Google doesn't make money from organic search. It's simply content they need to monetize like any publisher.
As with all publishers, their goal is to maximize revenue by:
- Increasing market share.
- Improving user loyalty and product usage.
- Monetizing users more effectively.
- If you haven't already, test the content network
- Prepare display ads for use in the content networks
- Try interest-based behavioral targeting
- Play with search retargeting on Yahoo
- Add additional sitelinks for your highest performing text ads
In the past few years, Google has made significant improvements in the relevance of their organic search results (content) by introducing universal search -- the integration of new types of content, such as video and product listings, directly into search results.
While those changes occurred, PPC ads have largely remained text only. It's possible that as universal search has gone mainstream, clicks on paid search ads may have suffered. Something had to give.
The Text Ad Revolution
As I noted in "2009: The Year AdWords Attacked Organic Search," Google made a series of changes, some rather dramatic, to their once staid text ads last year.
These changes largely fall under Google's AdWords New Ad Formats Initiative. At SES Chicago, I asked Devin Sandoz, Product Marketing Manager for AdWords, about the guiding principles behind the initiative. He pointed to the evolution of organic search results as the model for the initiative.
Google is playing with the visual balance between organic and paid search to balance user satisfaction and the average revenue per click/SERP. Any combination of images, videos, PlusBoxes, icons, product listings and multiple text ad links can now appear mixed in with paid search ads.
And this is only the beginning.
2010: The Year of Universal Paid Search
This year will be the year of universal paid search -- the evolution of online advertising served to searchers on Google and across the Web.
Universal paid search will be driven by four major trends:
- Increased ad diversity.
- Moving beyond CTR.
- Personalized text ads.
- Search retargeting with display.
Increased Ad Diversity
Text ads will continue to dominate most search results. However, we'll see a greater percentage of SERPs with new ad formats and ad extensions blended into text ads, specifically:
- Product listings ads.
- Product listing extensions.
- Comparative ads.
- Ad sitelinks.
The conditions that trigger comparative ad and ad sitelinks are somewhat limited. It's more likely, then, that product listing ads and extensions will be the first step in increased ad diversity.
New ad formats are more disruptive than ad extensions, so I expect that Google be more liberal with their beta tests for ad extensions. These often come in the form of their PlusBox. For example, rich media ads were introduced to the Content Network through the PlusBox this year. As this analysis shows, the presence of PlusBox increases CTRs.
It wouldn't be surprising to see video ads wade into the waters through the PlusBox. They've already tested these out in the entertainment area. PlusBox could also help recoup some of the massive drop in search spending within the pharmaceutical industry by adding a place for fair balance.
Moving Beyond Click-through Rate
Universal paid search isn't just about new ads, it's also about new calls-to-action/conversion events and monetization models for Google.
Google is increasingly trying to move the customer experience from advertisers' sites to the search results or other areas of Google. For example, Google is introducing ad formats to monetize ambiguous but high volume head terms in the loan industry with Comparative Ads. These ads lead users to a page where users give additional information about their query and advertisers pay if the user clicks through. These formats appear on a limited basis.
Other lead generation business models are probably within their sights. Similarly, new ad extensions are offering alternative actions for more specific queries:
- Form Extensions Beta allows users to fill out a form right on the SERP if the ad is in the preferred position (number one spot above organic listings). Advertisers are charged the maximum CPC for submissions.
- Click to Call with location extensions lets users browsing through smartphones click-to-call phone numbers in sponsored listings.
Personalized Text Ads
That announcement was limited to organic search. When Google implements personalized results in organic search, they can measure the impact to customer satisfaction more directly and advertisers don't really have a say in the process.
A similar evolution in search ads will occur, with some users more likely to see different ads or types of ads based on past interaction with search ads. However, paid search is much more complicated. Advertisers want to target, measure, and optimize variations in how their ads appear.
We're already seeing personalized search ads with session-based retargeting for broad match (here, here, and here). Notably, Google introduced the feature, then reporting and still hasn't given advertisers the explicit ability to opt into or out of this kind of advanced ad serving (with the exception of search query reports and negatives).
Google should move most cautiously into personalized paid search and follow the same feature -> reporting -> control model.
Search Retargeting with Display
- If you're local, try click-to-call targeting and billing
- Monitor your search queries closely, especially if you use broad match
- Retailers, start testing product listing ads and extensions
- Make friends with your Google rep and push to get early beta access
- Subscribe to Google's blogs to keep up to date on the major changes as they happen
Perhaps the biggest trend in universal paid search isn't about SERPs at all -- rather, it's Google's move into display. In case you missed it, Google is putting a big emphasis on display in 2010:
"Our display business will give advertisers the opportunity to reach people with visual stories and narratives that they couldn't with search-ad text," Mr. Schmidt said on a call with analysts.
"We've been saying for a while that display is a big opportunity. One story you haven't seen so far is how successful we've been in display, but that will come out in 2010." (AllThingsD)
Display is an enormous component of online advertising spend and critical to Google's continued revenue growth. Today, AdWords and display coexist primarily in the content network where advertisers can place image (and some rich media) through contextual targeting.
That model started to change when Google introduced behavioral targeting for audiences based on "interests" on the content network.
Google wants to monetize non-Google properties with their AdWords model of self-service and real-time bidding. They can accomplish this at scale through the eventual merging of AdSense and the DoubleClick Advertising Exchange.
There will be a mid-to-long-term learning curve to get traditional performance advertisers who use search to migrate some of their budget to display whenever that integration occurs. Search retargeting, which is defined in this case as reaching people who've already visited your site from search with display ads, will bridge that gap in the short term. This isn't news to search advertisers, because Yahoo already offers this feature.
The walls that divide search and display (and their budgets) will fall as the technology, data, and training advance.
Grappling with Universal Paid Search
Universal paid search will introduce more complexity and competition than ever before. Traditionally search exclusive advertisers and agencies are likely to face pressure to test new advertising options and explore ways to integrate display into the mix.
Make friends with your Google rep to get advanced notice and access to betas. Prepare yourselves; it's going to be a bumpy ride.
Meet Your Favorite Search Engine Watch Contributors
Many of SEW's leading expert contributors will be at ClickZ Live, the new online and digital marketing event kicking off in New York (March 31-April 3). Hear from the likes of: Thom Craver, Josh Braaten, Lisa Barone, Simon Heseltine, Josh McCoy, Lisa Raehsler, Greg Jarboe, Dan Cristo, Joseph Kerschbaum, John Gagnon, Eric Enge and more!