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Nielsen Says Search Engines are Leeches
are they sucking away your profits?
thrasher141

10+ Year Member



 
Msg#: 7341 posted 4:44 pm on Jan 9, 2006 (gmt 0)

Has anybody read this latest Alertbox on search engines [useit.com]?

Nielsen basically says that if you rely on search traffic (PPC mostly) then you will never be able to increase your profit margin much because you will continually have to bid higher on your keywords. Anybody find this to be true? Do keywords continually increase? Is there any way to work together (with one's competitors even) to set a limit to the bidding wars and stop the evil empire?

 

afterburner

10+ Year Member



 
Msg#: 7341 posted 5:18 pm on Jan 9, 2006 (gmt 0)

from my experience with PPC, I have to agree. I never seemed to make any money off of them. Some of my peers claim they do but I never did.

Brett_Tabke

WebmasterWorld Administrator brett_tabke us a WebmasterWorld Top Contributor of All Time 10+ Year Member



 
Msg#: 7341 posted 5:24 pm on Jan 9, 2006 (gmt 0)

"I worry that search engines are sucking out too much of the Web's value, acting as leeches on companies that create the very source materials the search engines index."

The most interesting - and scarey part - is he gets it that search engines are no longer about traffic - they are destinations instead of on ramps:

Recently, however, people have begun using search engines as answer engines to directly access what they want -- often without truly engaging with the websites that provide (and pay for) the services. -- often without truly engaging with the websites that provide (and pay for) the services.

Liberation from search dependency is a strategic imperative for both websites and software vendors."

NOTE: Jacob Neilsen *was* on the advisory board of Google!

[webmasterworld.com...]

walkman



 
Msg#: 7341 posted 5:26 pm on Jan 9, 2006 (gmt 0)

>> acting as leeches on companies that create the very source materials the search engines index

yet, if you block them, many people will not find you. Catch 22

wrgvt

10+ Year Member



 
Msg#: 7341 posted 5:40 pm on Jan 9, 2006 (gmt 0)

Nielsen basically says that if you rely on search traffic (PPC mostly) then you will never be able to increase your profit margin much because you will continually have to bid higher on your keywords.

This sounds more like a theory than a real-world analysis. I've been using PPC for years. Some of my bids are up, some of my bids are down, and some are about the same. What is true is that the more competition you have, the smaller your potential profit margin. That's just basic business. If a company is not consistently trying to improve its ad quality, landing page quality, or competitiveness of its products, I wouldn't be surprised if their profits continually dwindle in the face of competition. If you're not continually striving to do better, examining how new opportunities can be exploited to increase your profitability, and facing challenges as they arise, then you don't belong in business.

hannamyluv

WebmasterWorld Senior Member 10+ Year Member



 
Msg#: 7341 posted 5:53 pm on Jan 9, 2006 (gmt 0)

Well, if you are a static website, the PPC thing is true. There is only a finite number of keywords, no matter how long tail you get.

I agree with Mr. Nielsen that the search engines are leeches and, in a way, are sucking the internet dry. They suck everything they need into themselves and are making the threshold to get involved in the internet harder and harder. As little as a few months ago I truely believed that the search engines would never move to use things like validating 3WC pages as a factor, but with the recent quality changes to the adwords stuff, I have my doubts about that now.

I have seen evidence, that makes me certain, that part of that new quality score on adwords has to do with a human's opinion of how the landing page looks. I realized that they have enough advertisers to be able to make this kind of change. So if they have enough advertisers to make this kind of change where they are paid to list them, there is certainly enough websites out there where they could make such "quality" assesments of websites that offer themselves up for free.

Search engines are well on their way to becoming exclusive clubs that you either play along with or are left out in the cold. They call the shots, they use your info as they decide, to your benifit or not, and you will like it, d@mn it.

ronin

WebmasterWorld Senior Member 10+ Year Member



 
Msg#: 7341 posted 6:01 pm on Jan 9, 2006 (gmt 0)

Search engines are well on their way to becoming exclusive clubs that you either play along with or are left out in the cold.

All the more reason to aim to be big enough and well-known enough in your niche that if any search engine doesn't list you or doesn't list you in a high position, the search engine looks bad, not you.

vincevincevince

WebmasterWorld Senior Member vincevincevince us a WebmasterWorld Top Contributor of All Time 10+ Year Member



 
Msg#: 7341 posted 6:05 pm on Jan 9, 2006 (gmt 0)

Is there any way to work together (with one's competitors even) to set a limit to the bidding wars and stop the evil empire?

