As more advertisers enter the search marketplace and the inventory of available searches begins to slow, one can expect a number of effects.
Before you run to sell all your search engine stock, let's put the headline in proper context. Yes, total U.S. "searches" on the PC dropped 6 percent year-over-year to 27.8 billion in December 2012, as reported by comScore in the 15miles/Localeze Local Search Study. However, there was a 26 percent increase in mobile "searchers" reported in the same time period.
It should be noted that the PC referenced number reflects "Searches" while the mobile number references "Searchers." So a direct cause-and-effect analysis is not possible. However, the fact remains that search is in transition, and in numerous discussions with industry practitioners and advertisers, I have noted that many view search as becoming a mature media type.
So what does that mean? As more advertisers enter the search marketplace and the inventory of available searches begins to slow, one can expect a number of effects. First, keyword prices will begin to inflate as more advertisers chase less available inventory. Second, advertisers with better conversation rates will be advantaged over their counterparts.
A little math to illustrate my point:
Advertiser "A" pays $1 per click for a PPC keyword and has a 10 percent conversion to sale, so in effect she enjoys a $10 cost per sale from her PPC efforts.
Advertiser "B" pays the same $1 per click but because this advertiser has a 15 percent conversion rate the resulting cost per sale is $6.66.
So in effect, advertiser "B" can increase his bids and CPC over time and still maintain a positive ROI while Advertiser "A" will tap out her ability to compete.
Now there are a number of techniques for improving conversion rates, and a good start to put you on the path begins with Bryan Eisenberg's monthly column that often explores the topic of conversion optimization.
I am convinced that smart marketers need to continue to diversify their digital advertising portfolios so that they can increase sales lead generation and generate cost-efficient sales activity across numerous sources. A heavy reliance on a single media type can create a risk should the dynamics (price/return) change impact both brand and local advertisers. Last month we discussed the resurgence of Internet Yellow Pages (IYPs), which for a host of categories such as restaurants, jewelry stores, and dentists can provide cost-effective leads. I tend to recommend exhausting "directional" sources first and then moving into retargeting, behavioral, and contextual sources second.
An area where I see a great deal of under-tapped opportunity is local-based display advertising. There exists tens of thousands of locally based community websites with cost-efficient listings and display advertising that can provide an incredible source of leads that rivals search PPC costs. One of the reasons that these resources are often overlooked is the time it takes to research, negotiate, place, and track these small properties. Thomas Edison once said, "Opportunity is missed by most people because it is dressed in overalls and looks like work."
The job of researching local media opportunities is hard work. There are some local aggregated sources that reach local marketplaces like AOL's Patch.com or Citysearch.com, for example. Additionally, there are a number of planning and placement tools that can help with display localization. Examples of these are PaperG and Centro.
The limitation of these resources, however, is that they only "scratch the surface" of the local opportunity. If you are a local merchant, you probably can easily determine the most used local websites by asking your customers and friends what sources they use in your specific area. Once you have created your short list of sites, contact them and inquire about their rates and buying parameters (ad sizes, etc.).
For national brands marketing locally, start with the aggregated resources above and then create a gap analysis of markets where you sell but are not served or underserved by these providers. Local market research services like Borrell Associates can be helpful in identifying local websites for specific market negotiations. When all else fails, talk to your staff in market and seek their input, similar to what I suggest for local advertisers above.
Of course, like everything we recommend, make sure you know your performance metrics required to generate a positive ROI and hold these new media sources to those metrics. Also, because display is an additive element in a comprehensive local media strategy, measure the impact and potential sales lift on your other media sources like search, listings, and directory advertising. Consumers rarely rely on a single source of local purchase information on their engagement path to purchase.
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Gregg Stewart is founder and president of 15miles, a full-service marketing agency and consultancy, specializing in digital solutions, headquartered in Connecticut. 15miles supports businesses and agencies of all sizes. With more than 20 years of experience, Stewart applies his successful tenured career in interactive advertising and local search to the ongoing development of digital and mobile solutions for his clients' online-marketing campaigns. Through his strategic counsel, national and local brands become better equipped to target and reach niche consumers for increased leads and sales. In addition to his ClickZ columns, additional columns can be found in the Search Engine Watch archive. In 2013, Stewart was recognized with the ClickZ Hall of Fame award.
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