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Innovating for Value in Blog Search
Innovation in blog search will be more and more driven by the extent to which it can be used for business intelligence. Three players, bloglines, technorati, and blogpulse have all made important advances in this regard. Rests to see whether they can capitalize on them.
Sections: Business Emerging Practice
Topics: microformats search technorati weblogs
In response to my post about blog search imitation on Wednesday, Marc-Olivier Peyer of pointblog has asked if we could not benefit from a little more innovation. That seems reasonable, and I'd like to frame my response in terms of where we have already seen innovation based on the revenue potential. I expect that that is where we will see more in the future.
The first thing I note is that blog search engines exist because blogs are different from traditional web pages. Blogs are increasing at a faster rate than the rest of the web. Blogs, with an average update frequency of once every 10 days, are updated more frequently than the rest of the web. Blogs, with an average of 100 outbound links, have more outbound links per site than the rest of the web.
As a result of these differences, the value of blog search engine's indexes is closely tied to timeliness and the ability to represent linking relationships in addition to the traditional elements of coverage and relevance. Businesses in search of market intelligence seem the most easily monetized market for this kind of data. Businesses are typically aware of the need for market intelligence, and they are willing to pay when they perceive significant opportunity. By contrast, monetizing blog readers through contextual ads does not offer significant revenue potential.
Three companies have created innovations worth noting in regards to business intelligence, with others playing catch-up. The first is bloglines. Its value proposition for businesses is timely coverage and direct contact with the blog-reading audience. Bloglines discovers blogs via its readers who actively add blogs they are interested in and then actively poll these blogs for updates, seemingly a less error-prone method than other search engines' method of asking blogs to register themselves and then send a message every time they are updated.
The second is technorati. Technorati has taken the lead in getting bloggers to better structure their data, so that it is easier to infer what they are talking about and make linkages between blog posts. Recent performance problems aside, technorati has done an incredible job getting bloggers to adopt its formats and has even set up a separate site to promote the creation of new formats and foster their adoption. Technorati is actively marketing its expertise in format creation to other major companies.
The third is blogpulse. Its applied research center in Pittsburgh, PA has made well-noted progress in cracking the problem of determining bloggers' linking patterns. Even discounting this innovation, blogpulse is worth watching because it is part of a larger market intelligence firm, Intelliseek, and can pull from their experience in selling to businesses.
Of the three, technorati is the only one that is currently still venture-backed. Its exit price will provide a lagging indication of the value of its innovations and the extent to which others may want to imitate them. In this regard, we already have some data. Last summer, technorati closed their first round of $6.5 Million in funding at a rumored valuation of $12.5 Million. Earlier this year, Bloglines sold to Ask Jeeves for a rumored maximum of $25 Million. My guess is that technorati wants a higher multiple than what would be implied by a $25 Million sale price. Will its innovations get it there?
Bud posted this on July 22, 2005
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