Search Marketing in 2005

The environment is changing rapidly. The core temperature of the search engine sector is continuously growing warmer as interest in search-advertising increases. Over a dozen consecutive quarters of this intensifying heat is melting the ice cap that formed a glass ceiling between search engine marketers and mainstream advertising consciousness. Long-term revenue streams are now flooding as the melting ice cap sends buckets of liquid capital flowing into all regions of the sector.

Changes to an environment are often signaled by several seemingly unconnected events, the effects of which only become fully apparent as they unfold. The list of seemingly unconnected events grows longer every day. For months astute observers have noted the very real effects these events have on how search results are provided. An example would be the effect of Blogs both on popular culture and Google results. Another is the growing adoption of broadband in the United States. Other examples include, Yahoo's growing relationship with Hollywood, Google's global goals, MSN's declaration of tech-war, Ask's recent acquisitions, and this week's purchase of About.com by the New York Times. With search engine related items hitting the financial news on a daily basis, multi-billion dollar revenue projections and the sudden realization of what were once science-fiction fantasies, a shift in corporate group-think was inevitable. One day, the print-addled ad-execs on Madison Avenue woke up, smelled the silicone and went to the bank.
This shift in corporate consciousness has, to a large degree, caused and affected the evolution of the search engine environment. Over the past three years, various concepts of search have moved in from the peripheries towards the middle on the radar screens of corporate marketers. Being creatures of habit and working from their power base, they went where the money was.
Until recently, the largest advertisers appeared to define search as the PPC (pay-per-click) offerings of Google's Adwords and Overture, and the myriad of smaller pay-per-click programs. Unlike the technically challenging and unpredictable world of organic search engine optimization, PPC programs give marketing departments solid numbers to base budget estimates and outcome projections on. PPC programs with their massive contextual distribution networks caught the attention of corporate marketers and their investments in PPC have sustained and driven both Google and Overture's bottom lines.

This reliance on PPC has had a positive effect on the business of search, allowing both Google and Yahoo to post record profits on astronomical revenues in the last quarter. Investment in the search sector is also driven by the success of PPC/ad-delivery programs. That bulk of money is being pumped back into innovation and acquisitions with both giants and their smaller rivals expected to release dozens of new features in the coming months.

Corporate reliance on PPC has had a negative effect on growth in the search sector as well. With more attention being paid to paid listings, many large corporations neglected their websites' organic placements. Numerous studies have shown that most online traffic is generated by the organic or unpaid listings and that actual sales tend to stem from a holistic branding approach to search engine marketing. Reliance on one form of search-advertising has almost certainly inhibited online sales for many larger corporate sites, a situation which places their confidence in search-advertising models at risk. A lowering of advertiser confidence may be evidenced by a slight decline in the number of ad-purchases and keyword cost-bids in January though post-Christmas budget-shock might be an invisible factor.

Ultimately, the effects on the environment have been very positive for most of the SEO /SEM sector. Established SEM shops tend to be coping quite well with the sudden changes and are happily netting increasing volumes of big and small fish. They are hiring and training new SEOs and retraining older staff in SEM technique in order to keep up. Several independent SEOs are even turning work away as they are simply too busy to take on new clients. Conventional wisdom says that the organic SEO services shops that learn to combine organic and PPC services (either directly or with a third party) will not only survive the changes in our working environment but will be in a position to provide a much more comprehensive service to their clients.

Today's bottom line for both corporate advertisers and the SEMs who serve them is simple; learn, adapt, evolve, integrate skill-sets and thrive in the ever-expanding world of search. As the floods come in, don't be afraid to get your feet wet.

The Detail On Yahoo!'s New Paid Inclusion Service

The search engine marketplace has undergone significant changes over the past 18-months but yesterday's news from Yahoo! marks a turning point in the industry. How these new expenses will impact the search engine marketplace in the long-run remains to be seen but the impact on websites with lower advertising budgets will be enormous.
Yahoo's distribution reach is massive. Since it began displaying results from its own search engine in place of Google results, Yahoo controls over 41% of search engine traffic either directly or through one of its six distinct search properties, Yahoo Search, Yahoo Directory, Overture, AlltheWeb, Inktomi and AltaVista.
Site XChange
For larger, corporate websites, the new fee structure is not as daunting or intimidating, and may provide benefits for the advertisers. Site XChange will accept all pages in a site from an XML feed detailing information about that site. Overture staff will manage these accounts and provide feedback to webmasters in order to help them improve the information they provide to help improve rankings under targeted keywords and phrases. Fees will be charged on a pay-per-click basis. Ask your webmaster or search engine optimization for advise on establishing an XML feed.
The Bottom Lines
The last time the search engine marketing world saw a fee-schedule like this one was in November 2002 when LookSmart introduced a cost-per-click charge on top of previously paid submission fees. Webmasters immediately rebelled against LookSmart and look what's happened since. That is where the comparison ends however as Yahoo is the second largest search tool in the world and placement at Yahoo is just about as essential as placement at Google. A webmaster rebellion is not likely to last very long or be successful. We expect the team at Yahoo to make some changes to the fee structure of Site Match as it is obviously unfair to smaller players and will likely improve Overture's revenues at the cost of Yahoo's.
Adding a cost-per-click charge on top of a fee for inclusion might also drive smaller businesses over to Google which continues to provide the only 100% free listings available from the major search engines. This change also abruptly ends the honeymoon the "new" Yahoo has enjoyed with search engine marketers. SEOs and webmasters seemed unanimous in their praise for Yahoo's recent Google-free listings. With a massive increase in fees, many small businesses will no longer be able to afford to list in Yahoo. Several of our clients view SEO services marketing as an equalizer against their larger corporate competition. This assumes all things are equal on the Internet, which is obviously untrue as all advertising budgets are not created equally.
With Google being the only major player not charging fees for inclusion, it is assumed that it is only a matter of time before they are forced into jumping on the fee-for-service bandwagon. Luckily, Google co-founder Larry Page criticized Yahoo's new policy yesterday saying he felt paid-inclusion has the ability to compromise the credibility of search.
For now, it appears the future is about to get a lot more expensive. Thank goodness it is at least interesting.