Meta vs. Vertical
LookSmart announced the launch of five consumer-facing vertical content sites that will serve up LookSmart advertisers. They are: teenja.com for teens, gradewinner.com for "tweens," 24hourscholar.com for college students, and for parents there are parentsurf.com and gobelle.com.
LookSmart predicts that search is going to get increasingly vertical and personal. In this context, that's something of a self-serving statement. LookSmart needs to do something to grow and improve the quality of its network. So this is a smart move.
But as to the larger question of search €œverticalizing,€ the answer is yes and no.
Right now, it€™s na¯ve to challenge the established €œhorizontal€ search players. So anybody who wants to launch a €œsearch€ site needs to do it in a vertical/niche, where there is still potential opportunity.
There are a handful of verticals that matter, among them travel, shopping and local (if you consider it a vertical). The traditional classifieds space has significant traction too: jobs, cars and real estate.
And there€™s always opportunity for new sites that deliver value and functionality to consumers and advertisers to emerge and succeed. But as to the much-discussed trend of €œverticalization€ of search — I don€™t entirely buy it.
Consumers fundamentally want ease of use, simplicity and efficiency. They don€™t want to have to go to 100 sites to get the best travel deal or the best price on home electronics. They really want fewer (but better) choices, not more. This is the value proposition behind such recent launches as AOL€™s Pinpoint Travel, Oodle.com, Indeed.com and SimplyHired.com.
And the Yahoo! 360 beta product, which formally launched yesterday, is partly an effort to integrate and make more coherent the otherwise fragmented Yahoo! network. It€™s also about convenience and efficiency for consumer-users.
Yahoo!, as well as Google, AOL, MSN are trying to be comprehensive — partly because of competition and partly because they recognize consumers want fewer, more reliable sources of information. Consumers€™ lives are already fragmented and frustrating enough. They€™re looking for trust and simplicity, not complexity and fragmentation.
In The Kelsey Group€™s most recent consumer research, we actually found that local consumers are using fewer sites, including verticals, not more.
There will always be specialized sites and online communities that do a better job than search engines or portals of delivering content in specific areas. Hence €œvertical€ sites will continue to pop up and make a bid for consumer traffic and advertisers. Yet those sites need to rely on SEO and SEM to gain exposure.
It€™s on the advertiser side that the verticalization discussion has more significance. Where is the click/conversion going to happen? What€™s the quality of the lead that the site/engine delivers to the advertiser?
Advertiser behavior is tied to consumer behavior, of course. But rising prices for PPC and questions about the quality of leads (i.e., where is the consumer in the buying cycle?) may send some advertisers to vertical sites over time. In addition, verticals may constitute the €œonramp€ for some advertisers to the Internet (e.g., HomeGain, Lawyers.com).
All this goes to questions of emerging segmentation in the search marketplace, which will become clearer and be answered over time.
But for now there appear to be two competing phenomena in search — almost like two opposing principles of physics — a movement toward €œmeta€ and aggregation on the consumer side and fragmentation on the advertiser side.
Both are being driven by the complex logic of the search marketplace.
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Verticals have traditionally been defined by the content, in LookSmart case, it is being defined by the consumer – teen etc. This seems to have some potential since what teens want on the Internet is probably vastly different from what empty nesters. The question is does Looksmart have enough cash to wait for the usage and then the ad money to come their way.