Advertising depends on solid customer loyalty

March 3, 2005

Yankee Group analyst Kelly Ring says "searching on the Web is an interesting experience."

"Whoever wins customer loyalty will end up being the leader, because online advertising depends on strong customer relationship. And that's where all the revenue is for search engines", says Ring.

None of the three main search engines inspires a high degree of loyalty among its users, according to a new survey by Nielsen//NetRatings.

Nearly 71 percent of those who searched at Yahoo also visited at least one of the other top two search engines -- Google and MSN Search -- and 70 percent of those who searched at MSN also tried their luck at one or both of the other two.

Even Google's users tend to stray, the survey found, with 58 percent of Google searchers having reported that they visited Yahoo Search and MSN Search as well.

Google still is the undisputed search leader; 47 percent of all online searchers hit the Google Web site first, followed by Yahoo and MSN, which draw 21 percent and 13 percent, respectively. More than 80 percent of all searches were conducted at one of the top three search engines.

"While it shouldn't surprise anyone that Google is the search engine to beat, it is critical that all of the major search players, including Google, recognize that they exclusively own only a minority of their users," said Ken Cassar, director, strategic analysis, Nielsen//NetRatings.

The survey results have led Nielsen//NetRatings to conclude that while Google is the dominant search engine today, it is not necessarily destined to remain so. "The jury is still out as to whether Yahoo and MSN can over take Google," Charles Buchwalter, vice president of client analytics , tells NewsFactor. "But the fact that there are so many users now means that the lower-tier players have a good shot at increasing their marketshare."

One possibility the two lower-tier search engines could consider, the survey suggests, is exploiting MSN's and Yahoo's broader media offerings.

Google, Yahoo and MSN -- not to mention AOL and Ask Jeeves -- routinely introduce new features and capabilities in order to entice users to their respective Web sites. These features range from free storage to digital maps, local search, novel advertising and paid search strategies.

"The search space is fostering a great deal of innovation right now, in terms of features," Yankee Group analyst Kelly Ring told NewsFactor.

"It's an interesting race. Whoever wins customer loyalty will ultimately be the leader," she says, "because advertising depends on solid customer loyalty. That's where the revenue is for search companies."

Source: CIO Today

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