Deeper targeting and more competition on the search horizon

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Things in the search arena are looking good with moderate growth in inventory, traffic and ad spend. The industry has grown 20 percent to 30 percent from the first quarter of 2006, said David Berkowitz, director of emerging media at 360i, New York.

Total search engine marketing spending was $9.4 billion in 2006, according to market researcher SEMPO.

"The search space continues to show increased strength as more and more big brand, traditional marketers are looking at how to leverage search more effectively," said Chris Copeland, senior partner and managing director at Outrider, St. Louis.

Search forecast

Mr. Berkowitz said the industry is becoming more transparent, and there is increased competition among the major engines.

"On the paid search front, Yahoo's new ad platform Project Panama is requiring marketers to completely review their campaigns and adjust to the new system," Mr. Berkowitz said. "Early indications show that marketers are paying a lower cost-per-click and getting a higher ROI from their ad spend there.

"Meanwhile, Google is offering much more transparency into its Quality Score so marketers have a better indication of how their ads rank," he said.

SEM International president Michael Bonfils said another strength of the industry was an increasingly granular view of online campaigns.

"As more companies incorporate deep integrated analytic packages, the analysis of campaigns becomes the search marketing industry's version of being in between a rock and a hard place," Mr. Bonfils said. "It is easy to justify increased ad spends with fairly solid direct ROI proof. However, unlike traditional media, we are held to that same proof when expanding or testing campaigns outside of media scope."

Mr. Bonfils said that deep targeting - such as geographic, gender and demographic targeting - is another growth area for search. In addition, using information gathered from social networks, instant messengers and other popular tools is also a means of deep targeting.

There is also an increased focus on how social media affects search marketing.

"This connection's especially strong with search engine optimization, as social media marketing, which often centers on tags, links, and consumer-generated content, can impact natural search results," Mr. Bonfils said.

To be ahead in this space, companies need to continuously focus on organic and Web analytics because it leads to better, smarter management of paid search, said Laura Thieme, president of Bizresearch, Worthington, OH.

Each of the search engines now offers ad consoles, enabling smarter management of paid search campaigns.

"If organic is deemed increasingly important, along with Web analytics, companies will need to be able to set aside increased budget for this form of search engine marketing and analysis," Ms. Thieme said. "Currently, the majority of budget is spent on paid search, as opposed to organic and Web analytics itself."

The industry is crying for more volume, targeting and flexibility in how to advertise. Search is a demand market right now that shows little sign of letting up, Mr. Copeland said.

Emerging trends

Mr. Bonfils said international testing and integration for several clients, keen to expand on the international front through paid search, are looking strong for the summer.

Taking a more mainstream view, Mr. Copeland said advertisers want more connectivity with the consumers using search. The industry is moving toward more targeting and personalization. Behavioral targeting and post-click retargeting are the forbearers of an emerging trend. Mr. Berkowitz also emphasized the role budgeting will play in the future.

"The most important thing marketers should do is evaluate how search marketing fits in with their broader marketing campaigns and goals," he said.

Ms. Thieme predicted an increasing focus on organic, Web analytics and return on advertising spend despite more dollars spent on paid search.

"As more Web analytics data is reviewed, more companies may be likely to change their paid search marketing focus to search engines and keyword phrases that deliver the highest return on advertising spend," Ms. Thieme said.

How to prepare for search's future

Bizresearch president Laura Thieme offered search marketers and corporate executives the following tips:

• Realize the value of organic and attribute increased budget to IT resources to enable search engine optimization changes to occur; ensure changes are made to enable improved organic visibility

• Learn the analytics tools and use them for the keyword phrases

• Research more

• Get better tools to stay on top of the research to stay competitive

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