Gord Hotchkiss: Search Poised for “Great Year”

Gord Hotchkiss is the new chairperson of the Search Engine Marketing Professional Organization (SEMPO). He is also the president of Enquiro, a search engine marketing firm and a frequent speaker at Search Engine Strategies and ad:tech. Here are his thoughts on ad:tech San Francisco and trends in interactive advertising, marketing, media and technology.

What’s the mood of the market?

The market’s mood is reflected in SEMPO’s latest report, “The State of Search Engine Marketing 2005.” Last year was a good year for search. Advertisers in the U.S. and Canada spent $5.75 billion on search engine marketing in 2005. But this year should be a great year. The report also projects that search engine marketing spending in North America will reach $7.19 billion in 2006.

Last year’s growth was largely been driven by maturation in existing segments. Future growth will be fueled by an increased search presence from major advertisers and new monetization strategies from the major engines. The increased competitiveness in the marketplace will really drive the industry forward in the coming year.

What do you hope to see today at ad:tech San Francisco?

I’d like to see more discussion of integration of search into other marketing. Search is becoming the online barometer of consumer interest and there’s a real value there. Increasingly, this value should be recognized and leveraged. Search acts as the connector between consumers and their online destinations, and much of this online activity is driven by increased interest that comes from other online and offline marketing initiatives.

We’re beginning to see “search buzz” be used as a tremendously effective touch point with targets, but it takes a sophisticated marketer to be able to map out where this buzz can develop. I’d like to see the marketing community begin to explore the importance of search as the consumer-controlled and initiated online connection. Its value goes far beyond a direct response channel.

Do you have any news to announce?

Yes, SEMPO plans to announce more details on paid placement pricing trends from our “State of Search Engine Marketing” report. Advertisers and agencies are approaching their pricing limits. While most advertisers felt keyword pricing has risen in the past year, four out of five advertisers claimed they could still afford an increase in keyword pricing in 2006. Less than a quarter – 21 percent – claimed they were currently at maximum efficiency. Yet, even among advertisers who report the capacity to increase their ad expenditure, the vast majority can only absorb increases of less than 30 percent. Despite increasing ad spend and year-to-year growth in the value of search engine marketing, we are likely nearing a pricing plateau as advertisers near their maximum efficacy.

What has changed since last year’s ad:tech San Francisco?

The number of online advertisers and search engine marketing firms who believe click fraud is a serious issue has tripled in the past year, according to SEMPO data. Nearly two out of five advertisers and nearly half of the agencies surveyed have tracked fraud. Sixteen percent of the advertisers say it’s serious – nearly triple from December 2004.

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