Vertical Search
The major search engines are fighting for content and marketshare in verticals outside of the core algorithmic search product. For example, both Yahoo and MSN have question answering services where humans answer each other's questions for free. Google has a similar offering, but question answerers are paid for their work.
Google, Yahoo, and MSN are also fighting to become the default video platform on the web, which is a vertical where an upstart named YouTube also has a strong position.
Yahoo and Microsoft are aligned on book search in a group called the Open Content Alliance. Google, going it alone in that vertical, offers a proprietary Google Book search.
All three major search engines provide a news search service. Yahoo! has partnered with some premium providers to allow subscribers to include that content in their news search results. Google has partnered with the AP and a number of other news sources to extend their news database back over 200 years. And Topix.net is a popular news service which sold 75% of its ownership to 3 of the largest newspaper companies. Thousands of weblogs are updated daily reporting the news, some of which are competing with (and beating out) the mainstream media. If that were not enough options for news, social bookmarking sites like Del.icio.us frequently update recently popular lists, there are meme trackers likeTechmeme that track the spread of stories through blogs, and sites like Digg allow their users to directly vote on how much exposure each item gets.
Google also has a Scholar search program which aims to make scholarly research easier to do.
In some verticals, like shopping search, other third party players may have significant marketshare, gained through offline distribution and branding (for example, yellow pages companies), or gained largely through arbitraging traffic streams from the major search engines.
On November 15, 2005 Google launched a product called Google Base, which is a database of just about anything imaginable. Users can upload items and title, describe, and tag them as they see fit. Based on usage statistics this tool can help Google understand which vertical search products they should create or place more emphasis on. They believe that owning other verticals will allow them to drive more traffic back to their core search service. They also believe that targeted measured advertising associated with search can be carried over to other mediums. For example, Google bought dMarc, a radio ad placement firm. Yahoo! has also tried to extend their reach by buying other high traffic properties, like the photo sharing site Flickr, and the social bookmarking site del.icio.us.
After a couple years of testing, on May 5th, 2010 Google unveiled a 3 column search result layout which highlights many vertical search options in the left rail.
Search Engine Marketing
Search engine marketing is marketing via search engines, done through organic search engine optimization, paid search engine advertising, and paid inclusion programs.
Paid Inclusion
As mentioned earlier, many general web directories charge a one time flat fee or annually recurring rate for listing commercial sites. Many shopping search engines charge a flat cost per click rate to be included in their databases.
As far as major search engines go, Inktomi popularized the paid inclusion model. They were bought out by Yahoo in December of 2003. After Yahoo dropped Google and rolled out their own search technology they continued to offer a paid inclusion program to list sites in their regular search results, but Yahoo Search Submit was ended at the end of 2009.
Pay Per Click
Pay per click ads allow search engines to sell targeted traffic to advertisers on a cost per click basis. Typically pay per click ads are keyword targeted, but in some cases, some engines may also add in local targeting, behavioral targeting, or allow merchants to bid on traffic streams based on demographics as well.
Pay per click ads are typically sold in an auction where the highest bidder ranks #1 for that keyword. Some engines, like Google and Microsoft, also factor ad clickthrough rate into the click cost. Doing so ensures their ads get clicked on more frequently, and that their advertisements are more relevant. A merchant who writes compelling ad copy and gets a high CTR will be allowed to pay less per click to receive traffic.
In 1996 an 18-year-old college dropout named Scott Banister came up with the idea ofcharging search advertisers by the click with ads tied to the search keyword. He promoted it to the likes of Yahoo!, but their (lack of) vision was corrupted by easy money, so they couldn't see the potential of search. The person who finally ran with Mr. Banister's idea was IdeaLab's Bill Gross.
Overture (Formerly GoTo)
Overture, the pioneer in paid search, was originally launched by Bill Gross under the name GoTo in 1998. His idea was to arbitrage traffic streams and sell them with a level of accountability. John Battelle's The Search has an entertaining section about Bill Gross and the formation of overture. John also published that section on his blog.
“The more I [thought about it], the more I realized that the true value of the Internet was in its accountability,” Gross tells me. “Performance guarantees had to be the model for paying for media.”
Gross knew offering virtually risk-free clicks in an overheated and ravenous market ensured GoTo would takeoff. And while it would be easy to claim that GoTo worked because of the Internet bubble’s ouroboros-like hunger for traffic, the company managed to outlast the bust for one simple reason: it worked.
While Overture was wildly successful, it had two major downfalls which prevented them from taking Google's market position:
Destination Branding: Google allowed itself to grow into a search destination. Bill Gross decided not to grow Overture into one because he feared that would cost him distribution partnerships. When AOL selected Google as an ad partner, in spite of Google also growing out their own brand, that pretty much was the nails in the coffin for Overture being the premiere search ad platform.
Ad Network Efficiency: Google AdWords factors ad clickthrough rate into their ad costs, which ensures higher relevancy and more ad network efficiency. As of September 2006 the Overture platform (then known as Yahoo! Search Marketing) still did not fix that problem.
