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Taking Stock Of Search In 2005
StumbleUponToday, 85% of European Internet users first discover websites through search engines. But why has search marketing enjoyed such success? And where are local and mobile search heading, asks Yahoo! Search & Overture Europe's Stephen Taylor...
In just a few years, the Internet has evolved from a tool used by the scientific community for research and information purposes into a broad-reach mass medium with a variety of uses.By Stephen Taylor
[Register and post your own comments on this article below...]
A decade ago, two Stanford University Ph.D. candidates incorporated what had started out as a personal guide to their favourite Internet sites into a business. When more and more people began accessing their personal guide to find useful Web sites, a real business opportunity became apparent. Thus, Yahoo! – and the Internet search industry – was born.
Today, 85% of European Internet users first discover Web sites through search engines and, with the exception of email, consumers use search more than any other Internet application. With search presenting such a huge opportunity to reach interested buyers, marketers have been quick to respond, allocating more and more of their online budgets to search marketing. In fact, search marketing now accounts for 40% of online ad spend in the UK… not bad for a business model that didn’t even exist in Europe before November 2000.
The huge growth of this marketing medium is evident in a range of different areas. Spend in the Home & Garden, Telecoms and IT sectors all doubled in the last year and an even bigger growth can be seen in the Automotive sector, where spend has trebled – a reflection of the fact that more people are using the Internet as a research tool to evaluate later purchases offline.
Plus points of sponsored search
So why has search marketing – and sponsored search in particular - enjoyed such a success? Unlike some forms of advertising, entry costs are low and campaigns are totally accountable with sponsored search. There are no significant costs up front in terms of media buying or creative costs. With prices starting from as little as 10p each, advertisers ‘bid’ on search terms relevant to their business and are then listed in order of bid price in the search results on major Web sites and portals. The advertiser then only pays the bid price once a prospect actually clicks through to their Web site. This means the smallest local shop can advertise on equal terms with the biggest chain – for example, a boutique hat shop in Brighton could be listed alongside a large department store like John Lewis.
What’s more, sponsored search is a highly targeted form of marketing. Targets are not ‘cold prospects’ – they are people who are already actively looking for the advertiser’s product or service. As a result, the lead is more likely to convert to a sale than most other forms of advertising. It is the ultimate “buyer-led” form of advertising.
Improving relevancy and context
Search products in 2005 will focus on enhancing the user’s search experience and increasing the overall relevancy of listings. In turn, products and technologies will focus on improving the quantity and quality of leads for businesses using search marketing, in addition to making campaign execution simpler for these marketers. The commercial search industry will continue to develop technologies in three particularly hot areas - contextual advertising, local search listings and mobile search.
Contextual advertising (where relevant advertiser links are embedded on content-based pages) will continue to be a strong area for growth this year. For example, users reading a Web page about cars may see in-page advertiser links for second-hand cars, car insurance or car-buying services. Similarly, users who are researching holidays may see advertiser links from hotel and car-hire agencies. This is an important growth area, not only for search engines and portals looking for new ways to monetise the page, but also for advertisers to complement sponsored search campaigns.
Where is local search going?
Local search (geography-specific search) is a natural evolution for this marketplace – and is progressing rapidly. Allowing advertisers to easily market to interested customers within a defined radius of their business location, local search will make it much simpler for searchers to obtain the exact business information they need to purchase products or services locally. It’s also good news for smaller businesses looking to advertise online - in the case of Overture’s local search product in the US, advertisers don’t even need a Web site to participate. Key information about their business (address, phone number, map, etc) is displayed to users via a Locator page.
Once local search is well and truly up and running, the possibilities are endless. Why should search be restricted to your computer? Shouldn’t you be able to quickly and easily find the nearest restaurant or cinema in your area through a Web search on your phone, PDA, or even via your car’s GPS (Global Positioning System)?
Into the mobile search era...
Mobile search is the first step towards connecting consumers and businesses in this way. The number of mobile phone subscribers in the UK is set to hit 53 million by 2007, reaching 88% of the population and sophisticated handsets are becoming more common.
With WAP portal traffic now reaching significant levels, a sponsored search product is now viable in terms of both user experience and lead generation for advertisers. For example, while browsing the travel section of a network operator’s WAP portal (like Vodafone live! or Orange World), a user will be able to search for a ‘cheap flight to Spain’ from a directory-style service. The user could then choose to either go through to the company's WAP page, or simply click a link and initiate a phone call.
In essence, relevancy of search results will always be the key to survival in this industry. The future of search lies in improving the precision of search technology to the point that it fully understands user intent. As an industry, we should always be striving towards the ultimate goal of unravelling a user’s true intent behind a search, even if this is not directly communicated by the user and their keyboard. When we reach that level, we will be able to provide users with the highest quality search experience possible and advertisers the strongest return on their marketing investments.
About the Author:
Stephen Taylor is Regional VP & Managing Director, Yahoo! Search and Overture Europe. He has extensive experience in marketing and general management and has held senior marketing roles at Air Miles and Safeway. Prior to joining Overture at the beginning of 2003, Stephen had been involved in Internet businesses for six years. More recently, Mr Taylor was founder and CEO of Securicor eSolutions Ltd, a developer of secure shopping portal services, and was previously Managing Director of First Call International Ltd, a telephone and Internet travel and leisure business.
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