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Outlook 2006: Behavioral Targeting Poised For a Bigger Role in Search

Search marketing will grow aggressively this year. Data from Forrester Research’s market survey last quarter show that 60 percent of marketers (from a base of 364 marketers) currently use search, with another 20 percent expecting to pilot it within 12 months. Along with growth in the adoption of search marketing, we will see a few other issues.

First is the rising cost of keywords. More marketers bidding on the same keywords are driving up costs per click. Next is the overlap between search and other forms of online advertising. Search is, in essence, behavioral targeting: showing people an ad when they are doing a behavior – searching for a particular term – that indicates they are a likely target customer. We will see more types of display ads purchased in a similar way, more players trying to sell ads based on behaviors, and search players like Google continuing to extend their reach outside of traditional search marketing.

Finally, I think all of this overlap of the search and online ad models will increase marketer confusion and boost spending on professional services, bid management tools and marketing optimization help to make sense of the “search” marketing space.

Despite the fervor around marketers trying to leverage search, consumers are still very discerning. They use search to find an answer to their need. They happen to have a lot more options, available in paid listings or through different formats. It just gives them more options and doesn’t necessarily mean they are more or less able to discern what source will really provide the answer to their question.

Forrester projects search spending at $7.1 billion for 2006, up from $5.7 billion last year. We also will see more bid optimization technologies like the new portfolio optimization technology from Search Ignite. This system lets marketers set their overall budget for the day and their keywords and click-through goals, and the system automatically decides what they should bid on and on which keywords to get optimal performance. The system also can “suggest a budget,” which can help you determine how to spend less per day yet get the same results.

Behavioral Targeting Focus

I also think we will see more on behavioral targeting. This is not just pure search marketing, but started with search marketing and is working its way into how marketers buy display ads. We can expect more competitors to the behavioral targeting technologies like Revenue Science and Industry Brains. I also think we will see more emphasis on behavioral profiling capabilities from more traditional online technologies like ad servers and Web analytics companies.

My biggest tip for marketers would be to think holistically about search, using customer personas to guide strategy.

Most search marketers treat search in a very ad-hoc way, buying 50 keywords and basing bids on whatever the going rate is. Forrester encourages marketers first to create personas of their customers: representations of the real customers (or prospects) who are using, or looking for, their products. The marketer can use this profile to guide whether to do search engine optimization over paid search, what search engines to buy paid listings on, what keywords to buy, what copy to put in the ad, even how to design landing pages.

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