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| 'If their strategy remains trying to chase Yahoo and AOL, they’re going to have a really tough road. It’s going to be close to impossible at this point for anybody to catch them.'
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and AOL and Yahoo will win
Analyst: Also-rans face speedy demise
By Jeremy Schlosberg
Say goodbye to Lycos. Kiss Excite good night. As far as one top Forrester researcher is concerned, they’re history.
The portal wars are over and AOL and Yahoo have won, declares senior analyst Charlene Li.
Li argues that the day has come where there is no longer room on the web for big portals that aren’t the biggest of them all.
MSN is likely to survive, but Li thinks no other portal that seeks Yahoo-like breadth and reach will succeed.
Li, in a recent report grandly entitled "The Parting of the Portal Seas," says the numbers are already clear.
"Only AOL and Yahoo can command good advertising rates and top advertisers," she says.
Traffic at portals such as Go, Lycos and Excite—while still high compared to most web sites—pales in comparison. "These sites have resorted to pay for performance advertising," she says, a sure sign they are failing.
"It’s sort of a spiral. As you lose traffic, you lose advertisers; as you lose advertisers, you lose revenue; as you lose revenue, you lose the money you need to market yourself; as you lose that, you lose traffic."
According to the report, AOL, Yahoo and MSN accounted for 15 percent of web traffic as of September 1999.
A total of 10 other so-called "mid-tier portals"— About.com, AskJeeves, Excite, GO Network, Go2Net, Goto.com, LookSmart, Lycos and Snap—together accounted for just 5 percent of web traffic.
The rest of the web received the remaining 80 percent of traffic. This group is dominated by major vertical sites such as CNET and iVillage and e-commerce sites such as Amazon and eBay.
While Li groups MSN in with big shots AOL and Yahoo, she does so with some hesitation.
"MSN is a distant third—stuck between the top two and the rest of the field," she says. "They’ve done well in spite of themselves. And they do have the money to break out, so there’s the potential to pull through and stay in the game."
Of the mid-tier portals, those that have sought specialized approaches—such as About.com’s focus on human guides and directories, or Goto.com’s early adoption of a pay-for-placement search model—also stand a good chance of success on their own, smaller terms.
But those that have attempted to follow the Yahoo model of being all things to all users--AltaVista, Excite, Go and Lycos--are doomed to failure in the not too distant future.
To these she offers advice. Go vertical, and soon.
She thinks AltaVista should trumpet its well-regarded search function and seek to specialize in business and academic research.
Excite should stick to entertainment and seek to leverage its broadband connections. Lycos, she says, should focus on the internet’s youngest adults—the 16- to 22-year-old set—because of its MP3 search capacity and its Tripod community.
Go, on the other hand, should stop, she says, or rather break up, its parts being worth more than the whole.
The Go Network is serving merely to muddy some strong brand names that would do better on their own, including ESPN, ABC News and Disney.
Perhaps Disney could retool Go as a family-oriented portal, she says, but maybe it’s just not worth it.
Regarding all the mid-tier portals, Li says, "If their strategy remains trying to chase Yahoo and AOL, they’re going to have a really tough road. It’s going to be close to impossible at this point for anybody to catch them."
-Jeremy Schlosberg is the senior editor for new
media.