• by Mark Naples , November 14, 2003

Analysts and media types are usually ready to applaud any major company when they take measures to expand into other areas, as long as those areas make sense strategically. With Google launching their Deskbar last week, there was applause all over the news.

Deskbar is a free program that puts a search window at the bottom of Windows PC users' screens. It lets users search the Internet while working in any application and without opening a Web browser. Google has already monetized it via partnerships that enable a number of preset searches, for stock quotes on Yahoo, movie reviews from RottenTomatoes.com, and software downloads from CNet. Users can also define their own searches, but it's not so easy to do that - yet.

Is Google taking on Microsoft, while they are rumored to be acquired by them? Any company that wants to get on the user's desktop sort of has to live on the "Windows sill," as it were. So, I don't think that this should be regarded as an affront, except insofar as concerns Google's ability to mine their new user db - something Microsoft has been after since well before anyone discussed Passport. In time, we'll see any number of companies leveraging bespoke relationships with search entities. It only makes sense that vertical specific search reach from the host to the user. The more search is tailored to an individual's needs, the more it becomes media, and the more it will be monetizable.

Hmmmm - certainly sounds like something that would require an NT platform the effectuate. But, I'm not predicting that Google's Deskbar presages their acquisition by Microsoft. I'm just saying that it probably might mean that. Maybe.

Something that Google led along these lines a few years ago is the sale of search terms, a program they call AdWords. Some analysts have credited Overture, along with Google, for fueling the revival of Web advertising through keyword searches, which comprised roughly 31 percent of the $1.66 billion in U.S. online ad sales for the second quarter of 2003, according to the IAB.

But, is Google going to kill this golden-egg producing goose with recent changes they made to AdWords? Or, is the company just trying to inflate its revenue prior to its long-anticipated, but stealthy IPO plans?

In late October, Google tweaked AdWords, claiming it was making the move to better identify successful ads that get more clicks, and automatically enhance the placement of these links to increase their visibility to users - something akin to snowballing.

At the same time, the search engine also moved to reduce the number of unsuccessful ads that show up on its search results pages. Disgruntled advertisers say the new system pits smaller companies against bigger ones, ultimately favoring wealthier advertisers that can afford to outbid rivals for well-performing keywords. At the same time, some advertisers say that the changes may be responsible for decreased conversion rates--the crucial sales that come after someone clicks on a Web advertisement.

So, let's see where that leaves us - with an eye to a theme I generally maintain in this column - that attention must always be paid to consumers, where the money ultimately comes from. (It's the user, stupid)

On the one hand, Google is bringing search more directly to the consumer by placing Deskbar within their Windows interface. Good for them, bad for their competitors, and easier for the user. (very bad for competitors if anyone in Redmond is in cahoots.) To me, this is also a good move because once Google figures out how to let the user tailor Deskbar more specifically, the Google brand will be applied across multiple verticals and interest sets, and the company can sell across any and all. Think Vertical Net, without the need for editorial. Users will like it, so it will grow, and Google gets more cake both incrementally, and in the long run.

On the other hand, the risk that Google has taken with its AdWords changes is a serious one. As keyword marketing grows in popularity, providers like Google, Yahoo!, Overture and others will likely face a tough balancing act satisfying not only these ever-higher bidding advertisers, who will fight for visibility on increasingly crowded lists for only so long. They will also have a real challenge convincing users just how honest their search results really are. In time, this could cause Google and others to reconsider just how much they are willing to sell, as users not only complain, but go elsewhere for their search. Neglecting the user, of course, would result in less cake for Google.

Well-executed natural search optimization - with no tricks like keyword embedding - does not change what a company does, it just changes how it says what it does, thus increasing its visibility to search engine spiders. There's nothing wrong with that, and chances are, it makes winning Websites more clear to users. Paid search, while good for the industry, will see some changes in how it is executed some time in the next six months. Even if all it does is plateau, that might be good in the long run. Google should know that users know better. And there's billions of dollars in cake that are riding on it.