Vertical Leap: A Search Engine Conference this week featured both gorillas and startups, ranging from Google, Yahoo and MSN to stealth mode private companies, with advice ladled out by successful venture capitalists. The room was packed for this first search engine conference sponsored by the SDForum, a highly regarded non-profit venue for the technology community in Silicon Valley. Keynote speaker, David Hills, CEO of LookSmart, focused on the opportunities in vertical search to attract advertising money, a different currency and a different language for the typical technology company. He predicts advertisers and agencies will embrace verticals which offer audience segmentation closer to the point of purchase, but need easy ways to buy, a familiar theme. Verticals are not new, but he seems them accelerating much as cable media buying expanded with the multiplicity of channels, and that advertising money will follow as value is established. Yes, this is the latest flavor of niche publishing, just using web technology in addition to the human factors!

Money was also the topic for the obligatory venture capital panel on "Investing in Vertical Search", with the speakers emphasizing their interest in opportunities that have the potential of becoming $100 million plus companies. However, they see plenty of opportunity for innovative $20 to $30 million dollar companies founded with sweat equity and a modest amount of capital. Judging by the crowds in the hallways afterward, attendees were taking the opportunity to pitch their ideas for the next gorilla.

Ably organized by Dave McClure, Simply Hired, and tied together with his pithy "Top 10 Rules for Vertical Revolutionaries", the rest of the panels focused on established categories where vertical search is working today. The emphasis for this audience was consumer categories, and none were surprising. Each of these categories has its own nuances:

• Local Search was seen as a large opportunity, and is more than just business listings. Everyone is local, and the total advertising dollars for services is high, though fragmented. However, the key players are the big search engine companies, with representatives from Google, Yahoo!Local, MSN and Ask Jeeves talking about trying to provide great user experiences AND the right results. Interestingly, no one talked about how to partner with newspapers, with their experience in local news, events and advertising to follow the lead of their own local newly redesigned San Jose Mercury News.
• Shopping Search is another large opportunity, with the next frontier being information about local inventory. The big challenge is getting feeds from retailers, with manufacturer SKUs and product descriptions, then categorizing them into meaningful categories. Standardization is a major issue, a familiar aggregation issue. The importance of reviews and buying guides was emphasized, but this technology driven group, has not embraced paying for content from established authoritative sources.
• Travel search is an area of tools to find seat inventory and pricing across multiple carriers in real time. With the fragmentation of the airline industry, this has become even more difficult, and particularly so in Europe which has over 60 carriers. From a financial and customer relationship perspective, airlines prefer using vertical search rather than agencies such as Travelocity and Expedia. Cost of advertising, unsold inventory and technical infrastructure from the Sabre legacy are all issues in this still evolving vertical.
• Classified Ads / Job Search is consolidating around several models. On one dimension, there is the need to aggregate job listings nationwide, represented by Simply Hired. On a different dimension, Oodle specializes in large city sites with an emphasis on high end transactions such as real estate, which are concluded locally. Then eBay's Kijiji is the international version of Craigslist, a very successful model, which accepts no advertising, and charges for job listings in only a few cities. LinkedIn complements the job listing companies to selectively reach qualified candidates, as well as do reference checking.
• Blog search is still the wild, wild west and the panelists bogged down in discussion of the decade old wire problem of multiple rehashes of the same news. New technology, same journalistic issues. There was agreement that the Google Page Rank does not work well with the timeliness of blogs, so other algorithms are key to establishing relevancy, authority, and sentiment--key measures for advertisers interested in this new form of content.

The wrap-up of a long day was positioned as future technology directions for vertical search, but the focus became more general. PubSub was the most intriguing technology, since it is essentially an alerting service for new content which appears on the web in blogs, press releases, SEC filings, newsgroups and other sources. Other future developments include different algorithms for search, depending on the domain being searched, unified interfaces, and repurposing web content to provide useful answers. Not surprisingly, these are the same themes surfacing in the broader search world, which includes enterprise search and desktop search, as well as commercial search services, areas not included in this conference, but certainly part of the web ecosystem.