Search engines have become one of the fastest growing venues in the advertising market, bringing clients from the old world of traditional advertising to the new world of paid listings. Yet while ad revenue increases for the search engines, so do the concerns for some long-time search advertisers who have invested a huge stake in the industry.
A special report from the Search Engine Strategies 2003 Conference, August 18-21, San Jose, CA.
Some of search advertising's more prominent spokespersons gathered to share their profession's grievances at the Search Engine Strategies conference in San Jose this past August, speaking on the panel, "Search Economics - Advertiser Roundtable" along with addressing the shared concerns of search advertising specialists worldwide.
But before we dive headfirst into the fracas, first a quick introduction on search advertising for the uninitiated.
Search engine advertising refers to the various ways for advertisers to pay money in exchange for placement and/or positioning on search results pages. Often time it serves as a major component (or for many companies, the sole component), of a client's search engine marketing campaign and even their entire online marketing campaign.
Types of Search Engine Advertising
Search advertising generally falls into three categories: paid placement, paid inclusion, and the latest addition to the family contextual ads.
With paid placement, advertisers are guaranteed a high placement or top position in search results, usually in relation to specific keywords or a broad range of words. Positioning for paid listings on the page can vary, but they will usually run in three areas: (1) at the top of the page's search results, (2) on the side (usually the right-hand side) of the page, or (3) at the bottom of the page. Sometimes they are clearly marked as "sponsored listings" and segregated from editorial results, and other times they may be hard for the average user to distinguish. While pay-per-click (PPC) is the most common form of paid placement, fixed fees (usually for a premium amount) for paid placement exist for sponsorships or "featured listings" areas on Web sites.
With paid inclusion, a site owner pays a fee to be included in a search engine's editorial listings. There are two types of paid inclusion. The first is a paid submission program, where you pay a fee to have your site reviewed by a human editor to be considered inclusion into their directory under the category of your choice (or sometimes, their choice.) Yahoo and Business.com are two directories that currently offer a paid submission program.
The other type of paid inclusion involves the submission of individual pages for guaranteed indexing into a participating search engine and their partners. Inktomi, AlltheWeb, Teoma, and AltaVista are the search engines that currently offer paid inclusion programs. Pricing is usually a fixed per-URL fee for smaller page submissions, or an optional cost-per-click (CPC) pricing structure for large page submissions.
Positioning of submitted pages will appear in all participating engines' editorial results. It does NOT guarantee that the pages will appear in top positions. Thus, all pages submitted through paid inclusion programs should be optimized.
Contextual ads are new partner program that brings content-targeted advertising to the Web. Ads are targeted to the content of the page by a participating site, instead of on search results. Although at this time one must participate in a search engines paid keyword listings campaign to also opt-in for contextual advertising. Google's AdSense and Sprinks are examples of contextual ad programs.
Benefits of Search Engine Advertising
All of the panelists agreed that search engine advertising is growing at such an extraordinary rate not just because of guarantees and the popularity of search, but also because advertisers can do a much better job at targeting effectiveness than in traditional advertising mediums.
"Talk about a surgical buy -- search engine advertising is the best possible buy you can get right now. It beats traditional advertising," said Dana Todd, Founding Partner of SiteLab International, Inc.
Kevin Lee, CEO of DidIt.com, came from the traditional advertising realm before there was search advertising. "Even though we founded our company in 1996 when really all there was organic search engine optimization (SEO), we knew paid advertising was going to be a powerful medium. Over the years, we evolved into exclusively into helping agencies and clients to directly manage their paid listings in a variety of different engines."
"One of the ways that you can recognize the power of this medium is how even one of the most widespread product buzzes could still fail to harness the power of search," elaborated Frederick Marckini, CEO and Founder of iProspect.
"Remember when Dean Cayman's Segway scooter (also known as 'IT') was talked about in the press for years and was supposed to change our way of life and the world as we knew it? Yet despite all of the publicity and marketing beforehand, 'IT' could not be found in Google, Yahoo, MSN or any other search engine. They forgot that people search."
"There's no excuse because search engine advertising allows you to be visible almost instantaneously," Marckini continued. "You can buy in the morning and show up in the afternoon. And search engine advertising separates the wheat from the chaff. It allows you to market to people who are seeking you; who are already getting off their butt, taking an action and looking for your product and services. And when a query is launched, there are only two possible outcomes: they will find you, or they will find your competitor."
Moderator Danny Sullivan likened search engine advertising to a "reverse broadcast system." Instead of broadcasting to people on what they should want, search engine advertising works for the audience in telling you what they want, first.
"You are not trying to convince them as in traditional advertising. They are telling you, 'This is exactly what I'm looking for.' Do you have it?' That's why it can be so powerful. It's not about convincing them of what they want or building demand, it's about where can I buy it from?'"
"It's like a secret system for us for years, where very few people know about it and how to do it," continued Sullivan. "Our secret system is now becoming more vindicated as interest by the major brands has gone up. I think there's still a ton of advertisers who will be coming into this with their eyes open because they will realize that they don't have to build the brand."
