FAST Search and Transfer, the leading European search firm, today introduced a search based business platform for media companies and said that search traffic from its customers has surpassed Yahoo! and will overtake Google in 2 years.
The Norwegian based company said its FASTMedia software platform is the first to match content to individual users, in addition to supporting all types of online advertising models. The suite of applications is designed specifically for media companies and enables them to run their own ad networks.
FAST said that its top 35 media customers already generate search traffic that exceeds that of Yahoo!.
The market research firm IDC estimates that 70 per cent of search queries do not come from search engines.
Instead, people are choosing to bypass search engines and are going
directly to their preferred information sources, retailers, and other
websites and searching there.
FAST recently completed a survey of its top 35 media customers:
Together this "FAST Media Network" is generating as much search traffic as Yahoo!, with search traffic growing more than twice as quickly. At the current pace, searches within the "FAST Media Network" collectively will surpass Google in two years...
FAST wants media companies to "turn search from the disrupter of their worlds" and use the technology to grow their businesses.
For example, newspaper publishers have stood by and watched Google and Yahoo sell massive amounts of advertising based on their content without any direct benefit--unless a reader clicks through to their news site, and then happens to click on a Google or Yahoo text ad.
FAST wants to cut out the middle-men by selling search-based business software to media companies to run within their own data centers and operate their own adverting businesses.
Global Media Warming
The competition is for a very lucrative business--running massive advertising networks for global media companies. The search giants keep about 20 per cent of total advertising revenues.
But this revenue share is skewed towards a handful of large media companies with the clout to negotiate better deals. Most publishers receive far less, between 60 and 40 per cent of ad revenues.
The FASTMedia software supports pay-per-click, contextual, classifieds and all other types of online advertising services, plus self-service, and unique features. It's "Featured Content" technology matches content on-the-fly with online users' searches. Publishers can use this for targeted premium content services.
Should media companies run their own ad networks? GOOG and YHOO will argue that joining their ad networks means greater liquidity, more customers, which means more ads.
Yes, they can sell more ads but at what price?
Not only do media companies give up a big share of the revenues but the price of online advertising is kept low because the media partners have to compete with what GOOG and YHOO charge for advertising on their own sites.
This sets the price for all ads on the same network. Which means that unless media companies can reduce their operating costs to the same level as the search giants, revenues from online advertising through the search engine ad networks will never be enough to cover their costs.
Media companies have to pay content producers, Goog and Yahoo! don't.
By running their own advertising networks media companies will have a smaller pool of potential customers but they keep more of the advertising revenues. And they can gain better control over ad prices.
There are many media companies that have local markets cornered, and are well positioned in many niche markets. GOOG and YHOO and MSFT are way behind in targeting local markets.
If media companies run their own advertising networks they will have a far more favorable ad pricing environment plus opportunities to sell additional services. I can't see the downside.