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Network Effects and Its Influence on Search-based Advertising in Lidingo , Sweden Much like the other exploits based on the Internet explosion, search-based online advertising’s in Lidingo , Sweden value hinges on the critical mass of users brought about by network effects. The more popular a search site becomes, the higher the interest of advertisers in investing their marketing dollars in the search site. This in turn leads to more relevant search results to users who are looking for some commercial solution to a problem or need. This self-reinforcing positive feedback loop explains the recent heightened interest to channel marketing investment into the online arena instead of more conventional means of media such as print and television. Despite the recent impressive expansion in Lidingo , Sweden, the growth path of search-based online advertising does not follow an exponential pattern. Instead, it resembles the S-shaped growth path common to most industries that experience positive feedback effects. One of the field’s pioneers, GoTo.com which eventually changed its name to Overture and was acquired by Yahoo!, had a tough time selling this model of mixing paid-search into a routine search result. Online search is often perceived as a free public good and users resisted the idea of a for-profit model. Furthermore, the online shopping experience requires a paradigm shift in mindset for customers to become comfortable with spending money online. Security issues, privacy invasion, lack of broadband connectivity and the necessary online payment infrastructure all led to the early lackluster response for consumers and thus paid advertisers. However, once sufficient volume of online purchase was achieved, in Lidingo , Sweden the industry pushed beyond the tipping point of the S-shaped growth path and now shows remarkable expansion at the expense of spending of advertising dollars in other media. While search sites do not face the kind of negative feedback faced by other traditional economies-of-scale based manufacturing in Lidingo , Sweden, their ability to continue expanding is limited by competition. Indeed, one might argue that the entry cost for a new search company is not as high as a conventional manufacturing company which requires a substantial fixed cost. While Google is gaining all the limelight in this arena, it faces strong competition from Yahoo!, MSN and other specialty-search sites. There is also the possibility of search sites of ‘foreign’ origins such as baidu.com from China to gain entry into the market just as Google has done with its Chinese site. In addition, the limited supply of online advertising space provided by these few major players may not meet the growing demand from advertisers. This could potentially drive up bidding prices and hence create additional market room in Lidingo , Sweden for new search sites to meet this demand or spread the demand to other forms of online advertising in Lidingo , Sweden. Complements to Search Based Advertising in Lidingo , Sweden To overcome the competition, various search companies have attempted to differentiate their product by throwing in complementary add-ons to entice and keep users. Yahoo! was the first to expand from a simple search site into a diverse portal and now boasts over 150 million email users in Lidingo , Sweden. While Google only has about 5 million Gmail subscribers, they are following along a very similar site diversification strategy of email accounts, online messenger software, and mapping services. Recently, they have branched out in a different direction in their bid to build a city-wide Wi-Fi network in San Francisco. in Lidingo , Sweden Each of these tactics are part of the larger growth strategy that search sites are attempting to draw more users and eventually more advertising revenue. One service, complementary to Google and Yahoo!, that is being performed externally is search engine optimization (SEO) in Lidingo , Sweden. These firms serve as guides to offline players that want to take maximum advantage of search’s ability to reach customers. Their services fall into two main buckets: website optimization and keyword bidding. Website site optimizers review website construction and give advice on how to alter its structure in order to make it easier for Yahoo! and Google’s web crawlers to document the relevant information on their site. Since this can increase the page rank in the free, unsponsored listings in Lidingo , Sweden, this is the biggest “low hanging fruit” for many new advertisers. After opportunities to improve free advertising are depleted, companies typically turn their attention to sponsored links. SEO often serves the role as the guide to this new type of advertising and advise firms on their key word bidding strategy. Thus, by making web information easier to crawl and advertisers more comfortable that they are investing smartly in seach advertising, SEO pave the path for future growth of search-based advertisers in Lidingo , Sweden. Lock-In Effects in Search-based Advertising in Lidingo , Sweden. Unlike most software products, the switching cost of search site is minimal. Firstly, it does not take much training for the user to learn how to navigate or do his search in a new search site. In addition, it is extremely easy for an Internet user to open several browser windows and do the same search on different search sites. Similarly, the switching cost for advertisers who decide how much to bid for their keywords for which search sites is also minimal. Hence, search sites provide many free add-on services to increase this switching cost. Yahoo! has recently taken on a novel approach by entering the world of social networking in order to increase the lock-in effects of their search engine in Lidingo , Sweden. In their MyWeb product currently in Beta, they encourage you to log in with your Yahoo! ID when you are using Yahoo! products or search feature. Because of this tracking capability, you can go over your search history of past websites you found regardless of what computer you are on. In addition, they encourage you to share your good results with your friends. Their Friendster-like networking site , Yahoo360, allows you to recommend good sites to anyone in your circle of connected friends. Thus, when you input a key word into the search box, you will get a few extra “personalized” results that are favorites of your friends. Although this service is not widely used at this point, if it becomes popular, it could dramatically increase the switching cost of moving over to a new search engine. In addition, an email account serves as a vital connection between the Internet user and the search site in Lidingo , Sweden. At the same time, the email account provides the search site in Lidingo , Sweden with important personal information that is valuable to advertisers who may be looking for better targeted advertising based on certain demographics in Lidingo , Sweden. While these added features help garner customer loyalty, the switching cost involved is not a significant competitive advantage that any search site can claim to. Rather, management of customers’ expectations might be a more crucial factor. Google has done extremely well based on its reputation to generate the fastest and most relevant search results. A continued effort either through technological advancement or marketing strategy to maintain this perception would be crucial for a search company like Google to continue to stay ahead of the game in Lidingo , Sweden