Fighting Keyword Inflation

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At last week's Search Insider Summit, Chris Sherman made a scary prediction about keyword prices. Basically, Chris believes that keyword prices will explode soon, because so many big-brand advertisers are poised to enter the marketplace. As these advertisers discover that search marketing is more effective than older forms of untargeted media (especially print and broadcast television), they'll start pouring dollars into this medium like there's no tomorrow.

As Sherman noted, the overall global advertising spend is about one-half trillion dollars. In 2005, Search's $5 billion share of this pie was a tiny sliver: just 1/100th of this total! What if big branded marketers suddenly decided to shift an additional just ten percent of the total spend to Search? What would happen to keyword prices if we suddenly got an additional $50 billion flowing through Google, Yahoo, MSN, and the other engines?

Worse, as Chris Sherman posits, what if these advertisers aren't constrained by spend, and don't care about CTR or conversions? After all, these, big-brand advertisers are accustomed to slapping down millions of dollars on untargeted print or broadcast campaigns. They've got deep pockets, money to burn and a craving for top positions; in many respects, their free-spending, ROI-agnostic profile corresponds to the "lunatics" mentioned many times by my colleague, Kevin Lee.

These big brand behemoths will soon be entering the search marketplace with suitcases of cash, and their presence will definitely have an impact on the PPC marketplace. But the fact that "they don't think like search marketers" may be their Achilles' Heel. Do they employ rigorous analytics? Sophisticated campaign management solutions? Targeting? Probably not.

So what can you do about these 800 lb. brand gorillas waiting in the wings? Here are a few suggestions:

1. Invest in "Long tail" keywords. Big brands will naturally buy their own branded terms, plus high-trafficked keywords relating to their business, bidding the prices of these way up. "Long tail" keywords get less traffic, but convert better, and will be less subject to keyword inflation. Make sure your SEM team has done its homework and has performed a rigorous long tail keyword discovery process.

2. Investigate 2nd and 3rd Tier Engines. No engine delivers clicks like Google, so it's likely that the big brands will lay money down with Google first. Keyword price inflation may be less of a problem on engines such as Ask.com, MSN, and others. Hedge your bets against keyword inflation by making sure your team has a multiplatform engine strategy in place.

3. Use Targeting to Wage "Stealth" Campaigns. Many big brands will likely enter the marketplace with national campaigns aimed at a broad audience. Instead of fighting head-to-head with the big brands, use the full array of segmentation technologies available to wage campaigns that use geo-targeting, demographic targeting, and dayparting.

The appearance of the big brands and their big bucks will make the PPC market more difficult, more competitive, and for many, more expensive. But that's no reason to run and hide. Success in the PPC marketplace is not just a product of size; but of skill, agility, creativity, hard work, and the ability to deploy state-of-the-art campaign management technology.

Think like a brilliant search marketer and you'll have a better chance of winning against these intruders, whether you call them "big brands who don't care" or "lunatics."
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