The Kevins discuss issues DoubleClick faced entering the SEM program management biz (last of two parts).

DoubleClick is set to take by storm the world of search engine marketing (SEM) program management. In part one of my interview with the other Kevin Ryan, we discussed the search landscape, perceived development of the sponsored listing universe and some possible new customers for the Internet advertising heavyweight.

At long last, our discussion leads to topics on everyone’s mind, like the build-or-buy conundrum, the thought process behind feature integration, and SEM growth. As the interview wound down, I lost track of who was interviewing whom, when discussions of identity took over.

SearchTHIS: How are you facing the build or buy conundrum? Is this solution that you are ultimately going to form from acquisition or build from scratch?

Ryan: The way we approach all of these markets is pretty consistent. We start by looking at the entire market and seeing what’s out there, seeing how hard it is to build or what is available to buy and then make a decision early on. For example, SmartPath is a company that we acquired -- we went through the same process, and we decided right in the beginning we were not going to build it all. Here, that’s one fork and in the road. We traveled down that road and decided we were going to build. Now, that doesn’t exclude the possibility of buying in the same way we started building email, built our own product, and over time did buy two companies and folded that into our business. Ad serving we built, and later on bought one or two small companies that added into ad-serving. I never exclude the possibility of buying, but the focus right now is on building.

SearchTHIS: OK, so who are you looking at? Rumors I have heard include Performics, Did-it.Com and others.

Ryan: I think the origins of those rumors may be, as with all of the markets we are in, we end up meeting with everyone, not necessarily in an acquisition conversation, but to understand the markets. The options for us in the beginning were build, buy or even partner -- without buying the company. Just partner with them. For example, Dynamic Logic is a company we own a portion of but don’t control. The search market is very small and we’ve met with 10 or 15 companies over time -- certainly met with the two you mentioned since they are two of the larger players, but also met with GoToast.

SearchTHIS: I noticed a while ago you partnered with iProspect for search engine optimization, which raises another point -- how will this development affect existing partners?

Ryan: I don’t think it will affect them at all. DoubleClick works with a lot of different companies in different ways. We have a partnership with Epsilon, which is a data management company. They resell our campaign management tool. There are other areas in which we compete with them but we maintain a great relationship. I don’t think this will have any impact on our existing partnerships.

SearchTHIS: Can you give me any insights as to the key functionality or competitive advantages that DoubleClick will bring to the table at this point?

Ryan: That is the one thing, which will have to wait until the product is out, but you will see that in about a month.

SearchTHIS: OK, yeah, so you are telling me I got up at 7 a.m. on the west coast to do this interview and you are giving me squat. Give me something. Give me the goods. Spill it.

Ryan: The key thing to expect is integration into DFA (Dart For Advertisers), which is the principal reason for developing this tool... what's out there now is about 25 percent of where they will be in two years.

SearchTHIS: Yes, the industry is very, very young.

Ryan: It’s about four years behind the traditional Internet advertising industry, which makes sense. Well, what I am hearing from our clients, which includes large advertisers and most of the bigger agencies, is they want one dashboard as well. When an advertiser chooses a partner, it’s what you see right now. But the decision-making process must also include requirements for who is going to be able to build the better tools over time and adapt to whatever changes may occur in this dynamic industry. Our clients like the commitment and support to the industry as well as DFA integration. Ultimately, the big advertisers out there want to have one dashboard where they can see all of their Internet advertising purchases and compare what is and is not working.

SearchTHIS: That’s pretty consistent with what I have heard from larger advertisers and clients as well, although the agencies seem to be a bit more sedentary when it comes to search. A colleague of mine at one of the larger shops recently told me that search is about as important to him as peanut butter selection at this point. He just wants to know that it is being done right and wants to spend next to zero time on search.

Ryan: Search is a couple of billion dollars right now and growing. It is a very significant part of the media mix, and I think what some places are getting away with right now is that "I can just buy a couple of words and I am all set." If you are and I were talking about the bond market, you would pride yourself on the fact that you would pick up two basis points -- i.e. two hundredths of a percentage point -- better than I did. Over a billion dollars, that’s a lot of money and in a very mature market. But people still make incredibly larger amounts of money by arbitraging the difference between incredibly small differences.

