Search Engine Throne Up for Grabs

SAN JOSE, Calif. — The world of search engines is on the crux of some big changes with no clear winners in the next 12 months, according to SearchEngine Watch founder Danny Sullivan.

Whereas major players such as Google, Yahoo , and Microsoft currently dominate the landscape, the remaining batch of survivors also look to play a pivotal role in how much of the pie everyone gets.

“Next year will be a wildcard with all new opportunities,” Sullivan said to a packed house during the Search Engine Strategies 2003 Conference & Expo here. “Unless you’ve been under a rock for the last three months, you know that consolidation and contextual ads are the hot topic with major implications.”

Already the wheels of change are turning with Google scooping up the assets of Applied Semantics. Overture said it would buy the AltaVista and AlltheWeb.com. Yahoo then turned right around and announced plans to acquire Overture.

According to recent comScore figures, Google has a 32 percent slice of overall market share with Yahoo a close second at 25 percent. But if you consider that many partners such as Yahoo, AOL and MSN all use Google’s services, the upstart search engine’s sphere of influence grows to 76 percent with the rest all clustered together.

But by 2004, Sullivan says that is all going to change as consolidation and innovation grow. The search engine guru predicts Google’s overall pie will dip to 51 percent with Yahoo at 25 percent and then there is Microsoft.

“By next year, I expect Microsoft will have their own crawler generating unpaid results. I also see them expand their paid listings or likely to develop new self-serve cost per click program,” Sullivan said. And then there is the chance they may acquire someone like Ask Jeeves, FindWhat, LookSmart or even Google.

Internetnews.com has learned that the Redmond, Wash.-based software giant has about a dozen people including top-ranking executives here talking up their business strategy.

The issue of contextual ads remains crucial. Seventy six percent of marketing executives that used search engine marketing rate it as more successful than banner-style advertising and 64 percent plan on increasing their spending, according to JupiterResearch.

The same analysts also suggest that the online advertising revival is being driven almost entirely by search engines and contextual advertisements.

According to Sullivan, contextual ads need to be monitored and are expected to stabilize with industry direction. The future though is something he calls “bucket bidding.”

“Some terms are more popular on the competitive market than others and so they will cost more. For example, pricing that is keyword-based could charge 61-cents for the word ‘shoes’, 62-cents for ‘boots’ and 53-cents for ‘footwear’.”

Sullivan also says the practice of dayparting advertisements will also play a major role as will localized searches.

“Overture also remains important and HotBot is the future of Yahoo because it is powered by Inktomi,” he said.

Joining Sullivan on the keynote stage this week will be Google co-founder Sergey Brin on Wednesday and Yahoo Senior Vice President of Search and Marketplace Jeff Weiner on Thursday.

The breakout sessions are also reflecting the changing face of search engines. New topics and tracks include Organic Listings Forum; Search Engines & Trademarks; Cleaning Up the Mess; Search Engine Ratings; Balancing Organic & Paid Listings; Dayparts & Other Paid Listings Evolutions; Up Close With the Google API; Contextual Ads; Blogs, News Search & RSS Feeds; Search Engines & Web Server Issues; Meet The Meta Search Engines; Advanced Link Building Forum; and PPC Management Tool Vendors along with updated and improved sessions previously held.

The SearchEngine Strategy show is produced by Jupitermedia, parent company of this Web site.