Click-Price Inflation Gets Second-Tier Engines Second Looks

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CHICAGO -- The rapid cost-per-click increases at Google and Overture have caused some marketers to devote more money to the proliferating small paid search programs.


Though the 500 so-called second-tier search engines garner as little as 2 percent of the search market share, they offer something Google and Overture increasingly do not: low-priced leads.


"As massive as Google and Overture are ... they have a finite amount of inventory," Peter Hershberg, managing partner at search marketing firm Reprise Media, New York, said during a Search Engine Strategies panel covering alternative search ad programs.


One concern about second-tier engines is traffic quality. FindWhat and LookSmart, two of the largest paid search providers other than Google and Overture, do not reveal a full list of distribution partners.


"There's always going to be issues," said Bryan Everett, senior vice president of sales at LookSmart, San Francisco. "We're headed in the right direction as far as getting our advertisers good traffic."


Hershberg said that though paid search providers such as FindWhat.com, Kanoodle and LookSmart often have lower conversion rates, the difference in bid price often more than compensates.


According to Majestic Research, average click prices at Google and Overture have surpassed 50 cents. Fathom Online, a San Francisco SEM that tracks click prices across engines, reports click prices are up 21 percent in the past three months.


"This 21 percent increase is driven solely by Google and Overture," said Matt McMahon, executive vice president at Fathom.


The trend is not expected to fade soon, as large marketers devote more money to paid search campaigns they find drive both online and offline sales.


FindWhat's click prices are often half that of Google and Overture, said Jarod Caporino, director of sales for the Fort Myers, FL, paid search company.


Though Google and Overture offer good return, they should be complemented with campaigns on smaller engines and vertical search platforms like Business.com, McMahon said.


Fathom has put its money where its mouth is. The SEM gets 20 percent of its search volume for clients like L'Oreal and Covad from sources other than Google and Overture.


Hershberg and McMahon said marketers should test alternative engines and track the results for each keyword. Though managing campaigns on more networks can be an added administrative burden, it is made easier by more attentive customer service. FindWhat plans to make it easier to manage campaigns by providing a single interface for advertisers using its platform and those of its private-label partners, like Verizon's SuperPages.com and ThomasB2B.com.


Focusing solely on Google and Overture risks sacrificing customer acquisitions, Hershberg warned.


"If you're not there, your competitor will be there," he said.


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