Search Engines are BIG Business

Search Engines are BIG Business

The Business Value of Search Engine

•
Users looking for products would type the product name into a
search engine (28 percent), browse shopping 'channels' (5
percent) or click on ads (4 percent).

–
Jupiter Media Metrix & NPD (March 2001)


•
Nine out of 10 users visit a search engine, portal or community
site each month, and revisit them nearly five times per month.

–
Nielsen//NetRatings (May 2001)


•
Search engine placement (i.e., make your site rank at the top of
the search result) is the best way to get a loyal audience

–
Forrester Research Media Field Study

Search Engine Marketing (SEM)

•
Search Engine Marketing (SEM) or Search Engine
Placement/Positioning (SEP) helps a web site:

–
To be included in as many search engines as possible

–
To have high ranking in the result for search keywords relevant to the
business of the web site

•
E.g., for www.hsbc.com, relevant keywords could be bank, deposit,
invest, investment, loan, etc.


•
August, 2002: Lloyds TSB Insurance spent an estimated one million
pounds to buy 1,000 insurance
-
related keywords on Google. The one
-
year partnership marks the largest single online advertising deal in
Europe in recent memory.

•
Google has an estimated 7.5 million user base in UK (according to
Nielsen/NetRatings May 2002 stats)

•
The campaign is to generate traffic and increase online sales for
Lloyds TSB Insurance and its Screentrade brand.

Pay
-
for
-
Placement

•
Search engines that rank results purely based on how much the
sites pay for the query keywords

–
Usually sites can bid for keywords in real time


•
Market leader

–
Overture (www.overture.com), formerly www.goto.com, holds a
patent on pay
-
for
-
placement


•
Big money

–
eSpotting had guaranteed Lycos at least $9.2 million in its three
-
year contract signed in 2001.


Business Models

•
SEC provides search results for portals

–
SEC charges advertisers and shares the revenue with portals

–
SEC widen its distribution channels using the portals

–
Portals get extra income in addition to its own advertisement

–
Contract for Google to provide advertisements to AOL users is
estimated to worth US$ 60m to US$ 100m


•
Overture provides

–
Lycos: five listings at the top of search result pages

–
Yahoo!: three listings at the top and two at the bottom of result page

–
MSN: three listings at the top of each result page



•
Big money

–
eSpotting had guaranteed Lycos at least $9.2 million in its three
-
year
contract signed in 2001.

Other Major Business Deals

•
July 2002: 3
-
year contract between Ask Jeeves and Google to
carry the latter's AdWords listing

•
Anticipated ad revenue of 100 million US$ over 3 years.


•
"Jeeves said it had seen a 40 percent increase in the business
during the first half of the year, thanks in large part to new
keyword
-
based ad products."


www.ask.com

Google’s Business Profile

•
Investment

–
8/1998: US$ 1m from founders (Brin and Page), and families and friends

–
2/1999: US$ 25m from Kleiner Perkins and Sequoia Capital

–
2000: US$ 10m from Yahoo!


•
Revenue:

–
2001: US$ 70m (estimated)

–
Income from providing search to Yahoo! US$ 7m/year


•
People:

–
2001: 250

–
2002: 400 (15% with Ph.D. degrees)


Google’s Business Profile

•
Hardware infrastructure:

–
15,000 servers in 5 data centers (8/2002)


•
Number of hits per days = 50 million (2002)


•
Number of pages = 2.1 billion (2002)


•
Income:

–
Advertisement: Cost
-
per
-
Click Adword program (after experiencing
with impression
-
based scheme for a few months)

–
Provides search service to over 130 companies and government
agencies (2002)

–
Sells Google Appliance: Google
-
in
-
a
-
Box for intranet applications

References

•
Google Inks Ad Deal With U.K. Insurance Co.
http://siliconvalley.internet.com/news/article.php/1437921