February 3, 2005

B2B (Business-to-Business) publishers from all over the world have been warned about new competition on the Web, following the evolution of search engines in general, and, in particular, the rapid rise of Google during an emotional thirty minute address by Pat Kenealy, CEO of the International Data Group Inc.

As the opening keynote speaker at the 4th FIPP International b2b Conference in Barcelona last year, the chief executive of one of the world‘s most successful b2b companies which specialises in IT information, gave his candid insights into the emerging online climate, and urged publishers not to be caught off guard.

"With the internet, the rate of change is actually very hard to measure, and the pace of change is certainly faster than publishers can measure," Kenealy noted. "In the developing countries of the world the internet is already mainstream. The internet is not a growing trend, it is the present today."

After acknowledging how new technologies have historically created new media, "from the steam powered rotary press and giant metropolitan newspapers, to the railroad and big national magazines," Kenealy formed a compelling argument that new media displaces and changes old media, before recognising that, "Google is in many ways a media company."

In April of 2004, the previously secretive Google was forced into the spotlight and opened to public scrutiny when the private company went public - after filing for its initial public stock offering (IPO). Financial reports showed total assets valued at $1.08 billion, with the vast majority of revenue coming from advertising.

More than 220 media delegates from 28 countries at the two-day event in Barcelona‘s World Trade Center [sic] were warned against underestimating the strength of Google‘s business model: "Internet ads have been growing strongly throughout last year, and the trend continues," said Kenealy. "Not only is advertising up, but the share of advertising budgets being absorbed by the web is also up."

Although Google does not break down its revenues, most analysts believe keyword searches account for the lion‘s share. The introduction of paid keyword services by Google, and fellow search engines like Yahoo!, enables marketers to buy keyword link placements. Kenealy believes the success of these search services represents the single biggest threat to b2b publishers. The searches can reach consumers with tightly targeted messages as they seek tightly targeted information; "this places them firmly within the business-to-business arena", noted Kenealy.

"New media is often seen as a friend to publishers, but I can tell you that new media companies are often competitors," he added. To illustrate the point, IDG‘s ceo said estimates that Google received $80 million of revenue from keywords alone last year, "makes them [Google] our 5th biggest competitor in the US, in their first year in that business".

Kenealy told publishers to be very aware of the changing relationships with search engines like Google. Publishers initially took advertising from search engines through ads on their websites, but today‘s paid search now means publishers have become the customers, often forced to buy keywords to drive traffic to their own websites on the one hand, while competing with the search engines for ad spend on the other.

"While we may complain about the Post Office, it is equal." said Kenealy. "On the newstand, everyone is equal. But many believe the internet is developing far closer to the network TV business model - with a small number of companies controlling distribution," said Kenealy, warning: "There is no second class postage on the internet."

Kenealy told trade publishers to keep on top of developments in new technologies and to track the movements of its key players. "Stay very aware of the technologies that can alter or change your business," he advised. "I would recommend that you all study ‘search‘ very closely."

The inspiring ceo also suggested publishers tried to include online in all their market share measurements. While recognising this can be a difficult and daunting task, Kenealy urged everyone to try, stating: "Rough estimates today are better than perfect measurements later."

Getting to know your friends and your enemies was also considered vital for growth. The ceo asked the magazine community to get involved in online trade associations such as the IAB and OPA. In addition, publishers were encouraged to move away from their traditional three to four year business deals and, where possible, engineer short one year deals to match the changing times.

Kenealy also speculated whether publishers should ultimately lock their content away from search engines to stop them being trawled: "If it‘s early enough and you can build your sites behind registration systems than do it when you can," he said.

Answering questions from the floor, Kenealy re-emphasised the dangers keyword searches held for magazine publishers, stating: "Google levels the playing field again for non-branded content. It is not the publisher‘s branded content that appears first, it is who pays the most."

Commenting on the continued malaise still present in many of the world‘s b2b markets, Kenealy viewed it as another symptom of developments in new media. "In this cycle, magazines will come back to the newstands, but it will be much slower than anticipated," he said. "Publishers will soon discover there‘s another hole in the bucket, and that hole is the internet."

Kenealy concluded his thought-provoking presentation with words of encouragement for the world‘s b2b publishers; the skill-set, experience and professionalism of which he still regarded as holding the overall advantage online: "There is more opportunity than danger here. Go for it!"

Source: FIPP.com