This is media economics 101. Ad dollars follow audience. If search only represents 5% of online media time, it shouldn’t have 40% of the dollars, no matter how measurable search advertising is.
That's where you (and the FT) are mistaken. In search, ad dollars don't follow audience; they follow the stream of people clicking through and purchasing things from the companies buying the keywords.
It's a fundamental mistake to assume that all "online media time" has even remotely the same value to advertisers. Search *should* command a disproportionate share of online ad revenue because people searching are actively looking for something. This makes them much more receptive to a targeted ad, and much more likely to buy the advertiser's product.
So the "search audience" is inherently more valuable than one, say, watching sports or reading cnn.com. It's not just about measurability; it's about context, and being present when a potential buyer is making decisions.
Scott Karp
· 3 years ago
Dave,
I'm well aware of the basic rationale for search advertising. But this approach to marketing is similar in some ways to the "zero percent financing" approach to car sales. It drives sales in the short term but does little to build brand or create sustainable advantages over the long term.
If you're selling SUVs, for example, you of course want to focus on people currently in the market for SUVs. But what about the people who will be in the market for SUVs next year? Do you wait to try and grab their attention in the close-to-transaction moment? Or do you try to build brand and awareness now that might deliver some advantage downstream.
Try Googling SUV -- how far down that list of undifferentiated Sponsored Links do you think most people will look?
There are A LOT of marketing dollars tied to products and services that people aren't just "clicking through and purchasing" in the moment.
Attention is the currency -- and there is A LOT of attention online that is currently being undervalued. And the market WILL correct this eventually.
phil jones
· 3 years ago
But surely the argument is that users who are searching are in a state of mind that it far more "open" to adverts than users of other services.
When I search is the only time I don't exactly know where I'm going and what I want to do there. So that's the best time for an advert to try to attract my attention and tell me that *it* is the best place to go. I certainly don't care about clicking on an ad when I'm reading news or looking at my bank account.
So we should expect more ad revenue to end up at those times when users are more receptive.
Danny Sullivan
· 3 years ago
Old story, new spin. Did you know on average that search only sends like 6 to 13 percent of traffic to web sites? So what's the deal with it being one of the most used services? Why the search gap, as I've called it in the past. Answer? People find you initially through search, then they keep coming back. That five percent share is far more valuable to you as a long term introduction. Plus, c'mon, the FT doesn't know search. It's ROI driven. People are spending what they can afford to spend because they see the direct return on it.
Matthew Gertner
· 3 years ago
Dave totally nails it. The appeal of AdWords (i.e. search engine adds) is hugely greater than that of AdSense (i.e. semi-relevant graffiti). What's more, the problem of clickfraud is tied much more closely to the latter. When you think about it, the idea that anyone can set up a website and make money from people clicking on ads is far too easy to game. Making real cash money is a much bigger motivation than some nebulous idea that you are hurting your competitors by click their links, which is about the worst thing you can do with AdWords.
Wired had a great article about this recently (too lazy to dredge it up) in which they postulated that a botnet could bring the whole AdSense edifice down.
The trend is, IMO, the opposite of what you propose. It's AdSense, not AdWords, whose days are numbered.
Danny Sullivan
· 3 years ago
Matthew also makes a good point. Google doesn't divide its actual search revenue (adsense for search) from contextual revenue (adsense for content). But advertisers can purchase each thing separately. It may very well be that the problems anecdotally more associated with adsense for content (spam sights, clickbox) will cause that program to change, diminish, etc. But that's completely different from actual search advertising (adsense for search -- and darn their horrible names for these).
FYI, AdWords is technically the name for the program you use to buy either AdSense for search or AdSense for content. They made that change some time ago, and it just adds to the confusion.
dave
· 3 years ago
Attention is the currency  and there is A LOT of attention online that is currently being undervalued. And the market WILL correct this eventually.
How do we know it's undervalued? All you've suggested so far is that search is 5% of online minutes, but gets 40% of the dollars. Are you suggesting that search ads should be no more valuable "per online minute" than other kinds of brand-building ads?
Also, do ads displayed on other websites through google's adsense program fit into that 40%?
