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InContext / An inside look at the business of digital content

The revenue model for search is broken. So are the results.

August 4, 2021 | By Sridhar Ramaswamy, co-founder and CEO – Neeva @RamaswmySridhar

Twenty years ago, search engines put in motion a revolution in how we access and consume information. In the span of two decades, billions of people across the globe now have a world of information at their fingertips. However, this came with a tradeoff. In exchange for search engines providing information, advertisements appeared on the search page. In the beginning, consumers didn’t mind when they were occasionally shown an unobtrusive ad along with organic results. 

Ad supported search

A lot has changed since then. As traditional search engines grew, they faced the daily pressure of returning value to their shareholders by prioritizing advertisers and ad revenue. This has had several unintended consequences. These include an ever-increasing ad-load, ad driven content that can be misleading and harmful, and company practices that value profit over user privacy. 

Furthermore, with more ads on top of the search results, the information consumers are searching for gets pushed down and deprioritized. It’s the difference between searching for flu symptoms and being shown an ad for cough syrup rather than a medical article factually outlining the symptoms. Then that ad for cough syrup will follow consumers across the Internet for weeks. And in a worst case scenario, the consumer might be shown an ad containing misleading information about the flu or flu treatments. 


These problems are further exacerbated by the fact that there is a lack of competition in the search space. With one company controlling more than 90% of the market, consumers have few viable alternatives and entrepreneurs may be hesitant to enter the space. The lack of competition means fewer incentives for traditional search engines to spend the resources and time creating innovative features that better serve consumers. 

Moreover, any industry where one company has outsized control is generally bad for society. This is even more relevant when that industry is responsible for how billions of people gain access to knowledge and information. 

These are certainly not unique problems faced by search. Many industries rely on ad-supported models to drive revenue. And many industries, such as healthcare and agriculture, are witnessing consolidation on a scale unseen since the early 1900s. 

History and experience have shown that monopolies are bad for innovation and bad for consumers. Society and our democracy are better served when you have more choice in the products and services you use. More choice and market competition leads to a better experience for consumers. With more competition and opportunity in the market, there’s greater chance for new companies to create innovative products and compete with the existing leading platforms. 

Opportunities for innovation

Alternative models not only offer choice, they foster creativity — in the tool, yes. But also in the underlying business model. For example, one of the core tenets with an ad model is to keep individuals on the platform for as long as possible to increase the visibility of ads and the likelihood they will click on those ads. In reality the sole purpose of a search engine should be to best answer a user’s query as quickly as possible. Whether that person remains on the site for one second or one hour should be independent from the need to satisfy advertisers. The two goals could not be farther apart, yet, that is what the last 20 years of search has delivered.

When the search business no longer relies on advertisers for revenue, it gets the freedom to dream up new ideas and build the type of search experience that couldn’t exist before. This means giving more choice to consumers on the preferences for news outlets or filters that enable a shopper to search for only small retailers or companies that ethically source materials. Instead of showing an entire page of results, the right answer with an infographic could be shown in the search bar allowing a user to start their journey without ever landing on the search page.   

Not only do alternative models have significant impacts on a consumer’s overall experience, they can have major implications for privacy. Tracking personal data is at the core of today’s digital advertising ecosystem. However, without ads, strong privacy policies and user protections can be core features of the product rather than a business tradeoff. 

Experience matters

Consumers are increasingly aware of the way companies exploit their personal data and they want alternatives. According to a Pew survey, nearly 80% of Americans are concerned about how much data is collected about them by companies. Moreover, Last year, 52% of Americans said they had decided not to use a product or service because they were worried about how much personal information would be collected about them. In a separate McKinsey study, nearly 70% of consumer respondents were concerned about privacy with search. 

We know that competition leads to more creativity, more choice, and ultimately a better experience for the consumer. Alternative approaches to traditional business models such as an ads free, private search, shouldn’t be the exception to the rule, they should be the norm and we should continue to demand a level playing field to let innovation thrive.

About the author

Sridhar Ramaswamy is the co-founder and CEO of Neeva, the world’s first ad-free, private subscription search. He formerly oversaw all of Google’s Advertising products, which included search, display and video advertising, analytics, shopping, payments, and travel.

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