Search Cost

Categories: Marketing

This term usually applies to two very different fronts.

The first: a headhunter. That is, your company needs a new CEO after the old one was filmed with her very hot secretary on her desk, during company hours, voting for a Republican (yes, she was running a Silicon Valley company, so this was the end of her career). So now your company incurs headhunting costs to search for a new CEO, and those costs are high. Usually something like 1x the first year's salary and target bonus for that CEO. Super-expensive if the CEO makes bank. And note that being a headhunter can pay very well if you get the right clients. So that's one form of "search cost."

The other is likely how you found this page. Rhymes with Shmoogle. Google had big fixed cost (intellectual capital) to build out its very smart algorithm to find things, and to then house the entire internet's content on its servers, and then display it to people who are looking. But the cost of any one search for GOOG is almost nil. It's a little electricity maybe, and a little allocation to replacing servers every so often. But on a $1 SEM (search engine marketing)-sponsored click that a user clicks on, GOOG makes like 99 cents in contributed profits. Sweet deal for them.



Find other enlightening terms in Shmoop Finance Genius Bar(f)