One assumes that the market will achieve this automatically. If XYZ corp. increases bids above the optimum level, then it will be unprofitable (increased returns no longer exceed increased PPC spend), and XYZ corp. will either give up or go to the wall.

inbound

WebmasterWorld Senior Member 10+ Year Member



 
Msg#: 7341 posted 6:12 pm on Jan 9, 2006 (gmt 0)

This will strike a chord with many web publishers and honest e-commerce companies.

The most worrying aspect for me is where/what search engines will be in the next 6 months or a year, certainly they will move further into the territory of others.

If you look at Overture (I'm calling it that to differentiate it from the search engine), AdWords and MIVA there is only 1 of those that can truly claim to be independent. By independent I mean not competing with their own advertisers using their own destination sites or free 'Beta' products.

I know there are people out there that don't rate MIVA, but I'd have to say that in the UK (as eSpotting) they always delivered good traffic for me and they seem to be trying to move the US part of the business down the higher quality/less quantity of publisher route - that's a long process though. (FindWhat and eSpotting were hardly an ideal match when they 'got married')

The relevance of MIVA to all of this? Well you have to provide something different to your users, if they've seen Overture/AdWords ads a million times before on their quest for what they are looking for (as they see more content from the owners of the ad networks) the chances of you converting those ads into clicks will diminish. MIVA appears to be moving in to take advantage of the day when AdWords Apathy and Overture Overload kicks in and hurts smaller oprtations.

It doesn't have to be MIVA of course, it will be the network that persuades enough people to advertise with them AND delivers value to all. Real traffic, real revenue, real conversions. That's not going to be easy for anyone, even Yahoo and Google struggle to deliver all three, the important factor for Yahoo or Google is they are so dominant that they can get away with not delivering on all sides as there will always be more advertisers, always more customers and they're hardly short of traffic.

I think that anyone planning 4 years ahead is being a tad optimisistic, that's natural in a rapidly changing environment but it's a little sad too.

My final point is how Mega Corp will benefit from this. Take Microsoft, historically one of the worst web strategies of all time but still in with a fighting chance due to revenues from areas that they know better. The smaller business will continue to do well in niches (with the occasional big hitter), but by and large the corporations will start to 'own' the web more and more, by acquisitions or by simply overpaying to be seen on the 'only places to be seen'.

I suppose the motto of this little rant is 'make hay while the sun shines'.

hannamyluv

WebmasterWorld Senior Member 10+ Year Member



 
Msg#: 7341 posted 6:12 pm on Jan 9, 2006 (gmt 0)

the search engine looks bad, not you.

But do they? That is kind of the point. Do they look bad? Do they even care if they look bad? What do they have to lose now if they do look a little bad? So you are well respected, but the average user doesn't know that so the SEs don't care.

Corporations do things all the time that "make them look bad" and unless it makes them look really bad, it doesn't stop them. Search engines are corporations. If they can replace your very well respected site with a dozen respected sites, have they really lost any ground in the public's eye? Think Wal-Mart.

andrea99



 
Msg#: 7341 posted 6:15 pm on Jan 9, 2006 (gmt 0)

Nielsen's suggested remedies are email and conventional marketing, i.e. spam and promotional geegaws.

I think Nielsen is just like the telcos--upset because someone else's business model works better than his.

europeforvisitors



 
Msg#: 7341 posted 6:27 pm on Jan 9, 2006 (gmt 0)

Nielsen seems to be mixing apples and oranges. First he talks about "the Web sites that create the content," then he veers off into a discussion of PPC advertising (which is used mostly by e-commerce businesses, not information providers).

For what it's worth, I've got an information site (one that's supported by advertising and by affiliate links), and I certainly don't see the SEs as leeches that are sucking away my profits. Quite the contrary: They send me traffic that earns profits for me, and it doesn't cost me a dime.

The relationship between search engines and information providers is symbiotic, because the SEs need pages to index just as much as the information providers need to have their pages indexing. Also, there's nothing new about the idea of attracting and retaining readers outside the search engines: In case Nielsen hasn't heard, users were finding sites via links and keeping track of their favorite sites long before today's search engines arrived on the scene.

hannamyluv

WebmasterWorld Senior Member 10+ Year Member



 
Msg#: 7341 posted 6:42 pm on Jan 9, 2006 (gmt 0)

They send me traffic that earns profits for me, and it doesn't cost me a dime.

