Who is right? - Tim O'Reilly or Michael Arrington - Is search "done" or is it only beginning or is the birth of xRM on the way - part 1 - I guess?
[cross post to abstract curiousity] I relish the fact that we are starting to see the age of more packaged debates about what is really happening in the web space and the path being carved out for new innovation. A shining example of this is the 2 well written pieces by Tim O'Reilly (see MicroHoo: corporate penis envy? ) and Michael Arrington (The Importance Of A Competitive Search Market). Both have presented well articulated positions and again both provide levels of detail and insight that is simply amazing. If either existed without the other, I believe their individual level of detail and thought would convince you to buy into their view. To give my own distillation of the these views, I would summarise in the following way right now: - Tim O'Reilly - "So let's assume that Google has won at search, or close enough to make no difference. Is Microsoft better off trying to reimplement cat and ls, or trying to figure out what's still missing from the Internet Operating System? While they are locked in penis envy, all the really cute girls are going out with startups
 " - Michael Arrington - "Search is important because it is the starting point for most commercial intentions on the Internet. As I wrote earlier this week, 68% of online purchases begin at a search engine or shopping comparison site. That drives revenue, and a lot of it. About 40%, or $16 billion, of the $40 billion collected in online advertising comes from search. And 80% of that $16 billion comes from commerce related searches."
Personally and very much my view right on things is that both views are right but there are missing nuances as we have yet to see where the "invisible hand" mixes with flaws in human nature. what do I mean my this? Drawing from sources/comments within both pieces let me add my own thoughts: - People left Altavista, 'cause relevance was just so poor and Google provided a ROI to UX that largely remains today- through relevance and simplicity
- the monetization of Google was a moment of clarity when the realisation appeared that within a stream of gestures, lies a foundational subset that forms the basis of a commercial/sales pipeline/"intent to purchase". The attach rates, low barriers to entry, ROI and level of efficiencies are a event the industry have not seen in modern times before.
- Google has you attention at key monetization moments but this is only a part of the stream of attention. The best Google can do right now is be better than the rest, and as such its 60% market share of search gives it circa of 80%+ of the revenues.
- Google is mainstream now, holding a place of better than the rest, but its simple page design and market position of being dominate in general search has it a a really difficult place.
The last point I believe is the real crux of the issue. Already, Google is talking about how its A/B testing and overall monitoring of search page usage has shown that folks tend to not click below the fold, 10 results per page is "optimal" and going to the second page of results is a rarity; in fact folks at Google have openly talked about how people will actively try multiple searches till satisfaction or fustration is achieved - as opposed to using features of the Google search page. So this brings up the interesting question of where we are at!!! From the perspective of the user in general, Google has taught the user to expect a simple end user experience, where results are relevant and for a certain category of user the simple homepage is a zen moment in good UI/UX, in that the design does not make the user think and they use Google as an address bar (i.e. type yahoo.com into Google search). This for Google provides significant long term challenges, as it now has to train the user to have different expectations and train the user on mass to give a better set of gestures for it to give a quality outcome (especially in core areas that can be monetized). Why is this important, well if Google cannot achieve this, then they are exposed to the next big thing (in a Google Yahoo Microsoft way) being able to insert itself in the very psyche and fabric of everyday discovery in the Web, i.e. I want to "discover" what is a good phone/TV/laptop/vacation/hotel/etc... to buy For certain, Google has the largest hose pipe of intent and gestures, but can it filter it enough to be able to match a purchaser with intent to a seller with product and most important of all that can be a qualified opportunity and with a oh so important user interface and UX that people will find value and repeatedly/willingly reengage. For example on the information "discovery" front, we have already seen the cracks appear. The expectations and gratification are starting to gravitate away from Google, and sites such as Wikipedia, Mahalo, etc.... providing an editorial picture with such relevance and value that mechanic search cannot match and I think this is only the beginning. These are "THE" market leaders in their respective markets, as they excellently execute on the Web2.0 notions of wisdom of the crowd and to a less degree the notion of Data is the Intel inside. In my view this is only the beginning of where we see cracks appear in the advertising business that is perceived as a Search engine and commonly known as both a noun and verb called Google. Is Google just a utility? At its essence, it is exactly here because it is in a place where it adds value and at the same time it is also in a place where it gives use the best hints at what points are Google most at risk. If search as a category starts to break down and moves into a suite of discovery mechanisms (nah not vertical and mechanical search) with better filters and context, its position as one of the most efficient money generating machines is under serious threat. And at the core of this is how it is able to better facilitate the pre-qualification and qualification process for a sales pipeline and sales force automation engagement. Make no mistake, this is the essence of Google and what fuels all of that engineering horse power and why advertisers today wave fists full of cash at Google. The problem is that while the Google machine is better than the rest, it still is hugely inefficient and market forces with the help of the glorious "invisble hand" wil create innovation- while Google is perhaps becoming a utility and hamstrung with a UX. it is this whole area of discovery that perhaps is the biggest threat to the commercial aspects of Google and is best articulated by how I see the Social network - and specifically the social graph - play into this. A known referral or reference is a super magical ingredient/accelerant in any sales/commercial opportunity. While all functions are important to a business, such as Advertising (i.e. Marketing doing this MarComm and Demand generation and perhaps just awareness), it is the area where people insert themselves in a sales pipeline that make people with the purse strings pay attention. Advertising is just simply spray and pray when you compare it to the levels of efficiencies and effectiveness that comes with a good referral, and when comparing advertising to such a basic thing as a personal referral/reference - irrespective of target market, size of transaction or type of product - you are talking about the "true" next big thing. in essence....... He who can find a "friend" of a potential buyer with a good story/referral to tell about a product/service, is the new KING. What if the product is "bad", well this is where the "invisible hand" kicks in my friend. There is no bad product in this view of the world, as there is no "bad" story to tell and any negative story will be vetted by the wisdom of the crowd. Truly good products are good, and once awareness kicks in, they sell themselves. This type of model obviously works for google today, but in essense this is spray and pray (albeit more efficient that most), but its the attach and conversation rates that count and are king. In my view, this makes the current Google a utility in this world, but that is up to Google to determine I guess. If you subscribe to this view, what you end up with is a new layer of applications and services, and it certainly subscribes to the notion of a Internet OS, but frankly I think there is quite a bit to go yet. If you expand out my notion of Discovery, I think Social Networks (SNS) in the form of Facebook and Myspace are the most interesting. They change how people use the web and in a most curious and interesting way. The particular quality that seems to stand out the most is the game and journey of discovery and interconnectness. In particular I like to call out how Facebook lays out its information architecture, as I believe it places itself in a place where search is the paradigm to navigate through a path to discovery - around a social object. For that matter Myspace does the same, but it is less about the Social Graph being the object, but content, and that is to be expected when you look at the monetisation model MySpace is more focused on. Does this not all sound familiar and to be honest yes. Its how the walled garden gets reborn when it comes to today's innovation and particularly those innovators that provide a fabric that take the essence of Amazon, Ebay, Google, Skype, Microsoft, Yahoo and combine them together. Its implications are the fact these folks exist, that I believe that an Internet OS is not viable, but a compromised middle ground is achievable through further dilution of the power play that each bring to the table. I will hopefuly work on these aspects tomorrow or the coming days. Regards, /Paul
Web 2.0
Sunday, May 25, 2008 10:53:01 PM UTC |  | Disclaimer | |
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