Paid search results marketing is an effective tactic that has caught on. Here’s a brief history, and an overview of who’s who.

Paid search results marketing is a magnificent bullish beast that is taking the Internet advertising world by storm. In just over a year, the world of search results has reached center stage and industry gurus are saying search is now as popular as e-mail. An October 2002 report published by Salomon Smith Barney on The Internet Search Market estimates (amid other pretty astounding prognostications and observations) that search is a $1.4 billion market today, has the potential to grow 30% to 35% per year to 2004 and maintain 20% to 25% growth through 2008. Stand back.

This is at a time when most of the Internet Advertising world has slid back into the primordial ooze from whence it came and is beginning to crawl back out a bit more cautiously. The analysts at Salomon indicate the income growth (2001-2002) on search sites from banners, buttons and promotion was a placid 12% while Paid Inclusion and Paid Placement generated a superb 53%.

Evolution

Relatively speaking, the concept of simply syndicating or sending search results to portals and other search sites is not new. DMOZ, which purports to be “The largest human edited directory of the Web” (www.dmoz.org), has been sending traditional “editorial” listings to sites such as AOL Search, HotBot and Netscape since 1995.

The idea of getting advertisers to foot the bill for search results is the new element. Smart advertisers have accepted the juxtaposition of dynamic paid search results with lethargic editorial listings. The former will have you on top sites in a week; the latter could take months, if ever.

So as the popularity of buying search results increases, the old means of submitting URLs in the hopes of your audience one day finding your site (Search Engine Optimization, or SEO) appears to be going away. The dividing line between editorial search results and the new and improved paid search results has been drawn—pray for positioning has evolved into pay for positioning.

Paid listings are most often housed by one site and syndicated or sent to other sites (in sections) that share in pay-per-click revenues. These listings are most often found outside the more traditional “editorial” listings.

Despite their positioning on the page, the generally accepted conclusion has been that consumers are ambiguous to these links and don’t realize they are being duped into clicking on them by advertisers.

Ralph Nader to the rescue.

Not long ago, he and the FTC got involved in arguing on consumers’ behalf as to whether the listings should be clearly labeled as advertisements. Since Paid Search Results is oft compared to the glamorous world of phone book advertising, the best way to expand upon this lunatic logic might be to include large warning labels with your local telephone directory. “Attention Consumers: You may be persuaded to contact one plumber over another by an ad that said plumber has PAID TO BE INCLUDED in this directory.”

Let’s take it one step further, shall we? Network Television; PSA from your favorite pop star: “Y’know that stuff between this popular SYNDICATED sitcom? Those are people trying to sell you stuff, be careful.” Imagine the lawsuits on a shopping channel.

Since most of the industry complied by labeling these links “Featured Listings”, or “Sponsored Links” there hasn’t been much additional noise from the FTC.

Revolution

Of course, a big fat dilemma for advertisers is the timely question of whom and what is forcing this change. The most popular conjecture places “what” in the vein of a natural evolution from importance of search results combined with a need for more relevance while creating an efficient user experience. Simply put, users are predisposed to entering a product name into a search box in lieu of visiting a shopping area. Since site owners could not get their URLs listed in the right place fast enough through traditional SEO, said users found it difficult to quickly and easily find these products.

"Managing our presence in search results has always been critical to our business,” says Catherine Scott, vice president, Corporate Communications at computer storage device manufacturer Western Digital. "Paid listings simply add a new dynamic to an area we already monitor very closely.”

An integrated approach to SEO and Paid Search is probably the soundest practice, yet many advertisers and agencies are struggling to understand the space and are wondering if they should bother to get into it.

There is the identity crisis between traditional SEO providers and Interactive Agencies to consider as well. SEO providers are weighted in the technology end and have an understanding of search dynamics while an agency’s disciplines would lie more closely to creative and media. SEO providers spend their days cogitating on how best to be spidered and indexed based on site architecture and technology used while the agency suffers much pain and angst over how best to create brand perception in which advertising medium. Both players are dipping their toes in this space; both would seem to have the ability to successfully navigate the complex world of paid search. However, the question of who to call in the advertiser’s quest for “best of breed” remains unanswered. My money is on whomever reaches the client first.

Sorting It Out

Two six hundred pound twin gorillas, Overture.Com and Google.Com, dominate the paid search results industry. Overture’s Pay-For-PerformanceTM and Google’s AdWords SelectTM programs generate the lion’s share of Internet searches on sites like AOL, MSN and Yahoo! Both Overture and Google have auction-style syndicated listing programs with subtle differences in how listings are structured and syndicated. Both are in the news on a daily basis, and have some pretty exciting things going on. Overture recently announced the purchase of AltaVista and portions of Fast Search and Transfer, sacrificing earnings projections for a bigger piece of the pie. And Google recently rolled out content-targeted ads on sites like HowStuffWorks.com, taking syndicated search results to a new level with an expansion of the AdWords program. Stay tuned for more on this later.

But Overture and Google are not the only players in this market and stiff competition can drive traffic costs into the stratosphere pretty quickly. So, if buying clicks from the top-tier players leaves you feeling as though you have just purchased traffic from OPEC, you can shop around. Other players and rising stars in the space are Sprinks.Com, FindWhat.Com and Ah-ha.Com. All have auction-style search results bidding and syndicated listings. For B-to-B clients, there is the Santa Monica, CA-based Business.Com that provides targeted reach for business services.

Paid search results providers stand ready to help advertisers navigate the waters of search. And there are even a few independent sites to help you on your journey. Wordtracker.com, for example, has built its business model around helping advertisers in selecting proper search terms.

Looking Ahead

The people at Salomon Smith Barney feel the cost of selling search-related services and supporting the advertisers is the biggest expense item in their Search Market Income Statement. Of course it is. Advertisers have been programmed to hold this medium to a higher standard despite evangelical campaigns by a chosen few to create a paradigm shift away from behavioral performance measurement. In the rose-colored world of Paid Search Results, click-to-conversion rules.

And given the delicate needs of a traditional SEO program, agencies find it much easier to integrate auction genre paid search results into their online marketing plans. "We can use similar behavioral metrics and our existing third-party reporting system to seamlessly integrate Paid Search," reports Angelique Lipari of FCB Southern California.

To make things even simpler, Nielson/AdRelevance plans to offer measurement in a future release.

As the sun sets on still another beautiful day in search, we can look into our liquid crystal ball and see quite a bit of excitement in the near future. For one, Salomon predicts more consolidation. And providers of Paid Search will have to show value to advertisers, and continue to pay distribution sites handsomely to avoid being extracted from the equation. We all have front row seats to this exciting growth, which, in the worst advertising slump in a decade has to bring a smile to your face.

About the author: Kevin Ryan is a freelance contributor whose current and former client roster reads like a “who’s who” in big brands; Rolex Watch, USA, State Farm Insurance, Farmers Insurance, Minolta Corporation, Samsung Electronics America, Toyota Motor Sales, USA, Panasonic Services, and the Hilton Hotels brands, to name a few. He currently leads the Western US division of IPG’s Wahlstrom Interactive where he provides guidance in directional online marketing to Wahlstrom’s prestigious list of clients and sister agency brands.