Category Archives: Online Trends

No Real Surprises in the Latest iCrossing Study

iCrossing released the results of a new study conducted by Harris Interactive just before the holidays. The study looked at the role of online in the CPG market. A media release outlines the key findings, including:

  • Consumers look for CPG’s online, with 39% of US adults confirming they’ve conducted a search for CPG’s.
  • Women do this more than man. Footwear and apparel lead the categories searched for.
  • Online CPG searches often result in offline sales. Much of this activity is looking for sales or special offers at traditional bricks and mortar retail locations.
  • Activity is spread pretty evenly over search engines, retailer websites and manufacturer’s sites. Shopping engines and consumer information sites have substantially less traffic.

There are a few notable take aways here that speak to the future use of online. Most CPG’s have been slow to move to online as a marketing channel. The more commoditized the product, the less the online research activity, or so traditional marketing wisdom has told us. Certainly, CPG’s have been very slow to enter the search arena, yet the iCrossing study tells us that there is a significant portion of the consumer population are turning online to research these every day purchases.

To be honest, I think the study is probably underreporting the frequency of this. At Enquiro, we’re steering away from self reported survey based vehicles as a sole vehicle to look at search behavior, because we find that people have trouble recalling how often they use search and what they use it for. It’s become second nature for us to turn to online, and that in turn usually means search. So in a survey like the iCrossing one, memory lapses usually mean overly conservative numbers.

Another notable trend that would influence the findings are the increasing spread of high speed internet access. The likelihood of this CPG online activity happening is directly related to how handy a computer with an internet connection is. The more ubiquitous access is, the more we’ll do a quick look up on everything. About the only purchases I make now that I don’t do some form of online research about are groceries. And as local search becomes more robust, that will probably change too.

I’ve been predicting another surge of advertising dollars migrating into search over the next year or two. As we understand more how universal online research truly is, and how a lot of major advertisers are completely missing this very important touchpoint, more budget will find it’s way into search. While there are no real surprises in the iCrossing study, it’s good that major advertisers are continually reminded that they’re missing a rather large boat.

Year End Lists and the Stories They Tell

I was just putting a Search Insider column in the can for next week (it will run next Thursday) about the year end lists that are coming out of the various search engines and it brought up a few observations, together with a story that hit my desk about Google capturing 63% of searches.

First of all, the top ten lists. Here are the reported lists from each of the engines

Google Yahoo Microsoft
  1. Bebo
  2. Myspace
  3. World Cup
  4. Metacafe
  5. Radioblog
  6. Wikipedia
  7. Video
  8. Rebelde
  9. Mininova
  10. Wiki
  1. Britney Spears
  2. WWE
  3. Shakira
  4. Jessica Simpson
  5. Paris Hilton
  6. American Idol
  7. Beyonce Knowles
  8. Chris Brown
  9. Pamela Anderson
  10. Lindsay Lohan
  1. Ronaldinho
  2. Shakira
  3. Paris Hilton
  4. Britney Spears
  5. Harry Potter
  6. Eminem
  7. Pamela Anderson
  8. Hilary Duff
  9. Rebelde
  10. Angelina Jolie

First of all, I say reported because these aren’t actually the real top searches. Danny Sullivan had a good post pointing out the inconsistencies. These are filtered, sanitized and in Google’s case, apparently manipulated. The same could be true for the others, but unfortunately, they haven’t provided a tool like Google Trends that we can use to trip them up.

Be that as it may, it’s the comparison between them that holds the story that I touched on in the column, but would like to explore in greater depth.

Look at Google’s list. It’s obvious that people are using Google to interact with the web. They’re using it like a tool, to get to where they’re going. This becomes more apparent when we add the real top searches, the navigational queries that were filtered from the list.

googletrendsnav

People use Google to get to Yahoo, MSN..and even Google (okay, I’m still trying to figure that one out).

Look at Yahoo and Microsoft’s list. It’s the online equivalent of the trash tabloid section of the local magazine rack. These aren’t essential searches, these are fluff. It’s the searching you would do if you had time to kill. It’s the searching you would do if you had nothing better to do. It’s the searching you would do if you weren’t using Google for something useful.

I’m sure part of this comes from Yahoo and Microsoft’s portal roots. It speaks to a different philosophy towards search. Google aims to be the Web’s Swiss Army knife. It appears that Yahoo and Microsoft aspire to be the Entertainment Tonight of the Internet. When it comes to the Internet, Google is infrastructure, Yahoo and Microsoft are superstructure.

And that’s a fundamental issue for Yahoo and Microsoft. To win, or even hold their own in search, they have to offer tool-like utility. They have to live, breath and eat usability. They have to beat Google at Google’s own game. It’s not an easy task, and it’s getting harder every day. The latest numbers from Hitwise show they’re losing ground, not gaining it. According to the just released report, Google has a 62.79% share of searches for the 4 week period ending Dec. 16, compared to 21.9% for Yahoo and 9.28% for Microsoft. The number has been consistently trending up for Google, and trending down for the competition.

