Satisfaction and loyalty high among Google users; risk remains, S&P says

Since filing registration papers with the Securities and Exchange Commission, Google Inc. has stayed mum on the topic of its prospects in the upcoming IPO, but everyone else is talking. This week, Standard & Poor’s Equity Research Services issued the results of a survey of search engine users that highlights where the search giant leads, and where it could be vulnerable.

48% of search engine users surveyed said they use Google search most of the time, versus 20% who use Yahoo/Overture, 14% who use MSN and 7% who primarily use AOL. Satisfaction with and loyalty to the search engines they most use are high among consumers. 83% of those surveyed said they are extremely pleased with the search engine they use, and 67% have been using their search engine of choice for more than two years.

However, Google’s lead could be threatened if consumers encounter what they perceive to be a better search service, defined as one that delivers results whose accuracy and relevance exceeds Google’s. More than six out of 10 Google users say they’d switch search engines if a better service came along.

And Google`s current leadership in search may not necessarily transfer over into success with its expanding new offerings beyond search. For example, only 8% of search engine users surveyed said they would be very likely and only 15% somewhat likely to register for and regularly use Google’s new free e-mail service, G-mail, as the service is currently offered. In exchange for allowing Google technology to scan the content of their personal e-mail and serve up relevant ads alongside, G-mail subscribers receive free e-mail service, virtually unlimited e-mail storage capacity and the ability to search old e-mails.

S&P predicts that while Google’s net revenues could nearly double this year, its margins could narrow due to increased investment. Its preliminary estimate on Google’s market value is $33 billion to $40 billion. The commissioned survey, conducted by market research firm InsightExpress, surveyed 1,000 search engine users nationwide.