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Vertical search heats up

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As the search engine marketing industry matures, a new generation of niche-oriented search engines, also known as vertical search engines, has emerged. These specialty engines, which cater to specific business segments, are one of the fastest-growing parts of the search industry today.

Some analysts believe general search engines such as Google and Overture have primed the pump for vertical search marketing, since most marketers have already gone through the exercise of calculating the value of a lead obtained from a search marketing campaign.



"When new distribution sources like vertical directories sprout up, they already have an ROI framework in place and a willingness to pay a certain price for a lead," said Niki Scevak, an analyst at Jupiter Research. Jupiter will be conducting a study of the vertical search industry later this year.

Industry watchers say these specialty engines, provided by companies such as Bitpipe, Business.com, GlobalSpec, IndustryBrains and KnowledgeStorm, are part of the natural evolution of the search industry. They point out that as the volume of content on the Web continues to expand, users may be drawn to vertical search sites because they promise to do a better job of sifting through and finding information efficiently and quickly. This in turn should attract advertisers.

Specialized search engines also can make the case that they index material missed by the major engines. Consider that Google's index of some 4.28 billion Web pages-the major piece of its 6 billion or so indexed items- may be 30%, or as little as 10%, of the Internet's HTML content.

"It's not that people are not doing b-to-b searches on Yahoo! and Google, but the emergence of these alternatives is giving marketers a lot more flexibility," said Joshua Stylman, managing partner at Reprise Media, a search engine marketing company. "To fight competitive clutter, a strong tactic is to go to a niche player."

Data giant Fair Isaac Corp. integrated vertical search via KnowledgeStorm into its marketing plan in order to increase awareness of its business rules software. Ken Molay, director of product marketing at Fair Isaac, reached business technology users by sponsoring a research report on the topic at KnowledgeStorm's main site. (See case study of Fair Isaac Corp.'s use of vertical search on page 18 in the NetMarketing report on search marketing].

Pricing on vertical search sites can be advantageous, too. Advertising costs on Google can easily be triple what the specialty engines are charging, some marketers say.

But Jeff Ramminger, exec VP-products, technology and marketing at KnowledgeStorm, another niche IT search engine, said the difference between his company and a search giant like Google goes deeper.

"Our currency is not a click; it's a registered user," Ramminger said. "When they sign up, in order to get access to the content, their buy-in is that they agree to be contacted by a vendor. The currency is the lead."

"What we are seeing is the splintering of destinations into more vertical-focused search engines," Scevak said. "It is not unlike what happened to broadcast TV when cable TV was launched."

Others draw similar comparisons. "It is what happened to the IT media industry in the last 20 years," said Jay Habegger, president-CEO of Bitpipe, a vertical search engine for the IT industry.

Wendy Aldrich, VP-marketing at Business.com, agreed with the cable analogy.

"The way we think about search is kind of like how the cable channels popped up," she said.

GlobalSpec, one of the best known vertical sites, links buyers and sellers in the $500 billion electrical, mechanical and optical products markets. The company claims 1.1 million registered users and it is adding new, free registered users at the rate of about 15,000 per week.

"Our [advertiser] renewal rates are north of 80%," said John Schneiter, president and lead co-founder of GlobalSpec. He said the company works with 1,300 to 1,400 advertisers who spend anywhere from $7,000 to $60,000 a year with GlobalSpec.

Room for both?

Most agree there's enough room for both the general engines and the specialty engines in the search industry. This would, in fact, map to the historical pattern in other media.

There is even a chance that the two types of engines will work together.

"Vertical directories often have a symbiotic relationship with the likes of Google and Yahoo!," said Jupiter's Scevak.

"The general Web search engines are often the major source of their traffic," he said. "The user starts the search with a Google or Yahoo! and further drills down once they are at the vertical directory. In the end, there is a role for both."

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