One last thing. Yahoo can say they focus on usability, but take a tour of the interface they put on their top 10. This would be enough to make Jakob Nielsen go postal. It’s one of the most irritating interfaces I’ve run into in a long time. It’s completely in Flash, launches with an irritating video clip, and makes you hunt around for the plain HTML version. I just know somewhere in Sunnyvale, there’s a team patting each other on the back for putting this thing together.

Stepping into the Did It/Web Guerrilla/Searchengineland Fray

I came in this morning, and what did I find? Another tempest stirring up in the blogosphere! Danny Sullivan, Kevin Lee and Greg Boyser have all waded in, so what the hell, I’ll dive in too.

First, a little history. Did It President David Pasternack started the whole deal sometime ago when he took a swipe at SEO, calling for it’s imminent death. I’m not going to elaborate, but for those of you interested, here are links to the original article, and a follow up article.

Now, Kevin Lee from Did It has written a ClickZ column, adding some clarity, but also predicting organic results being pushed below the fold because sponsored ads are more relevant. I’m going to set aside for a moment the SEO spamming question that Kevin raises. Greg and Danny do a pretty passionate job of defending SEO.

I’d like to speak from another perspective, the search user. There are a couple things that should be considered here.

First of all, contrary to Kevin’s point, just paying for an ad doesn’t make it relevant. That’s because the vast majority of marketers don’t consider the intent of the search user. They assume that everyone is ready to buy right now. That assumption is at least 85% wrong. Go ahead, do a search for any popular consumer product. I’ll bet the ads you see are talking about lowest prices, free shipping, guarantees and other hot button items that are aimed at a purchaser. But study after study shows that search engines are used primarily for product research, not purchase. The problem is that marketers have a very biased set of metrics they use to measure return. They measure ROI based on purchase, so when they test, these types of ads tend to pull the numbers they’re looking for. But the metrics aren’t capturing the full story. The 85% of users that are researching are basically ignored. No value is assigned to them. Until PPC marketers figure this out, they’re not doing the user any favors.

Our research shows that a very interesting interaction takes place with the researcher versus the purchaser in that Golden Triangle real estate. Both users look at the top sponsored ads when they appear. They both look at the organic listings. Frankly, there’s not a lot of difference between the scan patterns. But it’s where they click that makes the difference. When they’re ready to buy, based on a recent eye tracking study, about 45% click on top sponsored, and about 55% clicked on the top 1 or 2 organic links. Almost a 50/50 split, FOR THOSE THAT ARE READY TO PURCHASE. But when we look at the other 85%, the ones doing research, EVERYONE OF THEM clicked on the organic link. And in the test, the same site appeared in both spots, so relevancy of the destination was equal. As long as users want organic links, organic optimization continues to be important.

Look, David Pasternack can ring the funeral bell for organic all he wants, but the fact is, it’s not his call. It’s the user’s. Yahoo has actually done exactly what he and Kevin are predicting. They’ve moved organic down the page, jamming more sponsored on the top. Based on Did It’s comments, this should be good for the user, right? It should be more relevant, pushing the “spam” down below the fold. Wrong. Google kicked Yahoo’s ass in user experience in our latest study by every metric we looked at. And they’re definitely winning in the big picture, including stock prices. The difference. About 14% of Yahoo’s screen real estate (at 1024 by 768 pixels) was reserved for top organic. 33% of Google’s real estate went for top organic. You want more proof? Ask, back in the Ask Jeeves days, pushed organic totally off the page, doing exactly what Kevin and David call for and filling the top with sponsored. Take a look at Ask now. Organic is back above the fold. Spend some time talking to Ask usability lead Michael Ferguson about how the absence of organic worked out for them.

And it’s not that sponsored links provide a bad experience. Our study proves Kevin somewhat right. Top sponsored links, for commercial queries, delivered the highest success rates. But those were in highly structured and commercially oriented scenarios. That doesn’t represent all searches. It’s not that we avoid sponsored links, but we do want a choice and we want relevance, ALIGNED TO OUR CURRENT INTENT. Google has recognized that to a much greater extent than their competitors, and they’re eating their lunch.

There’s a reason why 70% of users choose organic. We’ve done a number of studies over the past 3 years, and that number has remained fairly constant.  It can’t be because those results are filled with spam. I actually just chatted with Marissa Mayer at Google, and she continually emphasized the importance of organic on the page. It’s a cardinal rule there that at least one organic result will always appear at 800 by 600. It’s mandated by Larry and Sergey. And that’s because they know it’s important to the user. We want alternatives. And we will be the judge of relevancy. That’s why Google has stringent click through measures on their top sponsored ads. If they don’t get clicked, they don’t show. The top of the Golden Triangle is reserved for the most relevant results, period, and in more than 50% of the cases, those are organic (either through OneBox or traditional organic).

So we in this industry can debate sponsored versus organic. We can make predictions. We can post in blogs til the cows (or frogs) come home. But it’s not our call. It’s not even the engine’s call. It’s the user’s.

Yahoo’s Quiet Guy is Moving On

First published December 21, 2006 in Mediapost’s Search Insider

Last spring, I attended the Pubcon conference in Boston put on by Webmaster World. During one of the breaks between the sessions, I was tucked away in an empty room trying to keep up with the inevitable flood of e-mails.

