In the last post in this series we looked at how vertical search sites run by affiliate marketers are changing the shape of the purchase funnel for goods and services online. We compared this “funnel 2.0″ to the old approach, in which surfers would try to zero in on the best available product and retailer through multiple general searches. At the end of the article we introduced the idea that this new funnel threatens the AdWords model which powers Google’s search business.
In this post we want to explore further Google’s uneasy relationship with vertical search, and in particular the extent to which vertical search poses a significant threat to the business model for general search. At Keplar we believe that there’s an opportunity emerging for a new entrant to massively disrupt search as it exists today, and I discuss this in the article as well.
Google’s attitude to vertical search is a complex one. On the one hand, we continue to hear rumours that Google will spend a billion dollars buying travel search engine ITA Software, which powers Kayak.com, Orbitz and others. On the other hand, Google regularly bans affiliates from advertising their vertical search sites using Google AdWords: complaints about these mass bannings can be found all across the Web.
What’s behind this difficult relationship with vertical search? To understand the reasons, we first need to understand the commercial dynamics of general search, and understand Google’s hardening commitments to that business model.
