Follow That Car

In yesterday’s post suggesting that Yahoo! buy Shopping.com, I mentioned that the new Yahoo Autos looks like an indication of things to come. John Battelle makes a similar point today when he says “If you want to track the commercialization of search, watch Yahoo.”

Just as in years gone by, the search engines (it used to be the portals) will find more and more ways to monetize their traffic, which generally means keeping people on the site longer and sending them off the site less. Sure the world is a better place in that now they get paid when people leave the site – at least part of the time – but still they know that there’s lots of margin left in those users. So one by one they’ll figure out ways to take the most profitable market segments and keep them in-house longer and longer.

Reminds me of a friend who’s in the shopping mall business – after years of seeing which businesses lasted, had the best margins, and were the least difficult operationally, he buys up those businesses. Own the building, get nice safe rent from the tough or money loosing businesses and keep all the high-profit low-risk ones for yourself. Nice way to make a living.

Expect the same from your favorite search engines. They’ll sell you a click for $0.50 if it’s only worth a few bucks, but if they see that you’re paying $0.50 (or even $5.00) for clicks that nets $50, it isn’t going to take long for someone in the organization to start writing white papers about getting a bigger piece of that action.

There are lots of complications that will come out of this, both for the engines, internet users, and independent businesses and web sites. Hang on – the ride’s going to get bumpy!

Posted by Post Master at March 25, 2004 10:21 AM