MIVA's SVP/group MD takes a look at the likely future of pay-per-click advertising beyond the majors.

At the risk of coming across as one of those crystal-ball gazing new media types who pontificate loudly (and largely to themselves) at trade shows across the country, I wanted to take a forward look at where the pay-per-click networks beyond 'GYM' (Google / Yahoo! / MSN) are likely to be headed as we move into the next phase of growth for PPC advertising.

First, to put things in context: There appear to be a growing number of people looking with cautious speculation at the PPC networks operating beyond the majors to see just what sort of value can be extracted. I think this is due to two main reasons: first, the results marketers are achieving through PPC on the search networks -- 'is there any more of that good stuff out there…?''-- and second, due to the increased competition on the main engines, particularly for generic terms in more mature PPC sectors such as financial services or travel. For some, the search networks appear to be becoming simply too expensive, a barrier that ironically is removing, for some, the democratic formula that made the ad model so attractive to begin with.

So what are the PPC networks doing to capitalize on this interest and to build relationships with advertisers who are looking for new sources of traffic but may have had their fingers burnt in the past? The solution appears to be a shift towards vertical PPC. 

The sophistication of measurement tools and the savvy of search engine marketers mean that the old formula of "throw enough paint at the wall and some of it is bound to stick" simply won't remain viable. I think the future instead is a shift away from high-volume, broad-reach networks towards vertical or industry-specific networks designed to offer lower volume yet higher quality traffic.

The premise is straightforward. By advertising on networks that focus on specific vertical sectors, advertisers can reach people who are likely to be more receptive to sales messages and therefore of a higher value. Someone reading an article about travel on a general news site, for example, will typically be less likely to book a hotel than someone on a travel site reading a review on a particular holiday destination. Both of these sites could be displaying the same contextually targeted PPC ads, however, the travel site is likely to deliver higher quality traffic to advertisers.

These vertical networks are already starting to become prevalent -- think Industry Brains and the MIVA Precision Network -- but I think over the coming years we are likely to see more of the broad reach PPC networks optimizing their ad distribution across vertical channels.

One of the issues cited by advertisers with this low-volume, high-value model is having the available resource to manage campaigns. We know that a one-size-fits-all approach doesn't yield results with PPC, meaning that utilizing vertical networks effectively requires an investment of time from both a campaign planning and optimization perspective. However with some advertisers suggesting that vertical networks can deliver lower CPAs than the main search networks, it's an issue that's worth addressing.

The solution simply requires a subtle shift in mindset as to how PPC is planned and bought. No longer will it simply be about which networks to advertise on; it will be about understanding which verticals within those networks deliver the best results. One vertical network may be particularly strong in finance, for example, but less so in automotive. Advertisers will quickly establish the networks that provide the best fit and can then focus resources on optimizing campaigns for those specific networks.

Vertical PPC looks like the catalyst that will drive the growth of the PPC networks beyond the majors. As these networks develop there will inevitably be early mover advantages for PPC advertisers. Life beyond GYM is looking up. 

S. Brian Mukherjee is SVP/group MD for MIVA Media. Read full bio.