Category Archives: Search Marketing

Rashtchy’s Golden Search turns Platinum

First published on Feb 3, 2005 in Mediapost’s Search Insider

On November 9, 2004, Piper Jaffray analyst Safa Rashtchy dropped a bombshell on a small handful of people at the New York Ad:Tech show. He doubled his search revenue projections for the next five years. And, he bumped these projections less than two years after they originally came out.

Back then, Rashtchy’s $7 billion by 2007 revenue projection was quoted everywhere. You couldn’t turn around without seeing a reference to these amazing growth predictions. And now, he nonchalantly walked up to the podium and said search revenue in 2007 will be more like $13.5 billion! I was sitting in the audience and my jaw dropped.

But a strange thing happened this time. Nobody seemed to care. In preparing for this column, I scoured the Internet for any mention of Rashtchy’s exciting announcement. I found nothing. While it’s not surprising that the announcement missed the mainstream press, I can’t believe our own industry didn’t pick up on it. I finally had to resort to contacting Rashtchy’s team and getting a copy of his presentation.

In the process, I asked Rashtchy why the announcement didn’t seem to gain attention. His response indicates that the lack of attention means search is now accepted with more credibility: “I think search is now accepted as a big business. You have a $60 billion company on the market doing only search, so people are saying that with these valuations, we expect that you will up your estimates significantly.”

Sorry Rashtchy, Better Late than Never…. I think the readers of this column would be well served to get the high points of Rashtchy’s announcement, so let me share them with you.

First of all, the growth numbers. In March 2003, Rashtchy estimated that worldwide search revenues would hit $7 billion by 2007. Just a few months later he was quoted as saying that these numbers are likely too conservative. With last November’s presentation, he had the opportunity to bump those numbers up.

Rashtchy now feels we’ll not only hit that target, but surpass the 2007 – $7 billion mark this year. Next year, he predicts search revenues to top $10 billion, and then hit $13.5 billion in 2007, $16.2 billion in 2008, $19.8 billion in 2009 and top $23 billion in 2010.

Factors of Growth Rashtchy feels there are a number of revenue drivers fueling the growth: • The increasing use of search by big business

  • A second wave of small business just discovering search
  • The international growth of search
  • Discovery of the branding value of search
  • The growth of contextual search, with local search perhaps poised to take over

 

In addition, he sees four immediate and fundamental drivers of search growth. He collectively refers to them as T.C.P.C.

Traffic – More people doing more searches, especially commercial searches Coverage – Expansion of keyword baskets, monetizing more search terms Price – Increasing prices per click Conversion – As we get better at converting clicks to buyers, advertisers are willing to bid more

Local Search Rashtchy feels that local search could become a significant driver of new search revenue. I know there are mixed opinions about this (I for one agree with Rashtchy on this one and have said so in previous columns), but I think the salient point here is that local search, if successful, dramatically increases the market size for Google and Overture.

It takes search from a global consumer activity and brings it back home. It ties the Internet much closer to our day-to-day shopping activities. It will take a few years for local search to make much of a difference in overall search revenues, but once felt, the impact will be significant.

Search Efficiency – It Still Can’t be Beat In comparing methods for customer acquisition, search still comes out far ahead. Piper Jaffray estimates the average customer acquisition cost for search to be between $7 and $10, compared to $15 and $25 for Yellow Pages, $40 to 80 for e-mail and $60 to 80 for direct mail. Search is growing because it works.

Bottom Line Rashtchy summed up with five conclusions that state the future potential of search in no uncertain terms: – Search is likely to become the most successful marketing method for all businesses

  • Local search is a huge force that could change the dynamics of search for online-only merchants, putting them at a big disadvantage
  • Concepts like broad match could make search an effective soft sell, suggestive advertising mechanism
  • Merchants should focus on customer conversion and extending the customer life cycles
  • Search providers should focus more on merchant conversion rates and offer lower charges for broad match and contextual search. They should also focus heavily on local and international expansion.

