Publishing 2.0 - Latest Comments in The Coming Search Advertising Crash

Re: The Coming Search Advertising Crash

Ted — Sat, 11 Mar 2006 14:45:57 -0000

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!

Re: The Coming Search Advertising Crash

Pierre — Sat, 11 Mar 2006 03:41:41 -0000

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 ..

Re: The Coming Search Advertising Crash

grumpysecretary — Sat, 11 Mar 2006 01:41:20 -0000

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!

Re: The Coming Search Advertising Crash

VincentD — Fri, 10 Mar 2006 20:05:13 -0000

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.

Re: The Coming Search Advertising Crash

Ted — Fri, 10 Mar 2006 16:59:50 -0000

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.

Re: The Coming Search Advertising Crash

Brad — Fri, 10 Mar 2006 13:32:02 -0000

"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.

Re: The Coming Search Advertising Crash

Joshua Porter — Thu, 09 Mar 2006 19:51:29 -0000

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.

Re: The Coming Search Advertising Crash

Mark Devlin — Thu, 09 Mar 2006 19:35:09 -0000

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.

Re: The Coming Search Advertising Crash

Sebastian — Thu, 09 Mar 2006 17:54:43 -0000

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.

Re: The Coming Search Advertising Crash

Remy Porter — Thu, 09 Mar 2006 17:37:22 -0000

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.

Re: The Coming Search Advertising Crash

Scott Karp — Thu, 09 Mar 2006 17:12:41 -0000

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 Ã¢â‚¬Å“brand buildingÃ¢â‚¬Â is itself part of the Ã¢â‚¬Å“good old fashionedÃ¢â‚¬Â status quo assumptions about advertising? ItÃ¢â‚¬â„¢s what ad-sellers claim is happening when they canÃ¢â‚¬â„¢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, Ã¢â‚¬Å“IÃ¢â‚¬â„¢m interested in an SUV or French chocolates or whatever.Ã¢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.

Re: The Coming Search Advertising Crash

Susan Kuchinskas — Thu, 09 Mar 2006 16:29:04 -0000

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?

Re: The Coming Search Advertising Crash

interstar — Thu, 09 Mar 2006 16:10:28 -0000

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. ItÃ¢â‚¬â„¢s the same lack of imagination that kept online advertising in the doghouse until the Google AdWords revolution reinvented the rules of the game.

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 Coming Search Advertising Crash

Al — Thu, 09 Mar 2006 15:48:58 -0000

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

Re: The Coming Search Advertising Crash

RichM — Thu, 09 Mar 2006 15:40:12 -0000

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).

Re: The Coming Search Advertising Crash

dave — Thu, 09 Mar 2006 14:55:21 -0000

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.

Re: The Coming Search Advertising Crash

Ted — Thu, 09 Mar 2006 14:42:32 -0000

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.

Re: The Coming Search Advertising Crash

Derrick — Thu, 09 Mar 2006 14:11:42 -0000

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.

Re: The Coming Search Advertising Crash

Gopi — Thu, 09 Mar 2006 14:11:26 -0000

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!

Re: The Coming Search Advertising Crash

Scott Karp — Thu, 09 Mar 2006 13:44:44 -0000

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.

Re: The Coming Search Advertising Crash

Jakob Nielsen — Thu, 09 Mar 2006 13:29:36 -0000

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?

Re: The Coming Search Advertising Crash

Scott Karp — Thu, 09 Mar 2006 13:13:58 -0000

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?

Re: The Coming Search Advertising Crash

Gopi — Thu, 09 Mar 2006 13:06:02 -0000

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 :)

Re: The Coming Search Advertising Crash

elle — Thu, 09 Mar 2006 13:01:12 -0000

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.

Re: The Coming Search Advertising Crash

pasha sadri — Thu, 09 Mar 2006 12:29:42 -0000

the attention of the user while they are searching is much more valuable than when they are just spending time online.