Well, truth be told, the room wasn’t quite empty. There was another person, also hunched over a laptop, working at the table next to me. We were both pretty absorbed and quiet. It was one of those situations where you’re wondering whether it’s better to not introduce yourself and run the risk of looking like you’re ignoring the person, or break the silence and acknowledge the other person by way of a quick nod and hi. I eventually opted for the later, and I’m glad I did. This was the way I met Yahoo’s Tim Converse.

Tim posted on his blog earlier this week that he’s moving on from Yahoo. Knowing Tim, albeit not that well, I sat and thought about this for awhile. It brought up a number of interesting questions about our industry. I thought them worthy of comment.

Don’t Judge a Book…

Tim is a pretty quiet guy. In fact, many readers of this column probably don’t know who Tim is. He’s the head of Yahoo’s anti-spam patrol, so he’s a bit like the Matt Cutts of Yahoo. But not quite. While Tim came to Yahoo through the acquisition of Inktomi way back in 2003, he has generally let the spotlight shine on his counterpart at Yahoo, the more vocal Tim Mayer. In an industry notorious for flocking the algorithmic cops at the major engines (see my first encounter with Mr. Cutts) Tim Converse can walk through most shows unscathed and unrecognized. In fact, it’s only very recently that I’ve seen Tim participate on a panel at a show, at this fall’s Pubcon in Vegas. Tim is not as comfortable in the public eye as his counterparts; he doesn’t have the same practiced ease of the other Tim or the open charm of Matt, but it becomes quickly apparent that his brain is packed with algorithmic gold. This guy knows his stuff. And if you’ve ever had the chance to chat with Tim or read his blog, you’ll find a razor-sharp wit and some pretty deep thinking lies below that deceptively calm exterior.

Moving On

The post went live on Tim’s blog on Monday. The well-wishers that commented made it clear that while many may not know Tim, those that do have a great deal of respect for him. Posters included Cutts and Danny Sullivan. While Tim’s announcement didn’t elicit the same type of response that Sullivan did when he dropped his bombshell that he was moving on from the Search Engine Strategies franchise (imagine what would happen if Cutts posted that he was leaving Google), one can’t help but wonder what the impact on an already battle-sore Yahoo might be. Certainly no one is irreplaceable, but Tim was a definite asset in the relevancy war staged by the big three. He’s looking forward to seeing the showdown continue, albeit from a distance: “Who is going to have the highest-quality general web search a year from now? I think it’s still going to be a brutal battle between the current top three (including MSN), and the winner will be whoever can innovate and execute the fastest. I’m sorry I’m going to watch that particular game from the sidelines, because it’s definitely not even halftime yet.”

Hot Property

My other thought that came from Tim’s departure is more a precursor to what will inevitably happen at all the major engines. The people who serve on the algorithmic side of the engines, like Tim, are privy to an extraordinary amount of proprietary information. Now with the introduction of quality scoring on the sponsored side, the same is true for these teams as well. At some point, all that knowledge is apt to walk out the front door and never return. I’m sure Yahoo’s corporate legal department has a sheath of nondisclosure and noncompete agreements, but those have always been relatively hard to enforce when put to the test.

This concern over trade secrets is certainly not unique to search, but with the importance of search for millions of marketers, it does put a universally recognized premium on the value of that knowledge. It’s inevitable that others from all the three engines will follow Tim’s lead and move along. When they do, they will suddenly find themselves hot properties–even if they tend to be quiet guys, a little on the shy side.

The Elusive Click Fraud Issue: Google’s Side of the Story

First published December 14, 2006 in Mediapost’s Search Insider

There are few issues in search marketing more thorny and convoluted than click fraud. It’s the elusive problem, the industry scourge that seems to defy definition. Everyone wants to know the extent of click fraud, but to date, there seems to be no credible numbers to attach to the problem. A recent BusinessWeek “investigation” called it the “dark underground” of the Internet, “a dizzying collection of scams and deceptions that inflate advertising bills for thousands of companies of all sizes.” The article pegged the occurrence of click fraud at “10% to 15% of ad clicks… representing roughly $1 billion in annual billings.” Unfortunately, the reporter used some questionable sources and math to come up with this number.

Even experienced search marketers can sometimes jump to wrong conclusions. Noted search marketer Andy Beal thought he had a scoop earlier this week when he did a little rough calculation on a presentation made by Google click fraud point person Shuman Ghosemajumder and pegged the actual occurrence of click fraud at 2% on Google. There was actually a little miscommunication between Beal and Ghosemajumder (since corrected on Andy’s blog). I chatted with Ghosemajumder this week and here’s Google’s side of the story, largely ignored by the mainstream press.

Where Do These Numbers Come From?

