Googlenator*: The Rise of the Vertical Search Engine, circa 2010. (*apologies to James Cameron)

Google‘s google-logo.jpg chief strength–its dominance in the search advertising business–is also its main vulnerability. Currently, 99% of its revenue comes from search-related advertising. The remaining 1% comes from sales of its enterprise search appliance.

So what is a vertical search engine? Example: Let’s say you were looking to buy a house in another state, close to schools for your kids and under one million dollars. Of course it should also be nearby shops, walking distance to park maybe and a few other things that are important to you. Well, a search on Google would get you a house under one million in NC but how about those other amenities and essentials you need close by? Now, try that instead in Zillow. You can request schools within a radius of so many miles, shops etc. A much more refined and helpful search for what I need and in this case, I would only use Zillow.

These search dynamics exist in many other verticals — fitness, health, auto, dating, travel, legal, financial, etc.

Google has focused on the horizontal, generic search. However, as users get more and more sophisticated, they are discovering other brands that offer richer user experiences customized to the specifics and details required within one particular vertical or another.

And VC’s and other investors have noticed by investing in many of these verticals. Some of these are: Indeed.com – $ 5m (Indeed has over five million unique users), SimpyHired ($17.7 million from Foundation Capital and News Corp.), and Jobster ($48 million). The “online jobs” market is expected to be worth $10 billion by 2011.

In the travel section Kayak bought Sidestep, IAC bought several different web properties and now has several ‘verticals’ that they hold and foster including Dating, Travel, Local search and more.

Its been said that “Google will fail if they try to do separate vertical brands,”. “It’s like Wal-Mart vs. Tiffany. It’s about a deeper brand experience that Google can never offer.” says Gus Tai over at Trinity Ventures.

Verticalization has happened before. We saw this happen in ecommerce. Ebay, Amazon, etoys, overstock, and many others. There will be many vertical search engines behind Google and several will become very large companies and successful ones. Google’s continued torrid pace and revenues are just beginning to top out and growth will slow down. And growth of the vertical space will increase sending dollars to those efforts and taking dollars from Google coffers’. Pinpointing that will be hard but the numbers won’t lie. I believe that within the next 2 years we should be able to see the chink in Google armor. And for Wall Street, it won’t be pretty.

 

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2 comments on “Googlenator*: The Rise of the Vertical Search Engine, circa 2010. (*apologies to James Cameron)

  1. I found your site on technorati and read a few of your other posts. Keep up the good work. I just added your RSS feed to my Google News Reader. Looking forward to reading more from you.

    Allen Taylor

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