Last
Week was More Interesting than it Seemed
By Jim Hedger, StepForth News Editor, StepForth
Placement Inc.
August 12, 2005
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This was a truly interesting week. On top of the Search Engine Strategies Conference
in San Jose, the past five days provided search marketers a front-row view
of international economic development, the growth of a media empire, the
internal disruptive influence of corporate culture shifts, and a colligate
game of "mine is bigger than yours." While a happy family obligation
kept me away from San Jose, the week had several profoundly powerful sleeper
stories that show how serious, ironic and silly the world of search is.
China is the largest emerging market on the planet and it is coming of
age more rapidly than anyone could have predicted. While the Chinese paid-ad
sector was worth only $148 million in 2004 according to Shanghai based iResearch
Inc., international business advertising targeting the Chinese market is
expected to grow exponentially while the online economy of China matures
over the coming years.
Google, Yahoo and Microsoft are all heavily invested in the growing Chinese
tech world. Google and Yahoo both made major moves this month in relation to
their interests in China, the most public being Google's hiring of former Microsoft
executive, Dr. Kei Fu Lee. Google and Microsoft are now engaged in a bitter
legal dispute over Google's hiring policies. The decision in this case could
have far reaching implications on how major tech firms recruit employees as
well as on Dr. Lee's role in heading Google's efforts in China.
Google also announced it was retaining the services of three large Chinese
firms to represent its AdWords advertising for the Google China site. On
Tuesday Google named China
Enterprise, China Source and Hotsales as
authorized Google AdWords resellers and they will provide training and support
to the three firms. Google was moved to hire and train experts in their
bid to remain competitive with newly public rivals Baidu.com,
and Yahoo's newest partner, Alibaba.
Late last week, Yahoo acquired 40% of Chinese ecommerce and business vertical
search tool Alibaba.com in
a $1 billion stock purchase. This makes Yahoo the largest investor in Alibaba.com,
a position it is expected to use to push the Yahoo brand in the world's largest
emerging market. The deal gives Alibaba control Yahoo's China business network
while giving Yahoo effective control over Alibaba's overall activities.
Following on the smaller heels of fellow media giant Barry Diller, Robert
Murdoch announced News Corp is getting involved in search and is going to
purchase an established player in the coming months. News
Corporation is an international empire that owns FoxTV, SkyTV, FoxNews,
The New York Post, TV Guide, The Times Newspaper chain in the UK, and literally
thousands of other media outlets, publications and production facilities.
In a conference call with investors and analysts, Murdoch said News Corp
is in advanced discussions to acquire controlling interest in an unnamed
search engine. Speculation has turned to LookSmart and Mamma.Com as reasonable
targets. Class A shares of News Corp rose quickly when news of Murdoch's
plans were reported early yesterday, jumping from 16.42 to today's close
of 18.11.
News Corp is both a creator and a distributor of media content, which makes
their entry into the market more a challenge for Yahoo than for Google or
MSN in the long run. Yahoo has been actively pursuing online entertainment
distribution as a revenue channel along with paid search advertising.
That might be one of the few breaks Google got this week as the media skewered the
search giant for its punitive one-year info-ban on CNET
journalists. Google's PR department appeared to slip and fall in an
apparent attempt to flee the scene after word of the CNET info-chill scandal
made headlines early in the week.
The same day, an automatic Google Toolbar update switched the controversial AutoLink default
setting from inactive to active. In other words, Google did something they
said they weren't going to do and are now forcing limited but very real
alterations on private websites without the permission of the owner, content
creator or webmaster.
The inevitable culture shift seems to have occurred in and around the Googleplex
in the twelve months since they posted their mega-successful IPO last August.
While initial investors were fed the same "Don't Be Evil" line
in regards to Google’s corporate ethics policy the rest of the world
was fed, a somewhat darker tone has emanated. Google has lost a lot of its
luster over the past year, ironically while it has been getting much better
at filtering spam from organic placement results. The word being bandied
about is: Hubris (exaggerated
pride or self-confidence often resulting in retribution. - source, wikipedia)
Things got a bit silly when Yahoo announced its spidered content index
had grown to dwarf Google's spidered content index. Yahoo said its index
now contained over 19 billion objects and documents and almost 2 billion
images. Google's index is estimated to contain approximately 10 -12 billion
documents and images. Their attention suddenly focused away from their own
navels, Google
scientists quickly glanced at their rival's and questioned Yahoo’s
claim of size-superiority before announcing they had doubled the size of
Google’s image index. The search marketing community gently reminded
both that size is less important than relevancy, comparing the obsession
with size to a couple testosterone driven boys who end up looking juvenile
trying to outdo each other to impress an endless gaggle of girls.
What's funniest about the incident is that both Yahoo and Google have a
lot of impressive stuff to brag about. Both have strong business models
and post strong quarterly profits. Both moved this week to strengthen their
core paid-ad businesses by giving advertisers and webmasters more control
over various paid advertising opportunities. Yahoo opened the Yahoo
Publisher Network to a growing group of beta testers, a move that prompted
Google to offer more support to AdWords advertisers and more control over
ad placement to AdSense partners. And as mentioned above, both have recently
made aggressive moves into the growing Chinese market.
No review of the week could be complete without mention of the massive
SES Conference in San Jose. Billed as the biggest search shindig of the
year, SES San Jose is a playground of intellect, information and fun. Barry
Schwartz, or RustyBrick of the Search
Engine Roundtable posted coverage of several of the SES Sessions. Over
at Search Engine Watch, this forum tracked the SES
- Silicone Valley Parties.
Following the premise that history has a way of repeating itself, the level
of activity in the sector this week may not be surprising. The past week
was also the tenth anniversary of the Netscape IPO, widely considered the
spark that set off the Tech-bubble of the late 90's. The events of this
week are not those of a bubble but rather those of hyper inflated interest
in a sector that shows no end to its potential growth.
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