Thursday, July 26, 2007

Vertical search booms

A version of this piece was published in Marketing in 2007

Read about search, and you read about Google.  The powerhouse search business dominates how we think about search, and few places more so than in the UK.

We’re Google’s second biggest market (next to the US) –16% of their revenues – and a 79% share of searches, a far bigger share than it takes in the US.  Its share of ad revenue is even higher, as many advertisers lack the resources to spread their programmes beyond one search engine.  

So is there life beyond Google?

It’s tempting to think that the market’s sewn up, but just as in the display sector, where from many advertisers behaviour you’d think that only three websites exist, there’s actually a diverse ecosystem out there, full of niches Google hasn’t reached.

Online retail is now worth £11bn in the UK, and most purchases start with a search.  But search engines themselves are more important in the research phase – for buying itself, many people use price comparison sites.  Pricerunner, Kelkoo and all provide one stop access to hundreds of retailers, allowing consumers to compare features and pricing at a glance.

Whilst this has made a huge impact on white and brown goods, it’s gained little traction in clothing, where much of the recent growth in online retail has been focused. could change this, by allowing users to search for similar items to the ones they see.  Search for ‘shirt’ in men’s apparel, and a range of different ones are presented.  But click ‘likeness search’ next to the light blue short-sleeved shirt, and around 300 similar ones are displayed from dozens of manufacturers.

The retail vertical is further subdivided, with uSwitch and fighting for the market in financial services and utilities, and Moneysupermarket adding travel to these.  This area has generated a flurry of M&A activity recently, with Scripps buying uSwitch last year for £210m, Admiral considering the flotation of Confused, and Moneysupermarket’s expected £800m+ IPO this month.  These businesses have created a new intermediary in the value chain, and P/Es of around 40x show the expectations this market is creating in the city.

But search isn’t all about buying.  As the internet shifts from being an information to an entertainment medium, online video is booming.

Whilst much of the talk around online video has centred around sites like YouTube and, the fight for video search is a potentially much more lucrative one.

The most talked about name here is, whose recent IPO on AIM values it at £120m.  Blinkx claims to index video in a completely different way to other search engines, and have a broader range of content than either Google or Yahoo.  But it’s playing in possibly the most competitive development area online, up against dozens of startups like Clipblast and Everyzing, together with the big guys, AOL’s Truveo and Google Video. 

Whilst volumes are still small, video search holds the navigation key for future TV consumption.  So these guys are well-resourced, and not keen for anyone else to eat their lunch.

The web is a medium where consumption is based on interest, and particular fields can attach very specific meanings to given words.  In these cases, a general search can be a wild goose chase.  Engineering, science, motoring and business have all spawned search engines particularly dedicated to their topics, but perhaps the biggest area is medical search.

Described as the world’s second opinion, medical search engines like and provide access to information on virtually any condition, not just for consumers, but for doctors too.

These sites have created useful services that are clearly differentiated from the big guys.  They’re adding real worth to the search economy, and proving that the quality of search listings isn’t measured by their length.  But whilst they’re making money and creating real businesses, they’re not worrying Google.  For most people, the start and end of search is still there, and that’s the way it’ll stay, at least while the most common search term on Yahoo is… Google.

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