Neilsen point though is that increasingly, Ses are not making the person actually go to the webpage to get the info. They just display the answer from your site on their site. Right now, the cost/benifit is there for you, but his argument is that SEs are increaingly moving that way. How much will you be able to let a SE display on their page before it is not worth it to you? Do you have a choice either way?

users were finding sites via links and keeping track of their favorite sites long before today's search engines arrived on the scene.

But they are increasing losing that ability. SEs make it easy. Seeking out links is hard. For the same reasons they don't go beyond 1 or 2 SERPs for a search, is the same reason they will increasingly depend on SEs rather than searching for information outside a SE. Ask the average user, and they will tell you that SEs contain every webpage out there. You put up a site and it is magically in the SE, as far as they are concerned. So why make the effort to look further than a SE?

Namaste

WebmasterWorld Senior Member 10+ Year Member



 
Msg#: 7341 posted 7:01 pm on Jan 9, 2006 (gmt 0)

what is happening is that SEs are replacing recall. Instead of rembering, say, a tickets site, I search for it.
Thus advertisers need to shift ad dollars from brand to search positions.
I don't think overall spends are going up.
To win the game, ensure that your brand is as tight as possible

europeforvisitors



 
Msg#: 7341 posted 7:26 pm on Jan 9, 2006 (gmt 0)

Neilsen point though is that increasingly, Ses are not making the person actually go to the webpage to get the info. They just display the answer from your site on their site.

I think this is mostly an issue for information sites where simple answers are calculated or pulled from a database--e.g., sites that do currency conversions or supply dictionary definitions, or that give weather reports. And, of course, it's a problem for e-commerce sites that attract users by supplying airline fares or price comparisons. Such sites depend on branding and advertising to bring in users.

But I don't see the search engines becoming competitors of (or substitutes for) sites that deal in human-edited, in-depth information. I can see them competing with template-based, keyword-driven sites where most of the content consists of user-posted reviews or comments and links to other resources. A Google Travel, for example, could be a dangerous competitor to a travel "advisor" site, simply because it would duplicate the latter's strengths: a reliance on automation, traffic, and scalability.

Seeking out links is hard. For the same reasons they don't go beyond 1 or 2 SERPs for a search, is the same reason they will increasingly depend on SEs rather than searching for information outside a SE. Ask the average user, and they will tell you that SEs contain every webpage out there. You put up a site and it is magically in the SE, as far as they are concerned. So why make the effort to look further than a SE?

Users already depend on SEs to find specific information. There's nothing new about that. I doubt if most users (other than professionals) have ever sought out links. That doesn't mean they don't use links when they find them. When I was at About.com, a fair percentage of my weekly traffic consisted of "outbound frame" page views. [And no, I didn't approve of About's outbound frames, so please don't take me to task for that. :-)]

aleksl



 
Msg#: 7341 posted 7:57 pm on Jan 9, 2006 (gmt 0)

Have to agree. Leeches they are.

As a webmaster community we could potentially fight this back, and quite easy. I am sure there's effort out there to create an Open Source search engine. All they have to do is ensure they will not use advertising model (they could make money leasing search algorythm, donations, research grants, etc.). All we as professionals have to do is start linking to that engine from our sites - and boom, just like FireFox it will take 10% of the web.

Now, if that would be a good Search Engine as well...

hannamyluv

WebmasterWorld Senior Member 10+ Year Member



 
Msg#: 7341 posted 7:59 pm on Jan 9, 2006 (gmt 0)

But I don't see the search engines becoming competitors of (or substitutes for) sites that deal in human-edited, in-depth information.

But what's to stop G or Y from displaying the entire cache of your site, rather than a snippet? You might still get traffic because the person would navigate deeper in, so could you afford to tell them no? If you tell them no, wouldn't there be someone next in line who would be willing to step up?

I don't mean this against you EFV, but why do half the people here screaming bloody murder against scraper sites, when they get most of their traffic from what basically amount to giant scaper sites? How much would they be willing to let SEs "scrape"?

How much is any site willing to give up to a search engine? A snippet now, a whole page later? All for the privledge of being front and center to a person looking because it is now the only way a person looks. This is the point he is making.

You obviously have made traffic plans beyond the SEs. There are plenty who have not. It is an old subject, explored many times, mostly after a devestaing G update. He just adds that they now have the power to go ahead with something like this, so people should keep this in the back of their head.

trillianjedi

WebmasterWorld Senior Member trillianjedi us a WebmasterWorld Top Contributor of All Time 10+ Year Member



 
Msg#: 7341 posted 8:00 pm on Jan 9, 2006 (gmt 0)

they are destinations instead of on ramps

That's why "community" has been tagged a "web 2.0" thing.

