Google sees profit in product images
Published: 19 Dec 2001 13:49 GMT
Google is testing a feature that lets consumers browse the pages of mail-order catalogues, a departure from its core search business that signals a major move into commercial listings.
The beta service is currently free to catalogue companies such as L.L. Bean, Pottery Barn and Lands' End, but Google is developing programs "to boost catalogue sales," according to its Web site. Those for-fee services may include shopping-search analysis, advertising placement and direct linking to online retailers' checkout counters.
If the test evolves into a commercial service, it would set Google on a new course. The company has long cast itself as an incorruptible search service in an increasingly profit-driven business -- an image that helped it win a die-hard grassroots following. But that picture becomes less convincing each time it expands into new arenas in search of dollars.
"This is a new direction for Google; they are clearly looking to get new revenues," said Rob Lancaster, Internet analyst at The Yankee Group.
The company has added new search features before, including newsgroup archives and image searching. Building a separate, mall-like search engine for catalogues would be among its most overt grabs for revenue and could touch off turf wars with well-established e-commerce players such as Amazon.com, Yahoo! Shopping and others.
If adopted, such a step would thrust Google deeply into the world of commercial search -- a place the company has long thumbed its nose at. As the advertising market soured, nearly every major search provider, including top portals America Online, MSN and Yahoo!, have adopted some form of paid inclusion service to their databases. For example, Yahoo!, one of the last holdouts in relatively commercial-free search results, recently announced a deal with Overture Services through spring 2002, when it will launch its own for-fee listing service.
Google does not sell placement in its search database. But it does sell space on search results pages tied to keywords used in the search bar. The ads sit at the top and right-hand side of results pages and are clearly marked as sponsorships. A new catalogue search, like its image and newsgroup searches, would most likely be separated from its standard search pages.
"What you might see in this roll out is Google starting to do what others have done in paid inclusion," said Danny Sullivan, editor of industry newsletter Search Engine Watch.
The Mountain View, California-based company launched the beta of Google Catalogs last Thursday after developing it for nearly three months, a move first reported by MSNBC.com. It has more than 1,500 catalogues from hundreds of retailers in the directory. Shoppers can search for products ranging from toys and electronics to apparel, calling up print-catalogue images the size of Post-It notes. By clicking an image, consumers can view full pages from the retailer's catalogue and browse page by page or by typing in a page number.
"We see it as an opportunity to maximise (retailers') outreach and improve search for our consumers. For people who don't have a subscription to L.L. Bean's catalogue, they can search its products online," said Google representative Eileen Rodriguez.
Through the new service, the company plans to sell retailers research on shopper habits. According to its Web site, Google can help retailers understand how consumers use their catalogues by reporting the most common words used to find a catalogue, how many pages searchers examine, and the sell-through rates of online catalogues.
In addition, Google said it is developing advertising programs "to enhance (retailers') visibility within the Google Catalog Search pages." It also said it will sell retailers the names and addresses of Google users who request a specific catalogue in the mail.
Perhaps most importantly, the company suggested selling links to product pages on retailers' Web sites. For example, a consumer who pulls up a broom advertised in Target's catalogue could click on a link to the company's online checkout aisle.
"Although we are talking to a number of catalogue publishers, we have not announced formal relationships of any kind," Rodriguez said.
Catalogers such as Lands' End have yet to fully investigate the program. Lands' End spokeswoman Andrea Stephenson said her company is in a limited advertising partnership with Google and is reviewing the new service.
"We're open to looking at anything they have to offer; we're not sure how we're going to move forward yet," she said.
The selling point
Analysts say search provides three major sources of revenues for companies: licensing, advertising and retail partnerships. Companies such as Overture, formerly GoTo.com, proved the revenue potential of selling placement in a search directory in the last couple of years. Inktomi, Google and others have also entered the enterprise market by licensing their search technology to major corporations such as Sony. But retail is one key area of business for portals and search providers.
Yahoo!, for example, lets consumers search for products and services in its Yahoo! Shopping area; with each purchase from its site, it gets a cut of the retailer's profits. In the third quarter, Yahoo reported revenues of $132m from global marketing services and commerce, which includes shopping-related profits. It launched the service in November 1998.
AltaVista made a foray into comparison shopping search services through its purchase of Shopping.com, but it closed the service after it proved too costly. AltaVista more recently partnered with comparison-shopping engine DealTime to provide the feature to Web surfers.
DealTime makes money by sending leads to the merchants it's partnered with, including 800.com, REI and Wal-Mart. Its search engine lists the products of about 1,000 merchants; of those companies, 350 are paid relationships, according to the company. DealTime reached cash-flow breakeven in November.
Over the last year, Google has introduced several user-friendly features to its service. It restored the archives of millions of Usenet newsgroup discussions after it purchased the assets from Deja.com earlier in the year. The company also unveiled image search. Google has been testing a tool that offers snapshots of Web pages alongside ordinary search results and a voting system to rank Web pages.
To build the catalogue mall, search experts said Google had to scan the catalogues through an optical character recognition program, which would recognise words on the page and turn them into text rather than images. No small task.
"This is completely a brand new thing that they had to develop, begging the question, why would they do this," Search Engine Watch's Sullivan said.
"It does make sense for Google to develop a shopping oriented search service, but it's odd that it started with mail-order catalogues rather than online merchants. They might suspect it's an easier, more lucrative route to go."
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