Those two faults meant that Overture was heavily reliant on it's two largest distribution partners - Yahoo! and Microsoft. Overture bought out AltaVista and AllTheWeb to try to win some leverage, but ultimately they sold out to Yahoo! on July 14, 2003 for $1.63 billion.
Google AdWords
Google AdWords launched in 2000. The initial version was a failure because it priced ads on a flat CPM model. Some keywords were overpriced and unaffordable, while others were sold inefficiently at too cheap of a price. In February of 2002, Google relaunched AdWords selling the ads in an auction similar to Overture's, but also adding ad clickthrough rate in as a factor in the ad rankings.
Affiliates and other web entrepreneurs quickly took to AdWords because the precise targeting and great reach made it easy to make great profits from the comfort of your own home, while sitting in your underwear :)
Over time, as AdWords became more popular and more mainstream marketers adopted it, Google began closing some holes in their AdWords product. For example, to fight off noise and keep their ads as relevant as possible, they disallowed double serving of ads to one website. Later they started looking at landing page quality and establishing quality based minimum pricing, which squeezed the margins of many small arbitrage and affiliate players.
Google intends to take the trackable ad targeting allowed by AdWords and extend it into other mediums. Google has already tested print and newspaper ads. Google allows advertisers to buy graphic or video ads on content websites. On January 17, 2006, Google announced they bought dMarc Broadcasting, which is a company they will use to help Google sell targeted radio ads.
On September 15, 2006, Google partnered with Intuit to allow small businesses using QuickBooks to buy AdWords from within QuickBooks. The goal is to help make local ads more relevant by getting more small businesses to use AdWords.
On March 20, 2007, Google announced they were beta testing creating a distributed pay per action affiliate ad network. On April 13, 2007 Google announced the purchase of DoubleClick for $3.1 billion.
Google AdSense
On March 4, 2003 Google announced their content targeted ad network. In April 2003,Google bought Applied Semantics, which had CIRCA technology that allowed them to drastically improve the targeting of those ads. Google adopted the name AdSense for the new ad program.
AdSense allows web publishers large and small to automate the placement of relevant ads on their content. Google initially started off by allowing textual ads in numerous formats, but eventually added image ads and video ads. Advertisers could chose which keywords they wanted to target and which ad formats they wanted to market.
To help grow the network and make the market more efficient Google added a link which allows advertisers to sign up for AdWords account from content websites, and Google allowed advertisers to buy ads targeted to specific websites, pages, or demographic categories. Ads targeted on websites are sold on a cost per thousand impression (CPM) basis in an ad auction against other keyword targeted and site targeted ads.
Google also allows some publishers to place AdSense ads in their feeds, and some select publishers can place ads in emails.
To prevent the erosion of value of search ads Google allows advertisers to opt out of placing their ads on content sites, and Google also introduced what they called smart pricing. Smart pricing automatically adjusts the click cost of an ad based on what Google perceives a click from that page to be worth. An ad on a digital camera review page would typically be worth more than a click from a page with pictures on it.
Google was secretive about its revenue share since the inception of AdSense, but due to a lawsuit in Italy Google feared they would be stuck disclosing their revenue share, so they decided to do so publicly for good public relations on May 24, 2010. Google keeps 32% while giving publishers 68% of contextual ad revenues. On search ads Google keeps 49% and gives publishers 51%. Some premium publishers are able to negotiate higher rates & custom integration options as well.
Yahoo! Search Marketing
Yahoo! Search Marketing is the rebranded name for Overture after Yahoo! bought them out. As of September 2006 their platform is generally the exact same as the old Overture platform, with the same flaws - ad CTR not factored into click cost, it's hard to run local ads, and it is just generally clunky.
Microsoft AdCenter
In 2000 Microsoft launched a keyword driven ad program called keywords, but shut it down after 2 months because they feared it would cannibalize their banner ad revenues.
Microsoft AdCenter was launched on May 3. 2006. While Microsoft has limited marketshare, they intend to increase their marketshare by baking search into Internet Explorer 7. On the features front, Microsoft added demographic targeting and dayparting features to the pay per click mix. Microsoft's ad algorithm includes both cost per click and ad clickthrough rate.
Microsoft also created the XBox game console, and on May 4, 2006 announced they bought a video game ad targeting firm named Massive Inc. Eventually video game ads will be sold from within Microsoft AdCenter.
Search Engine Optimization
What is SEO?
Search engine optimization is the art and science of publishing information in a format which will make search engines believe that your content satisfies the needs of their users for relevant search queries. SEO, like search, is a field much older than I am. In fact, it was not originally even named search engine optimization, and to this day most people are still uncertain where that phrase came from.
Early SEO
Early search engine optimization consisted mostly of using descriptive file names, page titles, and meta descriptions. As search advanced on the page factors grew more important and then people started trying to aim for specific keyword densities.
Link Analysis
One of the big things that gave Google an advantage over their competitors was the introduction of PageRank, which graded the value of a page based on the number and quality of links pointing at it. Up until the end of 2003 search was exceptionally easy to manipulate. If you wanted to rank for something all you had to do was buy a few powerful links and place the words you wanted to rank for in the link anchor text.
