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SES Hints of Coming Convergence, Increased Complexity

  |  December 30, 2005   |  Comments

There's a coming convergence of SEM and mainstream advertising. Here's why.

At the 2005 Chicago Search Engine Strategies (SES) this December, there was a comprehensive mix of tried-and-true sessions and very new sessions, some of which hinted at a coming convergence between SEM (define) and mainstream advertising. I was struck by the increasing emphasis on contextual and behavioral advertising, sold on both a PPC (define) and CPM (define) basis. Much, if not most, of this new "contextual search" inventory is sold by Google, with Yahoo continuing to expand its offerings. MSN is still in beta with its search product, but every indication suggests AdCenter will be just that: an advertising center, not just a search campaign management system.

Google's site-targeting and graphical ad options open the door to additional convergence, fueled by search engines. However, the search ad-targeting systems are morphing into auction-based ad inventory centers where payment may no longer be in CPCs (define). This trend toward ad marketplaces is sure to continue. Most offline media is sold on a CPM basis and targeted though some combination of demographic, psychographic, and behavioral modeling, with overlays for reach, frequency, and, in some cases, custom metrics.

What, then, separates SEM from contextual and behavioral marketing? Clearly, the modes of traditional marketing are invading the SEM area. Or perhaps the search marketing industry will merge into the greater on- and offline ad industry. If that occurs, chances are it will be the search portals taking what they've learned about online ad auctions and applying that to media that's not targeted only by keyword or context. Online media are constantly evolving. As portals and search engines evolve, so will search, with the addition of mobile search, video search, local search, and the continued explosion of vertical search engines.

Most people think of vertical search engines as the shopping portals. Shopping search engines were among the first to propose people search differently for products than they do for information. They were right, and there's been a recent wave of acquisitions in the shopping search area showing just how right they were. However, the sites that started as product shopping portals recently expanded their offerings to include intangibles such as travel and mortgages. In addition, within many categories, specific vertical portals have emerged. Just within the travel industry there are several players, including Kayak.com, SideStep, Yahoo's Farechase, Cheapflights, Mobissimo Travel, QIXO, AOL's Pinpoint Travel, BookingBuddy.com, and Travelzoo's SuperSearch.

The major search engines are either building tabs to represent the vertical search options or acquiring separate vertical portals and offering them as separate brands. LookSmart has moved most of its business to building vertical sites. What else could we call Ask Jeeves' sister IAC companies but vertical specialty sites, some of which sell things and others that are in the content business already? Smells like convergence to me.

Ironically, SES Chicago was sparsely attended by traditional interactive agencies. The show was dominated by search marketers, some of whom (admittedly) have recently become business units of agencies or agency holding companies. Large traditional agencies may miss the boat as more media show up in the search engines. Engine expansion into additional media territory is scary to an agency media planner who has never had to buy auction-based media before. It's also scary for advertisers. Yet convergence is inevitable, primarily because of:

  • Money. Publishers are greedy, and they should be. If search engines offer the highest yield, the engines will get the eyeballs.

  • Eyeballs. Marketers are running out of eyeballs that actually pay attention to advertising. TV commercials are largely ignored or skipped with PVRs (define). The eyeballs have moved online; if they haven't, they're consuming media where ads themselves are already digitally produced and delivered.

  • Targeting. Better targeting means more money for publishers and more consumers who pay attention to ads.

  • Math. The processing power to manage real-time auctions required a supercomputer 15 years ago. Now, when properly programmed, a rack of inexpensive servers does the job.

  • Data. Advertisers and marketers possess data they could only guess at before. Some of it originates within their organization, thanks to CRM. Other data come from third parties, and much of it is available from advertising campaigns.

These are exciting times. 2006 promises continued innovation by the search engines, the SEM community, and marketers looking to tap the power of a converging, highly targeted stream of eyeballs that are auctioned off to the highest bidder.

Want more search information? ClickZ SEM Archives contain all our search columns, organized by topic.


Kevin Lee

Kevin Lee, Didit cofounder and executive chairman, has been an acknowledged search engine marketing expert since 1995. His years of SEM expertise provide the foundation for Didit's proprietary Maestro search campaign technology. The company's unparalleled results, custom strategies, and client growth have earned it recognition not only among marketers but also as part of the 2007 Inc 500 (No. 137) as well as three-time Deloitte's Fast 500 placement. Kevin's latest book, "Search Engine Advertising" has been widely praised.

Industry leadership includes being a founding board member of SEMPO and its first elected chairman. "The Wall St. Journal," "BusinessWeek," "The New York Times," Bloomberg, CNET, "USA Today," "San Jose Mercury News," and other press quote Kevin regularly. Kevin lectures at leading industry conferences, plus New York, Columbia, Fordham, and Pace universities. Kevin earned his MBA from the Yale School of Management in 1992 and lives in Manhattan with his wife, a New York psychologist and children.

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