Scott Karp
· 3 years ago
Interesting points and questions being raised -- see my response in the Update above.
pasha sadri
· 3 years ago
the attention of the user while they are searching is much more valuable than when they are just spending time online.
elle
· 3 years ago
You suggest that advertisers spend their money on search advertising based on faith; are you suggesting that advertisers don't know what they are doing?
Advertisers are very smart - they get people to spend $500 on a cell phone, $5 on fancy toothpaste and $100 on a pair of $10 tennis shoes. They doubled Google's revenues last year, in large part because they found search advertising to be measurably effective.
If they were spending their money based on faith, and they decided to advertise at sites that offer news, entertainment, email, instant messaging and other services, who would get the money?
Google, AOL & MSN.
Gopi
· 3 years ago
Tired of opinions from armchair analysts (with zero expirence in search marketing) like yours...Dave & Danny articulately posted what i intented to post, so i just i second their opinion :)
Scott Karp
· 3 years ago
Elle, some advertisers are indeed very smart, but many do operate on faith (and there is some significant overlap between these groups). Traditional TV, radio, and print advertising, with the exception of some direct response, is faith-based marketing. AOL, MSN, and Yahoo will continue to get the non-search online ad dollars until someone comes up with better ways to deliver customized, niched content to mainstream online media consumers -- new models of content customization will lead to new models for deriving marketing value from that attention.
When mass portal advertising is your best non-search option, of course search looks great.
Gopi, what is GSOFT MEDIA's theory of long-term brand building online?
Jakob Nielsen
· 3 years ago
One more problem with the analysis that non-search sites attract more minutes of user time and thus "ought" to attract more advertising dollars as well:
When on non-search sites, users do not look at the ads. So if you value attention and brand-building, you're not getting it, because users are not allocating their attention to the ads.
You can see one example of an eyetracking plot from a study I am currently running. All of the pages we have analyzed so far look like this: almost no fixations in the ads. (More formal results to be reported later, after the study is done.)
If you want to count attention, you should at least account for attention to the ads, as opposed to attention to the rest of the page. And I agree with several other commentators on this thread that you also have to account for intent: Are people looking for something new? Are they researching or buying, or just browsing?
Scott Karp
· 3 years ago
Jakob,
The eyetracking plot is fascinating. But just because current advertising formats (including AdWords) do not attract attention on non-search sites, that does NOT mean it's not possible to find ways to redirect that attention for marketing purposes.
With all due respect, this huge faith in the status quo that is evident in all the comments here strikes me as a lack of imagination. It's the same lack of imagination that kept online advertising in the doghouse until the Google AdWords revolution reinvented the rules of the game.
Why should we just walk away from the challenge of discovering a new way to effectively monetize the 95% of non-search attention?
When someone figures out a way to do this, THAT'S when the correction will happen.
Gopi
· 3 years ago
I hate to say this but for most part Internet is not a brand building channel (for offline companies) and never will be!...As jakob nielsen posted most users do not look at the ads when visiting non-search websites. Compare this to TV or radio advertising where ads are part of the consumer experience.
>>Why should we just walk away from the challenge of discovering a new way to effectively monetize the 95% of non-search attention?
May be in the future new techniques like behavioral targeting will increase the monetization/effective CPM of non-search sites , especially for non-contextual sites likes news or gaming sites where traditional contextual targeting like adsense dont work! .
But even with this new techniques the ads that will work would be direct response type not branding!
Derrick
· 3 years ago
The value of search advertising isn't in it's stickiness, in fact Google prides itself on how fast they deliver users results and send them on their way. It's the intent of the traffic that counts as I note in my blog AbsoluteValue.
Perhaps for brand advertising the vast number of page views generated elsewhere on the web are interesting, but if you just look at CPM for general traffic, you can see that advertisers clearly don't believe there is much value there.
I question what the other other 60% of the dollars get for their money.
Ted
· 3 years ago
I don't think online is all that great at brand advertising. In fact, it's not very good at all. Awareness but not prestige can be bought through internet brand advertising.
Search advertising, on the other hand, only increases in value every single day, as more products, services, and content are available for purchase online. Search advertising is not going off a cliff, it is just getting started. Non-search? Well we'll really have to wait and see, but if there's going to be a revolution in advertising, it will be in non-search. Instead of advertising on things, some brands will have to become destinations in their on right.
dave
· 3 years ago
Scott, This has been an interesting discussion; thanks for hosting and engaging in it.
