Mention the word "algorithm" (define) and media buyers and online marketers flee for cover. Algorithms don't scare search marketers or SEOs (define). The list of SEM (define) firms and technologies that offer proprietary technology with sophisticated algorithms is growing.
Analyst firms such as Forrester Research and Jupiter Research will need to give greater weight to proprietary technology when they release their evaluations of search marketing technologies and vendors, the Forrester Wave and the Jupiter Research Constellation, respectively. Efficient Frontier, Matchcraft, SearchIgnite, SEMDirector, 360i, iProspect, and The Rimm-Kauffman Group are just a few of the leading search marketing firms or interactive agencies that have staked their business on quant jocks and technology to support their search engine strategies.
Winners in 2008: PPC (define) management platforms, in-house search departments, and search marketers working with a core group of technologists, media buyers, and analysts who have faith in mathematics and algorithms. This year, they'll prosper.
Paid search remains the single most complex interactive advertising channel. Media exchanges, still desperately searching for inventory, will be a close second in 2008.
Are algorithms online marketing's salvation? No. There's no magic bullet or "set it and forget it" technology.
Efficient Frontier recently published a whitepaper that explains the complexities of portfolio management in the age of terror. "The Algorithmic Solution for Search Marketing Optimization" notes that algorithms were born in the cradle of civilization.
Other firms and online marketing competitors might find their own euphemisms for algorithms. The very word scares copywriters and -- dare I say it? -- even editors.
So it takes guts to publish sales and marketing material like Efficient Frontier's.
Search marketing firms with proprietary technology are viewed as arms merchants in the online marketing world. Their algorithms strike fear into the hearts of media buyers who want to believe -- as did newspaper editors before them -- they're not at war with search engines.
Media buyers keep their eyes wide shut, hoping and praying interactive marketing will make algorithms go away. They hope their DARTs can be sharpened without Google knowing; that Atlas won't fall to its proverbial knees under the burden of Microsoft AdCenter.
I asked James Beriker, the recently appointed president of Efficient Frontier, whether companies might be letting the fox guard the henhouse when companies use Google Analytics or manage in-house with Google AdWords optimization. He said that's often a sales tactic he's heard in the field, but one he doesn't subscribe to. Each prospect or client will base outsourcing decisions on the ability of a search marketing firm to manage across multiple engines and channels.
So he doesn't worry about Google trying to beat itself at its own game by optimizing with Performics or DART for search; or that Microsoft would dominate the market by being able to "aQuantify" their success.
The search marketing game is global now, and U.S.-based search engines aren't dominant in every European and Asian country. Europe dominates growth in search marketing spend, with search spending exceeding 80 percent growth in the next five years. In 2012, Forrester Research expects search marketing spend in Europe to surpass €8.1 billion, up from today's spend of €4.5 billion. Europe, though, as Beriker noted, is far more complicated than the U.S. with the need for foreign language translation and localization.
Search marketing firms have expanded their offices and formed alliances. 24/7 Real Media has long had a global search strategy. Efficient Frontier has offices in Europe and Chenai, India, with a total of 165 employees worldwide.
Search engines face huge competitive pressures, too. Ironically, first tier search marketing firms are growing, while second tier search engines, like Infospace, must cut their portfolio to core business opportunities.
Infospace has pared down to 175 employees and hired the former CMO of aQuantive as its own CMO. This may be the first time since Google launched that a search marketing firm has surpassed a search engine in growth and size.
Search engines are reinventing themselves. Ask.com just promoted Jim Safka, who cut his teeth on SEM at AT&T Wireless, one of the earliest big spenders in paid search. He then moved on to Match.com, where he took their search marketing campaigns to the next level, competing successfully against emerging social networks.
Paid search remains the most complex interactive ad channel. That's why retargeting has become the coin of the SEM realm.
Yahoo's Right Media and independent competitors like ContextWeb will expand opportunities for search marketing. Right Media hired Bill Wise, former CEO of Didit search marketing, to steer them into the future. Now, with the purchase of Right Media by Yahoo, he's Yahoo's global leader for the media exchange.
Display ads, too, will be purchased through search platforms. Acquisitions by Google and Microsoft have made marketing's future search clear. Combined with universal or blended search, searchers will beome accustomed to seeing display ads of all sizes in the margins of SERPs (define).
Social media ad buys are search buys, too. People are searching on Facebook -- once their interests are matched up with their community, the same algorithms that apply in search will enable online campaigns to deliver higher ROI (define).
Guess what? SEMs, SEOs, and SMOs will pull them into the 21st century. For the first time, large enterprises and search algorithms are pushing traditional ad agencies and some interactive agencies in the right direction.