• by Mark Naples , July 9, 2004

I took some heat for my recent piece that wondered out loud when Pharmaceutical companies were going to take advantage of the power of Search on a larger, industry-wide basis. The comments on the Spin Board ranged from pharma professionals and those close to the pharma and medical equipment industries telling me I was all wet, to those in the interactive industry writing in that there was so much more for the industry to learn about how to leverage Search.

I sort of anticipate this column generating a similar response.

Whether in possession of an MBA or not, anyone in the interactive industry may have learned what "reducing friction" means over the past few years. Reducing friction, of course, implies that the barriers between and among transactions get reduced, so that the efficiency of these transactions improves.

Anything that slows down a transaction can be classified as friction. Some rudimentary kinds of friction include waiting in line to pay for something at a retail store. Of course, we all have. Ever waited in line to pay for something online? Of course not, there are no such lines. Ever gone through the hassle of working through your local newspaper classifieds to sell your car or some quasi-valuable object? Compare that to listing it on eBay, where thousands of individuals and companies did more than $1M in revenue last year. (I've seen this number reported in the business press as 60,000 - a truly staggering number that I'm not sure I believe).

Whatever the case, this reduction of friction is the chief reason why e-commerce and CRM, despite the effects of the VC bubble in 2000, and the downturn in the economy we seem to be emerging from since, have remained on a steady, upward trend. Making these transactions and building these relationships digitally just works more efficiently.

It's also, for my money, where the real beauty of Search resides. If you've ever become frustrated when attempting to explain the power of Search to an uninitiated listener, start with an explanation of "pull" versus "push" marketing, and then discern if they know what a self-qualified prospect is. It should be simpler from there. Search, more than any other medium, has reduced the friction of sales and marketing for many industries, even in B to B, while re-invigorating e-commerce.

This week has seen announcements about a slowing in paid search and Yahoo!'s record, but lower-than-expected revenue figure, which pulled down so many industry stocks. Additionally, some Web retailers announced lower June numbers than they'd anticipated. These announcements, especially Yahoo!'s record figure being regarded as disappointing, got me to thinking about friction, and which would be the next industry to see its friction reduced the most by the Web.

Many in Search, especially those in the IYP space and otherwise focused on Local Search, have looked for ways to enable the Real Estate industry to take advantage of the friction-reducing attributes of interactive. If you've ever been disappointed with the service provided by your realtor, you might have wondered when the industry's larger players would take advantage of the opportunity.

What we have in the meantime is a bit of a land grab, with smaller, savvier players leveraging Search to build their businesses. Do a Search on "community X - real estate" and don't be surprised to find that solo practitioners are already growing their businesses this way, teasing visitors with partial listings, then making them sign up to see more information, including interactive tours via IPIX's cool technology and more.

Obviously, there are exceptions to this, as with the pharma example. But, while real estate represents perhaps the most friction-laden major investment made by most of us in our lifetimes, I look for the Web, specifically Search, to reduce this friction in the next few years.

Sorry for this example - but it's just too easy a corollary. Remember the scene in "Boogie Nights," where the porn executive thought that videocassettes were going to ruin that nasty industry? Au contraire - it exploded the industry and made it into something with far greater revenue and far more profitable for more people. Then, of course, the Web came along and we know what that did for this industry, in terms of revenue. Of course, a small percentage of us regard porn with anything but a jaundiced eye. But, we all pay rent or mortgages, and most of us look for a new place every few years, at least until we have kids (and can't afford anything).

If eBay can become the largest used car lot in the world, as has been reported, then the only thing keeping the major, national real estate companies from getting a large leg up via Search is these companies themselves. Search very well could change the industry in meaningful ways for buyers, sellers, and agents.

Until then, I expect some smaller, regional players to make serious inroads with both paid and natural Search strategies.