Thursday, December 15, 2005

Here Comes Alexa

This week issued an announcement that made the world of search engines sit up and take notice.

In June, 1999, Amazon purchased Alexa, a San Francisco search engine founded in 1996. Alexa is one of the smaller search engines (ranked 77th for Internet tools and Web services by Nielsen/Netratings).

Amazon now says that it will allow software and Web developers to request customized data searches. According to the Wall Street Journal (WSJ), a "test version of this service, called the Alexa Web Search Platform, will be widely available to the public" as of December 13th. This "new service will give developers access to specialized content, let them create more exciting applications and, in some cases, alleviate potential work for start-up companies."

Let's be specific. We're not talking about horizonal (generic) searches. Instead we're talking about vertical searches--the kind of focused search that has been the subject of a lot of attention recently.

Advertisers are demanding more from their Internet dollars. The original Google business model where an advertiser paid every time a consumer clicked on their ad is simply too subject to error and fraud. Instead of the broad horizontal searches that Google is known for, advertisers want to target consumer-rich niche markets. Vertical searches are targeted to a specific market. Remember my blog of 12/6 in which I talked about Jason Calacanis selling his group of one hundred niche blogs to AOL for a reported $25 million dollars? "While few blogs generate much revenue, they introduce a new, promising micromedia model. Blogs are cheap, easily updated, and can focus on a niche market with passionate followers--an advertiser's dream." (BusinessWeek Online)

Alexa offers the same kind of promise to Amazon. The WSJ gives an example of a Ph.D student in the Netherlands who used Alexa to build a website that lets Internet users identify music when all they know is the melody. "People who use his Web site to identify certain songs will . . . if interested, follow links to buy relevant music CDs on Amazon's Web site." The student receives a commission for each sale.

Other search engines are trying to capture targeted advertisers' revenue. Google recently announced its Local Search program that allows consumers to find vendors in their own neighborhood. Google is also reportedly building a database of individual users' interests and tastes.

While Google, Yahoo and Microsoft do permit limited access to their Web indexes, the type of customized data searches that Alexa is prepared to offer developers is not something that other commercial search engines generally allow.

The WSJ articles closes saying: "Amazon stands to benefit as more developers create applications . . . that encourage Internet consumers to buy products from Amazon. . . Amazon plans to charge small fees for storage and use of its computers and tools on the Alexa Web Search Platform."

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