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Detlev,
great insight in your article! Nice to see you are doing more writing! In
regards to Overture the stock fall could be for a few reasons from what I've
picked up consulting with a few analysts. Number one and a big concern to them
is the fact Yahoo! and MSN make up about 60% of OV revenue. All I talk to ask me
what the chances are of either not renewing/canceling their contract. IMHO, the
Yahoo! deal with Inktomi causes them great concern.
There was also the feeling that possibly the Google product providing both
algorhythmic search and ads in a single service was what large sites like ESPN
were going to be looking for. ESPN just did a deal for blended algosearch and
PPC using an Inktomi and Overture solution.
These are the only game in town in N. America and they have to compete! IMHO,
they either had to continue working with Inktomi or buy another search service.
FAST seems the best after Google and Inktomi.
Yahoo! buying Inktomi was major! The recent consolidation of search services
means if they loose one of Yahoo! or MSN they are in big trouble there is really
no major players left to pick up the slack. Either Google, Inktomi/Yahoo!? have
everything sewed up for awhile. They had to demonstrate that they were doing
something about this. Even if it was buying a couple that combined probably
aren't providing half the traffic of any of the big three.
AltaVista IMHO, was just OV buying a big billboard or real estate. They wanted
the still fairly substantial traffic (not major but). The writing, as we all
know has been on the wall for them for some time.
Buying them insured that another competitor didn't grab that real estate. It
will also help to lessen some of the blow if either Yahoo! or MSN bolt, which
IMHO, will happen.
AV text indexing technology is not that good, it is "old guard" and only younger
new services have the built in ability to eliminate listings of questionable
value. It is obvious to me AV is simply crap in, crap out. You don't have to
have a lot on the ball to see the obvious ad skew in the rankings. They protest
this vehemently but the results don't seem to reflect it. Their protests seem to
be spin.
PPC has been clearly driving the recent profit growth of all the engines using
it. So, if say someone like Yahoo! says" we're killing and only getting X%"
let's do this ourselves and get 100%. Bam, they just more than doubled their
revenue from that service. Yahoo! could have also coveted not only the
technology of Inktomi but an experienced sales staff and manager of PFP and
Inclusion. This didn't get a lot of play in what I read but Inktomi is head and
shoulders above all the rest in selling and managing these programs. I know if I
was thinking about getting into the Inclusion, PFP, or PPC business and had an
opportunity to buy the best at a good price it wouldn't be a tough decision.
In the end all of the moves lately are all about further monetization of
results. There is a real feeling IMHO, that if the FTC shoe drops PPC CTR will
plummet when users **really** know what is an ad and what is a result. Inclusion
will be the only way to **obscure** this further monetization if the FTC or
Nader decide to step in. Hence, the rush by OV to buy up these services at rock
bottom prices when they are flush with cash. Back home we call that hedging your
bet.
Hedging your bets is what we all should be doing. When that PPC revenue is lower
how do you think they will make it up? Inclusion, look around there are only a
few free places to submit and the list is shrinking not growing. I will be very
surprised if AlltheWeb and AV will continue free listings when, OV, which for
all intents and purposes is an ad agency, takes over. Free is not in their
vocabulary! Fact is, demand drives prices, demand for Inclusion goes up
and............ Inclu$ion prices go up!
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