The Future of Search Engine Marketing

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

What does 2003 and beyond hold in the constantly changing world of search engine marketing? A panel of industry experts looked into their crystal balls to provide some guidance.

Frederick Marckini, CEO of iProspect, said that the paradox of Web search and search engine marketing (SEM) is that properly optimized sites contain customer-specific language. "Who is talking about the language of the customer?" asked Marckini. "Only search engine marketing firms."

Both "natural" search engine optimization and pay-per-click (PPC) advertising bring traffic. SEM firms optimize for both types of online promotion, yet all of this traffic results in conversion to buyer rates of only 2-3 percent.

Therefore, SEM firms must not only research how people are searching, but where they are searching for specific things. "When the context of the brand demonstrates the intent of the query and then the corpus of documents is restricted by topic," Marckini said, "that search will yield an improved result."

Marckini emphasized that the focus of search engine marketing should not only be on keywords, but on conversions. "When you increase your web site's conversion rate, you improve the results obtained from all marketing sources including search, banner ads, and direct email," he said.

Another major trend Marckini sees is the verticalization of search, which was led by the consolidation of search space. "For instance, Google does a spectacular job at search relevancy," he said. "The problem is a mass-market search interface includes the entire web, and the audience cannot be defined."

"The industry has lost sight of the end goal," he said. "The future of SEM is marketing, and successful marketing requires knowing your audience and their behavioral patterns so that you can entice them to respond to the call for action."

Cheryle Pingel, Founder and President of Range Online Media, stated that more and more clients are through with playing games and want to deal up front with the search engines in their marketing plans. Search engine marketing goes hand in hand with working with ad agencies and with the television and radio dollars.

"Do not be afraid to go in and ask for those television dollars," advised Pingel.

To change the old marketing mentality of agencies, she said, it is important to show the return on investment (ROI) of search. Pingel used Travelocity.com as an example.

"In working with Travelocity in the beginning, we worked with only $2 to show them what we could do with search," said Pingel. "We're now pulling 20 percent of their traditional budget and putting that back online."

Pingel believes that the search engine marketing budget will come close to or even exceed that of television with Travelocity and many other accounts. "More and more people are spending less time in front of a television and more time online," she said.

Kevin Lee, CEO of DidIt.com, stated that contextual search is the future of search, and contextual search will have an impact on search engine marketers. "The search for increased inventory among the search vendors and distribution partners like Google and Overture means we are going to see an increases in types of inventory being offered," he said.

Lee offered his 10 predictions on the future of SEM:

  • Increases in contextually targeted inventory, hopefully with good levels of control by the marketer.
  • More image enhanced search listings (logos and other images).
  • Increases in geotargeting.
  • Marketers will be more and more focused on dynamic campaign management based on conversion and true traffic value (not so much position based strategies).
  • XML paid inclusion getting more advanced allowing for fields that communicate category, geography, or other variables that searchers may want to segment by.
  • The internet yellow pages market will finally awaken.
  • Branders will enter the search market after doing studies on post click branding impact.
  • Marketers will begin to apply lifetime value and busying cycle analysis to SEM campaigns.
  • Personal search profiles will start to appear in portals to allow the portals to predict the kind of results the person wants (commercial, organic, themes, geographies).
  • Vertical portals will emerge, or search channels will appear on portals.
  • Commercial search will take interesting turns (eBay is a huge search engine for stuff, so is Amazon, and so are the shopping bots, Froogle, DealTime, etc.)

Paid Inclusion and Pay-Per-Click Programs

"The paid inclusion industry really started with Inktomi," said Dennis Buchheim, Director of Inktomi Search Marketing Solutions. "It has proven to be an excellent business for us and has provided a lot of great opportunities to marketers and has been a price-leader."

Buchheim believes that the core value of search engine marketing really has a lot to do with content in both Inktomi's flat fee URL Submit and Pay-Per-Click (PPC) trusted feed programs.

"There's real power for a marketer to have that direct power with their media source to the search engine," he said. "It's that fine line between the editorial aspect of search and the marketing aspect of search that we want to straddle very carefully. We want to make sure that we're serving marketers, but ultimately make sure that we're serving end users."

Buchheim also believes there will be closer connections between marketers/agencies and content providers. Traditional ad agencies are starting to wake up and see that search engine marketing is a very significant medium that they can no longer be ignored. Ad dollars are being pulled away from television budgets and other sources and moved to search.

"We want to be able to support the agencies in a way they want to work with our reseller partners and their content providers," stated Buchheim. "There are a lot of interesting connections we're seeing forming as this industry matures."

Buchheim predicts that we will see tools every day: more search engine automation, both on the bid management and paid inclusion, more tools for submission, tracking, conversion/ROI tracking. "There is a lifetime relationship being formed with the customer, and everybody needs to remember that with the ROI process," he said. "The tools are getting better and better, and becoming more significant."

Chris Bolte, Strategic Alliances and Sales at Overture, said that the big trends he sees revolve around how many customers he sees coming online. "Overture has doubled from 40,000 customers a year ago to 80,000 today," he said, "and that's just a segment of the total market. We expect that trend to continue big-time going into 2003 and beyond."

Big-name brands are jumping online in a big way. As these clients get online and start testing search to see the true marketing value, especially compared to their other (traditional) online marketing vehicles, expect to see much more of the share go to search engine marketing, he said.

Also, new products are going the evolve that help connect merchants with searchers. "Paid inclusion is a big one, as well as contextual and local tools," he said. "We feel tracking tools online will dominate as a big advantage over traditional (offline) campaigns. The campaign management tools will help traditional ad agencies make smarter marketing decisions."

David Fischer, U.S. Manager for AdWords Sales & Operations at Google, said that Google has come a long way from 1996. "We are projecting 5-8 years from now that this market will really expand - increased number of tools, increased levels of sophistication, and so forth. There is a much bigger world out there that we can educate and open up to all this space and have them be a large part of this growth."

Google's plan for 2003 is content-targeted (contextual-based) advertising. "Take the targeted keyword research model and broaden the reach of it to other sites," he said. "For instance, if you are looking at a site that might have information about a topic such as mutual fund performance, you will see ad for mutual fund companies."

Fischer believes that Google has only scratched the surface so far. "We have had $5-6 billion in total online advertising spending this year," he said. "Direct marketing still spends 8 times that amount. We must continually communicate the effectiveness and advantages our [search” industry to direct marketers and ad agencies."

Shari Thurow is the Marketing Director at Grantastic Designs, Inc. and the author of the book Search Engine Visibility. She has been designing and promoting web sites since 1995 for businesses in a wide range of fields.