The 411 on Tier-Two Paid-Search Providers

Paid listings are becoming ubiquitous on the Web, and advertisers often ask me questions about “other” paid-search options. A survey at a recent online advertising trade event (show of hands) of audience members’ knowledge of other paid-search providers indicated a bifurcated audience with camps in Google and Overture. How sad.

It’s not that I am anti-Overture or Google. Quite the contrary. But with 33% of online ad spending being allocated to paid search and advertisers embracing search marketing at unprecedented levels, there is bound to be quite a bit of competition in an already volatile environment.

Enter tier-two paid search. There are literally dozens of paid-search providers that place advertiser listings on portals in a keyword search. Some second-tier paid-search sites will resent the “back seat” connotation this designation infers, but I don’t intend that interpretation.

These providers can help your site get more traffic and expand your search marketing program’s reach most efficiently. However, there are some key differences in the players to be aware of as you take your search marketing efforts to the next level.

What is Tier Two2?

Since Overture and Google represent the lion’s share of audience reach, the first question advertisers ask is, “Who else is there?” The next level of search listing syndicators includes providers like FindWhat, Sprinks, Ah-ha, Search123, and Kanoodle. Each site offers pay-per-click, keyword-driven, search terms in a competitive environment with listings that are sent out to search sites, destinations, and even desktop search applications.

These providers are certainly no strangers to the consolidation activities running rampant in search today. FindWhat recently merged with UK-based Espotting, a move that will push the organization into head-to-head competition with Overture in the United Kingdom. Search123 was recently acquired by ValueClick, adding, well, value, to the unique selling proposition offered by both companies. Search123 expanded its traffic, and the combined entity will enhance ValueClick’s contextual search offerings.

Situation Trepidation

Since larger paid search sites syndicate to MSN, AOL, Yahoo! and other top portals, the question I most often hear is in the vein of the blunt, “If all the top sites are taken, where will my listings be appearing, MonkeySpunk.Com?” I believe in the Aristotelian teaching method and my response is always, “Do you care where the user is coming from if said user is making a purchase?”

Sure, there are going to be sites in the alleged second tier that may not exist in your bookmark file. Search123 for example, syndicates to AskYourAunty.Com, but it also reaches NetZero, and Juno searchers. James Beriker, Search123’s senior vice president of Search Services, explains the situation this way, “Listening to our customers reports on the effectiveness of our partnerships is paramount to the success of our business. We live and die by the quality of our traffic.” I found a common theme in the providers I spoke to in that each set high standards for the sites in their networks.

Speaking of high standards, it’s pretty refreshing for me to meet someone like Lance Podell, the general manager of Sprinks. I visited that company’s office in Manhattan recently and, in addition to receiving some great information about Sprinks, I found a “Glass is half full” kind of leader who is as evangelical about measurement as I am. While Sprinks may hold a second-tier position in the keyword search arena, when it comes to contextual search, Sprinks is running ahead of the pack. “We maintain rigorous requirements for distribution partners that include post-click activity tracking on the behalf of our clients and monitoring each site individually for performance,” Podell said. He was also quick to point out Sprinks’ readiness to block sites that do not perform well.

The traffic quality question raises a couple of important cautionary notes as you move forward. Some tier-two sites provide immediate or real-time access to keyword listings where as larger sites use editors to evaluate listings for relevancy. Also, on larger sites, if your listing is not meeting minimum click-through requirements, it will get ousted, as it is perceived as not relevant enough. Often this is not the case with some of the sites in tier two. This places the onus of relevancy on the advertiser (very scary) and monitoring post-click activity becomes an important part of expanding the reach of your program.

Money Talks

Big budget advertisers have embraced the paid-search space and skyrocketing keyword bidding can often defy logic on these sites. I have seen click competition drive costs in some business-to-business categories into the neighborhood of forty dollars a click. According to Podell, “Pricing is arguably the best entry point for advertisers to expand a syndicated keyword listing program into other providers.”

Analyses of click costs across major sites reveals click cost percentage savings ranging from the low double digits into the realm of three digits. Consider category killer keywords, hotel and car rental. One recent Friday afternoon, I compared click costs on a few of these sites and leaving traffic as an x-factor for the moment, the tier-two pricing advantage becomes quite clear.

Keyword
Overture
Google
FindWhat
Sprinks
Search123
ah-ha
hotel
$1.01
$4.42
$0.60
$0.90
$0.25
$0.20
car rental
$1.26
$2.43
$0.25
$0.68
$0.20
$0.11

Traffic Walks

Another in-your-face question facing the tier-two paid-search providers relates to the abysmal drop-off in traffic critical mass. For example, in the first quarter of 2003, FindWhat delivered a total of 90 million clicks to Overture’s 608 million clicks. Using this example and the hotel click costs above, assuming Overture’s hotel keyword searches total one million per month with a 3% click rate, the monthly cost on Overture would exceed $30,000 for as many clicks while FindWhat’s monthly expenditure would be in the neighborhood of $2,700 for 4,500 clicks.

Since click costs can be considerably lower, your keyword list in the second tier may look a bit different than your tier-one list. Advertisers seeking health-care searchers may only include the phrase health maintenance organization due to competitive bidding situations on words like elder care, or even HMO, but on tier-two sites, if the click costs are 300% lower, the advertiser’s ROI model may accommodate the expanded keywords or phrases.

Theory to Practice

In the real world of paid search, click costs do not remain static (at press time, top hotel keyword bids on Overture and FindWhat were $1.26 and $.51, respectively), and not every second-tier provider generates the traffic of FindWhat and Sprinks. However, the answer to the expanded tier paid-search provider utilization question is a resounding, yes. Buying efficiencies and expanded keyword list advantages along with ever increasing distribution strength are making these players a key component of your overall Search Engine Marketing (SEM) program. In my opinion the tiered line should be erased in favor of including these providers as key components of the overall search plan.

About the author: iMedia search columnist Kevin Ryan’s 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 is currently Director Market Development of IPG’s Wahlstrom Interactive where he provides guidance in directional online marketing to Wahlstrom’s

 

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