BusinessWeek‘s article said “most academics and consultants who study online advertising” agree with the 10% to 15% number. Yet there has been no independent study done with reliable methodology to accurately scope the size of the issue. The study most often cited is a particularly damning one done by Outsell in May of 2006. In the study, 407 companies were asked what percentage of their search buy they believed to be fraudulent. They then averaged the responses and extrapolated it across the industry. Many of these advertisers weren’t even tracking ROI, definitely a prerequisite for accurate identification of actual fraudulent behavior. As Ghosemajumder pointed out, “it’s like asking a random group of people what they estimate the average salary in the U.S. to be, when they have no numbers to judge it on, and they don’t even know what their own salary is.” Yet, this is the number that seems to be accepted as fact by reporters determined to blow the issue into cover story status.

What’s Fraud, and What’s Attempted Fraud?

One fact that seems to be easily overlooked is what actually qualifies as click fraud. Fraud is only perpetrated when damage is done–in this case, if money passes hands. If no money changes hands, it’s attempted fraud. Yet this simple distinction seems to be overlooked by many “investigators” into the question of click fraud. Everything tends to be included in the same bucket, usually accompanied by a whopping percentage designed to scare the hell out of online advertisers.

The 2% number quoted on marketingpilgrim.com came from Andy Beal, not from Google. It was computed by looking at the relative size of some graphics on a slide deck that was prepared to show Google’s click fraud filtering systems.

Google has coined the term “invalid clicks” to refer to all those that advertisers are not charged for. This category also includes more benign examples, such as multiple clicks on the same ad that can happen when a visitor “pogo sticks,” or clicks on an ad, hits the back button, and then clicks through on the ad again. Ghosemajumder does confirm that the number of invalid clicks represents a “single digit” percentage of all clicks across the network,

The “vast majority” of these clicks are proactively filtered out by Google in real time before any money passes hands, he says. It’s as if the clicks didn’t happen. The advertisers don’t pay, and the publisher where the click originated doesn’t get paid. The invalid clicks that slip through the real time filter then go for offline analysis, primarily focused on the AdSense network. Advertisers here are affected, but get refunds from Google without their having to take any action. In this case, Google does have a procedure for going back to the sites where the clicks originated. If anyone is out of pocket for these clicks, it’s Google, not the advertiser.

Now we get to the 2% number. It refers to the clicks that make it through the proactive filters that the advertiser has to bring to Google’s attention. The official word from Google is that this number is a “negligible percentage” of the total number of invalid clicks. My sense is that it’s probably much less than 2%. Remember, this isn’t a negligible percentage of all clicks, but a negligible percentage of “invalid” clicks, which in turn is less than 10% of all the clicks happening on Google.

The Impact in Dollars and Cents

So, let’s talk about actual fraud, where the advertiser is the one out of pocket. Let’s assume there is an advertiser with a $100,000-per- month budget. Let’s further assume that the clicks this advertiser receives are representative of the total Google network.

Using the assumed 9% number as the number of invalid clicks, this means about $9000 of the budget falls into this category. From this, the “vast majority” are filtered out in real time, so there is no impact to the advertiser. A smaller percentage is refunded to the client without its having to take any action. Finally, there’s the percentage that slips through the proactive filters. Even if we go with 2%, that would make the amount that would impact the advertiser $180. If you’re doing your math, that’s 0.18% of the total monthly spend, a far cry from 10% to 15%.

But It’s Not that Simple

These are the estimates from Google, which has invested heavily in fighting click fraud. The same diligence in policing click fraud is probably not present in all advertising networks. Click fraud is definitely more prevalent in some sectors and on some networks than others. Finally, everyone acknowledges that we don’t know what we don’t know. If click fraud goes undetected through Google’s filters and the advertiser never challenges it, it won’t be identified. Google uses the ROI and conversion data that some of its advertisers share with it as an overall indicator of click fraud activity throughout its network. Its executives feel confident that there’s very little slipping through all of these cracks.

Yes, this is Google’s side of the story, but as the mainstream press seems to be more interested in focusing on a couple of egregious cases rather than providing a realistic picture of the issue across the entire network, I think it’s important to pass it along. In the absence of real numbers for the short term, shouldn’t you at least balance the numbers being touted by the press with those coming from the people fighting click fraud on a daily basis?

Search and the Winds of Change in Chicago

First published December 7, 2006 in Mediapost’s Search Insider

Things are changing in the SEM world. At the Search Engine Strategies Conference Chicago, it’s more than the ice-cold winds off Lake Michigan that are blowing. These are the winds of change. There is a palpable sense that we’re moving into a new era in search.

Dateline: Chicago

The word on the streets of Chicago (not that I’ve ventured on the streets that much) is that a huge consolidation juggernaut is about to steamroll the industry. We’ve seen the precursor to that in a few announcements timed with the show. But at the same time, we’re seeing the world of search fragment in another way, as search marketers now have to move their focus to include new worlds such as CRM platforms, ad networks, local, video, social tagging, analytics, usability and a host of other emerging developments. If we follow Google’s model, soon we’ll be dabbling in the world of print and radio. And I thought I had left those worlds behind in a previous life.

There’s a collective holding of our breath to see what’s next. One of the wonderful things about search, the fact that it’s the intersection of so much activity on the Internet, is also its biggest challenge. To truly leverage search, you have to have one foot in a lot of different worlds. And that’s tough to do as a small independent shop.

