2006 in Review, Part 2: Search Wars Raged, Did Anything Change?

In search, 2006 was a year of launches, re-launches and major partnership deals. Microsoft launched its ad platform. Yahoo started rolling out its improved paid ad platform, Panama. Google partnered with AOL and MySpace and bought YouTube. The search engine once known as “Jeeves” booted the butler and began life anew as “”

In the end, after all the changes, one thing remained as true at the end of 2006 as it was a year before: Google is the king of search.

Still Going Strong

For all the jockeying for position that took place this year, if anything, Google only got stronger.

“Google has executed beautifully,” said Ellen Siminoff, a former Yahoo executive who is now president and CEO of paid search firm Efficient Frontier.

Along the way, Google and other search engines have found the fuel for a revival of the Web, bringing it back to robust life after its long fall from the dizzying heights of the dot-com bubble.

“Search and paid search are really the engines behind the new and improved Internet economy,” Rob Friedman, co-founder and executive vice president of Digital Element, which provides IP intelligence solutions to search engines and marketers, told the E-Commerce Times.

Most observers expect more of the same in 2007, with rivals trying to bump Google from its perch and the search giant continuing to roll up market share. Next year will also see new fronts open in the same search wars, with mobile and local becoming major battlegrounds.

Microsoft Takes the Long View

Heading into 2006, all eyes were on Microsoft and whether it could find more answers for Google’s dominance in the Web search space. A year ago, Microsoft re-launched MSN Search to generally strong marks for its natural search capabilities. In 2006, the task for the software giant was to match Google’s ad selection and serving technology.

Formally launched in June, adCenter is meant to be that answer, the platform on which Microsoft says it can best Google by offering more targeted and more effective Web advertising. It came alongside the Microsoft Live effort, with advertisers able to buy ads on a number of platforms, from Web-based software sites to, eventually, interactive gaming on the Xbox platform.

Still, several months after Microsoft’s launches, Google continued to garner more search share and post rising revenues.

“Microsoft did not significantly change the game with the re-launch of its search capabilities this year,” David A. Kelly, president and founder of Upside Research, told the E-Commerce Times. “I believe the market essentially responded with a big yawn to Microsoft’s attempt to increase its share of the search market.”

Microsoft, however, has preached patience, with executives asking observers not to to measure Microsoft’s success in search in the short-term. CEO Steve Ballmer said Microsoft had the technology, the level of research spending and the know-how to become a major force in search and said a five-year time frame is more realistic for that to occur.

“Most users don’t view Microsoft as an alternative for Google,” said Friedman. “That may change, however. Microsoft’s search offering is actually extremely good. The big issue right now is that it doesn’t have word of mouth or cool factor driving users toward it. It’s also hard for advertisers to view Microsoft as a search/advertising company, because it’s been primarily a software company for so long. So, while Microsoft’s technology is on par with Google — and, in some cases, superior — it still is having difficulty changing the game.”

“I wouldn’t discount Microsoft’s possibility for eventual success,” Kelly said. “But the market is currently driven, and I believe will continue to be driven for the next year, by other, more aggressive and more visionary companies such as Google.”

New Kids in Town?

By some measures, the search landscape consists of Google and everyone else. In reality, though, experts say Yahoo and Microsoft join Google in the top tier, the type of search engines and publishing networks major advertisers consider advertising on first. That field may soon expand, however.

During 2006, quietly built up enough market share to rival the amount of search taking place on AOL — where Google is now the provider of search results. Ask has done it through a major re-branding overhaul that seems to have gained traction.

“Ask actually is doing a lot of things right,” said Friedman. “Because of its singular focus on the user and search rather than a lot of tangential things, Ask may be able to compete rather well and start attracting more and more market share as advertisers and users look for alternatives.”

Such alternatives are not scarce. From Search 123 to FindWhat, alternative paid placement sites offer choices beyond the majors, and new approaches to search are constantly being started up or spun off. StumbleUpon offers to help users find new sites on the Web by suggesting pages they might like to visit based upon their past Web use history. tries to enhance the visual side of search by offering thumbnail previews of search result pages.

There is room for many at the search party. “It’s not a zero sum game,” said Siminoff. “For the foreseeable future, search will continue to take ad spending away from traditional media, so there’s room for more choices.”

Looking Ahead

Will anything change in 2007? In the core paid Web search marketplace, probably not too much.

“Google clearly is at the center of the Internet universe and its gravity is very strong,” said Friedman. Google’s ability to monetize content creates a drive to create new content, a cycle that has the Web moving closer to its center of mass.

Rivals may do best by focusing on emerging areas. Both mobile and local search will see considerable growth, and while Google, Microsoft and Yahoo have already staked claims to those areas, the industries are still new enough to leave openings for innovators and fast-movers.

“Advertisers aren’t spending a ton of money yet on video search, but people are very aware that this is a marketplace that is going to be a very good one for them,” Siminoff noted. “It’s only a matter of time before it really takes off.”

2006 in Review, Part 1: Mapping the New Media Landscape

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