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Last Week was More Interesting than it Seemed
By Jim Hedger, StepForth News Editor, StepForth Placement Inc. (c) 2005

It was a truly interesting week. On top of the Search Engine
Strategies Conference in San Jose, the past five days provided
search marketers a front-row view of international economic
development, the growth of a media empire, the internal
disruptive influence of corporate culture shifts, and a
colligate game of "mine is bigger than yours." While a happy
family obligation kept me away from San Jose, the week had
several profoundly powerful sleeper stories that show how
serious, ironic and silly the world of search is.

China is the largest emerging market on the planet and it is
coming of age more rapidly than anyone could have predicted.
While the Chinese paid-ad sector was worth only $148 million in
2004 according to Shanghai based iResearch Inc., international
business advertising targeting the Chinese market is expected to
grow exponentially while the online economy of China matures
over the coming years.

Google, Yahoo and Microsoft are all heavily invested in the
growing Chinese tech world. Google and Yahoo both made major
moves this month in relation to their interests in China, the
most public being Google's hiring of former Microsoft executive,
Dr. Kei Fu Lee. Google and Microsoft are now engaged in a bitter
legal dispute over Google's hiring policies. The decision in
this case could have far reaching implications on how major tech
firms recruit employees as well as on Dr. Lee's role in heading
Google's efforts in China.

Google also announced it was retaining the services of three
large Chinese firms to represent its AdWords advertising for the
Google China site. On Tuesday Google named China Enterprise,
(http://www.china-enterprise.com/newEbiz1/EbizPortalFG/portal/html/index.html)
China Source and Hotsales (http://www.hotsales.net/index/) as
authorized Google AdWords resellers and they will provide
training and support to the three firms. Google was moved to
hire and train experts in their bid to remain competitive with
newly public rivals Baidu.com (http://www.baidu.com/), and
Yahoo's newest partner, Alibaba.

Late last week, Yahoo acquired 40% of Chinese ecommerce and
business vertical search tool Alibaba.com
(http://www.alibaba.com/) in a $1 billion stock purchase. This
makes Yahoo the largest investor in Alibaba.com, a position it
is expected to use to push the Yahoo brand in the world's largest
emerging market. The deal gives Alibaba control Yahoo's China
business network while giving Yahoo effective control over
Alibaba's overall activities.

Following on the smaller heels of fellow media giant Barry
Diller, Robert Murdoch announced News Corp is getting involved
in search and is going to purchase an established player in the
coming months. News Corporation (http://www.newscorp.com/) is an
international empire that owns FoxTV, SkyTV, FoxNews, The New
York Post, TV Guide, The Times Newspaper chain in the UK, and
literally thousands of other media outlets, publications and
production facilities. In a conference call with investors and
analysts, Murdoch said News Corp is in advanced discussions to
acquire controlling interest in an unnamed search engine.
Speculation has turned to LookSmart and Mamma.Com as reasonable
targets. Class A shares of News Corp rose quickly when news of
Murdoch's plans were reported early yesterday, jumping from
16.42 to today's close of 18.11.

News Corp is both a creator and a distributor of media content,
which makes their entry into the market more a challenge for
Yahoo than for Google or MSN in the long run. Yahoo has been
actively pursuing online entertainment distribution as a revenue
channel along with paid search advertising.

That might be one of the few breaks Google got this week as
the media skewered (http://en.wikipedia.org/wiki/Skewered)
the search giant for its punitive one-year info-ban on CNET
journalists. Google's PR department appeared to slip and fall
in an apparent attempt to flee the scene after word of the
CNET info-chill scandal made headlines early in the week.

The same day, an automatic Google Toolbar update switched the
controversial AutoLink
(http://www.washingtonpost.com/wp-dyn/articles/A660-2005Mar2.html)
default setting from inactive to active. In other words, Google
did something they said they weren't going to do and are now
forcing limited but very real alterations on private websites
without the permission of the owner, content creator or
webmaster.

The inevitable culture shift seems to have occurred in and
around the Googleplex in the twelve months since they posted
their mega-successful IPO last August. While initial investors
were fed the same "Don't Be Evil" line in regards to Google's
corporate ethics policy the rest of the world was fed, a
somewhat darker tone has emanated. Google has lost a lot of its
luster over the past year, ironically while it has been getting
much better at filtering spam from organic placement results.
The word being bandied about is: Hubris (exaggerated pride or
self-confidence often resulting in retribution. - source,
wikipedia)

Things got a bit silly when Yahoo announced its spidered content
index had grown to dwarf Google's spidered content index. Yahoo
said its index now contained over 19 billion objects and
documents and almost 2 billion images. Google's index is
estimated to contain approximately 10 -12 billion documents and
images. Their attention suddenly focused away from their own
navels, Google scientists
(http://www.searchenginelowdown.com/2005/08/google-we-dont-see-evidence-of-yahoos.html)
quickly glanced at their rival's and questioned Yahoo's claim
of size-superiority before announcing they had doubled the size
of Google's image index. The search marketing community gently
reminded both that size is less important than relevancy,
comparing the obsession with size to a couple testosterone
driven boys who end up looking juvenile trying to outdo each
other to impress an endless gaggle of girls.

What's funniest about the incident is that both Yahoo and Google
have a lot of impressive stuff to brag about. Both have strong
business models and post strong quarterly profits. Both moved
this week to strengthen their core paid-ad businesses by giving
advertisers and webmasters more control over various paid
advertising opportunities. Yahoo opened the Yahoo Publisher
Network (http://news.stepforth.com/2005-news/YPNBeta.shtml) to
a growing group of beta testers, a move that prompted Google to
offer more support to AdWords advertisers and more control over
ad placement to AdSense partners. And as mentioned above, both
have recently made aggressive moves into the growing Chinese
market.

No review of the week could be complete without mention of the
massive SES Conference in San Jose. Billed as the biggest search
shindig of the year, SES San Jose is a playground of intellect,
information and fun. Barry Schwartz, or RustyBrick of the Search
Engine Roundtable (http://www.seroundtable.com/archives/002371.html)
posted coverage of several of the SES Sessions. Over at Search
Engine Watch, this forum tracked the SES - Silicone Valley
Parties.
(http://forums.searchenginewatch.com/showthread.php?threadid=7213)

Following the premise that history has a way of repeating
itself, the level of activity in the sector this week may not be
surprising. The past week was also the tenth anniversary of the
Netscape IPO, widely considered the spark that set off the
Tech-bubble of the late 90's. The events of this week are not
those of a bubble but rather those of hyper inflated interest in
a sector that shows no end to its potential growth.

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Jim Hedger is a writer, speaker and search engine marketing
expert based in Victoria BC.  Jim writes and edits full-time for
StepForth and is also an editor for the Internet Search Engine
Database. He has worked as an SEO for over 5 years and welcomes
the opportunity to share his experience through interviews,
articles and speaking engagements. He can be reached at
"jimhedger@stepforth.com"
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