Blogs

While not a traditional content-rich internet portal like Yahoo! or MSN, Google has been slowly releasing content-centric services over the years in a number of different verticals. 

Take automotives for example;  perform a query for used automotives, and placed (strategically) below the paid advertisements but above the organic search results, Google presents a form to perform a more targeted automotive search:

Filling out the form takes you to Google Base, which displays a detailed list of autos for sale.

Another vertical in which you'll find this functionality is music.  Perform a standard music search, and you'll be presented with a link to more information on albums, songs, etc. on Google Music:

Looking for local movie showtimes?  Google has information on showtimes, movie reviews and theaters at Google Movies:

Google Merchant Search

Now, Google is taking this to the next level with Google Merchant Search.  Google Merchant Search acts as a middle-man between the service provider and the consumer, with Google assuming the role of advertiser.  In this case, Google is leveraging it's own platform in a big way.  Take, for example, this search on secured loans:

Enter a loan amount and you are presented with this screen:

This type of functionality is indeed beneficial to the consumer, however we must ask the question: how far is too far?  When do we start talking about Google as a monopoly, not as a search monopoly, but as an information repository? 

With Merchant Search, Google is on the verge of disrupting the entire search eco system.  More specifically, Google is at risk of alienating its biggest asset - Search Engine Marketers.  Search is incredibly profitable as it is.  Google profits when people click on sponsored listings.  Advertisers profit when the Google AdWords platform drives traffic.  Website publishers profit when Google brings in organic traffic. 

For anyone doing business online, Google is really a double edged sword.  It brings many of visitors to our site every day in its organic search results.  It also brings thousands of visitors to our network sites via AdWords.  While our business models rely and flourish with Google, it is also at risk for depending on Google.

In Conclusion

Is Google willing to infringe on it's advertisers territories for a piece of the pie?  You bet  - Google has shareholders to answer to, after all.  Besides, an expanded services offering benefits both Google and the consumer.  The only losers are search marketers and advertisers who don't partner with Google. 

In a press release today, Microsoft announced plans to offer advertisers a Cost Per Action (CPA) pricing model in addition to the more traditional Pay Per Click (PPC) pricing model.  From the release:

This offering is part of a larger initiative to offer cash back to shoppers who use Live Search to purchase goods, which I will cover in the next post.

Does this pricing model make sense for the search engines?  I do not believe that it does, in fact, a major search engine getting into the CPA game is a rather dangerous because it jeopardizes the entire search ecosystem.

In other words, if the CPA model catches any traction on a larger scale, we will witness a race to the bottom as advertisers squeeze their profit margins.  As advertisers fight for the top spots in the results pages, profit margins shrink as the search engines take a greater share of that profit from advertisers sales.

We should also recognize that the search engines have more at risk here too; while the potential exists to make more money on a CPA model, there is also the chance that the user does not complete a sale, and the search engines make nothing.

The PPC price model already works for everyone, why change it?  It's extraordinary profitable for the search engines and it allows the advertisers to decide what they feel comfortable with paying without divulging any more information to the search engines than they have to.

Don't get me wrong -- I think the CPA model is great; we've built our business on the CPA / Cost Per Lead (CPL) business model, and it works wonderfully in an advertiser / publisher relationship.  Search engines getting into this space would be a very regrettable, slippery slope.

Microsoft is really grasping at straws to become relevant in the search space.  In order to attract more users, Microsoft would be much better off focusing on the quality of its search results than increasing offerings to advertisers.