Search Landscape Changes to Bring Control, Complexity

Changes afoot among the big search players are expected to have a mixed effect on search engine marketers. New offerings from Yahoo and MSN may give advertisers more control, but industry-watchers predict pricing will continue to rise and campaign management will grow more complex.

This week, marketers got a sneak peek of the upcoming MSN adCenter search marketing product, and continued to be faced with persistent rumors of Yahoo’s plans for a contextual ad network of smaller publishers.

Neither move is expected to affect keyword prices over the long term, although there will undoubtedly be some fluctuation when MSN or Yahoo’s new services first launch.

“It’s going to be easily absorbed by the marketplace. Paid search, local, contextual — marketers are testing all of these buying opportunities,” said Chris Churchill, CEO of Fathom Online. “It shouldn’t affect keyword prices at all.”

Industry-watchers base their pricing predictions on the fact that new products from the big players or new entrants into the space have resulted in a regular influx of new inventory. Still, keyword prices continue to rise.

“Keyword prices are based on value to the advertiser, so I expect overall keyword prices to remain steady with modest growth,” added Kevin Lee, executive chairman of Did-It.com.

A bigger issue for marketers will be the added complexity a third major pay-per-click ad network like MSN will bring to deploying, managing and reporting on campaigns. Many of the new targeting tools that MSN has promised will need to be managed as well.

“It’s going to make life more complicated for search marketers,” said Danny Sullivan, editor of Search Engine Watch. “It’s going to make it even more essential for large advertisers to use a tool vendor, because management across three programs is going to be too much.”

But the complexity will also be a boon to technology providers and larger SEM firms that have the tools to handle it, said Fredrick Marckini, CEO of iProspect. He notes that an additional layer of complexity will come with MSN’s plans to give advertisers more control through business intelligence, letting advertisers target ads by location, gender, or age group.

“The big winners are SEM firms with bidding agents. More complexity means more need for machine intervention,” Marckini said. “The greatest thing that could happen to SEM now would be for AOL to come out with its own marketplace.”

The increased competition is also expected to spur the dominant Google to be more responsive to advertisers’ requests for control and transparency.

“A lot of people have been wanting Google to give publishers and advertisers more options, and Google has been relatively slow to make certain changes. The fact that there may be a competing program might make them feel like they have to come along on some of these things,” Sullivan said.

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