Will a New Tier of Search Advertising Providers Emerge?

As we progress through 2011, we’re bound to see some significant changes in the search advertising marketplace materialize. To be sure, we will begin to feel the tangible effects of last year’s mix of mergers, fallouts, acquisitions, and technology achievements.

Certainly one of the most momentous of all the new developments in the space was the widely covered integration of Yahoo and Microsoft. Now that Yahoo and Bing have combined, many search marketers are managing campaigns on just two providers, as opposed to three.

One potential outcome of this consolidation could be that marketers have more time to explore new partnerships in the broader search advertising market, namely with ad networks.

If this is the case, the task-at-hand for many search marketers will be to determine which additional search partners will allow them to effectively expand their PPC reach, while maintaining or beating their current ROI objectives. This is a daunting undertaking, especially considering the multitude of options available and the deficiencies inherent in the current tiered approach to organizing search providers.

How the Search Advertising Market is Structured Today

Without question, Google and Yahoo/Bing account for the vast majority of U.S. search market share and ad spend — they are referred to in our industry as “Tier 1” search providers. For most search marketers, these two Tier 1 providers are the first place they start when running search campaigns, and rightfully so — the most recent Nielsen statistics show that 92 percent of searches occur on these three search engines.

However, savvy search marketers have long been capitalizing on the remaining 8 percent of the market by complementing their campaigns on the large engines with additional buys on ad networks. Ad networks, those players who monetize traffic that doesn’t originate on the major search engines, are traditionally referred to as “Tier 2” providers.

A tiered approach to categorize search providers is all well and good, but when Google and Bing are Tier 1 and everyone else (i.e., all ad networks) are in Tier 2, things can get confusing.

Not all ad networks are created equal, and it’s important that we create some distinction among the various companies that occupy that realm.

As more search marketers enter the Tier 2 space this year, we’ll see a new category of search providers emerge — let’s call it Tier 1.5. These Tier 1.5 providers will differentiate themselves from the rest of the ad networks in a variety of ways, and become the trusted partners for those marketers looking to expand their reach beyond the Tier 1 engines.

The following will be crucial in determining who rises from the “great unwashed masses” of Tier 2 providers to secure a spot on the coveted Tier 1.5 list.

Platform Sophistication

Search ad networks need to take steps to ensure they are delivering advertisers the same Tier 1 experience of Google and Bing. Certainly it’s helpful to provide a similar interface so that advertisers don’t need to learn a new system, but the features and functionality must also be there.

Networks need to have advanced technology in place in order to offer the targeting, tracking, and reporting capabilities to meet search marketers’ varied needs and specific metric goals. Conversion tracking, geo-targeting, ad scheduling, ad rotation and site-level targeting are but a few of the things sophisticated search marketers expect from search providers.


Running search campaigns takes time and is highly labor-intensive. Even with some time freed up from the Search Alliance, search marketers are still taxed and want to know that running campaigns with a new provider will be worth their time.

Ad networks that are able to effectively aggregate thousands of individual traffic sources together — and offer access to a significant number of queries per day — serve as a one-stop-shop to reach a significant additional audience beyond the large search engines.

New Product Development

The promise of Tier 1.5 also lies in new product development. Some of the latest innovations the networks need to not only explore, but implement include:

  • Search retargeting.
  • Real-time bidding with set bid parameters based on different conditions.
  • Adjusted CPC based on real-time feedback from the marketplace.

Technology must evolve to the point that it can understand queries at the time the search is occurring. Some networks possess this ability already, meaning the others will need to play catch up.

Traffic Quality

A final criterion, and arguably the most important, for determining which networks will occupy the Tier 1.5 space is traffic quality.

Having safeguards in place to combat click fraud and working with third parties to ensure click validity are imperative for any ad network. While many ad networks pay lip service to quality, only the ones that have upheld a commitment to maintaining quality network will thrive as Tier 1.5 providers.

Ultimately, the consolidation of the big three premium search advertising companies provides a chance for other search providers to illustrate their value to advertisers with the time and inclination to expand their search advertising reach.

Whether those companies will rise to Tier 1.5 classification, or remain in the cluttered and chaotic Tier 2 space, will depend on innovative technology, the maintenance and growth of a quality network, and the right mix of engaged customers and trustworthy partners.

We’re heading into a three-tiered PPC search market, and it’s the Tier 1.5 providers who will have the biggest opportunity to succeed.

Join us for SES London 2011, the Leading Search & Social Marketing Event, taking place February 21-25! The conference offers sessions on topics including search engine optimization (SEO), keyword analysis, link building, local, mobile, video, analytics, social media, and more. Register now.

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