Search Gets More Sophisticated
On November 15, 2003 Google began to heavily introduce many more semantic elements into its search product. Researchers and SEO's alike have noticed wild changes in search relevancy during that update and many times since then, but many searchers remain clueless to the changes.
Search engines would prefer to bias search results toward informational resources to make the commercial ads on the search results appear more appealing. You can see an example of how search can be biased toward commercial or informational resources by playing withYahoo! Mindset.
Curbing Link Spam
On January 18, 2005, Google, MSN, and Yahoo! announced the release of a NoFollow tag which allows blog owners to block comment spam from passing link popularity. People continued to spam blogs and other resources, largely because search engines may still count some nofollow links, and largely because many of the pages they spammed still rank.
Since 2003 Google has came out with many advanced filters and crawling patterns to help make quality editorial links count more and depreciate the value of many overtly obvious paid links or other forms of link manipulation.
Historical, Editorial, & Usage Data
Older websites may be given more trust in relevancy algorithms than newer websites (just existing for a period of time is a signal of quality). All major search engines use human editors to help review content quality and help improve their relevancy algorithms. Search engines may factor in user acceptance and other usage data to help determine if a site needs reviewed for editorial quality and to help determine if linkage data is legitimate.
Google has also heavily pushed giving away useful software, tools, and services which allow them to personalize search results based on the searcher's historical preferences.
Self Reinforcing Market Positions
In many verticals search is self reinforcing, as in a winner take most battle. Jakob Nielsen'sThe Power of Defaults notes that the top search result is clicked on as often as 42% of the time. Not only is the distribution and traffic stream highly disproportionate, but many people tend to link to the results that were easy to find, which makes the system even more self reinforcing, as noted in Mike Grehan's Filthy Linking Rich.
A key thing to remember if you are trying to catch up with another website is that you have to do better than what was already done, and significantly enough better that it is comment worthy or citation worthy. You have to make people want to switch their world view to seeing you as an authority on your topic. Search engines will follow what people think.
Hypocrisy in Search
Google engineer Matt Cutts frequently comments that any paid link should have the nofollow attribute applied to it, although Google hypocritically does not place the nofollow attribute on links they buy. They also have placed their ads on the leading Warez site and continued to serve ads on sites that they banned for spamming. Yahoo! Shopping has also been known to be a big link buyer.
Much of the current search research is based upon the view that any form of marketing / promotion / SEO is spam. If that was true, it wouldn't make sense that Google is teaching SEO courses, which they do.
Early Years
Google's corporate history page has a pretty strong background on Google, starting from when Larry met Sergey at Stanford right up to present day. In 1995 Larry Page met Sergey Brin at Stanford.
By January of 1996, Larry and Sergey had begun collaboration on a search engine called BackRub, named for its unique ability to analyze the "back links" pointing to a given website. Larry, who had always enjoyed tinkering with machinery and had gained some notoriety for building a working printer out of Lego™ bricks, took on the task of creating a new kind of server environment that used low-end PCs instead of big expensive machines. Afflicted by the perennial shortage of cash common to graduate students everywhere, the pair took to haunting the department's loading docks in hopes of tracking down newly arrived computers that they could borrow for their network.
A year later, their unique approach to link analysis was earning BackRub a growing reputation among those who had seen it. Buzz about the new search technology began to build as word spread around campus.
BackRub ranked pages using citation notation, a concept which is popular in academic circles. If someone cites a source they usually think it is important. On the web, links act as citations. In the PageRank algorithm links count as votes, but some votes count more than others. Your ability to rank and the strength of your ability to vote for others depends upon your authority: how many people link to you and how trustworthy those links are.
In 1998, Google was launched. Sergey tried to shop their PageRank technology, but nobody was interested in buying or licensing their search technology at that time.
Winning the Search War
Later that year Andy Bechtolsheim gave them $100,000 seed funding, and Google received $25 million Sequoia Capital and Kleiner Perkins Caufield & Byers the following year. In 1999 AOL selected Google as a search partner, and Yahoo! followed suit a year later. In 2000 Google also launched their popular Google Toolbar. Google gained search market share year over year ever since.
In 2000 Google relaunched their AdWords program to sell ads on a CPM basis. In 2002 they retooled the service, selling ads in an auction which would factor in bid price and ad clickthrough rate. On May 1, 2002, AOL announced they would use Google to deliver their search related ads, which was a strong turning point in Google's battle against Overture.
In 2003 Google also launched their AdSense program, which allowed them to expand their ad network by selling targeted ads on other websites.
Going Public
Google used a two class stock structure, decided not to give earnings guidance, and offered shares of their stock in a Dutch auction. They received virtually limitless negative press for the perceived hubris they expressed in their "AN OWNER'S MANUAL" FOR GOOGLE'S SHAREHOLDERS. After some controversy surrounding an interview in Playboy, Google dropped their IPO offer range from $85 to $95 per share from $108 to $135. Google went public at $85 a share on August 19, 2004 and its first trade was at 11:56 am ET at $100.01.