The hostile bid for Yahoo by Microsoft proves one thing: search is prehistoric. There's been no shortage of dinosaur allusions in the press since my column two weeks ago. So let's do a dinosaur dig to discover the problems Google, Microsoft, and Yahoo face in this Cretaceous era of search.
I'm sure some of you shared in my disappointment with the Yahoo Panama release. It was more of a catch-up rather than a leap forward.
Why? Yahoo asked the wrong question: "What do advertisers want in terms of client interface, auction model, and invoices?"
The correct question: "What do searchers want?" If you have the searchers, the advertisers will come. The question now that should be asked by Microsoft, Yahoo, and Ask: "Where is Google vulnerable?"
As evidenced by the meteoric rise in Google's stock price, despite their recent dip, there aren't many weak spots. However, nobody's perfect.
Users and advertisers are collectively craving more real-time relevancy from Google. Due to the complexity of crawling the Web, that's inherently difficult to achieve in organic results. Why, though, has it taken so long to correct this problem on sponsored search sections?
Why can't an advertiser easily alert users of a winter sale? The search engines are racing furiously to fill this shortfall. The first search engine that does so will have a distinct advantage with users and advertisers. Let's look at an example.
The Paid Search Relevancy Dilemma
An online travel agency sells hotels, airfare, car rentals, cruises, etc. Since their business is centered on fulfilling demand, they're spending millions annually on search.
It's tough enough for consumers to differentiate the brands of Priceline (William Shatner), Travelocity (Roaming Gnome), and Expedia (Suitcase) in the marketplace. It's even tougher within the search engines. A good example: perform a search for "Chicago Hotels."
What jumps out in the above image? Absolutely nothing. The paid results are almost identical: best hotels, lowest rate guaranteed, etc.
Wouldn't it be better for the user and the advertiser if the results were more specific? For example, here's a better ad:
Boutique 5-Star Hotel
$89: Normally $299
Next to Wrigley Building
The results are infinitely more relevant for the user. In turn it would produce a greater return for the advertiser. So it's a win-win.
How much greater is the ROI (define)? We tested this exact scenario within a top 10 travel company that spends between $14 million and $15 million annually in search. When specific travel deals were dynamically inserted, the CTR (define) was five times greater than the campaign average. And, conversions were a whopping 413 percent higher.
If the returns are so great, why isn't everyone doing this? That's where it gets complex.
Tedious, Manual AdWords Feeds
Despite what Google will tell you, there isn't a simple way to set up a feed from your database that updates product pricing, specials, sales, etc. Even if you did, you'd run into the problem of automatically generating AdWord copy that makes sense. Imagine the opportunity for a search engine that could solve this issue for Target, Foot Locker, Expedia, Home Depot, etc.
Must Be New Keywords
Even if you decide to hire a bunch of cheap labor to upload your sales, travel deals, etc. into the search engines weekly, you'll run into an issue.
Example: Orbitz has a travel deal that is only good for the next week -- 50 percent off a hotel in Paris. Let's say Orbitz is buying over 100,000 keywords in their campaign. The odds of them not already buying a relevant travel keyword (e.g., Paris Hotel, Cheap Hotel in Paris) are slim.
Their campaign keywords are relevant and have built up a history over time. Due to Google quality score (define), you can't quickly infuse new copy into Google's AdWords program. Your incumbent/generic copy that's been running the past several months will almost always win in the short term. Your new copy will have a tough time even being served in the coming week.
Not giving up, Orbitz decides they'll pause all the other copy iterations for "Paris Hotel" and serve the new sale copy announcing 50 percent off. The problem here: no beneficial quality score. Orbitz would be paying more per click and would lose all the efficiencies gained.
Integration With Third Party Optimization Tools
We haven't even mentioned the complexity of an optimization/bidding tool (most likely via a third party search agency) that Orbitz is probably employing. Many of the most popular tools in the marketplace today can't react effectively when given a short window of opportunity (less than a week) when making adjustments to existing terms within a current campaign.
Everybody loses: the user (results don't show sale), search engines (lost potential click revenue), agency (disgruntled client and lost commission), and advertiser (lost leads/sales revenue).
All of these needs seem relatively basic, at least conceptually. Will someone seize the opportunity to fill this obvious void?
Just think, we haven't even mentioned branded images and video within the search results. So, as you can see, we'll soon be looking back at search shaking our heads asking, "How did we ever survive?"
Coming soon: we'll discuss how social networks will help hyper-accelerate the next evolution of search.
Click here to tell me whether you think search is prehistoric.