The Honeymoon’s Over

But the other topic of conversation I’m hearing is how the integration of traditional marketing and search is not going as swimmingly as some of the early marriages might have us believe. There’s a lot of drinking of one’s own Kool-Aid here. Search agencies position themselves as the keepers of the vaunted black box, the holders of arcane knowledge and assets essential to the truly enlightened marketer. That black box could be advanced algorithmic optimization knowledge and technology or sponsored search management technology and advanced campaign optimization tools. Whatever it is, the SEMs protect and promote it religiously, using it to drive up the price tag of their company.

The potential buyers seem content to cede this small area of expertise to the SEMs, because they lay claim to pretty much everything else. The entire brand relationship that lies outside the search silo is where they play, and the only reason they’re looking at search at all is because they’re being forced to by their clients. Reluctantly, they have to look at building or buying, and the lack of available talent is forcing their hand towards the second option. It’s a shotgun marriage, and in many cases, the results will be predictable. Search marketers are mavericks, and they won’t place nice in the corrals that are currently being set up for them.

We Don’t Know What We Don’t Know

The problem is that in both cases, the egos on both sides of the table don’t allow us to know what we don’t know. The trick here is not to be territorial about your area of expertise, but to acknowledge that the rules of the game are changing incredibly quickly, are being changed not by the agencies, not by the search engines, certainly not by the SEMs–but by the consumers, and we’d better all work together to figure out what’s happening.

I believe in integrated, or convergent, service offerings. I think it’s essential. But the simple fact is that there is no search silo. It sits at the center of a tremendous amount of consumer activity. But the firms that are positioning themselves to provide these convergent (or integrated, or 360 degree–you pick the buzzword)  better reacquaint themselves with the meaning of the words integrated and convergent, because unless they truly get it, admit they don’t know everything and are willing to work with new partners to effectively understand this new consumer control, they won’t be able to keep up. Passion is the price of entry, but please, everyone, check your egos at the door.

Living in a Quality Score World

Another point of interest that emerged in Chicago is the new reality of quality scoring being introduced by the engines. Suddenly, search marketers have to tweak a lot more campaign factors to determine position on the page. We have to look at not only the quality of the ad but also the quality of the landing page and the subsequent on site experience. To make matters murkier, the engines aren’t really sharing the criteria or methodology they’ll be using in these new quality algorithms. So once again, search marketers will be working in the dark, trying to reverse engineer the inner algo workings that will hopefully vault their page up into the top of the Golden Triangle, but this time on the sponsored side. I think search marketers will be well suited to the task, but the challenge is that this requires them to step into a lot of new areas, and in some cases, they’ll be stepping on toes in doing so, both on the client side and the agency side. Without exception, the biggest challenge we’ve had in delivering effective results has been in getting the buy-in of the various groups required to take a holistic approach to search. The introduction of a quality score means this will be happening with greater frequency.

New Madison Avenue Mavens?

One dinner conversation I had circled around the potential future of SEM agencies. Apparently, a representative from a major engine told a room full of SEMs that we’re the new Madison Avenue. We embrace accountable marketing in a way that much of the rest of the advertising world is struggling with. We’re not afraid of consumer-empowering technology, because we’ve cut our teeth on such technology. And we’ve learned to adapt and survive in a fluid marketplace, where things change daily. To me, these three things are the true value that SEMs bring to the table, and as traditional agencies look for potential partners, I’d be looking very hard at those three criteria. To be honest, most of the rest of our “black magic” boils down to simple common sense and a willingness to do the dirty work that’s required to optimize search campaigns, whether they’re on the organic or sponsored side.

It’s been a cold week in Chicago, but one would never guess–based on the heat being generated in the Chicago Hilton Convention Center. Hang on, it’s going to be a bumpy ride.

SEMPO’s Snapshot of Search

First published November 30, 2006 in Mediapost’s Search Insider

If you haven’t heard, or received your invite, the annual SEMPO State of the Market survey is currently looking for search marketers to give us this year’s snapshot of the industry. You can find a link to the survey at the SEMPO site. Now in its third year, this survey has become the definitive year-over-year look at search marketing.

Knowing that we’re in Chicago next week for Search Engine Strategies, we paused long enough to take some on the fly data points which we’ll be sharing at a special SEMPO meeting on Monday night. I can share one of them with you in this column.

Why the Survey?

First, why do we do this? Simple. In something as dynamic as search, it’s tough to keep your bearings. Obviously, year-over-year sizing of the markets is one yardstick, but there are a lot of other factors that we like to keep an eye on. We track advertiser’s acceptance of different strategies, including paid placement (or sponsored search), paid inclusion and organic optimization. Late- breaking info on this in a moment. This year, we’ll also be asking more questions about local search and what other marketing channels advertisers use.

We also check in with advertisers on issues like click fraud and how prevalent they feel it is, as well as use of search marketing technology and contextually targeted ads. Of course, we’re very interested in where those search engine budgets are being placed and where those budgets are coming from. Is search poaching from other budgets, or has it established itself as its own line item?

