Online Exclusive: Competition Is on Its Way

According to a study last month by market research and consulting firm Parks Associates, U.S. Internet adoption will grow only 1 percent — from 63 percent to 64 percent — this year. Compare that with an old Nielsen//Netratings report, which found that U.S. Internet users grew 16 percent from 2000 to 2001; and with a different Nielsen//Netratings study that found that, from 1999 to 2000, it grew 41 percent.

In other words, the Internet isn't really growing any more.

Which means search is heading for a whole new level of competition. Because while the number of daily searches is increasing rapidly for now, the pool of available searchers — the people who are online — isn't growing. And so it's only a matter of time before the search population effectively expands to the entire Internet population and search marketing becomes a matter of the same marketers competing on the same search results pages for the same people (think dogs competing over meat).

As long as search activity keeps growing rapidly, there's less to worry about. For every searcher your competitors steal from you, there are more fresh searchers waiting in the wings for you to pick up — there's enough search traffic to leave room for everyone to grow. That means less competition, and (relatively) lower spend levels.

But once the search activity growth hits the wall of near-zero-level Internet growth, everyone will be competing over the same searchers. And scaling campaigns will become less a matter of piggybacking on overall search-activity growth — and more a matter of stealing from the limited pool of search traffic that's available before your competition steals it first.

How long before that happens could be as far away as six years, or as close by as then next two. But not to worry, the wall could hit your industry a whole lot sooner. And if search activity in your field stops growing, the fact that search activity overall is spreading like gangbusters really won't make a difference in your life. Or, think of another scenario: Even while search activity continues to grow, your competitors' campaigns could grow even faster, effectively creating an artificial search activity slowdown.

In other words, you might not need to wait the full two to six years before you experience the new, bizarrely cutthroat levels of search competition just around the corner.

What can you do when things take a turn for the dog-eat-dog? You're really only left with two options: you can spend more to outbid everyone else, or you can become smarter and faster to outmaneuver everyone else. Smarter means figuring out strategies that get you the most leverage, out of the least spend. Faster means working with technology that's quick enough to take advantage of change in the search marketplace in ways your competition can't. Smarter plus faster means getting more done, without really needing to pay for it — an approach you'll want to take when competition makes everything in search really expensive.

But keep in mind that finding the fast technology, working out the smart strategies — or hunting down a search firm that can get you both — is a process that can take you months. It isn't something you want to start after you notice that you're throwing more and more money into you're campaign, yet you're still losing traffic. It's something you want to start thinking about now.

Of course, you could opt for sitting back, relaxing and getting comfortable with the idea of throwing away enormous amounts of spend just to keep your head above water. It's your choice, but whatever decision you go with, the search activity growth wall — and the fierce competition that comes with it — is a new reality that's on its way.

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