Event: Kelsey Group Drilling Down on Local Search 2005
Session Title: Branding and the Future of Search Marketing
Session Date: April 20, 2005
Session Time: 3:30 pm – 4:30 pm
Search engine marketing built a nearly US$4 billion empire largely on being a direct response medium, matching sellers with consumers who were “ready to buy.” But now that search has become the hottest form of online advertising, brand marketers and large agencies are starting to invest. As more and more branding dollars flood into search—as a comparatively inexpensive advertising medium—what are the implications for advertisers and the medium itself? While it will certainly boost revenues in the near and medium term, will it ultimately help or hurt search engine marketing? Will small businesses be shut out, or will search become highly segmented and stratified?
Jake Baillie, Product Manager, TrueLocal
Daniel Boberg, Senior Director, Strategic Alliances, Overture
Barbara Coll, CEO, WebMama.com, Chair & President, SEMPO Inc.
Matt Naeger, VP & General Counsel, IMPAQT
Mark Josephson, SVP, Marketing & Business Development, Kanoodle
Rob Middleton, EVP, Chief Strategy Officer, Fathom Online
Justin Sanger, President, LocalLaunch!
Richard Zwicky, Founder & CEO, Metamend Software & Design Ltd.
Related Posts: buzzhit!’s Drilling Down on Local Search 2005 Index Page
Q: Can online properities such as CBS Marketwatch match the offline revenue generation?
Coll: Only if CBS can raise its prices…
Q: How big can the market grow…
Sanger: You create more inventory by continuing to publish; you also do this by moving offsite, by moving offset (contextual advertising)
Josephson: Perhaps community newspapers aren’t being efficient in driving traffic to local advertisers…
Naeger: At the publisher level, you could be doing much more sophisticated segmentation to grow advertising rates.
Q: So that goes both to targeting capability and price increases, and to inventory
Naeger: People will be able to pay more if they are getting better conversion
Boberg: As more consumers use local products, advertisers are becoming more active. Targeting will play a role, but dollars will move as consumers adopt
Coll: It’s a stretch to think that people will click the local button/tab; it might be 6 months, it might be three years (user education)
Q: Can you generate the revenues on a schedule that the (stock) marketplace is demanding? How are we going to train the users so that the inventory is going to be developed? How do we monetize the Tail?
Naeger: You can train users, but you can also use demographic information as a proxy for local targeting. I’m not a believer that contextual is the future
Josephson: Targeting via context is only one way; context is one way, behavior is another, geo is another, etc. We need to do a better job of educating the marketplace
Q: Advertisers will be able to pay more over time as targeting technologies improve
Josephson: Advertising is demanding more control and transparency; sponsored link providers will be more proactive in providing services in the way that large advertisers demand they work
Boberg: Clearly there’s value around the search funnel; it’s not all direct response, direct reaction. There’s value throughout the marketing funnel. That will open up more dollars.
Middleton: More dollars are going to flow in as TV sags; not clear that Internet has the infrastructure to handle more dolalrs
Q: Isn’t there a ceiling due to scarce inventory?
Baillie: I see advertisers who don’t know how to use the tools they already have. Education and tool development are big problems
Coll: Advertisers think they can’t brand via search; they can uplift their brand. Yahoo!’s op is in convincing advertisers to buy their own brand name
Middleton: People ask why they should buy their names if they are in organics; we did a controlled test, removing the sponsored listing… traffic fell off 27%
Zwicky: We had a similar situation, traffic went down but so did spend
Boberg: There are 100Ms of Tail searches that are untapped; more will be created as query length increases
Sanger: Most of our small biz customers don’t care about branding, they care about conversions. Most of the marketplaces serve the highest bidded ad instead of the most relevant one
Q: Keep talking about it…
Sanger: If you look at Yahoo Local, “flower san jose”, you get geographic IP targeting + local match (that’s good: you’re showing local advertisers to a local query, segmenting local answers out to local consumers). If you run the same search on Google, you get FTD, 1-800 Flowers. This is causing what’s being perceived as an inventory shortage
Coll: I think there are national advertisers who will take advantage of the local opps; same thing happens in Yellow Pages. Their goal is to completely saturate listings in every city; small businesses can’t compete.
Boberg: Local advertisers are looking for conversion; that’s been true; people are looking for ROI, direct conversion. In YP, you’re looking at $30 leads; isn’t a lot of that brand advertising
Baillie: People talk about keyword space like it’s all the same. For flowers, you’re probably looking for a local guy; for rental cars, you’re probably looking for Hertz, not Joe’s Cars.
Q: Isn’t the best way to train users to provide local results; isn’t there a fundamental paradox if the inventory gets gobbled up by large national advertisers?
