Saturday, May 13, 2006

The Search Business-Strategies for Indian Internet Companies like SIFY and REDF

Search is big money.

Google is a $120B dollar company basically because of it's search strongarm. Microsoft and Yahoo are behind, but are investing heavily to catch up with GOOG in this very lucrative business. Microsoft recently announced a capex increase of $2B for the coming year; most of it will probably go towards improving MSN.com search and the launch of their ad platform-Adcenter. Google has it's own, called Adwords, and Yahoo has the erstwhile Overture program, now called Yahoo Search Marketing.

How does this work? When you type a query, e.g. "Apartment in Rome" you get a bunch of results from the Search Engines. On the top and to the right are "sponsored links". Advertisers bid heavily on search terms; when a client clicks on the ad money is deducted from the Advertisers account and goes to the Search Engine Company. Those little ads can be quite expensive-some terms demand per click charges of $10!

The technology is not easy to implement. First, you have to have great search results. Then developing the Adwords or Adcenter like system is very capital intensive; Google has farms of computer which do an amazing number of calculations to give you the best ad, optimized for search term, in a matter of milliseconds.

REDF and SIFY have the eyeballs in India. They need to promote their search boxes more. This is what Yahoo is doing right now; and Microsoft will most likely have a search box tied to msn.com on the Browser itself. This is the gravy train of the Internet, and the Indian Internet are behind in this; they need to spend more time promoting Rediff Search and Sify Search rather than just the portals rediff.com and sify.com.

Sanjay John G.


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