Why Is Search So Hot?

Last week was online advertising conference week in New York. The city was host to both Search Engine Strategies (SES) and DoubleClick’s Insight conference. It was a big week for the industry. It was a big week for search.

Both shows were very well attended. I’d say they were both standing room only to the point of overflowing but don’t want to draw too many comparisons to the dot-com days of old. Both were platforms for big industry announcements, among them Yahoo’s shift to a paid-inclusion model for search, and DoubleClick’s acquisition of a marketing automation firm and its entry into search campaign management (matching aQuantive’s recent acquisition of GoToast). Moods at both events had just the right level of cautious optimism. Both featured lots of research about the online advertising industry’s resurgence. Both had great parties. Above all, both had an awful lot of people talking incessantly about search.

I don’t think our industry has ever been as single-mindedly focused on a solitary issue as it is on search. Not banners, not email. Not rich media, privacy, or cost per click. Just search.

And why not?

The media has been in a feeding frenzy on the subject while awaiting Google’s much-anticipated IPO. Search is one of the Internet’s most popular consumer applications. Finally, in spite of talk about online advertising’s resurgence, eMarketer research presented last week at SES made clear what many feared: Search advertising was responsible for nearly all growth in the 2003 online advertising market. Although the overall industry grew 20 percent to $7.2 billion in 2003 (up $1.2 billion from the previous year), search advertising grew 123 percent to $2.0 billion, up almost the entire $1.2 billion itself.

Wow. I thought 2003 was a great year for the entire industry, not just for search. What happened? Why did advertisers embrace it so quickly? What does search have the rest of online advertising doesn’t?

Most folks believe search’s meteoric rise as an advertising vehicle is intrinsically tied to relevance between the consumer’s act of searching and the ads tied to the search keywords. I don’t agree. Relevance between consumer search and contextual ads provides better ad targeting than many other online ad formats. But relevance alone isn’t driving ad adoption.

It has more to do with the way search is packaged and sold.

Putting aside search’s inherent problems (from embarrassing contextual listing placement to missing higher-value branding opportunities), buying paid listings on search pages is as close to the Holy Grail of ad products as any I’ve seen. Systems are easy to use. It’s performance based. Pricing is transparent. Most important, tracking return on investment (ROI) is very easy. The rest of the media world could learn a lot from buying ads on Google or Overture.

Advertisers buying paid search listings are confronted with several phenomena not generally found in media products:

• Lead-based business models. Advertisers only pay when someone clicks on their ads. This delivers actual leads, not just impressions. They like that. It’s much closer to directly buying sales. It’s very measurable. It’s easy to track clicks and ROI. It’s much more immediate than branding. I’m a big believer in brand advertising, but these days, business models that can be directly tied to sales win budget.
• Simple, text-based ads. Advertisers don’t need graphic artists or creative shops. They, or their marketing departments, can create the ads… quickly. They can create tens, or hundreds, of different versions, depending on target audience and target context. They can change and adjust ad copy as often as they like, or swap ads in or out, usually in a matter of minutes.
• Self-service buying systems. Advertisers can, on their own, get a campaign up and running in minutes with nothing more than a credit card. Though search companies have large teams of sale executives and customer service personnel to help advertisers navigate the systems and manage large and complex campaigns, this self-service nature puts advertisers in charge. The advertiser is in control, whether they ever touch an ad order entry screen or not.
• Transparent, bid-based pricing. All advertisers pay market rate. Rate cards aren’t part of the keyword buying process. Prices are dictated by demand generated by other advertisers. Advertisers don’t have to worry about negotiating skills (theirs or their agency’s). They pay the market rate. As it’s easy to track how well ads convert clicks into sales (Google, Overture, and a number of independent service providers offer tools to measure actual campaign ROI), they can adjust bids in real time or cap spending, to ensure all their advertising drives profitable sales.

What a concept. Advertising that’s simple, easy to use, easy to track, accountable, and can potentially reach 100 million Americans a month.

That’s why search is hot.

Want more search information? ClickZ Search Archives contains all our search columns, organized by topic.