I think you're right to suggest that no one has definitively figured out how to consistently engage in brand-building advertising on the net. You can't interrupt people like you do with TV or radio ads, and when compared with print advertising, the smaller screens and more fragmented click-path makes it difficult for any ad to get people's attention if it's not what they were looking for in the first place.
One of the things the internet does best is to get people communicating with each other. And along those lines, the most powerful brand-building activities I can think of are the ones that get people to tell other people about a company or its products. Think of the subservient chicken, or the Nike soccer films showing Ronaldinho hitting the crossbar four times in a row... or the way companies send their products to bloggers for evaluation. In each of these cases, companies really have to rely more on word of mouth than they ever have before. Doesn't word of mouth lead to the most powerful and sustainable brands of all?
I would also suspect that the spending on these alternative kinds of online campaigns never makes it into the overall dollar amounts we hear about for online advertising. But they absolutely compete for our attention, and because they do, they compete for companies' marketing dollars.
Earlier, you referred to search-engine ads as providing a temporary boost, but not a viable way to build a long-lasting brand. I would make the same argument about most of the "faith" advertising you're talking about when compared to the power of word of mouth. That's where I would spend my money.
RichM
· 3 years ago
In the eyetracking heatmap in Jakob's example, no one looks at the ads because they're stuck in a sidebar at the bottom right. Few site operators who are serious AdSense users would locate their ads in this position. The most successful strategies incorporate the AdSense ads more closely with the content. This was well established some time ago based on Google's own heatmap (for which we assume they used eyetracking).
Al
· 3 years ago
Great post and so many stimulating comments, I can't resist in adding one myself here. First I think your correct in indicating the importance of advertising outside of search, although this can be very hard to get right. The reason that search advertising is so important and that it carries more value is as others have mentioned here down to context and intent. Not just intent to buy (which obviously make recipients more receptive to teh ads), but also that the recipient is looking for something. That means there is a good chance to acheive the ulimate from advertising return a 'new customer'. They normally are a new customer because they have exhausgted their current bookmarks and 1st degree contects and loinks. New customers are the most valueable from an advertising perspective, because they add to the bottom line. It is there no suprise that the search based advertising yeilds much higher 'New customer' per click.
That of course does not mean that adsense and other context based advertising outside of search isn't valuable, it is just early in it's evolution right now, and as such has lower yields. Thus it will probably require the addition of demographics etc.. to improve it's effeciencies towards the current search advertising success.
On another note the Lawyer for the plaintiffs in the google case was singing googles praises on cnbc squak box this morning. I guess that is partly because of his positive outcome but also because as he stated 'Google are way ahead of the others at detecting click fraud', he also indicated why they were happy to settle for past cases and not future, and although he could not discolse the exact details of google efforts , he indicated that the courts etc.. would find it difficult to run the=is type of case on google given the technology and processes they now have place. However Yahoo is still in the firing line and all of that is yet to run it's cause. so interesting times for online advertising either way.
sorry end of rant regards Al
phil jones
· 3 years ago
nn
With all due respect, this huge faith in the status quo that is evident in all the comments here strikes me as a lack of imagination. It’s the same lack of imagination that kept online advertising in the doghouse until the Google AdWords revolution reinvented the rules of the game.
nn
Surely "brand building" is itself part of the "good old fashioned" status quo assumptions about advertising? It's what ad-sellers claim is happening when they can't measure anything else. :-)
The challenge of "click-through" is that you can measure the impact of an ad directly. With AdSense, it seems that if there were other places where click-through ads worked as well as on search engines, we'd know about them by now, and they *would* be picking up more revenue.
So I suspect that your argument that search engine space is overvalued, is really an argument that click-through ads are over-valued compared to unmeasurable brand-building ones.
That, may or may not be true, but measurable usually beats unmeasurable, so I wouldn't bet too much on your prediction that revenue will return to brand-building.
