Opportunities and Pitfalls in the near-term evolution of Search Engine Marketing.
In one fashion or another I’ve spent the last decade making a very good living from marketing through Search Engines. As the CEO of a venture backed startup, later as a VP of Business Development, and today as the owner and founder of a couple of businesses I have spent the last decade relying on search engines to provide the foundation for my marketing programs and lead generation. Thus far it has been a labor of love, especially for those of us who are analytically inspired so to speak. Mastering the ability to visualize the needs of my customers, developing the products to meet those needs and then casting a net wide enough to describe those needs in the form of keyword driven ads, has delivered profitable results for one business model after another.
Operating Online Marketing Network, a regional ISP/Web Development and Online Marketing Agency, we managed hundreds of clients, most of which could undoubtedly benefit from the Internet’s reach and speed of simplicity in terms of acquiring new customers. Later as a consultant, my new clients were able to achieve multi-million dollar gains in sales with sizable margins in less than a year – all from search engine marketing.
Over the last 18 months however the landscape has changed dramatically with the big 3 (Google, Yahoo and Microsoft-Live Search). As the technology began to mature within its original form and client base, Google and Yahoo both began to make changes to their ad platforms in order to maintain revenue growth. Initially the market did not understand Google’s move, the metrics looked as if the market was shrinking. While Google increased the average cost of most clicks by increasing many minimum starting bids effectively reducing the number of advertisers per click and squeezing the remaining lot into higher yielding ads, Yahoo took another route. By “normalizing” the keyword searches that individuals place and thus effectively combining the advertisers’ keyword buys into the same result set, the advertisers’ have been placed into a more highly competitive landscape and in the end, a higher cost per customer acquisition (CPA).
Under this scenario of squeezing profits out of the technology, the economy, number of searchers or absolute volume of customers does not have to grow at all to provide the search engines’ revenue growth. Bravo to the statisticians working for both companies who developed these and other ingenious ways to milk more profit growth from the first phase of search engine technology.
But where does this leave the average business? In more competitive markets I have heard a number of executives say that they are beginning to shrink the percentage of dollars spent online. At the same time, and in the same week, I have heard others say that they can’t get enough out of this channel , comparing it to a drug with the amazing multiples that they make from online marketing efforts.
Obviously if you are a reseller of anyone’s products, the search engines have you in their sites, as they believe that their service replaces the need for you as they are a more efficient method to distribute goods and services by going direct. Counter-point is the fact that many resellers of goods and services actually add value to the core product, but they feel that they are being caught up in the mix.
A good marketer knows how to focus on the differentiating factors and actually capitalize on that value added service. This comes in the form of a larger more descriptive keyword base, and ads that actually meet customer’s needs, then if the work is done properly, the CPA will actually decrease.
Today, those who have tapped into such talent will be happy to replace their competitors who have decided one of the planet’s most enabling technologies is too expensive, too complicated and just not for them. My advice is to seek out the proper expertise, after all, the trends say that search engines are continuing to update and change their algorithms while developing the largest pool of prospective customers ever assembled in one “place”. Not to mention the fact that more growth is yet to come resulting in more opportunities for marketers as search engines continue to replace the yellow pages and make advances in mobile phone advertising. I’m sure you’ve heard the cliché’, if it is worth doing, it is worth doing well. This time the cliché is right.