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Saturday, December 25, 2004

Three lessons from the Google Zeitgeist

Google's press center just published its Zeitgeist 2004, a summary of the most popular searches in 2004. This is important reading, despite the fact that's it's backward-looking. Here are three key points from the Google data:

1. Entertainment is tops. Six of the top ten Google searches in 2004 were entertainment-related. This confirms other data that suggest that entertainment (particularly movies) is probably the top non-porn interest category on the Internet. This is good for publishers of movie-related content Web sites, including The Internet Movie Data Base (owned by Amazon.com), Movies.com (owned by Disney), and Hollywood.com (owned by Hollywood Media). Perhaps it also implies that the two Web sites that provide online purchasing of movie tickets -  Fandango (privately owned, gearing up for an IPO in 2005) and Movietickets.com (26% owned by Hollywood Media) - will continue to increase their penetration of the movie ticket market. It also explains why the search engines are beginning to offer specialized search for movie-related information. Look at MSN Search, for example, and you'll see that one of the seven topics for category-specific search in the drop-down menu next to the search box is for movies.

2. Search is entrenched as the on-ramp to the Web. According to Google, the top five brand name searches were all for companies whose URL was exactly the same as the search term used. The top five brand searches were for: "ebay", "walmart", "mapquest", "amazon", and "home depot". What's remarkable about these searches is that every one of them is for a Web site with exactly the URL used in the search - www.search-term.com. What does this show? That many people use search engines as an easy way to return to sites they have used before, even when they know the URL. (Seeking Alpha often gets hits from Google by people searching for SeekingAlpha.com, for example, and I'm sure that will be true for The Internet Stock Blog.) This is strongly positive for the search engine companies. It shows that they have entrenched themselves with users, even for non-search uses.

3. Here come the offline retailers. According to Google, "walmart" was the second most popular searched for consumer brand. We already know that offline retailers are gaining significant market share as they move online. What's remarkable, however, is that Wal-Mart has already overtaken Amazon in search popularity. Implication? The entry of the offline retailers will increase competitive pressure on the pure-play online retailers and reduce their growth rates. That can't be good for Amazon, Overstock, eCost, or the other Web retail stocks.

You can read the full Zeitgeist 2004 here.

Full disclosure: at the time of writing I'm long HOLL.

Posted by David Jackson on December 25, 2004 at 11:44 PM in Sector Themes, Sub-sector: Search, ticker: AMZN, ticker: ASKJ, ticker: EBAY, ticker: ECST, ticker: GOOG, ticker: HOLL, ticker: LOOK, ticker: OSTK, ticker: YHOO | Permalink

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