Search engine advertising gaining ground on old media

By KEITH McARTHUR
Monday, October 16, 2006
Ford Motor Co. had what it thought was a winning pitch for its Escape hybrid vehicle _ a Super Bowl commercial featuring Kermit the Frog crooning: "It's not easy being green."

After the 2006 game, thousands of consumers predictably typed terms like "Kermit ad" and "Kermit car" into search engines to learn more about the enviro-friendly cars.

What they found were "sponsored links" from frog-poaching rival General Motors Corp. directing traffic to Web sites for its own hybrid cars.

The controversial tactic _ known as ad drafting _ shows GM knows how to play the search game. But most Super Bowl advertisers did not take the initiative to buy keywords related to their Super Bowl commercials, according to Reprise Media, a New York search-marketing firm that puts out an annual scorecard after the big game.

Despite being one of the fastest growing ad media, search marketing is still misunderstood by many marketers.

Search advertising in the United States will overtake on-line display advertising for this first time this year, according to Jupiter Research, which estimates that search will grow to $11.1 billion in 2011, up from $5.1 billion last year.

"Search is still a baby ... " says Wendy Muller, president of Google Canada. "We're still way behind the percentage that someone will spend on television, print and radio (but) we're starting to see more and more Fortune 500 advertisers embracing this."

Search engines make most of their money through paid search _ the sponsored results that run at the top and right side of the results page. Advertisers bid on search terms, with higher bidders typically getting better placement. Most search terms cost $1 or less per click, but some go for much more. In 2004, lawyers looking for asbestos lawsuits were paying upwards of $100 per click for the term "mesothelioma."

The great advantage of search advertising is that it targets consumers at the exact moment they are looking for something. Traditional advertising vehicles such as television commercials are "push" advertisements, interrupting consumers when they are trying to do something else. With search advertising, consumers select the kind of information they're looking for, then decide on their own whether to participate in the "pull" advertising model by clicking on the sponsored links.

"It's such a great medium. It connects advertisers with willing consumers. That's what makes it so powerful and what makes it so attractive to advertisers," says Nick Barbuto, who buys Internet advertising for clients at Cossette Media. "When you're looking to reach consumers who are actively in the market looking for your products or services, I can't think of a better place to spend your first dollars."

Search has not been without controversy. A recent study by Outsell Inc. estimated that Internet advertisers paid $800 million for bogus clicks on their Web sites in 2005, prompting many to reduce spending on the medium.

The practice, known as click fraud, occurs when one company hires people to repeatedly click on ads to cause a rival to be overcharged. Google recently settled a class-action click fraud suit for $145 million initiated by Lane's Gifts and claiming that the search engines hadn't done enough to combat click fraud.

But the search engines say technologies for making sure customers don't get charged for fraudulent clicks are becoming increasingly rigorous. (Google says it looks for things such as duplicate Internet Protocol addresses and unusual user session and network information in detecting invalid clicks.)

Muller says search advertising is already one of the most accountable forms of advertising, and becoming increasingly so. She says Google and its rivals are able to prove return on investment better than other media precisely because customers only pay when the ads work, that is, when consumers click.

Some critics have questioned whether "clicks" should really be considered the Holy Grail. After all, some clicks turn into sales, but most do not.

And experts caution that paid clicks are only one side of the search marketing coin. The other is optimizing a Web site to elicit more free clicks.

Search engine optimization requires a bigger initial investment, but can reap bigger dividends over time, says Chris Biber, president and CEO of Searching Works.

"A lot of companies go the quote-unquote easy route. They set up pay-per-click campaigns and watch their money fly out the window. The moment you stop paying for clicks is the moment your clicks stop," he says.

There are indications that the extraordinary growth that search marketing has seen over the last three years is starting to slow down.

But the medium is still young. Search marketing is sure to evolve as it migrates onto cellphones and other hand-held devices and as the traditional text advertisements get replaced with ads containing images and even videos.

Jeff Quipp, president of Search Engine People, believes that search will replace television as the premier advertising medium of the future. "It's going to sound a little ludicrous, but long-term I do see search becoming bigger than television advertising," he says. "The sky's the limit."