The days when you could give away online content (however great), throw up some Google Ads, rake in oodles (or Goodles [about a Gillion]) of money, and sell your site to the highest Web 2.0 bidder are gone. In fact they never were.
VCs have voted with their risk taking bucks in verticals like YouTube (Video), MySpace, FaceBook (Social Networking) and Zillow (Real Estate); but the jury is still out on the question, "Can we drive Google-Like click rates with great content." All current evidence is shouting a deafening "NO!"
What's needed are new/different ad models.
FaceBook, instead of selling to Google, Yahoo or MSN for their $1 Billion market valuation, decided to stay private and try to generate ad revenue on its own, with ads, different from Google Ads. A recent ad CTR (Click-Through-Rate) for a Social Networking site was 1/200, well below Google's reported 1/8). FaceBook is using its millions in venture cash to find a new ad model effective on Social Networking sites. Will it? Maybe.
YouTube sold their traffic to Google for $1.65 Billion. YouTube had never made a profit. YouTube did have $100 MM worth of technology and $1.55 MMM of traffic ad potential. YouTube needs a new ad model too.
Zillow is an interesting Real Estate Vertical. Zillow is in Real Estate, but sells houses. Zillow was first to market with a Google/Network-Media Business Model for Real Estate:
Free Content (Home Valuations)> Drive Traffic > Sell Ads
Will Zillow's visitors, looking for a home's value, click on general Google Ads? Will they come back and click after the purchase offer? After the closing? After the move in? Zillow just got its 3rd round of funding for $30 MM. Richard Barton, Zillow's CEO, said they would use the new cash to develop their site and to implement a sales/ad program to local agents, plumbers, etc. I hear the frustration of the ineffectiveness of Google's AdSense revenue for vertical sites.
Ad-funded vertical sites like YouTube, FaceBook and Zillow need to develop ad models effective for their area. Google's keyword-relevant ads just don't have the click-through-rates on vertical sites to justify their revenue predictions and their VC market valuations.
Google, a general search engine, provides need fulfillment. You go to Google to find out the info you want by clicking on links. Google provides keyword relevant ads, the first of which look an awful like the organic lists which follow.
You go to a Vertical for specific information. Clicking on ads, no matter how keyword relevant, requires the added step of need generation to incent ad clicking. Visitors on FaceBook and MySpace pages aren't there to click on ads.
"All Real Estate is Local".
Google and the other Search Engines still struggle with the "Local Search Problem"; for both content-delivery and ad-delivery. So far the national algorithms of Google and Zillow haven't scaled well local. Bad for Google. Terrible for Zillow.
All Virtual Real Estate is Local.
Good Luck Zillow. I hope you don't need it.
Posted by: Cliff Jacobson
Adapt Or Die! Happy Searching.
WebHomeUSAblog; The Blog of Real Estate Search Marketing
Adapt Or Die!, Happy Searching, WebHomeUSAblog, The Blog of Real Estate Search Marketing, Google, YouTube, MySpace, FaceBook, Zillow, Online Ad Model
Did you ever make scrambled eggs? That's how the "guess idiots" at zillow.com learned how to make zestimates. The recipe appears to be screwed up and people are now crapping in their pants. Values too low, values too high, inaccurate maps, what's next?
Posted by: ron | December 01, 2007 at 11:15 PM