We try to determine the maturity of search by asking how much executive participation there is in search marketing decisions. We can also look at the different groups that answer the survey (advertisers, agencies and affiliate marketers) to see if there are variations in attitudes toward search amongst them.

Wake-Up Call for SEM Agencies

Last year, a key finding was the attitude of advertisers toward search marketing agencies. It was clear that there was a trust disconnect, with a full 65% looking to bring both paid and organic search capabilities in-house. For SEM agencies, it was a clear signal to up the ante in terms of measurable results.

We spend a fair amount of time in the survey digging into how companies conduct their search campaigns, the percentage that’s done in-house versus outsourced, whether this is a growth strategy for them, and trying to determine some of the hidden costs, such as the expense of internal staff to conduct the campaigns.

And of Course, There are Those Click Costs

One of the hottest data points from the survey tends to be around acceptance of current bid prices. Again, we get quite granular in determining the extent of price elasticity on paid placement. Last year, we saw a flattening out, with 21% of advertisers saying they were maxed out on bid prices, and another 37% saying they could go as high as 10 to 20% more.

If you want to find out more about the 2005 findings, make sure you visit the Learning Center at http://www.SEMPO.org.

Hot Off the Spreadsheet

So, how is the data shaping up this year? Well, I just pinged our number crunchers–and based on the results in so far, it looks like organic optimization is holding the lead as the most popular strategy when it comes to search. Last year, it barely edged out paid placement, with 80% of respondents saying they were using it, compared to 76% of respondents using paid placement. This year, adoption of both strategies increased, with 83% of respondents using organic optimization, and 80% using paid placement. Remember, this is very preliminary data, and will likely change a bit as we get more survey completions. We have a few other preliminary data points that we’ll be sharing in Chicago next week at Search Engine Strategies. Look for the SEMPO event, Monday, Dec. 4t at 6 p.m.

Call to Action

If you’re working in search, we need your participation. The more respondents, the better the data. Everyone will have access to a summary of the report, and SEMPO members can download the full report. Once again, you can take the survey at http://www.sempo.org/learning_center/research/sempo_research/sempo_2006_state.

The Coming Storm: Search and Consumer Privacy

First published November 9, 2006 in Mediapost’s Search Insider

Earlier this week, in OnlineSpin, Seana Mulcahy wrote about two new complaints filed by consumer groups with the Federal Trade Commission. The shadowy subjects of tracking online behavior, analytics and targeting are outlined in the complaints.

Earlier this year, in an interview, I predicted a showdown between search engines and consumers around privacy issues. I suspect these two complaints could be the harbinger of the coming storm.

The Natural Convergence of Search and Behavioral Targeting

It makes all kinds of sense for the worlds of search and behavioral targeting to overlap, and the conjunction of those two worlds is a very powerful place indeed for the marketer. Behavioral targeting allows you to track and target potential customers based on their click stream. You can identify promising click streams based on sites visited and behavior on those sites. The odds of picking the right person at the right time to receive your message go up substantially.

Now let’s look at search. At some point in the buying cycle, which is mirrored by the click stream, almost all consumers will turn to a search engine to look for more information. This is a rather momentous point. At the earliest occurrence, it often indicates when the consumer switches from awareness to consideration. It’s when they become actively engaged in the act of purchasing, which puts them in a whole new mindset. From that point forward, they could turn back to the search engine at different times to assist them in the purchase. The key is that consumers who are using a search engine are very receptive to information about the product or service, because they’ve requested that information. Push turns to pull.

 

The Challenge with Search

The problem with search right now is knowing where the consumer is–at which touch pointIs it early in the cycle, near the beginning of the consideration phase, when consumers are compiling candidates for their consideration set? Is it somewhere in the middle, when they’ve assembled their set and are comparing features or looking for reviews? Is it when they’re ready to purchase? It’s almost impossible to tell from the query, because as past comScore studies have shown, there is often not a search funnel. The same query could be used at each point in the cycle.

Given this inability to disambiguate intent from the query, most marketers aim for the sure bet. They go for the purchase, because it’s much easier to track conversions and ROI. Do a search right now on any engine for “digital cameras” and look at the sponsored ads that appear. I guarantee they’ll be aimed at someone ready to purchase. Is this the query you would use if you had done your research and were ready to purchase one specific model? Would you even buy online? Probably not. But it is the query you would use if you were starting to consider your options.

You’re not alone. The marketers on the results page are missing over 80% of potential buyers by focusing on the less than 5% who are ready to buy now. It’s just not a good match-up for the advertiser or the consumer.

Enter BT

Now, if you were able to combine behavioral targeting with that all- important search touch point, you could serve a research-based ad if you knew at what stage in the buying cycle the consumer was, based on his online visits. You could take the guesswork of matching the message to the person. And finally, we could start to pull away from the pure direct response tactics that restrict the effectiveness of search. It’s tremendously powerful.

This is not something in the far-distant future. The mechanisms are already in place for search engines to track your online behavior. Tool bars, mini apps, personal search history. All of these can and do track where you’ve been. Everybody is being tracked to some degree.

