July 30th, 2006

Inform Enters the Search Economy

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Inform.com has wisely gotten out of the Web 2.0 news aggregator business and into the publisher services business. Erick Schonfeld at the Business 2.0 Blog has the scoop:

As readership declines for newspapers and online readership grows, every publisher faces the threat coming from the edge of the network. Sites like Google News, Yahoo News, and Digg are becoming the new destination sites because of the mere fact that they point to where the news is, no matter where on the Web it may be. But on Monday, news Websites ranging from the Washingtonpost.com and The Oklahoman’s NewsOK.com to the Huffington Post will have a new way to counter that threat. New York-based startup Inform, which last year launched it’s own consumer news aggregation site, is rebooting as a search utility for mainstream news sites (yes, HuffingtonPost, welcome to the club). Inform is offering to replace the sub-par search on most news sites, and add in results not just from their own articles and archives, but from the Web as well (including blogs, video, and audio).

Since Erick has all the details, I’m going to delve into two key questions that Inform’s strategy raises:

1. Can content sites with relevant links and search results pull people out of search pathways that originated with Google, Yahoo, etc.?

2. Can parked domains improve ad performance by providing links to real content?

On the first question, Inform’s theory of the case is that searchers who come across a news story on an Inform-powered content site will find relevant links aplenty and continue their quest through those links rather than backing up to the original search results that brought them to the content page. This is an intriguing theory — the key question here is how important are the search engine’s results relative to other relevant links that a searcher encounters? Do searchers have such deep faith in their search engine’s results that they will always go back to the original results page? Or are they sufficiently fickle that a good list of additional relevant links will pull them off their usual path?

My gut says that for Google or Yahoo search, it will be hard to shake users loose from their habit of exploring search results. But for Google News or Yahoo News, it might be an easier task.

So much depends on the value of the content brand. If someone goes from Google News to the Washington Post and finds relevant links, how important is it that those links are being provided by the Post vs. impresonal Google News?

For that reason, I think combating Digg is much tougher, because there the driver is not relevancy than but popularity — users are more likely to go back to their exploration of Dugg stories.

All of this is just speculation, of course — what I’d really love is to see the traffic data from Inform’s first set of clients a few months out. That will be very telling for the future of news online.

Interestingly, Inform is also trying to compete in the search engine wars with key features like clustered results (a la Ask.com) and “did you mean?” keyword clarifications:

Inform1

Inform2

The second question arises from one of Inform’s first clients — parked domain powerhouse NameMedia. Erick argued a while back:

As domainers account for more of the search advertising inventory one of two things will happen. Either the price per click will go down because advertisers will figure out that all those clicks coming from the domainers (which will make up a bigger and bigger portion of Google’s external ad network AdSense) are worthless, or the domainers will get smart and figure out that the best way to get people to click on those ads is if they actually build out their sites with real content. NameMedia, for one, intends to go down that route for at least some of its major domains.

Many parked domains already use scraped content from Wikipedia and other open sites, but Inform seems to be more in the business of providing relevant links than content (of course, links are a form of content).

So here’s the question — will links to actual content compete for clicks with pay-per-click ads that now dominate most parked domains? And if so, why bother with the content? Unless the goal is to turn some of these parked domains into real information sites that people may have reason to go back to.

What could change this equation — and make the domain game a lot more interesting — is the transition to cost-per-action ads, where the goal is not just clicks but actual purchases (or some other high-threshold action). In that case, there maybe a stronger argument for parked domains’ providing a more substantive context CPA ads.

One last interesting question is how Inform fits in with all the deals that Google and Yahoo have been cutting with news organizations:

Google and Yahoo, along with dozens of other Internet companies, have been quietly agreeing to deals that compensate some of the country’s top news organizations for their content and help drive more traffic to their Web sites.

Recently completed deals, which include arrangements in which media organizations such as the Associated Press will be compensated on a pay-per-click basis, could herald a major shift in the relationship between the old media and new Internet gatekeepers.

“The people who own the content did a lot of work to generate the content,” Google Chief Executive Eric Schmidt said in an interview with the Mercury News. “We want them to get the majority of the revenue from advertising.”

Looking at the big picture, Inform’s approach speaks to a future where the competition over relevant links, the coveted click, and the holy grail of meaningful actions will become ever more intense.

Comments (4 Responses so far)

  1. Inform Enters the Search Economy

  2. … “users are more likely to go back to their exploration of Dugg stories.”

    The word “exploration” is key there, and it brings up one of the biggest reasons why “search” is overrated in the news business. Search seems to be the latest thing every company is trying to jump on because they hear of how much money Google is making from it and how great CPC ads perform. Well you know what? Not true in the news business at all. In fact, not true in any business that does not already lead consumers down the path to buy something. Why does it work on Google? Because people are searching for things they might want to buy (books, televisions, web hosting). Why does it work on subject-specific blogs? Because people are reading about things they might want to buy (phones, computers, music players). Search-based revenue occurs because you’re basically catching someone on the way to the store. With news sites (and a lot of other sites), this is a lot less so, and so there ends up being less money to go around.

    But back to the “exploration” part. “Exploring” is vastly different than “searching”, and it is also *much* more common in the news business. People don’t search for news nearly as often as they explore what is pushed to them. Digg and every other online news front page out there are examples of this. It’s “Show me what’s happening in the world, and I’ll click around some.”… not “show me a text field and let me figure out what to search for.”

    Inform.com got off to an awful start from the beginning, probably due to the fact that they paid zero attention to user experience and client-facing technology in general, so this may be a good thing for them… who knows. As for the other side of the business you mentioned — parked domains — we’ve been approached by some of those companies as well and have decided to stay away from that side of the web. “Accidental navigation” just doesn’t seem like a long-term business to me.

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