The Vertical Challenge

Few would argue that over the last five years the major search engines have made enormous strides in improving their coverage of the open Web. They now find new sites more quickly, re-index them more often and even provide searchable access to non-textual content. It's all very impressive and very much for the good. However, as we all well know, too much information can be as much a curse as a blessing. That's why so much effort has been invested in trying to improve the precision of search, an effort often referred to as "improving relevancy." Providing a list of Web pages that contain a keyword or phrase is no longer considered innovative or even particularly valuable. Value is now embodied in identifying the most relevant Web pages for searchers. Every major search engine has its own secret sauce of techniques, processes and algorithms to devine relevance, and they seem to be getting better every day. But this isn't where the battle for search primacy ends, not by a long shot.

The next phase in this competitive battle is to get more paid content under index. Opening shots in this battle have already been fired by both Google and Yahoo. Lexis-Nexis used to run an ad campaign in the early days of the Internet touting that it held far more data than the entire Internet. As a competitive response to the Web, it missed the whole point, but it does underscore another one: even at this late date, some of the most important, powerful and useful content is still not to be found through search engines. This may be the simple explanation why content aggregators continue to do well despite the long shadows cast by the big search engines: their content is valuable and not available elsewhere.

To its credit, the content aggregation industry realized years ago that this distinction would not provide protection forever, which is why they've upped the ante, moving beyond delivery of raw data, and even moving beyond the search precision issue to focus on the biggest value-add of all: making data truly useful. OneSource built a nice business by taking on the hard work of integrating disparate databases to create highly comparable company profiles. Alacra has a nice niche providing customized data feeds to clients for use in their internal systems. Factiva continues to develop increasingly elaborate and powerful taxonomies that can even be extended to the internal data of its clients. LexisNexis builds virtual company profiles drawing on its vast data warehouses.

Interestingly, publishers are jumping on this bandwagon as well. Gale is now out with a product that assembles content from across its range of databases to present deep and comparable profiles. infoUSA is also jumping into the fray, having become a recent convert to the power of data mining to deepen its databases.

Where's this all heading? I think once the gee whiz factor of all the new content assembly technology wears off, it will become evident that the marketplace has moved beyond giant, one-size-fits-all databases. No matter how big, deep and accessible a database is, the fact remains that engineers, purchasing agents and analysts need different data different ways, and it's unlikely that anyone will cook up a single product that will keep them all equally happy. And just as there is growing user sophistication in terms of data elements and search interfaces, so too is there growing sophistication in terms of the overall dataset. Users are going to value 98% coverage of what really matters to them over 80% coverage of everything in the world. All this suggests to me that the future of search looks vertical. Business success will be a function of limited coverage, tailored to certain specific types of users, and executed very, very well.

Winners and losers in this scenario? Most data publishers already have a vertical orientation, and those that quickly figure out how to deliver data as well as they compile it will be very nicely positioned. Aggregators should have a solid, continuing role serving the distinct market that will continue to need convenient access to broad swaths of content.

It's the search engines that seem to be the ones not invited to this party. They are simply too wedded to serving up the most stuff to the most people. That will still be a great business for them, but it's a different business. And as the data content business gets comfortable with its distinctive place in the market, the industry will see greater stability and a much clearer path to profits.

Caching In

There's been a flurry of activity lately around the obscure but important practice of Web page caching -- taking and preserving copies of someone else's Web pages.

One of the more remarkable Web sites I have ever run across is www.archive.org, also known as "The Wayback Machine," a non-profit venture co-founded by Brewster Kahle to essentially take snapshots of the Web at different points in time. Using The Wayback Machine, you can easily take a look at how any individual Web site has evolved over time. Perhaps not surprisingly, not everyone wants their history to be so readily accessible.

In a recent court case, a law firm used The Wayback Machine to uncover some evidence to support its case. The other party in the lawsuit turned around and sued the Internet Archive, operators of The Wayback Machine, for inappropriately making and holding copies of their Web pages. The case is complicated, and actually revolves more around something called a "robots.txt" file than the cached pages itself, but an adverse decision could have a chilling effect on archiving and making available historical content gathered on the Web.

At the same time, Canadian legislators are considering an amendment to the Canadian Copyright Act that will actually prohibit anyone from making and holding a cached copy of someone else's Web site without permission. While this could be a speedbump for search engines that cache content, it's not likely to disrupt them too much as they don't need to cache content to index Web sites, and indexing itself will not be prohibited.

But this is all part of a larger trend towards history disappearing from the Web, and therein may reside a real opportunity for data publishers.

I regularly see examples of companies removing all traces of unsucessful products, ousted executives and failed ventures from their Web sites, leaving no clue they ever existed. A large percentage of companies, mostly for benign reasons, "age off" old press releases and announcements from their Web sites, leaving only a narrow window of corporate history. Most companies seem to feel that the primary value of their Web sites is to provide current if not real-time information, with only a small nod to what has happened in the past. That means that those who capture and retain this type of business information will ultimately end up with a vast repository of business intelligence, much of it unavailable elsewhere.

