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Sunday, August 21, 2005

Search Engine Corporate: Google and Yahoo! Set to Race. Again.

Posted by @ 3:09 pm

Fresh from the announcement that Google is set to release some $4Billion worth of shares to raise further capital, speculation is rife that Google is amassing a slush fund, to go after various properties.

One company that looks like a solid prospect for acquisition is – not surprisingly – a traditional media company. Trader Classified Media, which owns 575 print titles including Canada’s Auto Trader to Buy and Sell Chinese and 56 websites across 20 countries, has been identified as being firmly in the sights of not only Google but also Yahoo!

An acquisition of Trader Classified Media by one of the search engines would provide additional real estate to bolster their P4P advertising networks with the aim of reaching more eyeballs. More eyeballs on the adverts, should result in increased clicks, which means more revenue. The 56 websites boast over 11 million unique visitors each month, according to stats quoted on the corporate website.

However, such an acquisition provides more than just “more eyeballs”. It provides access to many sest of new eyeballs that previously have gone untapped but have become increasing important. Trader invested $193M last month in Sou Fun Holdings, which is a Beijing based online properties listing business (see the acquisition press release)

Access to the exponentially growing Chinese online community and marketplace is something that many web based companies – including Google, Yahoo! and Ebay – have been actively pursuing. Both Google and Yahoo! have made recent strategic investments in the Chinese market place.

Whoever wins the race for Trader (although a race is even yet to be confirmed) will take the lead in the marathon to gain majority share of the important Chinese market. This is where both Yahoo! and Google see their long term revenue grow coming from. Both companies need to acquire new markets and/or revenue streams to keep the analysts happy and ultimately, their shareholders.

Another example of where Google and Yahoo! are butting heads in what is a proving to be a very competitive industry. In my opinion, the winner of this multi path race is not the one who has the highest search engine user satisfaction, or who has the biggest index, but the search engine who can keep double digit percentage growth will be the winner. At least on the stock exchange.

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