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The Power & Benefits of Search

You clicked on a link on the EBN homepage to open up this article, or perhaps you came to it via a {complink 6518|Yahoo Inc.} or {complink 2294|Google} search. However you found yourself here, you've just made money for somebody and possibly enhanced your own ability to generate future profits, according to a top research firm.

Most people were already aware that Web clicks and search engines can lead to a fatter bank account — just ask Mark Zuckerberg of {complink 10867|Facebook} — but one issue resulting from our use of the Internet remains, and that is: How much does our use of search engines contribute to global commerce? Researcher {complink 7473|McKinsey & Co.} is volunteering an answer. The media consultancy said our combined use of search engines buoyed the world economy by as much as $780 billion in 2009, adding that each click on the Web for information is worth about 50 cents.

Considering the exponential growth in Internet traffic, and by extension the use of search engines over the last couple of years, I suspect that amount will this year rise above $1 trillion, if it didn't already push past that level last year. The researcher noted that in the United States alone in 2010, the “average Internet user performed some 1,500 searchers, while some 1.6 trillion searches a year are conducted globally.”

Those numbers, of course, are dated, and off by many billion clicks. Today, Google is the world's dominant search engine, according to {complink 9236|comScore Inc.}, which reported the company accounted for 65 percent of the US market in July, compared with 16 percent for Yahoo and Microsoft's 14 percent. ComScore said Google had 11.2 billion searches in July in the US alone.

What does this mean? For one, {complink 3426|Microsoft Corp.} is right to dig in its heels for a share of the global search market. The company keeps updating and refining its Bing search engine to make it more competitive against Google and Yahoo. It also explains clearly why investors believe Google is worth almost $200 billion, greater than the GDP of many of the world's smaller countries. It also tells me that the fight for domination in the search engine market will intensify in coming years as newcomers try to upstage the current dominant players. All indications are that some unlikely companies will even try to get into the Web search market. How about Facebook?

McKinsey certainly believes we currently “underestimate” the value of search engines. In its report, the company noted that all of the metrics we use to determine the value of Web search “fail to fully capture the constant creation of economic value that the click of a search button enables through, for example, improved productivity, more transparency in the marketplace, the discovery of new information and the ability to link up with the right people and companies.”

Of course, the search engines and the clicks lead users deeper into the Internet, which means the resulting benefits are justifiably “attributed to the Internet.” But there has to be a way to determine the value of the search process itself, because it is only by doing this that we can better enhance the experience (faster, more accurate) and fund the research that can further improve the offering. For now, though, let's just all figure out how to benefit from the wonderful world search engines open up each day. Here are some of the key findings from the McKinsey report:

  • The total gross value of internet search across the global economy was $780 billion in 2009, equivalent to the GDP of the Netherlands or Turkey. By this estimate, each search is worth about $0.50.
  • Of that value, $540 billion — 69 percent of the total and 25 times the annual value added (profits) of search companies — flowed directly to global GDP, chiefly in the form of e-commerce, advertising revenues, and higher corporate productivity.
  • The remaining $240 billion (31 percent) does not show up in GDP statistics. It is captured by individuals rather than companies, in the form of consumer surplus and arises from unmeasured benefits, such as lower prices, convenience, and the time saved by swift access to information.
  • Among retailers, the value of search in 2009 equaled 2 percent of total annual revenues in developed nations and one percent in developing ones.

35 comments on “The Power & Benefits of Search

  1. _hm
    August 12, 2011

    This is nice quantitative evaluation for search engines market. How about evaluating it from the quality point of view?

    Micsosoft and other vendor has scope to enhance their market search by improving the quality of their search result. There is wide scope for that. Goggle many time biases result for paid vendors and their prefered vendors. Also, in fsome technical ields (e.g. searching electronics parts and obsolete parts in perticular) there are not good search engine. There are many niche fields like this.

  2. Clairvoyant
    August 12, 2011

    Great article, Anna. It's amazing how internet users simply doing searches online can have such a huge influence!

  3. Anne
    August 12, 2011

    Companies are taking advantage of this innovation, even on mobile applications to market themselves and make their brands known to the World.

  4. Wale Bakare
    August 12, 2011

    I think Google deliberately excluded search for electronic components from the scope of its search engine. May be Google does not want to get tangle with already established high flier electronics distributors, who have websites for searching electronics parts and obsolete components. 

  5. mfbertozzi
    August 12, 2011

    Maybe this is the point. Apart possible technicalities adopted for improving a specific own rank inside search engine output (basically tags or evoluted SEO), who and how is in charge of search engine management in terms of strategy? Are Internet search engines free or not?

  6. AnalyzeThis
    August 12, 2011

    Google isn't worth $200 billion just because it has the best search engine (which in itself is debatable, but I personally think it's the best): yes, the technology is great and all, but the reason Google is profitable and successful is because they've come up with the best way to monetize search, via advertising.

    Search is very important, but the technology of search is less important than the advertising strategies behind it. And Google dominates digital advertising so strongly that it's hard to imagine even Microsoft making a dent.

