Outlook 2005: Search Continues to Click for Advertisers

No sooner did passion for online banners abate and worries over e-mail escalate than did search marketing become the “it” online advertising vehicle. JupiterResearch, New York, projects paid search advertising will rise from $2.6 billion in 2004 to $3.2 billion this year, $4.4 billion in 2007 and $5.5 billion in 2009. Some industry estimates now place search marketing at 30 percent-plus of U.S. online advertising spend.

The sector’s poster child, Google, regularly dominated headlines last year. The company went public through a multibillion-dollar IPO and began testing its cavernous Gmail system. It also launched desktop search, local search, library search and book indexing, and it upgraded its Froogle comparison-shopping site.

To discuss search marketing and its effect on advertisers, advertising and consumers is Rick E. Bruner, former president of Executive Summary Consulting and now research manager at online ad giant DoubleClick Inc., New York.

Is search marketing here to stay? Is it as permanent as the print ad or the TV commercial?

I can’t see Internet search going away in the foreseeable future. Search advertising is married to search behavior as far in the future as I can imagine.

What makes search marketing so attractive to advertisers?

I cannot think of anything like it in traditional offline advertising, arguably except the Yellow Pages. But I think it’s considerably more powerful than that. Everybody in today’s media environment feels bombarded by advertising. We’ve conditioned ourselves to screen out what is offered to us as interruption advertising – that is, advertising that interrupts what we’re doing with an unrelated ad. That’s the model of TV, magazines, telemarketing and most other forms of advertising.

I believe in the future we’ll have what I refer to as “invertising,” by which I mean advertisements that tune into what the consumers are doing. There are many different ways you can do this, including permission e-mail, sponsorship, this trend of advertainment.

But search advertising is another example of invertising. You’re catching somebody with a highly relevant message. It’s unobtrusive, and it’s targeted at precisely what they’re looking for at that moment. At that point, nobody can call that kind of advertising annoying. It’s useful. So for the advertiser it works very well.

Search is a new kind of direct marketing. You’re not interrupting somebody. You’re intercepting with what is almost a helping hand.

What’s the outlook for search this year? Are click-throughs and response rates going up?

I see 25 percent to 40 percent growth. I think it still has a lot of momentum, particularly paid placement. Paid placement will drive the bus. But at the same time, it’s clear that most advertisers that are engaged in search marketing also place a high value on search engine optimization. It’s just that the dollars are not nearly as high.

Some advertisers worry about the complexity of search marketing. Others worry about the escalating costs of bids. And there are some who worry about response rates. Also, we’re seeing lawsuits now involving copyright violations.

I think these are all legitimate issues. Complexity is just the fact of how this works. I think of search marketing as the rocket science of advertising. It’s not for the faint of heart. It is an auction model. So if you’re not a careful student of analytics, you can waste a lot of money. On the other hand, it can be the most effective sales or lead generation technique known to man. The devil is in the details.

The cost of bids I’m less worried about because it’s an open marketplace. It’s self-correcting. I wouldn’t be surprised if response rates diminish in the coming years. But I still think fundamentally you’re presenting people with an answer they’re looking for. So response rates should hold reasonably stable.

The lawsuits remain to be seen.

Are you worried about Google’s dominance? Any other search engines to take note of?

Personally, I think there’s a lot of room for search to improve. Whether that’s Google getting better or some new search engine coming along is an open question. But I think it’ll be very hard for another business to out-Google Google, because the search technology is only part of the issue. Google is a multibillion-dollar business with hundreds of thousands of customers and a network of thousands of partner Web sites.

Even if somebody introduces better technology, it’s not 1997 anymore. It would be hard to unseat the business advantages that Google has in place. If somebody had better technology, Google could easily buy them.

Is search marketing ideal for any particular type of advertisers?

It works well for a lot of different advertisers. One of the surprises of my research for the Search Engine Marketing Professionals Organization was that the No. 1 objective that search advertisers have for search marketing is brand awareness, followed by sales and lead generation. So the obvious answer to that is that it works very well for anybody selling directly online, but there’s a lot of opportunity in this strategy that could be applied in some form for most marketers.

What tips would you give advertisers?

Invest in getting good at this because it’s very effective but very complicated. Consider working with an expert because it’s very hard to keep up with fast-changing expertise and competition in the sector.

So the search marketing business is not a bubble waiting to burst?

I don’t think burst … eventually maybe plateau. But I don’t expect that for a few years, if ever.

E-mail Rick E. Bruner at [email protected]

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