But as Seana pointed out in her column, most of us are blissfully unaware of it. That’s because it’s been relatively benign to this point. In return for a handy tool bar that offers increased convenience, the ability to index your desktop and other added functionality, we just click the accept button without really reading what we’re accepting. Up to now, there hasn’t seemed to be any consequences. But in the background, the engines are quietly collecting terabytes of click-stream data. And the time is coming when that data will be put to use.

Privacy Storm Front

At first, it will be subtle and a little unsettling. The search ads we’ll be seeing will be targeted much more precisely. They will seem to speak just to us. It will be like the advertiser is reading our mind. We’ll be thrilled at first, but eventually, we’ll read an article somewhere that will explain the uncanny ability of the advertiser to give us just the right message. It’s because they’ve been watching us, tracking what we do online. And it won’t just be on search, it will be throughout the search engine’s advertising networks.

“Hmmm” you’ll say to yourself, “I’m not sure I’m okay with that.”

More and more consumer groups will launch protests. Politicians will sense opportunity and jump on their soapboxes. There will be a very vocal minority that will rail against this “Big Brotherism.” There will also be a group of advertisers that will continue to step way beyond the acceptable, using targeting to subvert the user experience, rather than enhance it, hijacking the user and taking them to places they never intended. This will add fuel to the fire. And because they’re the most visible target, the search engines will bear the brunt of the attack.

In the end, we’ll realize there’s much more pro than con here. Effective targeting will generally add to our experience, not take away from it. We’ll toy with trying to use a third-party privacy filter, but in the end, most of us won’t be willing to give up the additional functionality in return for maintaining an illusion of anonymity online. Much of the usefulness of Web 2.0 (I know, I hate the term too, but at least it’s commonly understood) will be dependent on capturing personal and click-stream data. We’ll give in, and the storm will gradually fade away on the horizon.

At least, that’s my prediction.

Thou Shalt Not Google (unless it’s on Google)

First published November 2, 2006 in Mediapost’s Search Insider

goo-gle: Function: transitive verb: to use the Google search engine to obtain information about (as a person) on the World Wide Web
–Merriam-Webster Online Dictionary.
Of all the things that Google’s lawyers have in their basket, apparently stamping out inappropriate use of “Google” as a verb is right on top of the stack. It apparently irks them no end.Now, I can really sympathize here. It’s a little known fact that my last name has actually suffered the same fate as Google. In Japan, of all places, Hotchkiss has become the generic name for the office stapler. Each time a worker lost in the maze of cubicles at Mitsui and Co. says, “Pass me the Hotchkiss” I die a little inside. I kid you not! Check out Wikipedia.Mind your Ps and GooglesNow, according to a post on Google’s official blog, it’s not the fact that we Google on Google that causes the Google legal department to have hissy fits. It’s if we try Googling on Yahoo and MSN. It can’t be done. Not all tissue papers are Kleenex, not all copy machines are Xeroxes. To quote the post:

You can only “Google” on the Google search engine. If you absolutely must use one of our competitors, please feel free to “search” on Yahoo or any other search engine.

Hmmm..people are using the word “Google” to refer to Google’s competitors, and it’s Google that’s upset? Unless I’m missing something here, shouldn’t it be Yahoo and MSN that should be miffed?

I Google, therefore I am…

The inclusion of Google in the English lexicon is “faintly unsettling,” according to the folks at Google. They fear that Google will lose its identity as a trademark once it slips into common usage. They explain:

A trademark is a word, name, symbol or device that identifies a particular company’s products or services. Google is a trademark identifying Google Inc. and our search technology and services. While we’re pleased that so many people think of us when they think of searching the web, let’s face it, we do have a brand to protect, so we’d like to make clear that you should please only use “Google” when you’re actually referring to Google Inc. and our services.

Now, I know that Google has way too much money, and they have a team of very bright 12-year-old lawyers (or at least, they look 12) trying to reinvent the law. But in this case, I would suggest slipping down to the Google cafeteria for a double decaf low fat cappuccino and relaxing. There are better windmills to tilt at than this one.

Once again, who’s in control?

The irony here is that the very entity that has probably done more than any other to put control in the hands of the consumer is now fretting because consumers are exercising that control. We associate search with Google. We endorse the brand by using it as a verb. It’s just this critical mass that makes Google such a formidable competitor in the highly promising search market. Frankly, it’s not the fact that their brands became generic terms that hurt many of the companies that Google uses as examples. It’s because the companies became complacent and let the competition catch up, losing the distinction that their brand once afforded them. The consumers didn’t take the brand away from the company, the company surrendered the brand to the competition.

In the corporate culture that says “don’t be evil,” apparently improper use of “Googling” is now defined as evil. Just to make it clear, Merriam-Webster defines evil as “morally reprehensible.”.  Perhaps someday “google” will also mean “to spend one’s time unproductively fighting frivolous legal battles.” At this point, it’s a toss-up with “disney.”

A final word to Google’s legal team: As you’re putting together those multi-page lawsuits, go ahead and feel free to use the Hotchkiss. I don’t mind.