 

Black vs White: SEM Soul Searching

First published on Jan 6, 2005 in Mediapost’s Search Insider

At the recent Search Engine Strategies conference in Chicago, there was a new addition to the session list: Black Versus White, And Lots of Gray! Danny Sullivan wanted to stage a showdown between known black hat SEO’s and those that have chosen to tread the purer path. Holding down the dark side was Todd Friesen and Greg Boser. The champions of the straight and narrow were Alan Perkins and Jill Whelan. Falling into the great gray in between was Mikkel deMib Svendson.

The Lighter Side of the Dark Side

The session had a somewhat tongue in cheek tone, but nevertheless, some serious issues that lie at the heart of organic search optimization were explored. Alan Perkins began to tackle the thorny issue of whether black hat SEO was even legal.

His reasoning was that manipulation of factors to increase rank for obviously commercial pages of questionable relevancy was in fact misleading presentation of advertising messages. There’s also the issue of whether hiding or presenting content specifically for search engines falls offside of the recently enacted accessibility legislation.

Todd and Greg countered with a plea for all search engine optimizers to come clean and admit we all manipulate search results (Greg believes SEM should stand for search engine manipulation); it’s just that some of us are more effective at it than others. They use tactics of varying degrees of aggressiveness, and only use the extreme black hat tactics in industries where it’s an absolute necessity to compete, such as online pharmaceuticals and gambling.

Greg made the excellent point that the most serious breach of ethics he’s run across in SEO are those companies that use black hat tactics but don’t disclose the fact to their clients. He insists on full and total approval of tactics by the client.

Was Sun Tzu a Black Hat?

Mikkel likened search marketing to warfare, citing Jay Conrad Levinson’s guerrilla approach, and said that you have to do whatever you have to do to win. Greg agreed, calling it a “full frontal assault” on the search engines. Alan Perkins found the warfare analogy unfortunate and distasteful, saying he didn’t believe that search marketing should be compared to war, because there are no winners in war.

As could be predicted going into such a heated topic, no one changed their minds, but I think we discovered a few more shades of gray between the two extremes. I suspect that was Danny’s intention in putting the session on the agenda. Somewhere between the blinding white of Alan’s world and the dark practicality of Todd and Greg’s, the real world of SEO exists. And as long as people continue to look for organic results, that world will continue to be colored in various shades of gray.

In fact, there is a somewhat symbiotic relationship between the two extremes in our industry. Many reputable companies that steer well clear of questionable practices look with fascination on the tactics employed by the true black hats. One cannot help but admire the sheer brilliance of the methodical attack on the algorithms of the search engines. And in those tactics, they hope to pick up the kernel of a strategy that can be pulled back and employed in a less aggressive manner for their clients. Even the search engines routinely plant informants at the shows at which the black hats tend to congregate to pick up intelligence on the latest tactics.

In the “Wish I Said” Category…

So, at the end of the day, there were no easy answers. But there were a couple of points made in my follow up conversations that I wish had come up in the session. One of the best points was made by my friend Greg Jarboe of SEO-PR.

The fact is that black hats will aggressively look for any hole, and they will attack that hole with everything at their disposal. This means that legitimate ways to gain search visibility are soon exploited by the black hats, forcing search engines in many cases to close down legitimate and useful opportunities for both users and advertisers.

We know that search marketing is a real estate game, and there’s nothing wrong with aggressively looking for new opportunities to gain territory on the page by exploring new strategies including shopping feeds and news engines. That’s just smart search marketing. But the line is crossed when the black hats aggressively subvert the rules and use those new channels to artificially build links or boost their visibility at the expense of the user experience.

And that brings me to my final point. I believe there is a place for guerrilla marketing, but I think Mikkel, Greg, and Todd missed an important point in using the all-out war analogy. Levinson’s intention was that the casualty would be the competition. When you attack the search engines, the casualties are numbered amongst the users of that engine. And those users are your target consumer. I somehow doubt that Mr. Levinson ever wanted you to launch a war on your customer.