The Return of Coopetition: Is Search Friend or Foe?

Back in the day (in Internet years, that's 1998) the term "coopetition" became one of the keywords of the dotcom revolution. The uniqueness of the Web link, the sheer interdependence of one site with another to push and pull eyeballs around this vast new terrain, made it imperative that rival publishers of content partner share traffic and often ad revenues. All boats will rise, they said. Fallen out of favor in the post-bubble years, "coopetition" is exactly what I see evolving in the complex search/content economy. For content publishers, search engines are both lucrative partners and, in some ways, competitors.

Search ad spending is now responsible for 40 percent of online ad revenue, and by 2010 it should surpass display advertising, according to JupiterResearch. In fact, Jupiter finds some erosion in support for the traditional banner ad but persistent interest in search. In another recent analysis of the top information companies, Outsell sees clear signs that increased search ad budgets are starting to make a dent in overall publishing industry income. "Seven of the ten giants own significant newspaper and magazine assets, and Google and Yahoo! are clearly diverting advertising revenue from them," they report. While there is no clear-cut answer, publishers have to start asking the question: is search friend or foe?

Surely, content providers share in the largess of dollars and eyeballs that flow into the search engine economy—both in increased traffic and revenue splits on contextual ad placements at destination sites. And yet, whether publishers or the search engines themselves care to admit it, there is a great deal of search envy out there (see my last column) and some justified fear that search eventually will pull revenue and mindshare away from the branding and sponsorship efforts that benefit content destinations most.

A recent study by Google and Millward Brown has raised some concern among business publishers. According to press reports of research Google was presenting to clients, surveys showed that tech business buyers used search more frequently than they used most other media sources throughout the product buying cycle. In fact, a recent Google white paper stated that "[s]earch represents the most effective and efficient way to reach business technology influencers. Statistically, 63.9% of BtoB users make search their first resource ahead of manufacturers' sites, industry portals, and other online resources."

What does such research indicate? My first response (and I am not over it yet) is that Google is building a case for attracting B2B ad dollars away from the traditional trade press. After all, why point out the comparative worth of one medium if not to pull marketing dollars away from another? Advertisers don't grow ad budgets to accommodate new media; they shift dollars away from media that are losing power or mindshare.

That's not what we meant, says John Topping, head of Google's B2B tech division. He sponsored this research to help major tech clients like IBM and HP understand how search fit into the product research, consideration, and purchase stages of the buying cycle for high tech, not to target someone else's ad market. "We were happy that search showed up pretty well," says Topping, "but the main purpose was not to go after any form of media or to compare ourselves to them."

Topping knows too well that Google is not itself a content site; its raison d'être is linking to quality editorial that exists elsewhere. Google sees itself working in partnership with content brands. After all, the same study showed that during the second stage of the buying cycle, B2B searchers start adding in terms like "articles" and "reviews" as a way to call up trusted content destinations. This is good news for branded content, but it also points out how publishers must engage in the costly practice of optimizing their own sites and themselves buying keywords to ensure good exposure for their content.

Yet the reality is that search and display advertising probably do (or will) compete for relative pieces of the same interactive ad budget. Search firms say publicly that they are not competing directly with publishers. But how much will search ad buying come to dominate the thinking of media buyers? Increasingly, Google and Yahoo! try to make the case that text ads have branding value, not just direct marketing effects. Whether they want to admit it or not, it means that the mighty search engines are starting to encroach on ad markets traditionally controlled by destination sites.

Everyone I speak with (well, all except Google) waffles on this one and sees how search theoretically can be at once friend and foe. This is true, but it goes to show how achingly complex the popularity of search has made the digital content economy in just a few short years and how entwined everyone will be to only a few major search players.