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Search Engine Marketing Goes Mainstream

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A special report from the Search Engine Strategies conference in Boston, MA, March 4-6, 2003.

There was plenty of evidence at Search Engine Strategies 2003 that search engine marketing has gone mainstream. Even the issues addressed by both keynote speakers reflected the classic 'separation of church and state' concerns that mainstream media have been discussing for almost 100 years.

Despite the snowy weather, rocky economy and likely war, turnout for the Boston conference more than doubled from 600 in 2002 to 1,300 this year. The number of exhibitors also came close to doubling, from 15 a year ago to 29 in 2003.

In the past, most panelists dressed in business casual "shirts" that are typically worn by webmasters and search engine optimizers (SEOs). "This year, panels were packed with well-suited attendees, investment bankers and Fortune 500 advertisers," reported Stephanie Olsen, staff writer for CNET's News.com.

Among the well-suited attendees were research analysts from U.S. Bancorp Piper Jaffray, which has just published a 90-page report, The Golden Search. The report says the search industry is already a $1.5 billion business and estimates it will hit $7 billion in revenues by 2007.

In addition, the keynote sessions by Paul Ryan, chief technology officer for Overture, and Tim Cadogan, vice president of search at Yahoo, provided more evidence that search engines are no longer a niche market.

Both speakers represent publicly-traded companies. Overture (Nasdaq: OVER) had revenues of $667.7 million in 2002, a 132% increase from $288.1 million for 2001. Yahoo (Nasdaq: YHOO) had net revenues of $953.1 million for 2002, a 33% increase over $717.4 million in 2001.

Because of financial disclosure restrictions, both speakers avoided discussing the short-term implications of their companies' recent buying sprees. Overture has announced it will acquire AltaVista's business for $140 million as well as the Web search unit of Fast Search & Transfer in a deal worth up to $100 million. Meanwhile, Yahoo has completed the acquisition of Inktomi in a deal worth $235 million.

Instead, both speakers addressed the long-term implications of keeping the "state" side of search, the paid listings, from unduly influencing future development of the "church" side of search, which are often called the "editorial" listings.

For example, while his company pioneered the market for paid search listings, Overture's Ryan outlined his vision for coming improvements to the science of indexing billions of Web documents to produce relevant, non-commercial results.

"There's a lot of work to be done in Web search," said Ryan. "All of the search engines have fundamental problems with relevance."

Ryan then gave a short illustration of how to improve search engine technology with intelligence on the context of keyword queries and knowledge of a web surfer's intent while searching.

For his part, Yahoo's Cadogan acknowledged, "There has been a tension between the user experience and the economics of search. Our challenge is to strike the right balance."

He then discussed what Yahoo was doing to:

  • Better understand user needs, which requires a better feedback loop than the average two-word query provides;
  • Identify the right content, which can be difficult when the meaning and intent of a one-word query like "windows" could return pages for Microsoft or Anderson;
  • Optimize search presentation, which can get cluttered when offering choices of local content, images, and commercial matches;
  • Get performance feedback, which is critical to giving users what they want when they want it; and
  • Improve simplicity and ease of use, which is critical to user satisfaction and retention.

Cadogan concedes that balancing economics and user satisfaction will take work, and told Colin C. Haley of InternetNews.com at the conference that "the gray area is understanding if the customer needs (a product or service) or is interested in pure research."

While both Ryan and Cadogan handled church/state issues in an even-handed way, neither spent much time talking about the growing number of users who are posing increasingly specific queries.

According to U.S. Bancorp Piper Jaffray, less-frequently searched terms, the so-called "tail" of a search, now number in the millions daily. In addition, conversion rates on these "tail" searches are much higher than the low, single-digit, conversion rates for more common searches. For example, queries for "cheap airfares to London" will produce a higher percentage of qualified leads than queries for "travel".

This is the trend that most search engine marketers (the ones in "shirts") are already harnessing, while most mainstream marketers (the ones in "suits") are still learning the differences between paid and editorial listings.

Greg Jarboe is the co-founder of SEO-PR.

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