Thoughts on the Search Tornado: The Chasm Revisited

First published October 26, 2006 in Mediapost’s Search Insider

While pondering topics for this week’s column, I was in a quandary. I could join the 1.65 billion people who are penning about the GoogTube deal. I could do something timely about Danny Sullivan’s decision to stick it out with Incisive and Search Engine Strategies for a little longer (yes, if you haven’t heard, it appears they’ve kissed and made up, kind of, and Danny will be around for the New York, San Jose and Chicago conferences, although he’ll be transitioning to a new chair) or I could chat about meeting Marissa Mayer last week (albeit briefly), the person in charge of user experience at Google.

I pick… none of the above!

I’ll loop back to Marissa in a later column, but I’m angling for an interview to talk about some of the things I’ve learned in my rather obsessive detailing of user behavior on Google, so put that on the back shelf for now.

Instead, I’m continuing to pick up the thread from last week’s column. The idea of search marketing crossing the chasm perked up a few ears, notably amongst financial analysts, so I thought I’d spend a little more time exploring the concept and what it means for search. Ironically, the day after the column ran, Google was heading for a new stock high and I was scrambling from building to building and meeting to meeting at the Google complex in Mountain View. I must say, everyone seemed to be smiling. I think the surge in stock prices had everything to do with my column running and nothing to do with their quarterly earning report, but some may argue differently.

If search marketing is indeed crossing the chasm, there are some rather interesting aspects to look at.

Who’s Crossing First?

The ideal strategy for crossing chasms is to gain critical mass in a particular vertical, and then market to adjacent markets that share similar pains, gradually reaching the tipping point where everybody jumps on board. Geoffrey Moore refers to this as the Bowling Alley strategy, hitting the head pin and knocking down the adjacent ones.

Search is well down this road (or alley). Over the last few years, search has gained this critical mass in the verticals that tend to be proficient in direct response marketing. Categories like travel are heavy users of search, and we’re starting to see this extend into areas such as consumer electronics, software and other B2C consumer categories.  Hard on the heels of these head pin categories are financial services and automotive. These verticals will be the first to jump.

It will take longer for search to gain critical mass in the B2B sectors, but the early adopters in these verticals are already laying the foundations.

The last to cross will be the local Mom and Pop shops. There are still some challenges to be addressed in gaining local traction, the most notable being a lack of a quality Web presence. But every month that goes by, the functionality of online local search increases to the point where it will be the users driving adoption, since local businesses can no longer ignore the fact that this is where people are searching prior to purchasing. And this is where search can open up vast tracts of unexplored potential.

Reducing the Pain With a Total Solution

Another trend that is becoming more apparent is the assembling of a total solution. The chasm can only be crossed when a significant portion of pain and risk is eliminated from the equation. Early adopters can stomach this, but pragmatists will avoid it like the plague.

The early markets are comfortable with cobbling together pieces of solution from disparate sources, providing the glue that holds them together and investing significant resources in coming up with an advantage over their competitors. This is exactly where search is right now. You need a pretty savvy inside person who can make search click for most organizations. It’s still far from a turnkey solution.

But look at what’s currently happening with the engines: The belated release of Yahoo’s Panama platform. New targeting capabilities from MSN. Google’s offering of free analytics and landing page optimization tools. All these speak to one goal: eliminate the pain for a mainstream market by assembling a total solution. The engines are putting together the package they need to appeal to a mainstream buyer.

Who’s the Gorilla?

The biggest question: Who will the winner be? There can only be one 800-pound gorilla, despite all the talk from the three engines that there’s more than enough market to go around. Google’s current marginalization of Yahoo’s business model speaks to this. The fact is, the marketers will crown the winner, based primarily on market share, which is dictated on the best user experience. Google wins this battle hands down. While it seems as if the engines have up to now been willing to cede the pole position to Google, if they don’t want to end up in the chorus, they have to get serious about this race. It goes quickly–and right now, Google has a huge head start. I’m beginning to think it may be uncatchable. Perhaps that share price isn’t as ridiculous as it seems.

I drop one last King Kong-sized hint for the engines. You can’t pay enough attention to the user experience. And right now, Google’s eating your lunch, and your afternoon snack. Ad management platforms only matter if you have a market to target the ads to.

What This Means for SEMs

So, if we’re crossing the chasm, do SEMs get shut out? No, in fact, the opportunity has never been greater. We can ride along with the main players in this chasm crossing, the engines. But we have to be nimble and fleet of foot. There are plenty of opportunities to add value along the chain as the engines assemble the total solution. But remember, the aim of the total solution is to reduce the pain points, not increase them. Therefore, the engines will be working hard to identify where mainstream buyers experience pain and try to introduce new solutions to eliminate it. That means if a SEM finds a spot where they can add value, i.e. bid management, they have to be prepared for the engines to introduce a solution and wipe out their business model overnight. Another strategy is for SEMs to gain deep vertical expertise in one particular industry, because the engines will be caught in a vortex of demand and will be stretched far too thin to be all things to all people.

So there will be a lot of opportunity, but be prepared for it to be transitory. While this holds true for service-based SEMs, it applies to a much greater degree to technology developers. Sure, this might make it tough to navigate, but if the tornado develops, you really have no choice. Either you hang on for the ride, or you sink.