Wednesday, July 19, 2006


In a prior post, I wrote about the rise of vertical search engines and business models. The search engine market continues to grow with query volumes up 29% y-o-y, from 4.967 bn queries to day to 6.407bn queries. Google, Yahoo, and MSN own 86% of the search market, with Google at 44.7%, Yahoo at 28.5%, and MSN at 12.8%, respectively.

The search engine business model is also well understood: Revenue = Users * Queries/User * Ads/Query * Clicks/Ads * Revenue/Click

The race is on to aggregate queries, increase ad/query coverage, increase relevancy and hence clicks, and drive revenue per click opportunities. The focus on vertical search allows for greater query volumes and new opportunities for monetization. For example, local search will create a broader universe of possible searches (Palo Alto Best Buy) and local ads (coupon or pay per call) will allow for incremental revenue opportunities. Hummer Winblad is excited to have recently led an investment in Krillion.

Krillion will be launching a brand new service that makes it easy to find key products in the best stores in your local neighborhood. Krillion brings together millions of unbiased and comprehensive listings sources in one easy-to-use website. More details will be announced when the company launches. The company boasts a great team, with senior leadership coming from Yahoo!, AOL, Ariba and other leading companies.

The opportunity to increase the revenue/query ratio is driving innovation and opportunity. Krillion offers retailers, advertisers, and search engines a great vehicle for leveraging the continued growth and verticalization of search.

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