Even in the pre-Internet days, historical data had real value. I published one directory that ran a small index of corporate name changes that was one of the most popular and heavily used sections of the publication. I know another healthcare directory that didn't simply delete companies that went out of business, merged or were acquired. Instead, it ran it as an index called “Mutations” which proved incredibly popular. I know one financial publisher that actually retains all the previous positions held by the executives in its database, valuable information that could be the basis for a number of specialized, high-value products. In many industries, there are successful databases that cross-reference old and new part numbers, or suggest equivalent parts to replace discontinued parts. And knowing what products a company used to make, what ventures it has exited, and what executives it used to employ will become increasingly valuable as the information becomes harder to access. When it comes to data, the past can be a prelude to lucrative opportunities.

ROI: Really Over It

The recent Marketing Accountability Forum sponsored by the Association of National Advertisers kicked off by releasing results of a new survey of senior-level marketers. While some 60 percent of senior-level marketers surveyed said that defining, measuring, and taking action on ROI is important, only about 20 percent reported being satisfied with their ability to do so. Yup, here we go again, a new salvo in the advertising ROI war. Can anyone object to measuring the return on investment of business expenditures wherever possible? I certainly don't. The rub, however, is that little qualifier, "wherever possible."

The rush to prove advertising ROI is a direct outgrowth of the recent "pay for performance" advertising phenomenon induced by the search engines, which in some cases, does allow advertisers to measure ROI with some degree of precision. And for those who can't measure the ROI of their pay for performance advertising, there's at least the comfort that the advertiser is still only paying for performance, right? Right, but let's not forget that the definition of "performance" has been crafted by the same organizations you are paying for that performance. Just try to buy something with all those clickthroughs you just spent so much money to obtain, and you'll see just how abstract that definition really is.

For advertisers, asking a publisher for proof of ROI has no downside. ROI is a "motherhood and apple pie" concept: nobody will ever laugh at you for bringing it up. At the same time, while it is a serious business concept, it's also in many cases nothing more than a trendy new sales objection Can publishers prove value? Yes, but only if they define what value means, just as the search engines have defined what performance means.

Consider an air travel analogy. You have a hot new sales prospect in a distant city. You need to make your sales presentation in person. You call an airline and arrange the flight. Do you then require the airline to prove ROI before you purchase your ticket? After all, if you don't make the sale, the price of the ticket is wasted, and you'll have zero return on that investment. In this context, what is ROI? The airline can't guarantee you'll make the sale. The airline can't be reasonably asked to show statistics and case studies to prove that a high percentage of salespeople who fly to sales presentations close deals. The airline's job is to get you from point to point safely and on time. It can't and won't make any promises beyond that. If you can get to that sales presentation without flying, more power to you. But if you need to fly, you do it on the airline's terms, in the context of their clear mission and value proposition. The airline is a means to an end, a business tool.

When missions and value propositions get fuzzy, so do business roles, promises and measurements. And lest you think advertisers have more of a handle on this than publishers, consider the big new initiative rolled out during this ANA conference, called MI4 (Measurement Initiative: Advertisers, Agencies, Media and Researchers). Core to this new initiative is a proposal that the entire industry adopt "consumer engagement" as a key to "Return on Media Investment" analysis. What is "consumer engagement?" Well, even though it's fundamental to this new initiative, it still hasn't been defined, nor has it been tested. They're going off to do that now. The takeaway for database publishers? With all this uncertainty among people who are clamoring for certainty, it is incumbent on us to not only define our value, but also to define how that value is measured.

Know Thy Customer

I opened up two recently purchased music CD's yesterday and found they both contained postcards I could fill out to get on the mailing list for the music labels producing the CD's. I have seen this in scattered instances before, and what's particularly interesting to me is that only the small labels ever seem to bother, even though the cost to insert a postcard into a jewel case is virtually zero, and the information gained can be priceless. Yet for whole segments of the publishing industry, the customer continues to be an intermediary, not a true end-user.

I've never been particularly excited about any form of publishing where there isn't some direct connection with the end-user. I say this even for advertising-based publications. Many print publishers to this day continue to rent lists and ship out their ad-based publications to strangers, hoping that the large quantity they are sending out will compensate for their lack of knowledge about who they are sending to. This happens with many ad-based Web sites as well, with publishers evaluating their success based on level of site traffic -- eyeballs -- with no real knowledge of the users behind that traffic

Subscription-based publishers usually have better information on the end-user, but not always. Many data publishers sell a significant percentage of their subscriptions to libraries. Even when the customer appears to be an individual in a company, the subscription ends up in an internal information center, and the individual subscriber of record may not use the information at all.

