A few months ago, my business partner asked me if I had figured out which way the search engine industry was headed in 2007.
"Sideways," I replied.
After several years of moving at a healthy pace along well-traveled pathways, the search engine industry seems to be sailing off in surprising new directions.
For example, from October 2005 to October 2006, Google's traffic grew 22 percent to 109.7 million, according to comScore Networks. During the same period, YouTube's traffic grew 3,387 percent to 23.5 million. So, we shouldn't have been "shocked, shocked" to find that Google was acquiring YouTube last October for $1.65 billion.
To spot other unexpected opportunities and threats before reading about them in Google News, I've started conducting a full 360-degree scan of the horizon – even taking the time to read investment research that I would have deleted from my e-mail inbox six months ago.
And a couple of weeks ago, I opened an e-mail with two attached PDF files that had been sent out by Safa Rashtchy, managing director and senior Internet analyst, and Aaron Kessler, VP and senior Internet analyst, at Piper Jaffray & Co.
In their e-mail, Rashtchy and Kessler said, "Our team has focused on this report for more than a year, in part because our research kept uncovering new and important trends at a dizzying pace. It was clear that we were virtually reporting live a major upheaval unfolding in the media world, one that appeared revolutionary in magnitude. Consider this report as a warning of a storm that has already formed, a storm that will destroy many models and create new ones. Luckily, the full cycle of the storm will still take a few more years to complete, and there is still time to react."
They added, "Our goal in this massive volume was to not just share our observations, but also to lay out a framework for how we believe advertising and media models could succeed in the next 20 years."
After downloading one of the PDF files, entitled, "The User Revolution: The New Advertising Ecosystem and The Rise of the Internet as a Mass Medium," I realized that it was a detailed map of what I had assumed were uncharted waters.
It took me a couple of weekends to read and re-read Piper Jaffray's 425-page report. To give you a glimpse of the treasure buried in the 15 chapters and 217 exhibits, here are six of the 12 key findings:
The User Revolution. The advertising world is going through a revolution. The historically passive consumer is changing rapidly, not only becoming more informed and confident about purchase decisions, but also increasingly taking control of the consumption of information and content that used to be distributed by networks, studios, publishers, and retailers. Piper Jaffray believes this trend will cause a significant rise in prominence of the Internet as a major content consumption and marketing medium.
Communitainment. The Internet has increasingly become a principal medium for community, communication, and entertainment – three areas that have collided together and are impacting each other's growth – generating a new type of activity that Piper Jaffray calls "communitainment." Piper Jaffray believes communitainment is an emerging trend that will partially replace other forms of content consumption, from television to magazines, as well as other types of Internet sites as content consumption fragments along the "Long Tail."
The Internet is Mainstream. The Internet has become a mainstream media outlet that is now rivaling traditional media such as radio, television, newspapers, and magazines for reach and advertising dollars. In fact, the Internet is the leading medium at work and the second leading medium at home behind TV.
Media Fragmentation. The proliferation of online and offline media outlets has resulted in shrinking television audiences and an increasingly fragmented media landscape. More importantly, the quality of time people spend on TV has deteriorated rapidly with multi-tasking and the simultaneous use of other types of media, most notably usage of the Web while watching TV. The net result is that advertisers increasingly will need to buy more inventory from nearly all types of media, especially the Internet, to have the desired impact.
The Golden Search. Search is the second most commonly used application on the Web with 550 million searches daily in the United States, and search marketing is a $15.8 billion global industry growing to $44.5 billion over the next five years. Piper Jaffray believes the five key trends in the search industry are: 1) Search is the new portal; 2) Search is becoming a branding tool; 3) Google's dominance is increasing; 4) Local search remains a looming opportunity; and 5) New search technologies are likely to expand the field.
Video Ads Could Drive The Next Wave. Piper Jaffray believes Internet video ads could become a game changer for large brand advertisers, who are used to the :15 or :30 TV commercial. In today's Internet, the advertiser must actively engage the user in order to create a brand impression. This engagement could include watching an online video, playing an interactive game, creating user-generated brands, or publishing content. Piper Jaffray believes we are very early in the adoption of video ads, which could drive the next big wave of advertiser dollars migrating online.
Let me encourage you to read the full report. After re-reading it again this past weekend, I've learned that the search engine industry isn't headed "sideways" in 2007. That time horizon is too short and this conceptual metaphor is too terrestrial.
No, we are setting sail on a much longer journey to destinations at the edge of the known world where the phrase, "Here be dragons," still appears in the unexplored areas of old maps.
Greg Jarboe is the president and co-founder of SEO-PR, a search engine optimization and public relations firm. He is also the news search, blog search and PR correspondent for the Search Engine Watch Blog.
We report the top search marketing news daily at the Search Engine Watch Blog. Here's some more news from around the Web:
- Google's Schmidt At Tech Conference Talks On Mergers, Ads, Apple & Arrogance, Search Engine Land
- My.Netscape Being Re-Born as Web 2.0 Personalized Homepage, Read/Write Web
- Right Media's Big Ambitions, Business Week
- Ex-Google Answers Researchers Launch Q&A Site, Google Blogoscoped
- The Search for a Mobile Advertising Model, Marketing Pilgrim
- 10 Quick Ways to Increase Conversions, Search Engine Guide
- All About Robots, Webmaster Central Blog
- Think like a human; code like a computer, Accessible Web Design
- The Most Valuable pieces of Copy on the Page, SEM/SEO In-House Blog
- Where are your SMO priorities?, SEO'Brien
- No SEO, just people, Improve the Web
- Is It Paid Ad Position or the Paid Ad Copy That Matters?, Search Marketing Gurus
- Why Does Paid Search Work So Well?, Biznology
Last Week to Save on SES London Tickets!
Learn to engage customers and increase ROI by distributing your online marketing efforts across paid, owned & earned media. Join the leaders of today's digital marketing & advertising industry at SES London. Find out more ››
*Saver Rates expire this Friday, Dec 13.