    Google has the most popular search engine, and thus sells the largest amount of search related-ads, contextual advertising, and text-based ads. The most popular system for Advertisers to serve their ads is owned by Google and most large publishers use a Google-based system to manage their ads. Google owns the largest online ad network. Google just acquired one of the most popular remnant online advertising management tools. They also purchased one of the most popular methods of purchasing ads from multiple online ad exchanges. And do you know who owns the largest mobile advertising company? Take a guess…

    Web search is what catapulted Google to success, no doubt, but it's the advertising business that is what is going to drive its success going forward. Search? Not so much.

  7. SunitaT
    August 13, 2011

    @Anne,

      I agree with you that companies are taking advantage of this innovation even on mobile applications but I feel mobile ads are more of distraction to the users because the screen size is already small and mobile ads take lot of space. 

  8. SunitaT
    August 13, 2011

    There is wide scope for that. Goggle many time biases result for paid vendors and their prefered vendors.

    @_hm, I totally agree with you that google many time biases its results for paid investors.  Infact if you might recall recently it was in news that Google Inc. is close to settling a U.S. criminal investigation into allegations it made hundreds of millions of dollars by accepting ads from online pharmacies that break U.S. laws. 

  9. Anna Young
    August 13, 2011

    @ DennisQ, you're absolutely right,Google has the most popular search engine, advertising sales and distribution of technology. This has earned Google money over the years and brought them success…

    However, with the help of search engines anywhere in the world, access to the internet has been enhanced. It has become  faster and accurate. Search engines have offered immense value to businesses, individuals, as well as enhanced the discovery of new information at the click of the button anywhere in the world. Hence, the report revealed that the economic value of search engines are unparalled

  10. bolaji ojo
    August 13, 2011

    @DennisQ, It's a chicken and egg situation. Without first building its search engine to become the best in the industry Google wouldn't have been able to become the advertising powerhouse it is today. Go through any of Google's filings today and you'll see the company continues to devote huge resources to refining and making the search engine better. In fact, any failure by the company to continue making the search capabilities better and easier to use could give rivals the opening they are seeking. (See: Yahoo & Bing More Effective than Google?) The ad revenue was the goal but the tool to reaching it was search.

  11. bolaji ojo
    August 13, 2011

    Anne, Search engine utilization is as important to mobile phone users as it is to notebook & PC computer users. The only difference is that I might be more tolerant of advertising on my computer/tablet PC than I would if the same advertising was targeted to my mobile handset. But I am likely not representative of everyone. Would you be willing to accept some advertising on your handset for the advantage of having the ability to use search engine from anywhere?

  12. Anna Young
    August 13, 2011

    Clairvoyant, Online search does not just have a huge influence. Economically, it has contributed significantly to the global economy.  Mckinsey report revealed. In 2009 alone, use of the search engine generated $780 billion in total gross value. Amazing!

    Socially, it has enabled and made connectivity with people and loved ones easier and quicker, for example, Facebook, Twitter etc. It has enhanced and accelerated communications world wide at the click of the button. The power and benefit is just immense.

     

     

     

  13. t.alex
    August 14, 2011

    Google has been popular among students, scholars in universities. Nowadays, it is definitely difficult to dig for information without any internet search engine. Share the knowledge and generate more money.

  14. Nemos
    August 14, 2011

    I agree with your point. Furthermore, even if you are using a search engine the information that you get maybe it is not what you really want.  That kind of problem it is intense when the source(the information that you are looking for) it is not very popular among the Internet.

    Most of the times when you are looking at something very specialized, the returns from the search engines are garbage.

  15. Clairvoyant
    August 14, 2011

    Very true, Nemos. With the way the popular search engines work, the popular sites just keep getting more popular! I have found the same issues before, where searching for something specific that is not necessarily a popular topic is tricky to find.

    Are there search engines out there that don't search based on popularity but relevence instead?

  16. saranyatil
    August 14, 2011

    I was just thinking how calculator has created an intense addiction and i feel mental mathematics has become obsolete, similarlily a common man's day starts with a search engine. Any thing you want to do for that matter even we search for simple information like basic conversions upto complicated physics,

  17. FLYINGSCOT
    August 15, 2011

    I discussed this article with some friends over the weekend and got into an interesting debate.  We accepted that kids (especially) are so hooked into the internet that once can almost say it is now part of their makeup and an acceptable tool that they ALWAYS can access.  So we posed the following question:  if one wanted to challenge a bunch of kids to solve a fairly difficult task, would one bet on kids of 30 years ago or kids of today being more successful on the task?  Assumptions are that the task needed some ingenuity and analysis and was not simply answering who the president of Elbonia is for example.

  18. Susan Fourtané
    August 15, 2011

    DenisQ,

    Despite the other attepts, like Bing, to become a good search engine in terms of being profitable for advertising and offer a good search service for the customer Google is still the best. 

