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More on Buying Traffic

Navigate to TechCrunch for a very good discussion of “Microsoft’s bold move”. You can find the story, screenshots, and some useful data here. You should click on the link now because it’s an important commentary. Unlike some sites, TechCrunch does an excellent job of keeping content findable. A gentle quack to TechCrunch for the analysis and the data management on the site.

Now to my observations. Microsoft’s paying-for-traffic play underscores the dwindling options that Microsoft has for catching up to Google in Web search traffic. Under normal circumstances, a company would find a better technical mousetrap, build traffic, and then turn its attention to expanding its reach. An example of this approach in Web search is Exalead, the Paris-based company that shares some Google DNA. Exalead has done a solid job of using its Web site as a way to make the features of its system available to anyone with an Internet connection. Plus, the company has done old-fashioned marketing and selling to build its business for its search and content processing system. Exalead is a company I visited two years ago, and it is now on a double digit growth tear. Check it out at Exalead.com.

Illustration is from US20070198481. Figure 5.

I’m too old to get in the social network whirl. But Facebook.com is another example of a company that has managed to solve a problem, expand traffic, and move into a broader, increasingly disruptive role. I don’t want to argue the merits of Facebook.com, but I do want to point out that the company has attracted investment attention, including Microsoft’s money and affection. Facebook.com’s management–decades younger than I am–looked around for talent and has made a habit of plucking some Googley wizards from the Googleplex. The model seems to be working.

In both cases, Exalead and Facebook.com have managed to move forward in spite of or with some indifference to Googzilla. In my opinion, both Exalead and Facebook.com compete and compete successfully against Google. Neither of these companies is awed by Google. In my brief conversations with professionals from both Exalead and Facebook.com, Google is recognized as a pretty sharp outfit, but neither company finds it necessary to go to extreme and out-of-spectrum actions to compete, thrive, and grow in a Google-dominated world. That could change, but as I write this after a super-pleasant late flight from Washington, DC, to the metropolis of Harrod’s Creek, my mind wouldn’t let go of the pay-for-traffic play.

Here are the points I wrote on the Southwest Airlines’ “discomfort” bag this morning:

1. Google’s success is search is due to companies like Microsoft’s and Yahoo’s relegating search to no-brainer status. Google, on the other hand, put search front and center, ramped its investment in the plumbing necessary to deliver on-point results quickly and consistently for the last decade. Let me repeat that: the last 10 years. Google isn’t a tyro in search. Google is, except for Exalead, arguably the most sophisticated free Web search provider in the world. You don’t catch up with a season of 24 when you’ve been asleep for years. Certain technical work is serial in our real-time, massively-parallel world.
2. Microsoft continues to aim where Google was or is today. I’ve just finished some open source sleuthing that reveals Google is poised to release another leap frog technology. Yesterday in my endnote at the Enterprise Search Summit I showed this diagram. The email this morning contained five separate comments about this single figure. The importance of this screenshot is that it is possible only with certain behind-the-scenes data plumbing. In effect, you can’t deliver a dossier unless you know how to slice, dice, prioritize, value, and assemble uncertain data. My research suggests that Google now does that and more. Google has not released what I have discovered internally. One Googler came up to me and said, ‘That screenshot is Photoshopped.’ The implication was that I swizzled a fake illustration. Nope. This bright and perky Googler was clueless about the figures that Google’s attorneys include in Google’s own patent filings. Attorneys, dangerous as they are as a species, don’t Photoshop very well. Attorneys use information that can be verified in a legal matter. The screenshot, therefore, is an output of the Google brain factory, not a paralegal’s laptop.
3. The Microsoft innovations I have seen are often clever, extremely useful, and increasingly tasty (almost as if Apple’s design gurus contributed). The problem is that these are atomic innovations that run in the existing Microsoft computing environment. The job, therefore, is to get a better platform than Google has. Microsoft’s engineers are trying to catch up with applications that run on a zippier, more flexible computing infrastructure. So, applets are useful, but more robust services need a next-generation infrastructure.

What’s this mean? From my lofty vantage point in rural Kentucky, I think the pay-for-traffic play is indeed disruptive. But it is not the type of disruption in which Google specializes. Google’s approach to disruption has been structural. The Microsoft pay-for-traffic disruption is tactical, and it is unclear how the economics will play out if the traffic does not increase sufficiently to close the Grand Canyon gap that now exists between Google and Microsoft.

Second, I think that advertisers and users may be eager to give the pay-for-traffic play a try. If the results are not slam dunks, advertisers may find themselves pulled back into the gravitational field of Google. Google could tweak its approach to accelerate this process, but I think Google may sit and watch, a characteristic of the firm’s business behavior. What’s Microsoft’s next move if the pay-for-traffic play doesn’t work? What’s the next move if it does, particularly if the Microsoft infrastructure is stretched beyond its limits?

Finally, I think this is one more example of Microsoft’s management looking for a short cut. There’s not much you can do when the traffic gap is large and inelastic. There’s not much likelihood of leap frogging Google when resources are channeled into moves that create greater pressure on an aging technical infrastructure.

Google is not perfect, far from it. Yahoo is not perfect, and its management team has made that abundantly clear. Microsoft is not perfect. Its most recent actions reinforce the impression I have that it is trying to solve one problem while ignoring a larger, potentially company-breaking challenge in its fundamental technical infrastructure.

Let me know what you think.

Stephen Arnold, May 22, 2008

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