Search industry needs to adapt to get out of limbo

8 November 2007

Back in the heady days of low CPC prices, all you needed was a standard bid management solution and a few thousand keywords and, bingo, you had an impressive ROI that met your clients' objectives. It wasn't long before this success had created competition, which created inflation and SEMs found themselves having to get clever.

Cue the birth of the long tail (or adding a few hundred thousand keywords to offset rising costs). The increasingly opaque auction model pioneered by Google changed the landscape and forced the industry onto the back foot. Traditional bid-management tools were dead. Search campaign management now existed in a state of limbo.

But there's nothing like a near-death experience to refocus and rethink. The days of a 20:1 ROI out of an unbranded keyword may well be over but more sophisticated measurement techniques and nimble thinking have given search the kiss of life. But only the fittest survive. SEMs with a clean bill of health are doing a lot of thinking and asking a lot of questions. They're asking whether or not searchers will return at a later date through a different keyword to convert; asking how many offline sales the keyword can generate; and, regardless of whether the keyword-related product is bought, they're asking whether or not other products have been searched for or how much time has been spent browsing on the site. They are asking whether search impressions have any brand value and, if so, how much.

This dynamic shift means search campaign managers are likely to spend less time thinking about the keywords and more time thinking about the customer.

In fact, as measurement becomes more complex and search requires the analysis of multiple success metrics, putting the customer at the heart of campaign management becomes the difference between life and death. Those who combine good ad-serving technology, bid management and analytics tools will, exponentially, increase their chances.

So what lies ahead? How can search grow in strength in order to become the robust and lucrative tool of the good old days?

For certain, lack of innovation among the search platforms is hampering the recovery of search marketing. What's needed is one technology platform that can combine those essential, life-giving tools: ad serving, bid management and analytics. Google and Microsoft appear to be the leaders in this field and it'll be interesting to see which produces this platform first.

Businesses will also play a role. They'll need to work more closely with their agencies in order to understand what success looks like, and the requirement from clients to have everything trackable will have to ease.

Agencies will also be forced to adapt. Customer analytics will require more focus; measurement and analysis, not buying power, will be the skills that agencies will sell. Those that get their media, creative, strategy, analytics and web development teams working together, and which can use search analytics data to influence the way sites are built, will thrive.

This will help breathe life back into an industry that has been struggling to innovate.

Nathan Levi is search director at Avenue A/Razorfish

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