Susan Kuchinskas
· 3 years ago
I agree with everybuddy and Danny, Scott, that you're mixing traditional ad models with search. ROI is what it is -- you don't need to question it, and search marketing makes it very clear what the response to a campaign is.
Re "the search frame of mind," it's not just that people are more open to ads because they're searching. In commercially-oriented searches, they actual target themselves. The query says, "I'm interested in an SUV or French chocolates or whatever." That's why that 5 percent of viewing can be worth 40 percent of ad dollars. (Agreed, SUVs have a long sales cycle and can benefit from brand and awareness advertising.)
Nevertheless, this was a very interesting and provocative post! Don't you think that Google may be chasing old media such as print to get an even bigger share of total ad spending than its portion of that 40 percent?
Scott Karp
· 3 years ago
My goodness, this sure struck a nerve. Which is great, because that's when I learn the most, and when blogging actually lives up to the hype.
Surely “brand building†is itself part of the “good old fashioned†status quo assumptions about advertising? It’s what ad-sellers claim is happening when they can’t measure anything else.
Just because ad-sellers use the notion of brand-building as an ROI avoidance tactic, that doesn't mean that brands have no value -- and it doesn't mean you don't need to build them!
The query says, “I’m interested in an SUV or French chocolates or whatever.â€Â
There's a big difference between the buying cycles for an SUV and chocolate!
If marketing has been reduced to nothing more than trying to hook people after they have ALREADY decided to look for or buy something, that is a SAD state of affairs.
I'm tempted to say that the measurability of search advertising has lead to a fair amount of complacency with what marketing can achieve.
One of the things the internet does best is to get people communicating with each other. And along those lines, the most powerful brand-building activities I can think of are the ones that get people to tell other people about a company or its products.
Instead of advertising on things, some brands will have to become destinations in their on right.
This is where marketing is headed. Marketing that fully leverages the interactivity of Web 2.0 will create value propositions for brands that extend much further back in the buying cycle than the moment of searching for something you want to buy. People weren't "searching" for a place to buy a chicken sandwich when they came across subservient chicken and ended up hanging out a Burger King.
t3knomanser
· 3 years ago
Google has a winning strategy for ads, and it isn't the one on the Google page- it's the "Web Clips" in GMail. In the past few weeks, I've clicked on four or five ads- which is four or five more than I normally click on. By mixing ads into content in a fashion that the ads themselves seem informative, you've got a much better shot at passive ads along the edge of the screen. I'm habituated to scroll past ads, even the ones in the middle of the article. But the sponsored links in Web Clips don't _seem_ like ads- they seem like information. And I've found that they WERE useful- which increaases the chance that I'll view those ads again.
Sebastian
· 3 years ago
There's an oversimplification here that the only relevant search traffic to consider from a search advertising standpoint is the 'ready to buy' point of a sales cycle. Nonsense. This is where brand-building occurs and is being missed in this discussion.
Try to frame it how *you* might search. I'm nowhere near ready to buy a HDTV, but I search on them constantly to see where the market is and what's out there. And I click on paid listings when they look like they might be good from a price-checking or research standpoint. The search space should be viewed by advertisers like a TV program or magazine with everyone's ads competing for space, even for branding.
In my searches, I've read more about Samsung DLP HDTVs and their features/benefits than any other brand. I've also not read one single print ad or seen one TV commercial for them so far. If you're in the search space and people can find you and research your product? You're building your brand, in a totally different interactive way than print or TV.
Mark Devlin
· 3 years ago
A recent study showed that 51% of UK internet users only visit 5 sites. In my experience as people become used to the net they search less. This is bad for search and good news for existing brands. However, Google now has hundreds of thousands of advertising clients that they can repurpose if necessary -- their strength is really in the client base, not the output media.
Joshua Porter
· 3 years ago
The Search stage is one of the most valuable not because people are more willing to buy or consider buying at this stage, but because each individual entering a search query has given you a simple, targeted query, which is more and better information about their present state of mind than at any other moment they are online.
Their intentions are, in that moment, as transparent as they ever get to a 3rd party site.
