A new study from Kanoodle fuels speculation and anticipation about the future of search.
At last, Wall Street analyst comments have caught up with at least one search marketing pundit’s prognostications. Last week, an announcement from RBC Capital Markets that downgraded search engine stocks (Yahoo! went to "sector perform" from "outperform") instigated a mass “whatever shall we do?” buzz in the search business. Naturally, search stock prices headed south in the wake of the announcement.
What shall we do? I’ll get to that in a moment.
Among the notes from RBC representatives was a suggestion that Yahoo! is in a slightly better position than Google because of more diversified offerings. Diversification, as it were, may be the most understated and under scrutinized aspect of search marketing offerings to date, which brings me to this week’s lesson on search innovation.
What will fuel search growth? Search offerings include directive search sponsored listings, graphic ad units, telephone-based response vehicles (a.k.a. pay per call,) and of course content or contextual sponsored listings. For our purposes this week, let’s focus on the content portion of search and why text-based online advertising might just be the fuel search marketing is looking for, at least in the short term.
Finding the right formula
While Kanoodle’s offerings may appear on a smaller scale than Google or Overture, the research they provide offers an interesting look inside the minds of advertisers. Contextual listings have long been the key to getting beyond the limitations of directive search with the vastness of inventory they represent. According to popular estimates, only five to seven percent of the web’s pages are search results while as much as 95 percent are content.
“We see a couple of trends in contextual search. The first is, contextual doesn’t mean content,” says Kanoodle’s Mark Josephson, senior vice president, marketing and business development. “The second is, different content pages require different types of targeting.”
For all intents and purposes there are two types of contextual search advertising. The first relies on reading keywords (dynamic keyword scans) on content pages to assign sponsored listings. The second deploys a category (topical) mapping feature to help define relevance for content targeted listings. These two examples represent the bulk of contextual targeting today. Which one is better?
Keyword scanning techniques exist on larger networks while smaller innovators like Kanoodle and Industry Brains use mapping technologies. Kanoodle commissioned Jupiter Research to help find this answer (along with a few others) and a sample of over 700 advertisers offered some key insights.
Content matching face off
Advertiser satisfaction with directive search sponsored listings often appears in the 80 percent to 90 percent range. When asked about satisfaction with keyword scanning technology for contextual search, 53 percent of advertisers said they were satisfied while only 38 percent said they were satisfied with the topical mapping structure. Dissatisfaction was pretty similar -- 28 percent with scanning and 35 percent with topical.
This might be an educational issue, as we often see that larger advertisers tend to know more about what’s going on with their investments. When the data is separated according to the size of the firm, of advertisers with 1,000-plus employees worldwide, 44 percent were satisfied with topical ad mapping.
Oddly enough, no matter how you separate the data, a large portion of advertisers in the 20 percent to 48 percent range indicated they were “neutral” when it came to mapping features. Let’s hear it for apathy! Hip! Hip! Snooze.
Perhaps advertisers need more education about content listing targeting abilities. Maybe they need to be more aware. Maybe smaller search providers need more reach, or maybe advertisers just need more of an incentive to give a hoot. In any case, of the advertisers who said they used both content targeting and directive search, respondents said they preferred directive search over content targeting 73 percent to nine percent.
The advertiser wish list
Kanoodle’s Josephson noted a third trend in content targeting in that big spenders (or big brands) are buying in like never before, yet he wasn’t overly optimistic about the future of contextual search. “We are at the risk of letting one or two sites define how [contextual search] evolves,” Josephson cautioned. “Currently targeting is very restrictive on larger networks and that is not in line with advertiser demand.”
Of course with large advertisers come large demands and topping the list of advertiser requests is quality sites within content networks. When advertisers were asked what was most important in choosing a content network, quality of distribution came first at 57 percent.
Advertisers definitely want to know that the sites in which their contextual listings appear are Grade A, but what else is going on in the mind of searchers? Not surprisingly, bid management and campaign tracking came in second at 48 percent but what’s really interesting is that the desire to treat directive search and content listings differently came in third at 38 percent. I really would’ve thought the separation of search and content would have been number one.
The art of site selection and transparency
The request I most often get from advertisers represents a desire to choose specific sites for listings once they have determined which sites work best for their chosen metrics. This request is oddly reminiscent of an early online advertising practice in which ad networks were used to help determine which sites worked well with stated objectives and which didn’t. Sites could then be selected Chinese menu style.
Clearly, advertisers want transparency and control. This is where a system like Kanoodle’s leaves everyone else in the dust. Whereas in one system bids are knocked down or out based on response rates, Kanoodle has a system to place control back in the hands of the advertisers.
“You can’t cherry pick the sites, because publishers want to protect their rates and their sales channels,” says Josephson. “Our solution was to build out a targeted system that places control back in the hands of advertisers in recognizing the different types of content pages. A few of these are blogs, Really Simple Syndication or RSS, social networks and local. We allow advertisers to manage different types of targeting independently.”
Growth and scale vs. targeting realities
No one aspect of search marketing can compare to the sheer potential that exists with contextual search. The Jupiter survey indicated that over the next 12 months, an additional 20 percent of advertisers would incorporate them into their overall marketing program.
While Wall Street analysts indicate that MSN or AOL jumping headlong into search will keep the revenue fires burning, I don’t believe that market segmentation will stimulate growth the same way adoption of new technologies and tools will. That is, just because there are more players in the market, I don’t think an additional 20 million people will suddenly start clicking on paid links.
I am not saying I am getting tired of my observations suddenly appearing in industry financial reports six months after I lay them out; quite the contrary. In fact, I should say it's rather flattering. I have spent a fair amount of time pointing out the world’s innovators in the space such as Business.Com and Industry Brains and I expect that financial prognosticators will once again follow suit. Kanoodle, with its sly partnership strategies and innovations in transparency might just set future standards for network-based listings.
Additional Resources:
Breaking News: Contextual Search Indicted
Search THIS: Why Search is Slowing
Google’s Instigated Public Optimization
Search THIS: The Evolution Revolution
Visit Kanoodle
Visit Industry Brains
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.