Yesterday’s news can look pretty silly when you go back and look; in our industry, in particular. Especially when that was news about something from the future that was going to be the next big thing. The blog you’re reading now was originally called “The Guide to Portals.”
Many years ago, people started talking about “vertical search” and “vertical portals” taking over from the soon-to-die “a mile wide and an inch deep” services such as Google (in search) and Yahoo (in portals). Just in case it was an important trend, I snatched up a domain called “vortals.org.” (Didn’t keep it for long.)
Where that theory kept failing was on the front of Google’s role as a gatekeeper in deciding who gets to find out about a company in the first place. Your service can be really useful and specific to a market segment’s needs, but how are you going to get the word out in an online setting? TripAdvisor got lucky (timing-wise), and stayed good long enough that it was the exception that proved the rule: they ruled the top couple positions in the organic SERP’s so well for so long that they won over the consumer drip by drip, in the effective way that a steady replenishing of the funnel with free “new visitors” from organic search referrals can achieve. Amazingly, they still seem to do that well in the free SERP’s. Again: the exception that proves the rule. TripAdvisor, today, is a $7 billion company. Awesome work, guys.
Many specific services haven’t been so lucky — shopping search engines, for example. It got costly to keep reminding people to try Pricegrabber, or whatever. That company seems to be enjoying annual spikes in traffic at holiday time, but its audience is dwindling year over year. According to reports, PriceGrabber was bought by Experian for $485 million in 2005; it was unloaded for less than $200 million in 2012.
As the logic of the claim of “vertical search engines chipping away at Google” unfolded, it became clearer that a handful of destination digital brands (we wouldn’t call them vertical portals or vertical search engines today) might break through to become a “destination brand,” but they’d need to do it will Google’s blessing. So this hardly boded ill for Google’s bottom line or its status as a dominant player. In line with our premise when we started writing about the industry at Traffick.com in 1999, these monopolistic gatekeeper companies (these were Yahoo, AOL, and Microsoft then… Google hadn’t pulled it off yet) can reach such a stage of ubiquity that their competitors and ecosystem coopetitors may be seriously hampered if the gatekeeper simply stops giving them permission to exist. Do a search one week and find a variety of resources, the next week, maybe you find Google resources primarily, with the option of paying for increasingly expensive ads. Google isn’t quite all-powerful, but they’re not going to let their whole business be eroded by the “rise” of anyone in particular, or a variety of threats from “vertical search engines” who are trying to Out-Google Google.
The supposed failings of Google being “too generalized” and trying to cover too much ground are a recurring theme — most recently in this New York Times article that wonders if Google will lose traction to appealing apps from companies like Yelp, TripAdvisor, Kayak, and Weather Underground, as more people seek quick answers and tailored tools in a mobile environment.
Google should, and still might, lose a healthy amount of user engagement to these more specific services. It’s no secret I’m a big fan of companies like Yelp and TripAdvisor who have built appealing, useful services on their own, with their own loyal communities of engaged users. Sure, they have flaws, but in building these services independently to the level of success they currently enjoy, Yelp and TripAdvisor (to say nothing of many other growing services like OpenTable, Pandora, LinkedIn, Angie’s List, etc.), it’s bravo all around.
What seems to unite these success stories? They’ve all raised large sums of cash — and their profiles — by taking their companies public. This way they have war chests to keep building the value of their services; to hire lawyers to beat back attacks from larger predators; to build their profiles through sales and marketing; to leverage and scale their platforms for better economies of scale; to achieve international expansion; and to get their names out there in the media, who love to cover companies whose stock you can buy.
It’s incredibly hard to gain permanent brand awareness in a world where bigger players like Google decide how visible you are. And Google won’t take any of this lying down. In an Android, Chrome, YouTube, Google Apps, Google Plus world, Google’s Microsoft-in-the-1990’s-analogous chokehold on the digital user’s environment is well along the way to being complete.
But with direct pipelines to their user bases, wisely built through timely and large cash infusions, this new generation of “vertical portals” seems better positioned to stand firm than the flimsy attempts we saw a decade ago.
Will many of them wind up being acquired, or consolidated? Or will we see more long-term diversity with more large (but not enormous) “vertical” companies being run independently? That doesn’t seem like a stable set of affairs when Wall Street tends to dictate that the biggest companies keep doing something to get even bigger. What’s likelihood of TripAdvisor, Yelp, OpenTable, etc. staying independent for longer than five years?
It will be interesting to watch. Some of the results could be surprising, heavily dependent on the type of “lens” users prefer to see the world through (assuming that sufficient resources and regulation are in place to allow some reasonable degree of choice of lens). Does everyone want to be subject to an opinionated “master lens,” a giant Google Glass, if you will? An AOL, Facebook, or Apple style walled garden? Or will folks find ways of enabling more neutral platforms (or somehow using the above technology in a neutral way) that will help them do a better job of enabling many “starting points,” a postmodern collection of “lenses,” in the manner of their choosing?
Companies like Yahoo can do their part by blowing up their old, broken purple monolith model, acquiring some of the above “lenses” (like Yelp, and why not OpenTable while they’re at it), and leaving open the possibility that those parts of the new company grow so fast that the new company of tomorrow is actually renamed Yelp.
Whatever happens, I think a lot of people are still cheering for that old idea that “verticals” can chip away at the dominance of an all-consuming player that actively tries to hamper the growth of that ecosystem for anticompetitive, profit-driven reasons alone.If we don’t have choices, then what’s left?
Is that realistic? Well, it’s more so if investors and investment bankers are willing to bet on it – so score one for big bad Wall Street. “Greed is good.”
The last generation of “vertical services” rarely came close to the type of scale needed to reach a tipping point of full and direct access to consumer mindshare. This time may be different.