    -Susan 

     

  19. Susan Fourtané
    August 15, 2011

    Flyingscot, 

    The last time I made plans to visit Ebonia Dogbert had made himself dictator. I cancelled the trip until the general situation of the country would be more normal. It seems it remains the same, though. 

    As for this: So we posed the following question:  if one wanted to challenge a bunch of kids to solve a fairly difficult task, would one bet on kids of 30 years ago or kids of today being more successful on the task?”

    It would be interesting to perform the experiment. Get three to five volunteers from each group and assign them the task. Your can then share the results here with us. 

    I would say at the end the results may depend on the type of individuals the ones subject to the experiment are instead of generalizing. Or it may be because I don't agree with generalizations that much. 

    My bet would be that you can find someone from both groups who can successfully solve a farly difficult task provided they are all given the same tools. 

    -Susan

  20. itguyphil
    August 15, 2011

    True, unfortunately, I still havent't found a way to reverse the 'use my data and make money while I don't' trend.

  21. Ms. Daisy
    August 15, 2011

    We the consumers are begining to take search engines foregranted. They have not only contributed to the global economy alone, but have become a glue in our social life and education. The ease of getting information no matter how mundane the topic or how remote the source cannot be over stated. It will continue to be a herculean task to estimate their worth. I still ponder on how to accurately estimate the quality of life of individuals so I can imagine how difficult it is to accurately quantify the worth of search engines.

  22. Ariella
    August 15, 2011

    Good point, Ms. Daisy. I recently shared s cartoon on just that them  on Google + 

    It was originally shared by sheigh crabtree  

  23. Anna Young
    August 16, 2011

    @Ms. Daisy, I believe companies like Google, Yahoo and Microsoft have figured out the value of search engines but they are the primary beneficiaries of the activities the rest of us are involved in. However, how about medium and small companies? How about ordinary consumers? Shouldn't we also find a way to profit (yes) from the power of search? I wonder about this at times.

    Yes, the product is great and you are right that we take it for granted but I am beginning to think that we take it for granted in more ways than we care to admit. We use it when we need it but we are also not exploring how we can monetize it for our own purpose. Companies, for instance, allow Google, Microsoft and other search engine providers to provide search functionalities on their web pages. While they benefit from the ease of use provided and the fact customers may more easily find their products, the companies don't directly profit from the traffic generated (the search engine provider gets the advertising revenue). A model has to be found for consumers also to make money from using search. Your thoughts?

  24. Anna Young
    August 16, 2011

    @Nemos, Correct. My experience is that most search engines are not as intuitive as we would like them to be. Many search results often include items that are not directly related to what a person is seeking and so you spend a lot of time weeding through the dross before finding the gold. This can only mean that there is still room for Google, Bing and Yahoo to improve their search engines or for someone else to challenge their dominance.

  25. xoroy
    August 19, 2011

    infact most of the online magazines offer search by relevance when someone searches for an article. Though it is not a generic search engine.

  26. t.alex
    August 19, 2011

    Clairvoyant, that is a challenge. Isn't it true for most of the time, relevance is defined by popularity? Typically users will change the search keyword to get what they want.

  27. Anand
    August 20, 2011

    I was just thinking how calculator has created an intense addiction and i feel mental mathematics has become obsolete, similarlily a common man's day starts with a search engine.

    @saranyatil, that is a very interesting way to look at search engines. I think since we know google is available we take information for granted and dont try to remember stuff.

  28. saranyatil
    August 20, 2011

    Anandvy,

    Exactly I think the page that opens on everyones laptop is Google the moment laptop is turned on.

  29. Anna Young
    August 23, 2011

    I was just thinking how calculator has created an intense addiction and i feel mental mathematics has become obsolete, similarlily a common man's day starts with a search engine you're right,

    anandvy, this is an interesting way of comparing the use of search engines to a total reliance on calculator to add our sums. I like that.

    Yes, with easy access to the internet via the search engine, we google almost anything, without physically leaving the comfort of our domain.

    How convenient!  

  30. Anna Young
    August 23, 2011

    Saranyatil, Google search engine is a coomon household name and the most popular amongst others. It has made access to information fast,simple and fun. Isn't it?

  31. saranyatil
    August 23, 2011

    Anna young,

    yes google  has created wonders and made life simple.

  32. Ms. Daisy
    August 24, 2011

    @Anna Young, You have actually brought up a good point that I have really not thought through well. I seem to have focused on the ease of use and never gave customers making money a thought. The companies definitely make boat load of profit from the traffic generated from advertising revenue.

    The model that new search engines could develop to become competitive could be similar to the the Visa and Mastercard model where bank customers that use their bankcard get credited a small stipend. It will add up over time. Your thoughts?

  33. Ms. Daisy
    August 24, 2011

    @ Ariella, really cute!

  34. Kunmi
    August 24, 2011

    The level of information one could have will be greatly impaired if not the search Engine exists. You can “google” anything that comes to your brain and you will still get a response somehow. It's lovely!.

  35. mario8a
    August 26, 2011

    Kummi

    you can even find things you don't want to find.

    😀

     

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