the ability of Ask and Yahoo!Soft to compete with Google’s monetized search results will collapse.

If Yahoo! goes, Ask won’t be far behind.

Consolidations in search technologies sort of made sense a few years ago because Inktomi was the secret power behind so many search brands. But Inktomi is gone. Consolidations today don’t make sense because the brands (technologies) are disparate and foreign to each other. You can look at the market projections all you want but those projections reflect four search brands (technologies) and will become completely invalid the moment either the Microsoft or Yahoo! brand (technology) ceases to function.

Wall Street just doesn’t get it, but by the time they do figure out what search brands are really about it may be too late to save the search environment from a Googlopoly that will homogenize search results in a way we have never seen before. Only the best Google marketers will win, and that will hurt a lot of people.