"They can just sell the product people already want," said Sullivan. "But it will take some time for some of them to make that shift, especially if its something they know nothing about. Agencies tend to be about building brands, so it will be harder for them to understand."
One item search engine advertising professional must deal with is that search engine advertising looks deceptively easy to the layperson, even though the process is quite time consuming. "The dirty little secret of search engine advertising is that it takes a lot of work, a lot of time, and you really have to devote resources to it," explained Marckini. "If you are managing any significant volume of keywords, you really need to have some automation to manage those campaigns."
Despite all of the attention now on search engine advertising, long-time advertisers are uneasy about how the search engines might be pulling the rug out from under them by adding contextual inventory.
"One of the beauties of paid search is that it was always a non-intrusive medium," said Lee. "But as these search networks continue to add more contextual inventory, there is a potential risk that some of this non-intrusive media will become more intrusive. Marketers will be should be more careful on how they measure the success of their paid search with contextual inventory."
"What's been keeping me awake all night is that some of networks are starting to kill the golden goose," said Todd. "What I'm worried about, as an advertiser, is that the secret gem I have for my advertising clients is going to be destroyed by the very networks that have made it available to us."
"The search engines have indicated that in the future their tools will allow you to opt out of some of their contextual network," Todd further explained. "But all the networks say there's no way you'll be able to cherry pick your distribution network. The official stance right now with them is 'no.' You either buy the entire network or opt-out."
Marckini added, "I think contextual advertising could be offered on a varying price model, where you can have the whole network of sites of various quality. Or opt into some sites that are worth more money."
Sullivan asked the panel if they had a "wish list" for the search engines to make their advertising jobs easier. "The networks need to make it easier for advertisers and agencies to participate," said Todd. "If the search engines really want to get giant chunks of cash from advertisers, and the agencies that control those accounts, they are going to have to be much more accommodating than they are now."
Marckini added, "The search engines are unresponsive to the advertiser. They are unresponsive to emails or phone calls, or don't get back fast enough. Over time, Overture gets more expensive. You rarely see the bid process go down. There is also a serious lack of business intelligence. I fear that people are just not measuring their conversions, and that's causing a false economy is some of these keyword markets."
Lee also did not see things getting easier for search engine advertisers, but does not share the belief that it should be easier. "I think it's a case of the search engines trying to balance both user experience and their network ability," he said. "Part of the complexity is driven by the way the marketplace has evolved. More features and options by search industries add to the complexity. That level of complexity is somewhat required because it allows the marketer to target more effectively. It's a double-edged sword."
"You can say you want simplicity, but simplicity would mean that you can only broad match and buy single term keywords," Lee continued. "While it would be really simple, it would not allow marketers to more fully extract the value, nor would it be a good user experience. Complexity benefits marketers the search experience. I think you will see it gets more complex before it gets easier."
Several audience members asked the panel their thoughts on paid inclusion, wondering whether it was deceptive, and where its lies.
"If it makes money, it will continue," said Marckini. "I don't think it's deceptive because there is no promotion of your URL because the URL is in the index. It's simply just a toll booth on the add URL."
Lee also did not think the paid inclusion model is deceptive. "My training as an economist tells me that in the end, all things equalize," he said. "With any deceptive advertising, it will eventually disappear because the marketer will end up not getting compensated for it (with the exception of email spam, since there's no cost associated with it). I think paid inclusion will continue to exist. My prediction is that there may even be a merging of some of the databases."
"We can only take the word of the search engines that they're not giving a boost to pages participating in paid inclusion programs over regular search indexing," Sullivan pointed out. "But it wouldn't even be wrong if it did happen as long as it was disclosed to the consumer. If paid inclusion makes things more relevant as the search engines are saying, then just boost it and make it clear to advertisers rather than being wishy-washy, saying it may rank better or it may not. The consumer may then have a better idea of what they are searching for."
"That comes back to the definition of what is a search engine," said Todd. "Is it held to the same standards that journalism has? There seems to be a lot of people who seem to think so. But the reality is that search engines are a business. They are in the business of search. They are in the business of helping users to find what they believe are the most relevant results. And if their beliefs are influenced by a commercial factor, then that's their business."
Sullivan concluded that the added complexity of search advertising would separate the professional from the amateurs. "The dumb marketers will fall by the wayside. The smart marketers understand the big picture and how to value traffic. In the end, the best marketer will win. That may take years, and that may more evident in certain marketing segments."
"The question is will the bubble burst on this industry -- for both the search engines and advertisers? I don't think so," said Sullivan. "Or, are all of these advertisers going to band together? I don't think that will happen, either."
Grant Crowell is the CEO and Creative Director at Grantastic Designs, Inc., founded in 1993 in Honolulu. He has 15 combined years of experience in the fields of print and online design, newspaper journalism, public relations, and publications.