Brad
· 3 years ago
"This is media economics 101. Ad dollars follow audience." According McCann Erickson, Yellow Pages garner about $15b in advertising, Direct Mail about $60b, outdoor about $7b - so thats about $92b, or a third of total U.S. advertising. Obvisouly, people spend FAR less than 5% of their media time with the yellow pages, direct mail and outdoor advertising, but some how these are huge businesses that no one in his right mind would say are going away (any time soon). Ad dollars do follow audience, but not in proportion to time used when looked at across media. For example, radio has 20% of media time but 8% of ad share. Radio advertising will change with the radio audience but the RATIO of 2/5 (ad share/audience share) is unlikely to change much.
Ted
· 3 years ago
Yellow Pages garner about $15b in advertising
This is something that I surprisingly don't hear about enough. Google/Yahoo/MSN are all moving hard into that market. The Yellow Pages are disappearing (somewhat) and those dollars will flow into their online/mobile/in-car equivalents. That is why, even if Google plateaus with search ads, there is still at least one monster place where they can go.
Throw in direct mail --> email and you've got another monster ad-eater.
VincentD
· 3 years ago
If figures matter :
Point 1 : 1 internet session out of 3 begins with the user (the "audience") performing a research on a search engine.
Point 2: Datatracking allows things that other media do not : - the "media" (the search engine) knows what share of the audience watches a given page (one page per searched expression) - both the "media" and the advertiser get to know what share of the audience does notice AND click trough an advertising - the resulting clicktrough ratio is IN ITSELF an indication of the value of a given adspace (just like it would be for a magazine ad that could be identified as having led a potential customer to cross the door of a shop)
Point 3 : What really gives an adspace its value is the amount of transactions it leads to, that : - cannot be tracked with precision for TV, Movie, Radio, Press ads - can be precisely monitored and thus enable Spends fine tuning DURING the advertisement campaign
Last point : While search engines use represent only 5% of the time a user spends surfing on the internet, it does represent, for any given amount of adspends shared equaly between "traditionnal" (on site banners, or even rich media ads) and search engine marketing, more to far more than 40% of the transactions your advertising campaign will generate.
My belief : Search Engine Marketing represents a volume of advertising share that is equivalent to the sellings it generates (I even think it's often under-estimated). It can still grow, while traditionnal onsites graphical advertisement will be mainly used to build brand awareness.
grumpysecretary
· 3 years ago
Not a crash per se. Rather a shift. Advertisers, especially local advertisers will realize that a search result within the site of a trusted provider, such as a major newspaper, is much more valuable than a google result.
The shift is coming. It would have been here already but newspaper editors have been very slow to see how valuable search results can be within their sites. Because in the end, most of what I want to find is local, and I'd rather turn to local trusted providers. And now that DART and others can serve rich media ads based upon key words searches within sites... things are gonna shift.
Newspapers are going to gain a larger share of online ad buys for search results. And those buys from local and national advertisers will target search results within the newspaper sites. And as this happens, there will be competition between advertisers for those key words and thus the CPM will rise.
The LA Times for instance, will be able to sell ads based upon a search within their site for "Sushi" for the same amount or more than a homepage ad placement. And their search data will tell them which keywords to market and to which advertisers. Soon there will be stand alone key word search results "rate cards"
Really! Wait & see!
Pierre
· 3 years ago
Interesting but the success of adwords is in the EASY way you can open an account and put your advertising. Same for Adsense. For big firms your are right but for millions of little firms, the success key is to be EASY SYSTEM !!! People prefer easy system that brings 0,01 than complicated system that may be can bring more.. Why ? Only because they want to spend maximum 5% of their time ;-)) to learn how the systme works ..
Ted
· 3 years ago
Grumpysecretery makes a good point. Newspapers will need to upgrade their search engines, and organize their content in a better way (the kosmix.com taxonomy approach might be good here) so people will start to think of them as a resource.
As a counterpoint, however, why would I go to Latimes.com and search for sushi, when I can go to local.google.com and search for 'sushi 90049'? Presumably this would include indexed LATimes pages as well as others. Is it the trust factor? If that is so, then Newspapers have a huge advantage, as there is still quite a wide gulf between how much most people trust search results and how much they trust a known local news source with the prestige of a LATimes. Interesting comment!
All Comments
That's where you (and the FT) are mistaken. In search, ad dollars don't follow audience; they follow the stream of people clicking through and purchasing things from the companies buying the keywords.
