For the past week I have been talking with a bunch of people about vertical search business models. I have a pretty bipolar perspective on vertical search; some days I think there is a business there and some days I don’t. After many enlightening conversations, my general thoughts can be summed up in the following way:
As long as vertical search supports or enables an economic transaction, there is a chance to create a viable business model. Taking a small cut of an existing transaction (or replacing the existing intermediary) seems to be much easier than getting people to pay for something where they are not accustomed to paying.
What are some examples? Trulia in real estate (connecting home buyers and agents), Indeed and SimplyHired for jobs (connecting job seekers and employers), and all of the travel vertical search sites (connecting travel seekers with travel options). Just because there is a business model that might work does not mean that any or all of these companies will be successful in achieving their aims.
For some reason I find the jobs vertical to be particularly interesting, so I will focus on that one for the time being. There are lots of questions as to how vertical job search sites will generate revenue. The challenge, as I see it, is as follows:
1. You can’t charge the employers whose content you are scraping/aggregating as they didn’t ask you to do it.
2. Charging job seekers for access to this content would be hard; it is contrary to most successful aggregation models. Plus, this is not proprietary content — it is all information that can be found publicly.
3. Revenues from participating in an ad network won’t be enough to really grow the business.
My suggestion is that these vertical job search sites look at the advantages that they have as traffic aggregators. They know which jobs, companies, and geographies (and keywords) are most popular across a wide number of users. Why not create something like AdSense for Jobs (we will call it JobSense)? Why not offer employers the opportunity to bid on the right to be a sponsored result when certain keywords are entered? For example, when I checked SimplyHired and ran a query for “product manager” in Sunnyvale, CA I got 639 results. That’s a lot, no? How far would a job seeker be willing to wade before he/she either narrowed the search or just got bored? It turns out that a lot of these jobs are at Yahoo. Would Yahoo! (or a startup company for that matter) be willing to bid to be a sponsored result at the top of the page (or on the side) whenever someone typed in a search for product manager in Sunnyvale? Why not? Presumably the jobs available on company websites are ones that need to be filled. Assuming that filling these jobs (or at least generating more candidate inquiries) is important, perhaps employers would be willing to pay for that privilege.
I can see a model where employers pay for the right to be listed as sponsored results for keyword searches based on geography, job title, etc. There are even ways to do more interesting wrinkles. For example, if Yahoo had 5-10 jobs that they really wanted to fill, they could show those as sponsored results anytime someone searched for Yahoo as a keyword regardless of the specific job title. Or, if you were a start-up looking to get web 2.0 types, you could bid on the Yahoo! keyword and hopefully redirect job seekers looking to join the big exclamation point. There are lots of other things that could be done along these lines – it could be executed as CPC, CPM, or through some other mechanism.
Thoughts? You can always email me.