Search right now is not as extreme as the bond trader example, but people [program management vendors] are getting away with doing some sloppy things right now, which over time, advertisers will be able to test and say, "You didn’t buy these words correctly or optimize it perfectly." So the standard will go up and technology will play a big part of that, but not the whole part. People’s experience in media buying and planning will also play a key role.

SearchTHIS: Excellent point. The more advanced and expanded phrases are it seems the more keyword costs drop. Despite the latest research suggesting more people are using multi-word phrases people still use basic language and optimizing still requires a human component.

Ryan: Look at the sophistication of catalog companies we work with and how they send out catalogs to an audience who thinks, "Wow, I just got the latest catalog!" -- without realizing there are 50 versions of this catalog. Each one receives product-specific measurement and profiles customer response information in the form of massive spreadsheets, comparing what did and did not work. Media buying agencies are going to have to be at that level with search.

SearchTHIS: Ok, but that still does not explain why I get the 4-color, heavy stock Neiman Marcus women’s collection catalog every spring. Wait, never mind, Moscow is expensive. One good point leads to another and it seems the only reasonable entry point for a very large inventory retailer at this point is with some type of inclusion program. Will DoubleClick’s tool make the sponsored listing universe more appropriate for large catalog retailers?

Ryan: Well, we don’t expect to solve everything day one at all. This reminds me of '98 when we launched DFA and the questions I got at the time were, "Do you feel like you are too late to the market because AdForce was there four months before?" We said look, it is very early and that company went bankrupt very early. Now, no one even remembers who they are.

SearchTHIS: Speaking of longevity, the basis associated with sponsored search is invariably to going to force metrics for search beyond direct response. How is DoubleClick preparing for this? Will the view through become a part of our SEM lives with this tool?

Ryan: All of this is measurable. I think, for the same reasons every other advertising medium has been successful without really even having a click, the online industry jumped so quickly to the click, partially because it was there, but it is not the ultimate measure. Search has yet to embrace that concept. Billboards make sense but there is no click through, yet one measures over time the value, which is the equivalent of the view-through. I think the view through in search is a smaller component of the value than it is in the rest of Internet advertising. A lot of search is immediate, but I don’t think the industry has fully valued people who come back later from search. The ultimate result will be that the value of keywords will be a little higher than people will think they are now.

SearchTHIS: Getting people to buy into the view through process is a fundamentally entertaining process, particularly when one is applying this thought process to search. I can remember sitting in a client meeting recently and trying to get them to buy into the view through as opposed to direct response, which was met with the usual resistance until someone in the back of the room piped up and said, "Five years ago we were spending $25 million on direct mail with no idea what was working. These guys are showing you a 1,500 percent ROI from direct and indirect response with actual dollars on the table -- stop beating them up."

On to the important question: What’s it like living in my shadow, seriously?

Ryan: No one realizes how hard it is to live in your shadow. I go to clients, they confuse me all the time, and they think I’m you. I get phone calls and people realize they’re stuck with me and I have to try and entertain them. When I show up at cool restaurants I get the best table, then they realize I am not you and kick me out. It is just psychologically very difficult and people don’t realize it.

SearchTHIS: I think it's tough on both sides. A couple years ago, I was at a speaking engagement and I had to get on stage and explain that I was the "other" Kevin Ryan. They looked very disappointed.

Ryan: I think what we have to do is just start letting people know we are actually the same person. Look, has anyone ever seen us in the same picture? No.

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. Kevin believes in sound guidance, creative thought, accountable actions and collaborative execution as applied to search -- or any form of marketing. His principled approach and staunch commitment to the industry have made him one of the most sought-after personalities in online marketing.Kevin volunteers his time with the Interactive Advertising Bureau, Search Engine Marketing Professional Organization and several regional non-profit organizations. Meet Kevin Ryan at Ad:Tech May 24-26th, 2004, and on the iMediaLearning Search Tour.