It's a fundamental mistake to assume that all "online media time" has even remotely the same value to advertisers. Search *should* command a disproportionate share of online ad revenue because people searching are actively looking for something. This makes them much more receptive to a targeted ad, and much more likely to buy the advertiser's product.
So the "search audience" is inherently more valuable than one, say, watching sports or reading cnn.com. It's not just about measurability; it's about context, and being present when a potential buyer is making decisions.
I'm well aware of the basic rationale for search advertising. But this approach to marketing is similar in some ways to the "zero percent financing" approach to car sales. It drives sales in the short term but does little to build brand or create sustainable advantages over the long term.
If you're selling SUVs, for example, you of course want to focus on people currently in the market for SUVs. But what about the people who will be in the market for SUVs next year? Do you wait to try and grab their attention in the close-to-transaction moment? Or do you try to build brand and awareness now that might deliver some advantage downstream.
Try Googling SUV -- how far down that list of undifferentiated Sponsored Links do you think most people will look?
There are A LOT of marketing dollars tied to products and services that people aren't just "clicking through and purchasing" in the moment.
Attention is the currency -- and there is A LOT of attention online that is currently being undervalued. And the market WILL correct this eventually.
When I search is the only time I don't exactly know where I'm going and what I want to do there. So that's the best time for an advert to try to attract my attention and tell me that *it* is the best place to go. I certainly don't care about clicking on an ad when I'm reading news or looking at my bank account.
So we should expect more ad revenue to end up at those times when users are more receptive.
Wired had a great article about this recently (too lazy to dredge it up) in which they postulated that a botnet could bring the whole AdSense edifice down.
The trend is, IMO, the opposite of what you propose. It's AdSense, not AdWords, whose days are numbered.
FYI, AdWords is technically the name for the program you use to buy either AdSense for search or AdSense for content. They made that change some time ago, and it just adds to the confusion.
How do we know it's undervalued? All you've suggested so far is that search is 5% of online minutes, but gets 40% of the dollars. Are you suggesting that search ads should be no more valuable "per online minute" than other kinds of brand-building ads?
Also, do ads displayed on other websites through google's adsense program fit into that 40%?
Advertisers are very smart - they get people to spend $500 on a cell phone, $5 on fancy toothpaste and $100 on a pair of $10 tennis shoes. They doubled Google's revenues last year, in large part because they found search advertising to be measurably effective.
If they were spending their money based on faith, and they decided to advertise at sites that offer news, entertainment, email, instant messaging and other services, who would get the money?
Google, AOL & MSN.
When mass portal advertising is your best non-search option, of course search looks great.
Gopi, what is GSOFT MEDIA's theory of long-term brand building online?
When on non-search sites, users do not look at the ads. So if you value attention and brand-building, you're not getting it, because users are not allocating their attention to the ads.
You can see one example of an eyetracking plot from a study I am currently running. All of the pages we have analyzed so far look like this: almost no fixations in the ads. (More formal results to be reported later, after the study is done.)
If you want to count attention, you should at least account for attention to the ads, as opposed to attention to the rest of the page. And I agree with several other commentators on this thread that you also have to account for intent: Are people looking for something new? Are they researching or buying, or just browsing?
The eyetracking plot is fascinating. But just because current advertising formats (including AdWords) do not attract attention on non-search sites, that does NOT mean it's not possible to find ways to redirect that attention for marketing purposes.
With all due respect, this huge faith in the status quo that is evident in all the comments here strikes me as a lack of imagination. It's the same lack of imagination that kept online advertising in the doghouse until the Google AdWords revolution reinvented the rules of the game.
Why should we just walk away from the challenge of discovering a new way to effectively monetize the 95% of non-search attention?
When someone figures out a way to do this, THAT'S when the correction will happen.
>>Why should we just walk away from the challenge of discovering a new way to effectively monetize the 95% of non-search attention?
May be in the future new techniques like behavioral targeting will increase the monetization/effective CPM of non-search sites , especially for non-contextual sites likes news or gaming sites where traditional contextual targeting like adsense dont work! .
But even with this new techniques the ads that will work would be direct response type not branding!
