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Search Marketing in 2005 – Adaptation ensures
Evolution
By Jim Hedger, StepForth News Editor, StepForth Placement Inc.
February 23, 2005
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The environment is changing rapidly. The core temperature of the search
engine sector is continuously growing warmer as interest in search-advertising
increases. Over a dozen consecutive quarters of this intensifying heat
is melting the ice cap that formed a glass ceiling between search engine
marketers and mainstream advertising consciousness. Long-term revenue
streams are now flooding as the melting ice cap sends buckets of liquid
capital flowing into all regions of the sector.
Changes to an environment are often signaled by several seemingly unconnected
events, the effects of which only become fully apparent as they unfold.
The list of seemingly unconnected events grows longer every day. For months
astute observers have noted the very real effects these events have on how
search results are provided. An example would be the effect of Blogs both
on popular culture and Google results. Another is the growing adoption of
broadband in the United States. Other examples include, Yahoo's growing
relationship with Hollywood, Google's global goals, MSN's declaration of
tech-war, Ask's recent acquisitions, and this week's purchase of About.com
by the New York Times. With search engine related items hitting the financial
news on a daily basis, multi-billion dollar revenue projections and the
sudden realization of what were once science-fiction fantasies, a shift
in corporate group-think was inevitable. One day, the print-addled ad-execs
on Madison Avenue woke up, smelled the silicone and went to the bank.
This shift in corporate consciousness has, to a large degree, caused and
affected the evolution of the search engine environment. Over the past three
years, various concepts of search have moved in from the peripheries towards
the middle on the radar screens of corporate marketers. Being creatures
of habit and working from their power base, they went where the money was.
Until recently, the largest advertisers appeared to define search as the
PPC (pay-per-click) offerings of Google's Adwords and Overture, and the
myriad of smaller pay-per-click programs. Unlike the technically challenging
and unpredictable world of organic SEO, PPC programs give marketing departments
solid numbers to base budget estimates and outcome projections on. PPC programs
with their massive contextual distribution networks caught the attention
of corporate marketers and their investments in PPC have sustained and driven
both Google and Overture's bottom lines.
This reliance on PPC has had a positive effect on the business of search, allowing
both Google and Yahoo to post record profits on astronomical
revenues in the last quarter. Investment in the search sector is also driven
by the success of PPC/ad-delivery programs. That bulk of money is
being pumped back into innovation and acquisitions with both giants and their
smaller rivals expected to release dozens of new features in the coming months.
Corporate reliance on PPC has had a negative effect on growth in the search
sector as well. With more attention being paid to paid listings, many large
corporations neglected their websites' organic placements. Numerous studies
have shown that most online traffic is generated by the organic or unpaid
listings and that actual sales tend to stem from a holistic branding approach
to search engine marketing. Reliance on one form of search-advertising has
almost certainly inhibited online sales for many larger corporate sites,
a situation which places their confidence in search-advertising models at
risk. A lowering of advertiser confidence may be evidenced by a slight decline
in the number of ad-purchases and keyword cost-bids in January though post-Christmas
budget-shock might be an invisible factor.
For the past few weeks search engine journalists have written about the
lack of corporate interest in organic placements and the perils of ignoring
the free listings. Another study released today by Nick Hynes of UK SEM
shop, The Search
Works notes that over two thirds of FTSE100 (UK version
of Fortune100) companies do not appear in the Top20 under keyword phrases
relevant to their industries. Similar results can be found when searching
for Fortune100 companies at Google, Yahoo and MSN. This prompting is starting
to have an effect with an increase in corporate awareness about the importance
of organic placements. If corporate advertisers find a profitable balance
between organic and paid search marketing, this balance will form the basis
of optimal search-marketing campaigns for the coming years, thus providing
both advertisers and the SEMs who serve them a sense of solid ground in
the midst of the rapidly changing environment.
Ultimately, the effects on the environment have been very positive for
most of the SEO/SEM sector. Established SEM shops tend to be coping quite
well with the sudden changes and are happily netting increasing volumes
of big and small fish. They are hiring and training new SEOs and retraining
older staff in SEM technique in order to keep up. Several independent SEOs
are even turning work away as they are simply too busy to take on new clients.
Conventional wisdom says that the organic SEO shops that learn to combine
organic and PPC services (either directly or with a third party) will not
only survive the changes in our working environment but will be in a position
to provide a much more comprehensive service to their clients.
Today's bottom line for both corporate advertisers and the SEMs who serve
them is simple; learn, adapt, evolve, integrate skill-sets and thrive in
the ever-expanding world of search. As the floods come in, don't be afraid
to get your feet wet.
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