Search in the Spotlight

A couple years ago, my colleague Danny Sullivan‘s Search Engine Strategies conference was a highly respected event in the search industry. Webmasters flocked there to learn how to chart a northward course on results pages by fine-tuning their meta tags and HTML.

May I confess it wasn’t the most mesmerizing event on my calendar?

Well, that’s changed. This week, well over a thousand marketers strained the limits of the San Jose venue. Most remained for the entirety of the four-day, three-track event. They saw parties every night, networking galore, VCs, investment bankers, ad agencies, the founding of a trade association, and a giant exposition floor. They heard solemn pronouncements from pundits such as Piper Jaffray analyst Safa Rashtchy, who said his company’s recent estimate that search will be a $7 billion industry by 2007 is likely “too conservative.”

Google cofounder Sergey Brin signed autographs.

Search, Danny pointed out, is “reverse broadcast advertising…. People are telling you, as an advertiser, what they want. Their question is, ‘Where do I buy it from?'”

That’s what marketers are asking, too, as the array of paid search products and options grows in breadth and complexity. Following are some of the issues and opportunities search marketers are grappling with.

Balancing Paid and Organic

“If your strategy has been to get things for free, you’re not planning for the future. It’s time to start building a strategy and a budget,” Danny reminded those still optimizing for rankings while ignoring paid models.

iProspect’s Frederick Marckini carried the opposite message to marketers who believe they can spend their way to search success. “They’ll find you, or they’ll find your competitor,” he said, reminding advertisers that once budget caps are hit on Google or Overture, causing a paid listing or result to disappear, organic results are the only way that advertiser can continue to appear in listings.

Complexity and Service

Hypergrowth means even search professionals are becoming flummoxed. “Just entering all the keywords we manage into two separate systems for Google and Overture is incredibly time consuming,” complained one search service provider. Carat Interactive’s Barry Peters called the 30,000 keywords his agency handles for a major retailer a “management nightmare.”

Few tools exist to track and optimize campaigns across search platforms (GO TOAST and Overture-owned Keylime are exceptions), and many smaller, self-service marketers want search management tools that integrate with other metrics software.

Providers recognize this, but will the fixes come fast enough? The search giants are working on the problem, as are second-tier companies such as Business.com and ValueClick’s Search123. The technology hasn’t kept pace with demand, and competitive issues abound.

How comfortable is Google with the fact competitor Overture has a product that can measure campaigns on its platform? David Fischer, U.S. manager of AdWords sales and operations, told me it’s a balance. Google recognizes advertisers’ need for “a level playing field.” Be certain the company is working hard to refine its own tools to better track return on investment (ROI), conversion, and other critical metrics.

Customer service is another area of frustration in search. By definition, self-service is critical to keeping search low cost and keeping the playing field level for even small advertisers. But across the board, advertisers and search engine marketing (SEM) companies grumbled about unresponsiveness from search companies. “If they’d get back to us faster, we’d spend more money. It can take four days for Overture to get back to us,” noted Marckini.

Business.com’s Jake Weinbaum recognizes the problem and points out buys on his network are not as much work as they are on large search engines. Still, he admits, “our best clients are the most sophisticated.”

Dana Todd, a cofounder of SiteLab, is blunt on the issue. “Search is in danger of being destroyed by the networks that created it. If search engines want more money, they’ll have to make it easier.”

Contextual Ads: A Different Animal?

In a presentation that caused executives from Google, Overture, and Sprinks.com to look rather uncomfortable on the dais, NewGate Internet’s Brad Byrd shared results of two case studies comparing the results of two separate campaigns on Google, both of which used the same terms on both the AdWords (search) and AdSense (contextual ad) programs.

In both cases, the contextual ads woefully underperformed. Average CPC was 30 to 40 percent higher for the AdSense campaigns, with cost per order (CPO) ranging from two to eight times higher (one advertiser was a major pharmaceutical company, the other an online gifts and gourmet retailer). Most stunning was the disparity in CTR. The search ads for the pharmaceutical company garnered 4.2 percent versus 0.04 percent for contextual ads. The retailer saw a CTR of 1.4 percent for search versus 0.1 percent for contextual ads.

Byrd rightly pointed out two data points do not a final conclusion make, and search mode significantly differs from surf behavior. His conclusion, that contextual ads and search should be separately sold, tracked, and managed, appears at first glance to be quite convincing.

“We’d spend significantly more if we could treat these differently,” agreed Reprise Media’s Josh Stylman.

Susan Wojcicki, Google AdSense director of product management, said Google’s much more extensive research shows though CTRs for contextual ads are lower (for obvious reasons), conversion rates for both ad formats tend be on par with one another once the clicks actually happen. AdSense launched this spring, and Wojcicki has made numerous changes since then, introducing two new ad formats just this week.

Would she separate the bidding process for the two products? “It’s worth exploring how to provide more tracking information to advertisers,” she replied, “People want to know they’re getting good ROI.” She admits the need for better tools, saying, “Conversion is an important metric for advertisers.”

New Tools, New Products

As they race to refine the technology to manage and track campaigns, there’s another race for newer and even more complex search products. As Danny put it, “Specialty search is coming.”

Get ready for search by daypart, for geotargeting and yellow pages listings. Expect new evolutions in paid listings as advertisers demand customization of color and fonts and the addition of graphics to their ads. The vertical searches offered by networks such as Business.com are being enthusiastically adopted by Google, Yahoo, and a host of others. Searching “travel,” “finance,” or “shopping” can provide more relevance — and added layers of complexity for marketers.

So, readers, what do you need to know about search? ClickZ plans to expand our coverage of this very hot topic. Help us to help you. Weigh in. Tell us what you need to know.

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