As usual, the water cooler talk for the SEM folks is about Google. With Google+ grabbing the attention of many, my concern remains with a more fundamental issue facing the entire industry gathered around that proverbial water cooler -- search. I'm not picking on Google here. In fact, it's just the opposite. I'm pointing to the powerhouse touting 65 percent of the search engine market to make a point Olivia Oran alluded to in her assessment of Google's earnings in TheStreet.com when she asked how Google (and search for that matter) "will it sustain long-term growth."
It's a good question. The answer will come from other companies that are innovating in other areas of the SEM business. Search, you could say, is searching for a future. Not a future among consumers. For them, the concept of search isn't going anywhere but up. For advertisers, however, SEM needs something innovative to grow on. It needs to break the limits of keyword costs, ROI, and overall results.
For advertisers, the future of search is in search retargeting. Although search retargeting adds to (rather than competes with) search engines, it's worth taking a look at where Google and the rest of the industry are headed. This analysis shows that search's current leaders are not going to innovate in SEM. Google's recent purchases of Admeld for $400 million and Invite Media for $70 million clearly put a large portion of Google's focus on display (as well as mobile, local, and social businesses). AOL is headed aggressively into the content business as its recent purchase of Huffington Post shows. Yahoo is shoring up its international expansion. Bing is sharpening its Google-like features, including street view. None of these are an aggressive move to make SEM a more effective form of media. And, let's face it, just as display has experienced innovation in scalability, creativity, and effectiveness, so should search.
In the past, search was simple. You would type in "flat screen TV," check the results, and collect information toward a decision. Maybe you even make a purchase. Now, search has become a more reliable means of identifying customer intent. Let's again say you search for a TV and possibly pose a question, such as "Where to buy a Sony TV?" That phrase, full of various terms like "TV" and "Sony," takes search one step further. As new technologies evolve, including search retargeting, the consumer who searched for a "TV" and "Sony" might see an ad across multiple channels (online, mobile, video) for a Best Buy promotion or from Sony offering free shipping on the TV later on in the consideration process.
With exchange inventory more widely available, display isn't the only channel cashing in. It's the ability to capture search and take the intent it reveals outside of the search engine and into the display inventory arena that will continue to drive momentum for the search channel. Search retargeting gets beyond the simplicity that has limited search marketing's results. Instead, search retargeting is strengthening the relationship between search and display.
According to the OPA's Internet Activity Index and Nielsen's Online data, only 4 percent of online activity is spent in search, while 96 percent of consumers' time is spent on other types of online content, including news sites, blogs, social networks, etc. Search retargeting makes for a one-two punch -- while more than 95 percent of the clicks you buy in search don't convert, retargeting lets you reach those users again, at the right time, and move in for the sale.
It's clear that search needs to continue to evolve and extend its offerings beyond what Google brought to the internet when cost-per-click was introduced in 2002. The advertisers and agencies that embrace the future of search will be one step ahead in a business that knows no limits and has never accepted them. For marketers looking to spend dollars online, it's hardly time to bail on SEM. It's time to ask the following question: "How does the search channel add value to my brand?" Bottom line, search retargeting helps advertisers use mobile, video, text, and ad network placements to move beyond search engines, where the initial search was initiated. ROI goes up, cost goes down. Now that's a good future.
Josh Shatkin-Margolis is the CEO of Magnetic.
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