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Wednesday, January 7th, 2004

Winners and Losers of 2003 – Who's Hot in 2004?

 

2003 was a watershed year in the search engine industry. Not only was it the year of mergers and acquisitions, it was also the year that the media, business and financial sectors really took notice. It was a very busy year for the SEO sector as well, perhaps marking the maturity of the optimization industry. With so much action and so many changes, one almost required a scorecard to keep up. By the end of 2003 the search world looked remarkably different than it did at the beginning. Some firms were big winners while others were huge losers. Here’s our list to kick off the new year.

WINNERS

#1) Yahoo! Yahoo! was the clear winner of the search engine war last year. Yahoo spent most of the first quarter of 2003 purchasing several of the biggest names in search. The biggest and brightest move made by Yahoo was the acquisition of Overture, shortly after Overture had bought AltaVista and AlltheWeb. Yahoo also bought Inktomi, the largest paid-inclusion database on the web. Yahoo! now controls (if combined) the largest search database, two of the most innovative search tools and the second largest paid-placement and contextual advertising firm. Along with one of the most recognized brand names on the Internet, these new facets of Yahoo!’s business place them in the same position as Google when it comes to presenting search results independent of other search firms. Yahoo! will be dropping listings from LookSmart as of January 15th, and is likely to drop listings from Google shortly thereafter.

#2) Google was the undisputed champion of search engines last year. Driving over 77% of all search traffic in one way or another helped place them there but their real power came from the near cultish popularity of their brand. The name “Google” became firmly synonymous with search in 2003. Google blazed several paths in 2002-2003 from the introduction of Google News in late 2002 to their online catalog search tool, Froogle. In 2003, Google also introduced their strong paid-advertising programs, AdWords and AdSense. These two programs revitalized the search market and are likely Google’s greatest strengths going into their widely expected IPO. Google’s reputation has been building over their five year existence as the “clean” search tool, winning the trust of search engine users around the world. In November, Google took a huge risk in re-tooling their search ranking algorithm. Named the Florida Update, the re-tooling might prove to be Google’s biggest misstep in it’s history but, it might have also been the wisest (despite the thoughtless timing). Since November, the search returns offered by Google have been, for the most part, abysmal. They are getting better though as we have seen a general reduction in SPAM in the listings over the past week and have also seen good sites get rewarded with good listings recently.

#3) MSN is ranking number three today mostly due to the hype they managed to build around their new search engine and the release of the new operating system Longhorn. While both are scheduled to make their appearances in 2005, Microsoft managed to make their main competitors jump through hoops

in 2003. The threat of MSN’s new search tool forced Google to make upgrades to its algorithm and Yahoo! to develop its own in house search solutions.

#4) Inktomi is not a search engine but it does have the largest search database in the world. Now owned by Yahoo!, many think Inktomi’s database will be replacing Google as the major distributor of search listings on the Internet. Inktomi currently powers HotBot, MSN, Excite and Overture (for areas without paid listings).

LOSERS

#1) LookSmart is facing deep troubles this year. Dropped by MSN, Sprinks and Yahoo! as the provider of paid-inclusion listings, LookSmart enters 2004 with significantly reduced revenue sources. Their stock price has plummeted and senior management is jumping ship. LookSmart started 2003 behind an eight-ball of their own creating when in late 2002 they changed their pricing structure overnight without warning, angering webmasters and advertisers. They were never able to fully recover this market or the goodwill of the webmaster/SEO community.

#2) Pity the poor souls working at Netscape. Battered by Microsoft, bought by AOL, and almost totally neglected by TimeWarner (AOL’s owners), Netscape continued to roll along through 2003 until the day AOL announced a deal with MSN to provide search results to AOL customers. Netscape seems to have been put out to pasture and lost its R&D arm. Netscape will always find a soft-spot in long-term Internet user’s hearts but it very rarely comes to mind and may not be around this time next year.

#3) AltaVista is the oldest surviving search tool and continues to provide extremely solid, relevant results. Its problem is that it is owned by Yahoo! and does not have the brand-name appeal to keep it going as a business entity. Industry rumour has Yahoo! shutting the doors at AltaVista in the coming months. (Please note, this is just rumour)

Those to Watch in 2004

Google (IPO), Yahoo! (in house search tool), MSN (in house search tool), TEOMA (innovation), Vivisimo (lots of great media coverage towards end of 2003).


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