Zwicky: Customers fundamentally care about ROI. Down the road we’re going to use speech, so inventory will explode as no one will phrase things exactly the same
Q: Back to previous question
Zwicky: I agree with the premise, but there are permutations. If you’re in SJ searching for something in SJ, it’ll be local. If you’re in Chicago searching for something in SJ, you’ll get national brands
Coll: Not going to work until we’re mobile and have GPS; IP sniffing is useless
Josephson: Gotta rank advertisers by yield, not just bidded amount
Q: Don’t you get into a contradiction? Isn’t the motivation to take the national ad dollars
Josephson: The goal is to create an effective marketplace to bid for user attention, based on user decisions. Everyone wins.
Baillie: For loca, we toss out everyone who doesn’t have a physical presence (all the aggregators, online presence only, etc); freeing up the inventory for local businesses
Josephson: And we’re held accountable by our distribution partners for yield; if you rank on yield, advertisers generating more clicks can bid less. Yield rank creates better relevance
Boberg: Relance is king. Results have to be good or users won’t use it. We have seen categories were local advertisers can outbid national aggregators; floral, dental. It just depends on the category.
Naeger: It still comes down to the value of the person who did the search and where they want to go. I have a problem with large national advertisers being blown out of the listings. Home Depot is my local hardware store.
Sanger: Search is splintering and segmenting; engines are infatuated with user intent. One search box is not where search is going. The brilliant part of the Internet is that it can drill down into human behavior. Engines will be forced to create an experience that coincides with human experience
Naeger: The problem is that users don’t use IYP, they use Google. Education.
Coll: It comes down to a question being answered and the most relevant answer being delivered. We’ll figure out how to respond to the question. How can you do that without understanding user behavior.
Q: Will the marketplace tolerate 8-9 years?
Coll: I don’t think industry analysts be that patient, Greg [laugh]
Q: Will SERPs be segmented with local in one pane?
Sanger: Users will demand that search meets their needs. Vertical plays are exploding because they can provide specific answers that horizontal search can’t.
Naeger: Aren’t you really talkin about the evolution of what the user does, versus what the search engine does. Users are educating us as much as we’re educating them.
Coll: This gets back to the question of whether analysts and Wall St. will wait. Portals need to invest in the user experience instead of other places. Where do those R&D dollars come from when the pressure is on making money now?
Josephson: The largest gating factor in offline spend moving online is the brand manager not getting it. But as people with more online experience move up the food chain, things will change
Audience Q: Are you seeing click fraud in Local and what are you doing
Sangster: Click fraud is more prevelant for SMEs than at the national level. The deeper you get, the more fraud you see
Boberg: We see click fraud as a serious but manageable one. We have a dedicated team to address it, continually improving algorithms and filtering clicks
Coll: I have to agree with Justin; SMEs have limited budgets, competitive click fraud a big issue
Josephson: It’s interesting to see what providers have and haven’t said about it. Yahoo’s done a great job. We don’t want to tell people what we’re doing, because it will help them game it. We all have systems and technology. Everyone looks at every click.
Baillie: The issue isn’t engines not detecting it; it’s that businesses aren’t tracking it. Click fraud will continue to be more and more prevelant until advertisers look at their clicks. Detection and prevention is years behind what’s going on. Engines can’t see the activity on your site; half the responsibility is the advertisers
Audience Q: Back to voice search… is this realistic, and if so, will avatars come back to brand
Zwicky: No idea on avatars, but I see natural language voice search as a natural evolution
Kelsey: Are Google and Yahoo trying to be all things to all people… what happens when NP and YP provide a great search experience, will I go to them instead of Yahoo/Google Local? They don’t have the same challenge with national advertisers? Will there be many search engines instead of just a couple biggies
Coll: That hasn’t been proven. MSN is doing great things, don’t forget them. Yahoo has always tried to offer users everything; they’re a portal. There’s a huge OEM business servicing the NP and YP; that’s who powers most of their search and contextual now
Sanger: In Chicago if you want restaurant results, you use MetroMix; Tribune company. You can’t drill down as a horizontal player. I think you’re right John
Q: Does it build out where aggregators own the front page and drive people to local sites… Say whatever you want
Boberg: We really value choice in the marketplace; consumers determine what’s relevant. I think there’s a lot of room for a lot of players to create a robust experience.
* These are raw, unproofed notes taken in real-time. Nothing attributed to any speaker should be assumed to be an exact quote. Rather, my goal was to capture and communicate the essence of what was said. If there is a significant mistake, please post a comment or email me; I will make a correction at my earliest opportunity.