TJ

WebPixie

10+ Year Member



 
Msg#: 7341 posted 8:12 pm on Jan 9, 2006 (gmt 0)

Could the adult online industry's trouble with Google Image be an example of future problems with mainstream sites?

I'm not in the adult game but wasn't the issue that if Google was scraping images and showing them, why would people visit the site itself?

When I first heard that Brett didn't like SEs caching WW it seemed a bit petty to me. I've learned a lot since then. :)

dmorison

WebmasterWorld Senior Member 10+ Year Member



 
Msg#: 7341 posted 8:14 pm on Jan 9, 2006 (gmt 0)

Search Bids Eat the Gains of Site Improvement

I'm not sure I buy the point of this argument. I've got no problem with the logic, that's sound - but everything in business is about supply and demand. It's what pushes profitability to the wire in almost every area of doing business; and is why it is possible to maintain a relatively stable economy.

You can't fault Google or any PPC engine for that. They've created a marketplace - an opportunity to win and lose. Most will lose; but that's the only reason it works.

caveman

WebmasterWorld Senior Member caveman us a WebmasterWorld Top Contributor of All Time 10+ Year Member



 
Msg#: 7341 posted 8:18 pm on Jan 9, 2006 (gmt 0)

IMHO, Nielsen calls attention to a fundamental truth of search marketing, though I agree that the piece was a bit all over the place. Who cares; he's helping to advance an important dialogue.

I personally believe that the issue is not just pricing levels per se, but:
1) the share of market that two SE's have of total search (with search having become the default gateway to much of the Web),
2) how that puts these two companies in a position to effectively control search pricing, and,
3) how cloaked their pricing mechanisms are.

If I am a marketer wanting to advertise in print, or on radio, or on TV, my biggest problem is: too many options, i.e., fragmentation. Not so in search marketing. Search marketing is a relatively unique marketplace as media goes ... in effect, a duopoly ... and G recently took a big step to help keep it that way.

Yahoo! is not a search company; it is an entertainment company. Google is not a search company; it is an advertising behemoth. For both of these companies, search is now merely a means to an end.

Brilliant though they may be, leading SE's are still essentially doing little more than scraping site info with their bots, organizing it, ordering it, and slaping advertising on the results. (TV Guide on steoroids.)

Will just a few SE's be able to maintain near total control of the search marketplace? ;-)

cerebrum

5+ Year Member



 
Msg#: 7341 posted 9:16 pm on Jan 9, 2006 (gmt 0)

Amazon followed Nielsen principles long back and became No.1 e-commerce site on Internet. Page usability matters a lot. Right now we cant ignore Seaarch Engines as they became gateways to Internet. But if you want to become No.1 in e-commerce, then you must follow Nielsen principles (+SEO ofcourse).

superpower

10+ Year Member



 
Msg#: 7341 posted 10:10 pm on Jan 9, 2006 (gmt 0)

europeforvisitors, I think you are off base in assuming human-edited in-depth content in general can weather the voracious appetite of searchengines and new datamining and aggregation technologies.

Granted there will always be exceptions, as some people will still read newspapers and some individual bloggers will be self-sustaining. However, for the most part it will become more and more difficult to sustain such a site.

Your site will be mined for a relevant/useful info and only this will be presented to the user--without them ever being on your website or displaying your ads.

If I can get the useful info from your site all from one place, and useful info from many other istes in one place, then why would I go to your site> Because you are a nice guy? Maybe.

I think that's what Nielsen is getting out--individual site owners need to strengthen relationships with their customers through other means.

If you disagree, please state why this would not be the case.

europeforvisitors



 
Msg#: 7341 posted 10:32 pm on Jan 9, 2006 (gmt 0)

Your site will be mined for a relevant/useful info and only this will be presented to the user--without them ever being on your website or displaying your ads.

If I can get the useful info from your site all from one place...

What do you mean by "info"? Most information is readily available from different sources; it's the packaging and presentation that makes it desirable to any given audience.

Guidebooks are a perfect example: You can buy a London guidebook from Rick Steves, Frommer's, Fodor's, Michelin, Lonely Planet, Rough Guides, Time Out, Cadogan, etc., and much of the information will be the same in each (the Gatwick Express runs from Gatwick Airport to Victoria Station, the London Eye is a big sightseeing wheel, the Underground offers visitor cards, the Tower of London houses the Crown Jewels, etc). Yet the person who reads TIME OUT: LONDON probably won't be satisfied with RICK STEVES' LONDON, and vice versa, because the content is selected, written, and formatted for a different audience in each case.

