Before we dive with enthusiasm into 2008, let’s quickly review 2007’s notable changes in the PPC (define) search landscape, as well as how some of those changes will impact 2008 and beyond. There were some telling changes over the last year, some of which are still going on. Since the more recent developments will have a more immediate (if not the greatest) impact on next year, let’s work our way backwards.
A common 2007 theme was the crossing of boundaries once considered sacrosanct. These crossings include the near-elimination of true third-party ad serving and a blurring of lines between publisher, network, technology provider, and agency.
“GoogleClick” Deal Gets FTC Approval
The last big news of 2007 was a bit anticlimactic: Google got the nod from the U.S. FTC on its DoubleClick acquisition. (The EU is still reviewing the deal but is expected to approve it with very few restrictions.) Depending on where you are in the online media ecosystem, the fact that this deal is going forward may be completely unimportant or highly material.
For publishers offering primarily display content, the deal is a double-edged sword. Publishers prefer direct relationships with advertisers and don’t want to cannibalize their own high CPM (define) sales. However, PPC search has proven that bids on high-value inventory may increase significantly when buyers understand the value of the inventory on which they’re bidding and where auction results are replicable.
When Google and DoubleClick complete and integrate their Advertising Exchange and the AdWords/AdSense interface, the exchange will have instant access to over 500,000 Google advertisers. While Google’s current advertisers are overwhelmingly text-link-only, the time will come when many will have graphical, rich media, and video advertising assets available. When that time comes, the combination of Google’s advertiser base and the potential reach of an ad network with tentacles into the full Dart for Publishers customer base could be quite compelling. From what I’ve heard, DoubleClick is positioning its exchange to handle both remnant and non-remnant inventory. If successful, this means publishers may give the exchange some mid-tier inventory, not just leftovers the in-house ad team or dedicated rep firm couldn’t sell at premium prices. This makes the sales teams at some sites a bit nervous, because if the targeting systems and technology available as part of the DoubleClick exchange combine with an auction format and a large advertiser base (resulting in high effective CPMs), the publisher may allocate ever-increasing percentages of inventory to the exchange.
Those are big ifs, and 2008 will be a very telling year for GoogleClick.
Will Google keep Performics, DoubleClick’s performance (search, affiliate, and consulting) business? As with the Microsoft/AvenueA deal, potential for conflict of interest perception is high — and perception may matter as much as reality. Advertising clients may perceive that media dollars are more likely to flow to the parent company rather than entities that may offer more value to the client. Doubt can exist even if there’s been no breach of fiduciary duty of the agency to spend its clients’ money as effectively as possible given the information at hand. Is that good for Performics or Google?
AOL Acquires Quigo
Quigo’s AdSonar isn’t really a pure keyword-targeted product, but Quigo has at least a foot in the search business, so it’s interesting to see AOL add Quigo to the stable that recently added Tacoda, too. Lines between targeting methods are becoming increasingly blurry.
Changes to Google’s PPC Algorithm and Quality Score
Last year, Google had to move beyond the low-hanging fruit and “middle of the tree” for incremental monetization gains (the money it makes from a set number of search queries). Google launched increasingly complex versions of its Quality Score and AdRank system, including the latest incarnation that includes an option for Google to arbitrarily set up two pricing tiers. Consequently, top listings (above organic results in the SERP) would have both a Quality Score minimum and a CPC (define) minimum, potentially forcing advertisers to dig deeper into their budgets to afford the coveted high-visibility, high-volume placements. While there seems to be a desire among marketers for more transparency, it will be difficult to imagine a way Google can provide both increased transparency and a more complex formula calculating AdRank and billed CPC.
Microsoft Completes Acquisitions
Microsoft was reportedly a bidder for DoubleClick right down to the wire. In the end, it purchased aQuantive, a company with its headquarters and development team in the Seattle area. The shared labor pool and the fact Atlas was built on Microsoft’s .NET technology may have provided an additional level of comfort to both parties. AdECN was also a technology-related acquisition.
WPP Buys 24/7 Real Media
Continuing the theme of blurred lines between agency and network, ad agency holding company WPP purchased 24/7 Real Media, a company with both an SEM (define) division and an ad network, as well as a publisher ad server.
Yahoo Completes Acquisitions
Yahoo continues to extend its reach beyond search with purchases of Right Media and BlueLithium. The major search engines are fighting not only for search dollars but also for display ad budgets. Already display ads can serve advertising targeted on search, making media buys more difficult to describe than simply “search versus display.” Essentially, media buying will increasingly be described based on targeting system, targeting algorithm, and creative execution.
Yahoo’s Panama Launches
Yahoo’s Panama was an anticlimactic launch so far as Wall Street analysts were concerned, but many Yahoo advertisers felt a material impact and continue to be either at an advantage or disadvantage in comparison to pre-Panama days. Given Yahoo’s acquisitions, one can expect future versions of Panama to be more holistic. Yet given Yahoo’s technology development speed record, we may be waiting for some time.
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