Seeing Search’s Future at Ad:Tech

Last week’s Ad:Tech San Francisco show wasn’t specifically about search marketing—although there were some grumbles overheard from audience members that “If you’re not in search marketing, you’re out in the cold here.” (True quote!) While the conference, which focuses broadly on the interface between marketing and technology, had only two sessions explicitly devoted to search, most of its other panels certainly touched on topics that search marketers are thinking about, from social networks to behavioral targeting of ads.

Heck, the opening keynote speaker was Mark Kvamme, a venture partner with Sequoia Capital, a firm that made early and important investments in both Google and Yahoo! Kvamme told the audience that there’s an untapped audience for Internet advertising of both the search and the display varieties, and that as a consequence, online ad spending of all types will hit $30 billion to $35 billion in the next two years.

After Kvamme’s lead-off talk, one of the first panels at the conference brought up four search marketing experts to ponder questions about “The Future of Search”.

One of those questions grew out of recent headlines: the poaching by Microsoft of Steve Berkowitz, the CEO of Ask.com, which is making a big to grab search market share and lift itself into greater prominence and profitability. Moderator Bambi Francisco, the MarketWatch correspondent, asked panelists if Ask.com was gaining traction with users and advertisers.

John Battelle, author of Google biography “The Search” and head of the newly-formed Federated Media blog content network, said that perennial fourth-place engine Ask “was competing very successfully with itself” and growing very well against its own year-over-year user numbers. But he said that Berkowitz had been so crucial to turning the company around, making its search results more relevant and its business model less ad-driven, that his move to head up Microsoft’s online services division, coming right after Ask re-launched its search services, “was a big boon to Microsoft and probably a big blow to Ask.”

Battelle speculated that Berkowitz might have joined the ranks at Redmond partly because of the dominance of Barry Diller, chairman and CEO of InterActiveCorp, which bought Ask last year when it still had its Jeeves attached. But he also expressed reservations about the Microsoft move because Berkowitz will not have responsibility for product development at MSN. “If you’re going to run a big chunk of business and you don’t control how products are developed, that’s something I would watch out for at MSN,” he said.

On the subject of MSN, its adCenter product, which allows marketers to pay more to target specific searcher demographic groups when they buy keywords, now supplies about 70% of the sponsored listings on Windows properties and is expected to have a full U.S. launch in June or July. It’s received some strong endorsements from the marketers and agencies that have already started using it, and is being touted as the wave of the near future for other search engines.

Dana Todd, executive vice president of search marketing firm SiteLab International and president of the Search Engine Marketing Professional Organization, admitted that she found the theory behind adCenter “pretty cool”—that marketers who saw a big lifetime value in reaching, say, women 18-35 who play active sports could leverage that value by paying more to make sure they reach those customers.

But Todd also said she fears that the move toward targeted search buys may ultimately undercut the strengths of search marketing.

“We in search always thought that we were doing something unique in advertising by bypassing the demographics, the GRP {gross rating point], all the loose metrics and going right for performance,” she said. “It didn’t matter who you were, how old you were, or what you wanted those tennis shoes for; marketers were able to buy that specifically. And I wonder if [targeting in search] is a step forward, backward or just a parallel step, not just for MSN but for any of the other search engines going down this road.”

She added that it may still turn out that users can’t be easily segmented into demographic profiles. “I’m not sure that the online space really works with these metrics in an ongoing fashion.”

Francisco noted that Yahoo! reported in its first-quarter financials that revenue per page view had gone up 10% in the quarter and asked why the engine was so successful in monetizing search. Fredrick Marckini, founder and CEO of search marketing firm iProspect, pointed out that Yahoo! is the only major engine that can monetize its organic search results through paid inclusion, under which Web operators can submit their sites to Yahoo! to be indexed for a fee.

“Paid inclusion is the most underreported killer app for marketers in our experience,” he said. Where Google might take three to six months to spider a 100,000-page site, paid inclusion can get the entire site into Yahoo!’s index almost overnight. “That’s like having 100,000 lottery tickets rather than 20,000,” he said. “When we feed clients into the paid-inclusion program, they get better control over the listings and can usually improve their showing in the rankings a little bit.

The question came up of the viability of niche vertical searches in a world so dominated by Google. Marckini and Battelle agreed that the term “search engine” needs to be widened to include a variety of different mechanisms that people use to find things on the Web—for example, iTunes as a vertical music/ podcast search or Amazon as a search for books and other goods.

“Search is a user interface now,” Battelle said. “It’s a platform, similar to Windows. For every thousand companies that were funded to do some spiffy utility on top of Windows, 900 of them died in the first four years. But that means we’re trying a lot of really interesting ideas that will feed into the ecosystem and make the search interface better.”

Todd said that the only survival hope for most vertical engines was to strike partnership deals with the major engines and to enhance their own organic listings. Marckini offered that while chances were slim of any engine taking out Google in head-to-head competition, “The opportunity is to slice off one piece of their pie after another, going after the travel section and slicing off category after category.”

Kevin Ryan, managing partner with interactive marketing firm Kinetic Results, suggested that if there is indeed a “Google-killer” out there, it may be in the infrastructures now being built by the voice carrier and cable networks.

A number of search companies have arisen that offer “social search”, the ability to deliver restructured search results based on what other like-minded people have found valuable. Ryan said this might be a step in the right direction to offering users more relevant information.

“What we’re doing here is trying to get away from the simple Page Rank methodology and use other people’s ideas of relevance as a base line for determining relevance,” he said. “I think any new technology applied to indexing that connects the user to information is a positive move.”

From the advertiser’s standpoint, Todd said the broad move toward personalized search results will create search campaign difficulties for marketers. “That’s part of the complexity of managing a campaign when ‘rank’ is an irrelevant word because one person’s results are different from another’s,” she said.

And advertisers may not have many alternatives to simply handing over that control to users and hoping that their ads carry the same impact in that customized search. “It’s a problem that you can’t do anything about, so just do the best you can,” she said. “Just write the check, change your ads frequently, and measure your return on investment.”

Todd added that the growing personalization of search results also presents difficulties for relations between her search marketing firm and its clients. “Trying to explain to my client why they see something different in New York than I see in San Diego is a little frustrating,” she said. “They think I’m lying.”

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