This is something that many techies don't seem to grasp: Content isn't just information, and facts--like ideas--are a dime a dozen. (That's why, for example, recipes can't be copyrighted but a cookbook or article with recipes can be. And the fact that content = information + editing and presentation is people buy one cookbook instead of another, or PC Magazine instead of PC WORLD.)

stapel

WebmasterWorld Senior Member 10+ Year Member



 
Msg#: 7341 posted 10:46 pm on Jan 9, 2006 (gmt 0)

I think too many site owners have come to feel that search engines, especially Google, owe them something -- traffic, revenue, whatever -- and complain when they don't get what they want.

But it's a two-way street, isn't it? No content: nothing to search for. But no search engines: harder to find what you want.

Maybe if more people were trying to provide legitimate services, rather than making a quick buck from overdoing SEO and churning domain names, the situation wouldn't have become so fraught. But too many people have been taking advantage of the service that search engines provide. It seems a bit rich to complain now.

Just my $0.02....

Eliz.

superpower

10+ Year Member



 
Msg#: 7341 posted 12:25 am on Jan 10, 2006 (gmt 0)

What do you mean by "info"?

American Heritage Dictionary:
"Information":
1 Knowledge derived from study, experience, or instruction.
2 Knowledge of specific events or situations that has been gathered or received by communication; intelligence or news.
3 A collection of facts or data: statistical information.
4 The act of informing or the condition of being informed; communication of knowledge
5 Computer Science. Processed, stored, or transmitted data.

Most information is readily available from different sources; it's the packaging and presentation that makes it desirable to any given audience.

I agree, in general, although it depends on the specific circumstances. However, many more queries in the future will be answered directly from the SE. For example: Want opinions,stories,travelogues on Florence,Italy? Here is a list of them on Google. Halfway down the page, the list of external links that go to travel guide sites. That's just an example, it will most liekly happen for any niche. Remember when Yahoo Directory was so prominent on Yahoo? Compare that to where all there niche servcies are advertised on the front page.

If most of your traffic *did not* come from Google then that would evidence your presentation was both differentiated and popular.

Google brings in traffic because of query/algo matches that ultimately order you in the SERPS either higher or lower on a Google page NOT because your presentation is desirable to a particular audience.

leadegroot

WebmasterWorld Senior Member 10+ Year Member



 
Msg#: 7341 posted 1:58 am on Jan 10, 2006 (gmt 0)

Nielsen:
This is great news for search engines: they can double their income by doing nothing.

Its important to bear in mind that the search engines do not do nothing, there is a huge amount of work happening at the SEs to improve their algorithms to attempt to show better results than the competition, because fortunately there is competition.
(sidenote: I can only say thank god for MS, which I thought I would never say, for pulling up their socks in the game so we have no risk of a monopoly and don't even suffer under a duopoly)
The success of PPC on the SEs is dependant on the quality of the organic results - if the organic results slowly degrade, users will overtime jump to the competition, and not see the paid ads.
Really, I think the answer remains not surprising: long term success of a website remains in organic SERPs, and sites which return results so brief that they can be reproduced in a snippet should have a better long term plan.

farmboy

WebmasterWorld Senior Member farmboy us a WebmasterWorld Top Contributor of All Time 5+ Year Member Top Contributors Of The Month



 
Msg#: 7341 posted 3:42 am on Jan 10, 2006 (gmt 0)

Nielson wrote in part:

The obscene profitability of search advertising...

At the risk of sounding like I dismiss an entire article based on a few words -

Once I find that someone has used the tired & weak cliche of "obscene profitability" I can easily ignore the remainder of what is expressed and be fairly confident I'm not missing any profound business wisdom.

FarmBoy

cline

WebmasterWorld Senior Member 10+ Year Member



 
Msg#: 7341 posted 4:01 am on Jan 10, 2006 (gmt 0)

Nielsen is essentially correct about the PPC costs of traffic for which there is a substantial number of efficient competitors (8 or more). But as you go under that number, more value is left on the table for the advertisers. Given the long-tail nature of search, for many advertisers the effect Nielsen is describing isn't significant.

Powdork

WebmasterWorld Senior Member powdork us a WebmasterWorld Top Contributor of All Time 10+ Year Member



 
Msg#: 7341 posted 8:01 am on Jan 10, 2006 (gmt 0)

Maybe Nielsen is ticked of at G because he got one of those hidden text letters.
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