This is my quick take:
Vertical Search is pretty darn hot right now and there are a ton of companies jumping into the game. Keynote speaker David Hills, CEO of Looksmart, compared vertical search to the emergence of cable television. Long ago, no one believed there would be a golf channel, soap channel, cooking channel, etc., but those channels and are now thriving. David highlighted BET. While BET’s reach is minimal compared with that of a major network, the channel offers unique programming for a targeted audience. In the end, advertisers are willing to pay a premium to reach BET’s veiwers. The consumers, programmers, and advertisers all benefit.
The same is true of vertical search. Google and Yahoo are great for general research, but vertical search engines know what the users want and can provide ‘correct’ or unique results. Advertisers will pay a premium for this type of targeted traffic.
Unfortunately, though, many shopping comparison engines have thrived simply because they are playing a ‘traffic arbitrage game’ (I might have stolen that phrase from Siva Kumar of FatLens), buying PPC ads on the general search engines and selling PPC ads to merchants for 2-5x that amount. While there is nothing wrong with this model – in fact it’s an extremely lucrative one – I’m just worried that we’re going to see more and more companies jumping on the shopping comparison bandwagon (and vertical search bandwagon in general) which have no place in this world.
As shopping season quickly approaches, expect to see many launches (yesterday OnePAL popped up). I’ll be interested in asking these companies how they plan to differentiate themselves from the established players. Did they develop a new technology? Do they offer features not found on the current engines? Or are they just around to make a quick buck through a smart arbitrage game?
At this point, I have to applaud PriceGrabber which has developed strong traffic through partnerships with over 300 companies and Mobissimo which has built an extremely comprehensive travel search engine and has not spent much (if any) money on PPC marketing. Expect Mobissimo to follow PriceGrabber’s example and develop distribution partnerships as opposed to paying PPC fees.
Ok, I just got back to NYC on a red eye. It’s time to sleep.