Monetizing The Search

Monetizing The Search

By Danny Sullivan
From The Search Engine Report
Sept. 4, 2000

Over at RealNames, do a search for "survivor" and you'll be delivered to the popular Survivor.com web site directly, regardless of the fact that Survivor is not paying RealNames for the linkage. It's something that RealNames simply provides, as it provides to many other companies for free. Why? To do less would make its system less usable.

Unfortunately, giving away your product for free isn't a great business model. Even in the strange world of net economics, companies are falling under pressure to show how they'll make a profit. In the search engine business, this is known as "monetizing the search," which means making money in some way off the search results you present. More than ever, monetizing the search is a concern for the search engines.

Yahoo is currently taking a battering in the stock market because some analysts are predicting a drop in banner advertisements, given that many web companies are going under or having to tighten their belts. Earlier this year, nails were hammered into the coffin of big portal deals. How are search engines going to stay afloat? One idea is to monitize the search by shifting the burden to web sites, and it's looking to be a revolution that's catching on.

As with the RealNames example, search engines send a lot of traffic to web sites for free. Paid listings on the GoTo model are one idea to make money from doing this, but that's generally seen as bad. GoTo itself admits it had no reputation to lose when it launched its pay for placement service, but major players like Excite or Lycos could risk bad press if they undertook large scale sale of their main results.

Additionally, many of the search engines feel that selling listings will decrease the usability of their results. Yes, the product people behind search engines really do care about quality. When I visited one service recently, we discussed how paid links might be integrated into results. One idea was to place them in their own section, above ordinary links. However, the search engine folks didn't like this, because they didn't want the editorial product to fall "below the fold" of screen real estate.

Such attitudes are to be much applauded, but no one will be clapping if a service goes out of business. Given the sensitivity of paid links, the idea of "pay for consideration" or "pay for submission" systems are growing in popularity. The idea is appealing to search engines, because it allows them to claim that the editorial product is staying untainted.

LookSmart already has a pay for submission system, and Inktomi's will launch later this year. Last month, Yahoo also expanded its pay for submission " Business Express" option to all categories of its directory. Previously, the $199 Business Express service was restricted to relatively few categories.

The cynical might see this as a crass move by Yahoo to make money, but one of the biggest complaints I've had from webmasters about Yahoo was why the program was restricted to only some categories. The Yahoo change actually satisfies pent up demand. However, the company clearly had to feel more comfortable expanding its program after the programs at LookSmart and Inktomi attracted little criticism or complaint.

Expect to see more pay for submission systems coming. There are concerns that some sites will be overlooked, and it's something I'll be watching closely. But, as I've written in the past, pay for submission can go a long way in easing the significant burden of organizing the web, one that has always been under strain from spamming. A small number of people will go to very large extremes to capture traffic, and this already contributes to why some sites might get missed.

What I'd call "pay for display" may also emerge. This is what RealNames is experimenting with, to solve its dilemma. Do a search for "survivor" at a site that uses RealNames links. Clicking on the link makes the Survivor site appear within a frame. The same happens for a search on "big brother." So far, RealNames is deliberately only using ads in the top part of the frame to advertise its own product, but the company could let anyone advertise within space it creates.

If so, RealNames would have a much better ability to monitize the search it provides to many sites and searchers for free. It could also has an opposite product. Any client that takes out a RealNames subscription wouldn't be framed. Naturally, some clients would be interested in this. Nike, for example, probably would not want ads for Adidas appearing in a frame window above its own site.

Pay for display could extend into the search engine world. Instead of loading sites in their own windows, search engines might instead put up their own frames, showing ads targeted to search terms -- something Ask Jeeves has done from the very beginning of its launch. Sites that prefer not to be framed might negotiate contracts to own the entire display space, perhaps paying a few cents per visitor delivered. Can't afford a contract? You still get traffic for free, but at least the search engine gets the chance to earn something for delivering people to you.

Pay for display offers a variety of advantages. None of the pay for placement concerns apply, and sites that can't pay still get represented. The search engine no longer feels it needs to keep users at its site, because the display of ads in frames would provide the continuing opportunity to earn money. That could mean more time spent on improving the quality of search, in contrast to developing new portal features to keep users "sticking" around.