Perhaps for brand advertising the vast number of page views generated elsewhere on the web are interesting, but if you just look at CPM for general traffic, you can see that advertisers clearly don't believe there is much value there.
I question what the other other 60% of the dollars get for their money.
Search advertising, on the other hand, only increases in value every single day, as more products, services, and content are available for purchase online. Search advertising is not going off a cliff, it is just getting started. Non-search? Well we'll really have to wait and see, but if there's going to be a revolution in advertising, it will be in non-search. Instead of advertising on things, some brands will have to become destinations in their on right.
This has been an interesting discussion; thanks for hosting and engaging in it.
I think you're right to suggest that no one has definitively figured out how to consistently engage in brand-building advertising on the net. You can't interrupt people like you do with TV or radio ads, and when compared with print advertising, the smaller screens and more fragmented click-path makes it difficult for any ad to get people's attention if it's not what they were looking for in the first place.
One of the things the internet does best is to get people communicating with each other. And along those lines, the most powerful brand-building activities I can think of are the ones that get people to tell other people about a company or its products. Think of the subservient chicken, or the Nike soccer films showing Ronaldinho hitting the crossbar four times in a row... or the way companies send their products to bloggers for evaluation. In each of these cases, companies really have to rely more on word of mouth than they ever have before. Doesn't word of mouth lead to the most powerful and sustainable brands of all?
I would also suspect that the spending on these alternative kinds of online campaigns never makes it into the overall dollar amounts we hear about for online advertising. But they absolutely compete for our attention, and because they do, they compete for companies' marketing dollars.
Earlier, you referred to search-engine ads as providing a temporary boost, but not a viable way to build a long-lasting brand. I would make the same argument about most of the "faith" advertising you're talking about when compared to the power of word of mouth. That's where I would spend my money.
First I think your correct in indicating the importance of advertising outside of search, although this can be very hard to get right.
The reason that search advertising is so important and that it carries more value is as others have mentioned here down to context and intent. Not just intent to buy (which obviously make recipients more receptive to teh ads), but also that the recipient is looking for something. That means there is a good chance to acheive the ulimate from advertising return a 'new customer'. They normally are a new customer because they have exhausgted their current bookmarks and 1st degree contects and loinks. New customers are the most valueable from an advertising perspective, because they add to the bottom line. It is there no suprise that the search based advertising yeilds much higher 'New customer' per click.
That of course does not mean that adsense and other context based advertising outside of search isn't valuable, it is just early in it's evolution right now, and as such has lower yields. Thus it will probably require the addition of demographics etc.. to improve it's effeciencies towards the current search advertising success.
On another note the Lawyer for the plaintiffs in the google case was singing googles praises on cnbc squak box this morning. I guess that is partly because of his positive outcome but also because as he stated 'Google are way ahead of the others at detecting click fraud', he also indicated why they were happy to settle for past cases and not future, and although he could not discolse the exact details of google efforts , he indicated that the courts etc.. would find it difficult to run the=is type of case on google given the technology and processes they now have place.
However Yahoo is still in the firing line and all of that is yet to run it's cause. so interesting times for online advertising either way.
sorry end of rant
regards
Al
Surely "brand building" is itself part of the "good old fashioned" status quo assumptions about advertising? It's what ad-sellers claim is happening when they can't measure anything else. :-)
The challenge of "click-through" is that you can measure the impact of an ad directly. With AdSense, it seems that if there were other places where click-through ads worked as well as on search engines, we'd know about them by now, and they *would* be picking up more revenue.
So I suspect that your argument that search engine space is overvalued, is really an argument that click-through ads are over-valued compared to unmeasurable brand-building ones.
That, may or may not be true, but measurable usually beats unmeasurable, so I wouldn't bet too much on your prediction that revenue will return to brand-building.
Re "the search frame of mind," it's not just that people are more open to ads because they're searching. In commercially-oriented searches, they actual target themselves. The query says, "I'm interested in an SUV or French chocolates or whatever." That's why that 5 percent of viewing can be worth 40 percent of ad dollars. (Agreed, SUVs have a long sales cycle and can benefit from brand and awareness advertising.)
