SearchTHIS: Search Industry Update

What has more charts and graphs than Keith Richards’ medical file? Why an eMarketer search engine marketing report of course. Yes folks, in case you missed every research report published in recent search history, this is the place to get the search engine marketing executive summary.

Last week’s release of eMarketer’s Search Users and Usage report will no doubt give you the scoop on all things search and all the latest key trends. Where is ad spending going? How about those click costs? What makes people click? Do they care if listings are sponsored?

Though my weekly abstract could never really do the report justice, here’s the top line from the experts at bringing you all the data that’s fit for online marketing.

What’s search worth?

Probably the most intriguing aspect of the amalgamated search report (as I have come to call it) is the side-by-side comparison of search engine marketing spending. The report combines the Search Engine Marketing Professional Organization (SEMPO) with that of Forrester, Jupiter, Piper Jaffray and Smith Barney from the dawn of paid search (about 2002) to the end of the foreseeable future (2009-ish.)

eMarketer suggests the total spending for search engine marketing, including paid search and paid inclusion will be nearly 7.4 billion by 2008, without a doubt the highest of all prognosticators. On the low side, Jupiter came in at about 5 billion by 2008. The bottom line with search is that it will continue to grow like Jack’s beanstalk for the near future.

More ah-has arriving in the form of comparisons of search ad spending as a percentage of total spending. This is the big one for most marketers who haven’t quite yet established how to budget for search. Most analysts’ numbers agreed the big search spending allocation spike occurred from 2002 to 2004 when search budget percentages went from the 20 percent neighborhood to around 40 percent. However, this year and beyond search budget percentages will flatten out, staying in the 40 percent range.

That’s not to say overall spending will flatten out. The online budget overall has been creeping up on traditional marketing budgets for quite some time and eMarketer predicts that spending will grow from 11.5 billion this year to 17.6 billion by 2008. Of course, reach increases don’t necessarily grow in sync with spending.

Click cost good news

Here’s a thought for all those search marketers who have been watching paid search click costs spiral out of control. The report cited an August, 2004 Jupiter Research report from a Morgan Stanley presentation that indicated the biggest spikes have passed us.

Huge 24 percent increases like the one from 2003 to 2004 will begin calming down this year. After this year, predicted at 11.1 percent the following years will slow down to almost match up with our own economic inflation. Search marketers of the world rejoice!

While average keyword costs is a really sharp benchmark for the business and it's really comforting to know that if you are getting the shaft, so is everyone else, but what’s really important is how much click costs are increasing in your budget.

eMarketer does a smart little acid test of keywords from Overture depicting bid costs for the top five positions from June to December, 2004. Similarly, a published Fathom online October to November 2004 industry specific keyword cost comparison was included. Keyword and position costs ranged from double digit declines to double digit increases and everything in between. The message here is clear; monitoring keyword and position costs are key intelligence, specific to each campaign, and should be part of your paid search initiative.

Why do people click? 

Marrying hundreds or thousands of key phrases to landing pages and making sure that cost per order requirements are met is as much an art as it is a science. Topping the list of marketer demands is developing an understanding as to what incites the user to action a listing.

Depending on who you ask, paid search listings are crap and organic listing are the schiznit. It’s the same old story -- except there might be something to relevance and trust. Relevance, according to the included information provided by Enquiro, is the reason 23 percent of users surveyed actually clicked.

The primary reason users clicked? Over 50 percent said they trusted the source or stated source provided unbiased information. Relatively speaking, “relevance” is pretty easy to achieve when compared to going after trust. 

Effectively tying keywords to landing pages is the fastest way to relevance. Paid search sites have editorial guidelines and natural result ranking systems have ways to prevent cheating along with complex algorithms to help thwart the evil doers (read: search spammers).

It’s important to realize that trust has a close relationship to relevance in that a relevant search result may lead to trust. The all encompassing word “trust” has a lot of different meanings. However, in a search result, there are two trust issues at work:

  1. Trust of the search site
  2. Trust of the site that owns the listing

Part of the onus for engendering trust within a search result lies with the marketer. Trust (at least initially) for most people is a leap of faith. Most people would agree that brand trust, which translates into listing trust, falls into a category well beyond what can be accomplished in two lines of search listing text. Message to marketers: Think before you link.

The last word on search efficiency

I’ve read at least half a dozen research reports over the last couple of years complaining how inefficient performing a search can be. eMarketer cites last year’s Harris Interactive study that indicated 29 percent of users found what they were looking for “only sometimes,” or “rarely” while another 30 percent indicated some level of dissatisfaction with a search.

Of course the natural inclination after reading something like that is to assert that search engines really need to advance efforts in refining site indexing technology and algorithms while increasing restrictions on “sponsored listings.”

That’s one way to look at it.

Another way might be for everyone to simply lower their expectations. There is a certain freedom in not expecting much from anyone. Here’s a thought: Did anyone ever stop to think that what these people sought from the search engine might not be there? Maybe it's not even on the internet. Maybe that dissatisfied 30 percent are the people who are dissatisfied with almost everything.

These are the same people who, if your search site boasts it can index 6 billion web pages, will be quick to point out that 6 billion just isn’t enough. Well not me folks, I can find everything I want all the time (sometimes it’s right there in the living room) and I for one would like to thank each and every search engine for bringing me 6 billion options even if what I consider to be an answer is not listed there. But then again, I never really went through all 6 billion results, so how would I know anyway?

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iMedia Search Editor 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. Ryan 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. Ryan volunteers his time with the Interactive Advertising Bureau, Search Engine Marketing Professional Organization, and several regional non-profit organizations.

Ryan serves as Executive Vice President at the search engine marketing specialist agency, Did-it.Com.