Wize Commerce/ Nextag CEO Jeff Katz on the Future of Online Search
In a continuation of the exclusive interview, Jeff talks about Google’s purchase of Channel Intelligence and his thoughts on where comparison shopping websites are headed over the next 5 years.
Rick: Hello Everybody, I’m Rick Backus, the CEO of CPC Strategy. Today I’m joined by Jeffrey Katz, who is the CEO of Nextag.
Google Shopping Channel Intelligence Deal
Rick: How did you interpret the Channel Intelligence deal? So Google just bought them for $125 million. It was something that I don’t think a lot of people were anticipating. Do you think that [the Google Shopping purchase of Channel Intelligence] is a step in the direction of a Google marketplace? When you first saw that [the Google Shopping purchase of Channel Intelligence], what was your first impression?
Jeff: Well, of course, I don’t have any, sort of keen insights into the ultimate intent. But, I think what it [the Google Shopping purchase of Channel Intelligence] does, clearly, is make an intention, or provide the possibility to get closer to merchants. To make the tool set between CI’s [Channel Intelligence] clientele and perhaps any client, and any advertiser who’s a merchant. To get closer [to Google Shopping] and better information and a relationship. And, I presume business performance by doing so. The offsetting of that is it potentially creates a non-neutrality of that relationship. We see that in other sectors with Hewlett Packard owning EDS, for example. There’s a lot of situations where the owning company says: “No, there’s a Chinese wall.” But honestly there’s a knowledge level and a tendency to pitch what you know best.
Jeff: And, there’s got to be in house hardware, an in house search engine, and an in house shopping engine. But, I think, it creates a non-neutrality that we should expect is there over time. But, ultimately, it’s Google Shopping increasing its knowledge and depth of relationship. And I think the countervailing thing is, for the rest of us it creates an opportunity to be different, and better, and more neutral. And, I think that’s something merchants will value.
Are Comparison Shopping Websites Dying?
Rick: Got it. That was a good answer. So, transitioning to, just kind of the comparison shopping engines (CSEs). I used to work at PriceGrabber, way back in 2006. And, even back then, I would get feedback that the comparison shopping engines are dying. And the next big thing is social and the CSE’s aren’t really going anywhere. And, so to me it feels kind of like the demise of the CSE’s has been greatly exaggerated. From your perspective, do you think that the major comparison shopping engines, so you guys [Nextag], PriceGrabber, Shopping.com [Ebay Commerce Network], Shopzilla, do you see them all being around in five years?
Jeff: Well, this industry’s been around for about 12 or 13 years now, and it’s maturing. And mature industries tend to do one thing, and that’s consolidate. And, I think 2013 is really going to be the first year where we see consolidation happening. I think you could say Google’s actions are kind of a consolidation as they go deeper into the channel. So, I think we’ll start to see consolidation. No, I don’t think we’ll see all the individual entities out there, for some because they don’t have enough differentiated value and there’s just too much excess cost. Given the presence of a large competitor like Google, and for that matter Amazon, and who else may come into the marketplace. Apple, for example.
Jeff: Having said that, I think these companies provide important value. And, if we look at another sector, like travel, what’s happening in travel in comparison, it’s actually beginning to become more robust. Priceline and Expedia both bought comparison shopping travel companies, despite Google’s entrance into the [travel] marketplace.
Jeff: So, I think there’s a real value. Shoppers want to compare. They’re not going to stop comparing and they’re not only going to go to Google. My experience in travel is that, a minimum of three comparisons are made before travel is purchased. And, I think in purchasing, something that’s important to you, whether it’s a running shoe or a refrigerator, you’re not going to go to one place and buy.