Another bubble? The buzz in paid search at Search Engine Strategies
Net Stocks"Who's providing the new source of keyword demand?
It does appear that venture-backed startups are becoming, in part, a new source of paid-search advertising demand. See Net sense.
Many startups are buying up keyword terms and trying to carve out niche search engine sites through which they can qualify the traffic and sell it at higher rates to advertisers.
These vertical sites have a shot but it'll be difficult down the road to compete against the majors, Google and Yahoo, said Sullivan. 'When you get into this dangerous area of competing with the majors, you'll get licensed out, bought out or burned out,' he said...
"Similar to the late 1990s when buying and reselling domain names was all the rage, these days several companies and individual entrepreneurs are out there buying search keywords and then trying to resell them to the higher bidder," said Bill Burnham, a venture capitalist"
The big risk they face is that either the advertisers or the search engines will try to cut out the middleman through either a new technology or simply banning the practice," said Burnham.
"If aggregators continue to buy search keywords in bulk and resell the traffic/lead for 2X via an arbitrage model it will assert pressure on the search providers [Yahoo and Google] to go more downstream to acquire the marketers directly at some point if they want to continue to grow their top line revenue," said D.C. Cullinane, CEO and co-founder of thinkingVoice"
Net Sense
Bambi Francisco analyses and discusses the keyword market putting a large part of the growth down to venture backed start-ups
"these middlemen are likely to create a bubble in paid search that will lead to a loss of incremental demand at Google and Yahoo. And, if that happens down the road, Google and Yahoo may opt to bypass these middlemen altogether as they search for revenue. So at best, these arbitrageurs will create a lot of noise and distortion in the true value of keyword terms.
These arbitrageurs stand between the undifferentiated Internet surfer who enters the Web via Google and Yahoo searches and the advertisers who want a more qualified lead."
posted by Jen @ 7:05 AM
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