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Enough Talk About Search Bubbles!

on 14 Mar  Posted by Admin  Category: General  

by Gord Hotchkiss

Geoff Ramsay from eMarketer is a smart guy. At Search Engine Strategies in New York last week, Geoff said that search marketing is only at 10% of its potential size. I'm not sure how Geoff quantified the 10% figure, but when it comes to the fact that we're only scratching the surface of search, I agree whole heartedly.

There was also a lot of press last week about Google's share price eroding because their CFO George Reyes said he expected slowing growth in the next quarter. So what's the deal? Is search growing, or isn't it?

My Breakfast with the Analysts

While in New York for SES, I spent a breakfast with a number of financial analysts. They wanted me to quote a hard number to try to quantify growth of search spending quarter over quarter. They wanted the exact impact of click fraud. They were hungry, and it wasn't for the scrambled eggs and bacon. They wanted numbers to plug into a spreadsheet and try to predict a growth trend for Google. They wanted to eliminate ambiguity, put form to the nebulous and try to quantify a social phenomenon. My panel partner, Marshall Simmonds and I tried to give them what they were looking for, but I couldn't help but think we were on opposite sides of a communication chasm. We weren't looking at the industry through the same lens.

Here's the problem. I tend to be a big picture, long term thinker. In that context, I see nothing but blue sky for search. It can't help but grow exponentially. The analysts are focused on the next 3 months and what next earning report is going to look like. Is there a gremlin lurking out there that will jinx Google's profitability next month?

I understand the short term focus. I know it's vitally important to investors. I am somewhat familiar with how the market works. But I'm just not sure how you micro measure something that's perhaps the most significant sociological event in our lifetime. And no, I don't think I'm overstating the case.

This Isn�t a Bubble, It's a Tidal Wave!

I've said this before, and I'm saying it again. Search is the key to online interaction. It is the connector between intent and content online. And online will soon become the only line. It will be the umbilical cord through which we interact with everything beyond our immediate physical world.

We have no idea how much our lives will change in the next two decades. It will be the most rapid assimilation of sociological change in history. Everything that forms our current reality will be re-engineered and reinvented from the ground up. This includes our definitions of community, social relationships, family, communication, our work, our leisure and our very concept of self. The physical and the virtual will merge, and the simple act of searching will become the synapse that connects us to the World 2.0.

That's a big concept, one that's hard to constrain with talk of quarterly earnings, bid prices remaining flat and the potential danger of click fraud. These are all valid concerns, but to me, it's a bit like forecasting the demise of the automobile in 1902 because poor roads caused frequent flat tires and there were no gas stations. Perhaps that dampened sales of automobiles in the short term, but the fact remained that a fundamental wave of change was underway, and any restricting obstacles were eventually swept away by the sheer force of that change. The same is true of search.

Consumer Control

Here's just one concept that has been irrevocably altered forever. The individual is now in control. We can connect instantaneously with other individuals and ground swells of societal change can happen literally overnight. We no longer mindlessly accept what is given to us, we take what we want. And search is the mechanism we use to find what it is we want. It used to be that vast power constructs were required to form the pipelines required to get goods, services or entertainment to us. The internet has made those power constructs unnecessary. The infrastructure now exists for any company to connect to any consumer. But, and this is a fundamental concept, the consumer now chooses to connect with the company, not the company with the consumer. The agenda lies totally in the hands of the indiv