Of course, many data products are sold through distributors and aggregators, another type of intermediary sale where the ultimate user is unknown. Distributors have traditionally been loathe to release any end-user usage information. I can remember sitting in meetings when Dialog ruled the roost, begging and pleading for the tiniest shred of information on who might be using our content. Ironically, with aggregators and distributors increasingly feeding corporate intranets, even they don't truly know the ultimate user anymore

Interestingly, a lot of publishers are wringing their hands and worrying about maintaining their brands in an environment where information distribution is increasingly anonymous and diffuse. The focus on branding content is in one sense an admission of defeat: publishers are effectively saying, "I probably will never know who you are, so I want you to at least know who I am." Presumably these end-users will then seek out the publisher directly for additional content. At least, that's the hope But this is not the time for passivity when it comes to knowing your customers. It's not just a sales issue. It means understanding how and why your content is being used, and intermediaries will never be able to truly answer that question for you. Because if you don't know exactly who is using your data, as well as how and why it is being used, you won't be able to apply the high-value infocommerce characteristics that are critical to continued success and growth.

HEAR FROM THE MOST IMPORTANT NAMES IN THE DATA PUBLISHING BUSINESS ...TODAY'S AND TOMORROW'S InfoCommerce 2005 is proud to announce that

Tim DeMello, Chairman and CEO of Ziggs, has been confirmed as a speaker.

InfoCommerce 2005 November 6-8 | Philadelphia

The Working Conference for the Thinking Publisher.

Finding the Expedia Solution

Expedia and Hotels.com, two of the great innovators and success stories in the online travel agency business, have recently been spun off by their parent, Barry Diller's IAC, into a new company called Expedia. The spin-off is intended to boost IAC's sagging stock price. Apparently, Diller believes there is more upside potential in IAC's remaining properties, which include Ticketmaster and the Ask Jeeves search engine, than in its online travel properties.

On August 8, the New York Times wrote a piece that nicely summarized the many challenges facing the newly independent Expedia. In essence, Expedia profited handsomely during the economic downturn by buying blocks of hotel rooms on the cheap from the major hotel chains then reselling them at a markup. Hotels got badly needed money, but they ended up paying a high price in business disruption, not the least of which was enabling a third party to sell their hotel rooms less expensively than they could.

But now with an improving economy, the hotels are fighting back, aggressively pushing travelers to their own, much improved Web sites, which now always offer the best available room prices. Some chains have gone even further, and are now squeezing Expedia on standard booking commissions. Further, Expedia's many competitors have begun copying much of the Expedia business model. End result: much more competition and a less compelling product are both kicking in at the same time. Expedia is hardly out of the game, but it's going to be a tough battle going forward. And how does Expedia plan to distinguish itself and hold onto market share in this hotly competitive market? A new focus on content to help travelers make more informed travel purchases, an effort that will likely be fueled by another company that IAC included in the Expedia spin-off, TripAdvisor (a 2004 InfoCommerce Model of Excellence winner).

A second article in the New York Times on August 16 described the rapid growth and success of the managed corporate travel business. Managed corporate travel essentially involves a corporation pushing all its travel bookings through a single online travel agency in exchange for efficiencies and savings. One of the biggest players in this field, the article noted, is Expedia Corporate Travel.

Is there a contradiction here? Not at all. What it underscored are the essential differences between consumer and business markets, and the power of infocommerce.

Because consumer markets for almost anything tend to be huge, they attract lots of players. These players compete aggressively for market share, because consumer markets tend to depend on volume to make real money. To attract fickle consumers, the general pattern is for the competitors to start an arms race to offer the most content, the most features and the most functionality. It's an endless, expensive spiral, and many companies cripple themselves in the process of trying to cripple the competition. Worst of all, it's harder than ever to build loyalty among consumers, and more expensive than ever to try to remain front-of-mind with them.

In contrast, business information markets tend to be smaller but afford greater stability. Further, businesses still tend to consider other factors in the buying decision beyond price, such as dependability and functionality. Expedia Corporate Travel is doing so well in the corporate travel market because it's doing a lot more than booking cheap fares. In addition, it provides management tools, enforces corporate travel policies, provides sophisticated reporting and saves client companies money as well. By taking information (hotel and airline rates and schedules) and making it actionable (by taking reservations), Expedia adds value by improving productivity while controlling costs. By acting as a central corporate travel agency and providing management control and reporting, it embeds itself into corporate workflow so deeply it is almost impossible to dislodge.

Not all data providers can or want to take their customers all the way to a purchase, but what we should be striving towards is adding functionality to data so that it helps customers improve their efficiency and productivity. And that is the essence of infocommerce - to become part of internal customer workflow, where you can deliver the highest value while creating long-term customer dependency and significant switching costs. As the tale of the two Expedias illustrates, the future of data publishing is less linked to finding lots of new customers than pushing more deeply into the businesses of our existing ones.

HEAR FROM THE MOST IMPORTANT NAMES IN DATA PUBLISHING BUSINESS ...
TODAY'S AND TOMORROW'S InfoCommerce 2005 is proud to announce that Dale T. Denham, Senior Vice President, Advertising Specialty Institute, has been confirmed as a speaker.