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2006 Search Engine Marketing Milestones for Chief Marketers

By Nov 20, 2006

Consumers’ use of search engines as a primary vehicle for engaging with online information and brands continues to grow rapidly. According to the Pew Internet & American Life Project, Americans conducted 6.6 billion searches in September 2006, up 31% from September 2005.

For chief marketers, adapting to the changing behavior of consumer targets is a real challenge, compounded by the continued rapid development of the new advertising vehicles available to engage those consumers. So as we near the end of 2006, let’s recap some of the most significant developments in the search marketing industry and what their effect will be going forward.

Self-targeting search
The beauty of search has long been its self-targeted nature. Consumers raise their hands and ask for information and resources on any given topic. Advertisers respond with targeted information and engagement opportunities rather than broadcasting messages with the goal of capturing some attention and interest.

With the rollout of MSN’s Microsoft adCenter early this year, though, marketers got their first significant opportunity to target search by demographics. Marketers can now respond to ambiguous queries such as “khakis” or “lexus” by directing women to the “women’s khakis” page or choosing to bid less for “lexus” when the searcher is 14 years old. Marketers report promising early results through these capabilities.

The launch of MSN’s new platform also enabled marketers to target MSN’s visitors independently. This positive trend of disaggregating search distribution networks or enabling site-level targeting within these networks needs to continue into 2007.

In such a data-driven channel, site audience needs to be a controlled variable. This year AOL gained the right to sell Google ads to be shown to its searchers. Many marketers would love the ability to target AOL searchers independently, but we’ll have to wait and see what AOL does with this in 2007.

Behavioral and local targeting of search also made great strides in 2006. Although behavioral targeting should be executed carefully, it can greatly improve user experience and the return realized by marketers by significantly boosting ad relevance. Whether you’re a big-brand multichannel merchant, a leading cataloger, or an Internet pure-play, you can improve the efficiency of your search marketing with behavioral targeting.

Local search targeting gained significant traction in 2006. Beyond geo-targeting of search ads, Google now allows marketers to engage searchers via text ads and logos on the popular Google Maps site. For multichannel merchants, this localized search targeting is perhaps the most important development of 2006. Similar to behavioral targeting, local targeting increases relevance, boosts efficiency, and creates a more continuous consumer experience. Clever use of these new capabilities can greatly improve search-to-store tracking. If you’re a multichannel merchant and not yet using local search, you should adjust your strategy in 2007 to capitalize on these growing opportunities.

More dynamic developments
The past year has also been one of “fixing the airplane while flying it.” Search marketing is completely dependent on search engine technology platforms, and MSN, Yahoo!, Google, and MIVA have all made fundamental changes to their platforms in 2006.

Many marketers and technology providers were preoccupied with transitioning to the MSN platform earlier this year. For its part, Google made extensive changes to its application program interface (API), the back-end system allowing search campaign management technology to pull reports and load keywords directly into the marketplace, throughout the year.

But Yahoo!’s recent release of its “Panama” platform could have the biggest industry impact of any 2006 development. Lower-than-average click-through and click-monetization rates hampered Yahoo!’s growth in 2006. With enhanced targeting and campaign management capabilities, the new platform brings Yahoo to parity with its competitors. But the real upside will come in early 2007 when ad relevance begins being factored into the ranking. This will enable more-relevant ads to rank higher at a lower cost per click (CPC) and should improve results for branded marketers—and for Yahoo!—as a result.

Of course, thanks to more acquisitions and innovations, 2006 brought continued growing dominance of Google in search share and advertiser attention. Among the 2006 advertiser enhancements rolled out by Google: better control of content targeting; Google Base replacing Froogle; and the testing of print ads and video, and the promise of audio ads. Google’s aspirations have always been enormous, and its continued profit growth only accelerates those goals. You’ll need well-thought-out, adaptable strategies to keep up with Google’s continuous changes.

So as significant as these 2006 developments were, they are merely transitional stages in the continued evolution of marketing and consumers’ adaptation to the Web-enabled world. According to a recent Economist Intelligence Unit report, “The Future of Marketing,” only 2% of chief marketing officers globally report that the Internet is not relevant to their businesses; a full 88% expect to increase spending on Internet marketing in the next two years.

In my next column, we’ll look more deeply at the ongoing implications of 2006’s developments on plans and budgets for 2007.

Cam Balzer is vice president of strategic planning at Performics, the Chicago-based performance marketing division of DoubleClick, and a monthly contributor to CHIEF MARKETER. Contact him at cbalzer@performics.com.

Other articles by Cam Balzer:

Search Engine Marketing Does More Than Ever This Holiday Season

Quantifying Online Search’s Impact on Offline Demand

Listen to the Data: Using Search to Understand Your Market

Click Fraud: Three Important Considerations

Four Tactics for Search Optimization Success

If You Build It, They Will Come… If You Attract Them

Using Search to Boost Branding

The SEM Opportunity Curve