Nevertheless, this was a very interesting and provocative post! Don't you think that Google may be chasing old media such as print to get an even bigger share of total ad spending than its portion of that 40 percent?
Just because ad-sellers use the notion of brand-building as an ROI avoidance tactic, that doesn't mean that brands have no value -- and it doesn't mean you don't need to build them!
There's a big difference between the buying cycles for an SUV and chocolate!
If marketing has been reduced to nothing more than trying to hook people after they have ALREADY decided to look for or buy something, that is a SAD state of affairs.
I'm tempted to say that the measurability of search advertising has lead to a fair amount of complacency with what marketing can achieve.
This is where marketing is headed. Marketing that fully leverages the interactivity of Web 2.0 will create value propositions for brands that extend much further back in the buying cycle than the moment of searching for something you want to buy. People weren't "searching" for a place to buy a chicken sandwich when they came across subservient chicken and ended up hanging out a Burger King.
Try to frame it how *you* might search. I'm nowhere near ready to buy a HDTV, but I search on them constantly to see where the market is and what's out there. And I click on paid listings when they look like they might be good from a price-checking or research standpoint. The search space should be viewed by advertisers like a TV program or magazine with everyone's ads competing for space, even for branding.
In my searches, I've read more about Samsung DLP HDTVs and their features/benefits than any other brand. I've also not read one single print ad or seen one TV commercial for them so far. If you're in the search space and people can find you and research your product? You're building your brand, in a totally different interactive way than print or TV.
Their intentions are, in that moment, as transparent as they ever get to a 3rd party site.
This is something that I surprisingly don't hear about enough. Google/Yahoo/MSN are all moving hard into that market. The Yellow Pages are disappearing (somewhat) and those dollars will flow into their online/mobile/in-car equivalents. That is why, even if Google plateaus with search ads, there is still at least one monster place where they can go.
Throw in direct mail --> email and you've got another monster ad-eater.
Point 1 :
1 internet session out of 3 begins with the user (the "audience") performing a research on a search engine.
Point 2:
Datatracking allows things that other media do not :
- the "media" (the search engine) knows what share of the audience watches a given page (one page per searched expression)
- both the "media" and the advertiser get to know what share of the audience does notice AND click trough an advertising
- the resulting clicktrough ratio is IN ITSELF an indication of the value of a given adspace (just like it would be for a magazine ad that could be identified as having led a potential customer to cross the door of a shop)
Point 3 :
What really gives an adspace its value is the amount of transactions it leads to, that :
- cannot be tracked with precision for TV, Movie, Radio, Press ads
- can be precisely monitored and thus enable Spends fine tuning DURING the advertisement campaign
Last point :
While search engines use represent only 5% of the time a user spends surfing on the internet, it does represent, for any given amount of adspends shared equaly between "traditionnal" (on site banners, or even rich media ads) and search engine marketing, more to far more than 40% of the transactions your advertising campaign will generate.
My belief :
Search Engine Marketing represents a volume of advertising share that is equivalent to the sellings it generates (I even think it's often under-estimated). It can still grow, while traditionnal onsites graphical advertisement will be mainly used to build brand awareness.
The shift is coming. It would have been here already but newspaper editors have been very slow to see how valuable search results can be within their sites. Because in the end, most of what I want to find is local, and I'd rather turn to local trusted providers. And now that DART and others can serve rich media ads based upon key words searches within sites... things are gonna shift.
Newspapers are going to gain a larger share of online ad buys for search results. And those buys from local and national advertisers will target search results within the newspaper sites. And as this happens, there will be competition between advertisers for those key words and thus the CPM will rise.
The LA Times for instance, will be able to sell ads based upon a search within their site for "Sushi" for the same amount or more than a homepage ad placement. And their search data will tell them which keywords to market and to which advertisers. Soon there will be stand alone key word search results "rate cards"
Really! Wait & see!
As a counterpoint, however, why would I go to Latimes.com and search for sushi, when I can go to local.google.com and search for 'sushi 90049'? Presumably this would include indexed LATimes pages as well as others. Is it the trust factor? If that is so, then Newspapers have a huge advantage, as there is still quite a wide gulf between how much most people trust search results and how much they trust a known local news source with the prestige of a LATimes. Interesting comment!