We often talk about competition being good for consumers and, ultimately, businesses. The technology industry is a good case study.
Microsoft shows how competition forces a business to raise their game; when they won the browser wars by dispatching Netscape early in the Internet era, they let Internet Explorer stagnate until the Mozilla Firefox, Opera and Apple Safari web browsers came along.
Similarly, they allowed their flagship product Microsoft Office drift once they dominated the productivity software market. The arrival of Google Docs and some other new players forced them to refresh and redesign the Office package.
Today Google find themselves in the same position – Facebook, Microsoft’s Bing and various other search engines are reminding the leader that their position is not safe.
The Business Insider website recently took a critical look at Demand Media’s business model, a service that publishes low quality articles that tend to rank high with the aid of clever Search Engine Optimisation (SEO). As a result of Demand’s high rankings on Google searches these articles tend to attract advertisers.
In a search engine market where Google is the only noteworthy game in town, this situation would suit Google and Demand Media as both would have a nice predictable stream of advertising and neither party would have any great incentive to change things and for a while it appeared that might be the case.
With the arrival of real competition to Google such as Microsoft Bing and Facebook, all things change as now search engine results matter – the whole reason Google beat out competitors was because their search results were better than anyone else’s – if Google’s results aren’t as good then users will switch.
So Google’s been changing their algorithm, the formula they use for searches, in order to improve the results of queries on their system. So much so that my fellow Smartcompany blogger, Chris Thomas, accuses them of Attention Deficit Disorder.
This is good news for Google’s users who now get better quality search results and great news for Google’s advertisers who get better quality pages where potential buyers are likely to stay longer and click more.
Google though is the biggest winner as the better results they deliver, the more profitable and long lasting their core advertising business will be.
For Demand Media, things aren’t so good as there’s no shortage of poorly written tripe on the Internet and if they can’t get Google ranking goodness then their business model dies.
Which may show that in the new economy, bad soap doesn’t necessarily replace good soap.