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Written by: Alan Trzuskoski

Opportunity Recognition

     Opportunity recognition involves a process of recognizing a “fit” between market needs and available resources. (Ardichvili, 108-109).  Craig was able to identify a number of feasible opportunities in his journey to become a successful entrepreneur.

     While working as an independent sales contractor for an Internet company Craig recognized this budding new industry as an opportunity.  He taught himself Html; the basic language of web design. While designing web pages, Craig stumbled across a focus referred to as search engine optimization (SEO).  SEO is streamlining a web page’s content in order to receive top billing in search engines based on key search terms. 

     Historically, advertisers, even on the Internet were charged per potential impression with no guarantee of effectiveness.  However, the Internet’s ability to track online behavior, gave rise to performance-based, keyword-targeted advertisements (Harmon and Segal 6).  Performance-based advertising is able to deliver a message at the exact moment a prospect has shown interest (9).  That way, advertisers only pay for actual traffic to their site.  It also allows advertisers complete control and monitoring of their spending in real time (11).

FindWhat.com’s Core Business Strategy

     One successful attribute of FindWhat’s core business strategy has been the avoidance of head to head competition through segmentation of the market (Barney 57).  While Google and Overture have battled in the corporate arena for giant contracts, FindWhat has come to the forefront of the small-distributor sector (Harmon and Segal 16-17).  Another successful strategy is to avoid destructive price competition (Porter 64).  In fact because customer price is set through a bidding system, more competition among customers increases revenue percentages.

     FindWhat’s inability to make large prepayment deals with major vendors has led to one level of differentiation.  Instead of major vendors, they focus on the lower economic tiers of business.  Furthermore to keep costs down, FindWhat only works with distributors accepting smaller margins (Harmon and Segal 15-16).  Another successful differentiation is FindWhat’s emphasis on customer service. According to David Rae, “Contractual relationships are secondary because, if the working and interpersonal relationships fail, no contract will make the partnership successful”.  While FindWhat’s clients and distributors need costly technical hand holding the expense is justified.  FindWhat is unwilling and does not need to accept the low margins Overture and Google accept (17).

     According to Porter, “As customers become more familiar with the technology, their loyalty to their initial suppliers will also decline; they will realize that the cost of switching is low” (70).  However in FindWhat’s case, customer loyalty has actually increased with familiarity.   This is due to the added economic value of FindWhat’s differentiation.  They have been able to keep the cost of switching from FindWhat considerably higher (Porter 65-73).  “Google and Overture have tried to take some of our customers.  They were temporarily successful with a few, but all have come back” (Harmon and Segal, 17).

     Another key component of FindWhat’s core business strategy has been targeting companies with users in the Internet-age sweet spot.  They have taken a targeted solicitation approach to gain customers. Their prospective clients have already been educated about the pay-for-performance search engine model by the competition. This approach has added value by keeping costs down.  As soon as FindWhat’s logo became visible in ad listings, a snowball effect of new business began (12).

     FindWhat has formed strategic alliances with popular web portals; referred to as distribution partners.  FindWhat has more than 200 alliances, none representing more than ten percent of their revenue. Another successful aspect of FindWhat’s core business strategy is to offer distributors a percentage of advertising revenue.  That provides the needed incentive for distributors to use FindWhat’s search system. FindWhat’s strategy for distribution was selective, as they partnered particularly with smaller distributors, such as Excite and Webcrawler. This selection allows a win-win opportunity for both parties. By seeking out these channels, FindWhat provides some protection to small distributors from competition as the internet industry is consolidating. They monetarily strengthen their bond by paying out an average 50% return on advertiser revenue to the distributor. Overall, FindWhat’s strategy provides camaraderie in support of small business activity. FindWhat establishes strong relationships with these distributors, thus providing the means to reaching their key customers, the small size advertisers. FindWhat’s choice of distribution channels also continued to ensure them flexibility, as relations were non-exclusive for one-year-with-renewal options (9).

     FindWhat’s collective learning has been successful.  It could be compared to a large tree (Prahalad and Hamel 80-85).  Their core competencies include search engine design and optimization as well as web design.  Those competencies provide the nourishment, sustenance, and stability for the company and therefore are analogous to the tree’s root system (Harmon and Segal 2).  Their core product is a performance driven, auction-based listing service which is compared to the tree’s trunk (10).  The limbs and leaves represent the business units.  In FindWhat’s case, they include their own branded performance driven, auction-based listing service as well as a Private-Label Program, whereby the company licenses its search engine (12).

     The major barriers to entry of FindWhat’s small-distributor niche are primarily operational.  They include an understanding of: relevance, traffic patterns, distributor partners and real traffic.  For this reason, FindWhat views their history in the performance-based advertising sector as a major source of competitive advantage (Barney, 60).  In fact Alta Vista attempted, unsuccessfully, to get into the sector twice.  They had a competitive product, but failed to find an operational solution (Harmon and Segal, 16).

     In order for FindWhat to sustain its current position in the Internet advertising industry, it must effectively implement its core products in additional arenas (Prahalad and Hamel, 86-87). FindWhat believes that as the Internet advertising industry moves forward, all large search companies will posses their own pay-per-click solution. FindWhat’s Private Label program offers the opportunity to supply those search companies with the backend solution they need for their own branded pay-per-click solution (Harmon and Segal, 12-13).

     The future structural attractiveness of this industry is international. Although Google only entered the performance based search engine sector in 2002, it has been expanding rapidly in both the US and European markets. Terra Lycos has chosen to move into the paid-search sector in Latin America.  Instead of building their own pay-for-performance competencies they have signed a licensing agreement with FindWhat.com.  The few strong foreign competitors that exist have appeared more concerned with establishing domestic viability rather than challenge the well-established players of the USmarket (12-13). This leads to the expectation that FindWhat should continue their global expansion.

Works Cited

Ardichvili, Alexander, Richard Cardoza, Sourav Ray. “A Theory of Entrepreneurial

     Opportunity Identification and Development.” Journal of Business Venturing.

     2000. 105-123.

Barney, Jay. “Looking Inside for Competitive Advantage.” Academy of Management

     Executive.” 1995. 49-61.

Bygrave, William D. “The Entrepreneurial Process.” The Portable MBA of

     Entrepreneurship. Eds. Bygrave and Zacharakis. Hoboken, New Jersey: John

     Wiley & Sons, 2004. 1-27.

Gerber, Michael E.  “Maturity and the Entrepreneurial Perspective.” The E Myth

     Revisited. New York, New York: Harper Collins Publishers, 2001. 72.

     Lange, Julian E. “Entrepreneurs and the Internet.” Wiley & Sons, 2004. 377-404.

Porter, Michael E. “Strategy and the Internet.” Harvard Business Review. 2002. 63-78.

Prahalad, C.K. and Gary Hamel. “The Core Competence of the Corporation.” Harvard

     Business Review. 1990. 79-91.

Segal, Gerald and Joel Harmon. “FindWhat.com.” Case Research Journal. 2003. 1-19.

Stevenson and Sahlman, 1994, “The Entrepreneurial Process,” p. 105, Burns and

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