ISM Signpost #2
SIGNPOST is the monthly executive summary of the
internet search marketing industry.
11.05 ISSUE 2
To request further copies or to stop receiving
SIGNPOST, please email p.roberts@isearchm.com
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* Wooing AOL
* Google’s Auction
* MSN’s Demographic Sale
* The Public Library
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+++ WOOING AOL +++
Who will end up with AOL - Microsoft or Google?
The suitors are queuing up at AOL’s door. It’s the
most love and attention the internet service provider
has received since its expensive ‘merger’ with Time
Warner five years ago, during the heady days of the
last dotcom boom.
Yahoo!, News Corp, Google, Comcast and Microsoft have
all been wooing Time Warner to buy a minority stake
in the once-troubled ISP. Time Warner says that any
deal must value AOL at more than $20 billion
(£11.3bn.)
It is continuing serious discussions about a possible
tie-up with just Microsoft and Google, according to
sources at Time Warner. Talks with Microsoft are
believed to centre on forming a joint venture,
whereas talks with Google are focused on selling a
minority stake. Both companies are battling to become
the primary gateway to the internet and neither wants
competition to get their hands on AOL.
It was not so long ago that Time Warner was regarding
AOL as an overpriced, troublesome acquisition,
striking its name from the company title and
relegating it to a business unit. But now the media
company is smiling on it again. The merger between
Time Warner and AOL in 2000 was billed as the biggest
deal of all time, creating a company worth
$350billion (£197bn) during the height of the
internet bubble.
AOL still generates most of its cash from its
traditional internet dial-up access business but this
area is declining and less valuable than advertising.
So AOL is knocking down most of the walled garden it
built for subscribers over the last decade to build
an advertising-driven portal.
Microsoft wants to replace Google to provide the
technology in AOL’s search engine and these talks
have progressed into creating a joint venture between
MSN and AOL. This deal could give Microsoft a
much-needed boost against search leader Google and
give Time Warner more ad revenue and stronger online
distribution for its content.
Google has stepped up its pursuit of AOL in an
attempt to block Microsoft’s bid. It has also
approached Time Warner about a joint bid with
Comcast, the US cable company. Google is pursuing a
portal strategy based on the media content AOL has,
and AOL is trying to bulk up search engine and
traffic. They are two distinct brands that overlap
less than MSN and AOL.
Whoever succeeds in wrestling AOL from the arms of
Time Warner, one thing is certain: this time around
Time Warner wants cash and not internet stock.
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+++ GOOGLE’S AUCTION +++
Google is going to be stepping on eBay’s toes
Google is testing a new, free, classified listings
service called Google Base, similar to eBay’s.
Information users submit will be put into a
searchable database and users will be able buy and
sell products without paying for the service.
By collecting personal listings and making them
searchable without charging a fee, Google could pose
a direct challenge to eBay – one of its biggest
advertisers. EBay users pay an average seven per cent
of the value of sales they conduct through the
auction site.
Google Base also threatens the health of traditional
classified advertisers such as newspapers and
magazines, who are already suffering from the rise of
internet advertising. Similar to other online listing
players, Google Base will be able to play on its
ability to offer more targeted advertising than
traditional media.
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+++ MSN’S DEMOGRAPHIC SALE +++
Microsoft’s new ad system
Microsoft has unveiled its own system for selling web
advertising, as it battles to compete in the search
market against Yahoo! and Google. The new system, to
be used by MSN, enables marketers to target ads on
web search pages based on sex, age or location. For
example, men searching for “tulips” would see ads for
florists’ websites, whereas women might see
advertising for garden centres.
Microsoft will launch the new service across its
websites in Singapore and France, before rolling out
the system into the US and other markets. Until now,
the ads on MSN were sold by Yahoo! But Microsoft
expects to use its new system to sell ads on other
websites, just as Yahoo! and Google do with their
systems.
Like other search-based systems, MSN will let
advertisers specify how much they will pay each time
a user clicks on their ad. But what’s different is
that MSN will enable advertisers to bid different
amounts depending on the characteristics of the user
who sees the ad. Microsoft is able to collect this
information from its hotmail email service and
passport identity service.
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+++ THE PUBLIC LIBRARY +++
The race to transform the publishing industry
The library of Alexandria in ancient Egypt was man’s
first attempt to bring all human knowledge together
in one place at one time. Centuries later, it’s the
search engines that are battling to become the first
online repository of knowledge: a collective memory.
Google, closely followed by Yahoo!, is attempting to
extend its business into the controversial library
search market. This would enable users to search
online texts of millions of books and periodicals in
libraries.
However, this strategy has become entangled in
copyright problems. Five major publishers, working
through their trade group the Association of American
Publishers (AAP) sued in a New York federal court to
try to stop Google from scanning and making digital
copies of books. But the search engine provider said
it will resume scanning the collections of Stanford
University and the University of Michigan “soon.”
Google has been eyeing up the world’s estimated store
of 30 million books for nearly two years. Since 2003,
Google Print has been adding books to its database
with the permission of publishers. However, only a
small percentage of books are still in print and
Google wanted to add the rest, which is why it struck
agreements with a number of libraries to scan their
books. But book publishers charge that by making
electronic copies, Google is committing massive
copyright infringement.
Meanwhile, Yahoo! is beta testing deep web search,
which presents results from sites that require a
subscription. This content doesn’t normally appear in
an average search because there’s no point in search
algorithms looking for walled content, when most
users can’t access it.
And an unexpected entrant has entered the search
engines’ battleground – The European Commission. It
has its own plan to turn Europe’s cultural heritage
into a digital library and is said to resent the idea
that Silicon Valley companies might eventually
dominate western written culture.
Whoever succeeds - the race to transform the
publishing industry with a global search engine could
do for printed material what Caxton did for
illuminated handwritten manuscripts.
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SIGNPOST is published monthly by Internet Search
Management Ltd. The opinions expressed are those of
the Editor and not necessarily those of Internet
Search Management Ltd.
All material Copyright 2005 Internet
Search Management Ltd. All rights reserved.
ENDS