Among the downsides, there are various ways for webmasters to bust frames. No doubt some of these would be employed. And naturally, someone can be expected to file a lawsuit, as has happened with some sites that frame others in the past.

Users might also find frames annoying. I personally hate sites that frame other sites and find it the worst thing about Ask Jeeves. But Ask Jeeves does provide an ability for me to easily turn off the frame from within the frame itself. A creative idea might be that by registering with Ask Jeeves, users could set their preferences to see sites unframed. Ask Jeeves would lose some opportunity to monetize search, but it would also gain a better ability to target ads in remaining areas, because it would know more about its users.

"Pay for clickthrough" is another system I expect we'll see more of. Many sites, such as Amazon, have affiliate programs. They will pay other sites for sending them traffic. There's really no reason why search engines shouldn't be able to sign up for every affiliate program out there. Then, if a site naturally ranks well for a particular search, the search engine earns a little by sending people across as an affiliate partner. To date, pay for clickthrough is a system that community search sites and browser companion tools are exploring as a revenue stream.

LookSmart operates a hybrid pay for submission/pay for clickthrough system called "Subsites." In this program, a major company can choose to have its site listed down to a very fine level. For example, eHow.com has well over 100 listings throughout the directory, in categories such as "Basketball tips" to "dishwashing advice." Many of the eHow listings are directed through ad tracking URLs, which allow LookSmart to charge anytime someone clicks through on one of the links.

There's no promise that a site will rank better for being in the Subsite program, especially in that LookSmart cannot control what its partners such as MSN Search do with its information. However, the LookSmart advertiser will certainly see a traffic rise because by having so many listings, it will naturally be relevant for a wider range of terms -- even within LookSmart partner sites.

Should an advertiser opt out of the program, it would then fall back to having only a few main listing and will see a corresponding drop in traffic. That's worrying, because it also means searchers may no longer be reaching the company in response to product searches.

In a future article, I'll take a closer look at the Subsite program and the issues it raises. But LookSmart defends the program by saying that any company that stops paying can still be found when searched upon by its own name and whatever key terms reside in its main listings. It also correctly notes that, depending on the particular search, a user might be equally satisfied by a link to another company that provides similar products or services.

"Pay for appearance" is a last idea that we might see. Site owners might pay to control the appearance of how they look at a search engine. Perhaps you can purchase icons or bold text to make your listing stand out from others. Such a system wouldn't influence rankings, yet it would provide another way for search engines to make money by working with site owners.

In conclusion, search engines are making the transition from seeing site owners and web marketers as group they should fend off to instead a group they can sell to. That's going to bring an entire realm of new opportunities, along with some concerns for both webmasters and searchers. But done properly, this transition could ultimately be a positive thing for everyone.

Ad-revenue worries weigh down Yahoo
Bloomberg, Sept. 1, 2000
http://news.cnet.com/news/0-1005-200-2670551.html

Discusses how predicted drop in ad revenue is hurting Yahoo's stock.

Advertisers renegotiating deals with portals
News.com, July 26, 2000
http://news.cnet.com/news/0-1005-200-2350751.html

One recent article of many this year talking about the end of the big portal deal.

Pay For Placement?
Collection of past articles on the topic of paid placements at search engines.

Searching for Revenue
The Standard, Aug. 28, 2000
http://www.thestandard.com/article/display/0,1151,18023,00.html

Yahoo Business Express Help
http://help.yahoo.com/help/bizex/

All categories are now open to the $199 Business Express system, and it has also been expanded to Yahoo editions for Australia, Canada, Ireland, New Zealand and the United Kingdom.

LookSmart First To Charge Commercial Sites
The Search Engine Report, Aug. 2, 2000

After months of beta testing, LookSmart become the first major search service to charge commercial sites to be reviewed for inclusion in its listings.

Inktomi To Offer Paid Submit Option
The Search Engine Report, Aug. 2, 2000

In the wake of LookSmart's new pay-for-consideration system, Inktomi announced that it will offer a pay for inclusion service.