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IN THE MAY ISSUE...
BALLMER CHALLENGES GOOGLE WITH MICROSOFT ADCENTER
Forbes, Palmy Olson 05/04/2006
Getting specific: With its minimalist white décor and lightning-quick searches, Google has attracted countless surfers--and spawned millions in revenue through AdSense, one of the Web's most popular platforms for targeted, pay-per-click advertising.
Having watched all of this very carefully indeed, Microsoft's Chief Executive Steve Ballmer is today announcing his own lean mean money making ad machine. MSN adCenter, the company's version of Google's AdSense, is moving out of its beta stage to be officially launched and re-branded as Microsoft adCenter.
So how does it work? Essentially adCenter allows businesses to "bid" for keywords such as "car" that are typed into an MSN search engine. What makes Microsoft different from Google is its so-called "exclusive targeting features" which allow registered users to selected whom, what day of week or time of day and to what geographic location their ad will be shown.
For instance, if a car dealership wanted to get more specific about its target audience with its advertising, it could bid a little extra to make sure its ad is found by a male, aged between 18 and 25, who is online between Monday through Thursday, and between 6 p.m. to 11 p.m. A bid that specific would cost $1.50. The business would not have to pay that amount unless a male fitting that description searched for "car," saw the ad and clicked on it.
The rub for Google is that Microsoft is able to target its audience so specifically, a huge audience. The software giant is able to tap into an enormous portal of information that it has gathered through its network of online sites and services. That's a factor which may well rile civil liberties advocates, but it could help Microsoft make a nice return on its increased investments--an increase which rattled investors last week.
WHAT GOOGLE SHOULD DO WITH ITS $10 BILLION WAR CHEST
Paul R. La Monica, CNN Money, 04/11/2006
Saving for a rainy day is common practice for many businesses. But what kind of downpour are you expecting if you need $10 billion?
That's what search engine Google has on its balance sheet following last month's secondary offering of 5.3 million shares. Google raised about $2.065 billion from the sale.
The company didn't sell the stock because it needed cash. Google (Research) said in a regulatory filing that one of the main reasons for the sale was to meet demand from index funds that needed to buy the stock after Google was added to the benchmark S&P 500 on March 31.
But Google's growing cash hoard (analysts predict that Google could have more than $12 billion by year's end) has Wall Street speculating about what the company might be planning to do next.
A Google spokesperson would not comment. According to the company's filing, proceeds from the stock offering would be used for "general corporate purposes, including working capital and capital expenditures, and possible acquisitions of complementary businesses, technologies or other assets."
Thus far, the company has avoided large purchases, instead preferring to buy smaller private firms. Analysts don't expect that to change.
"They will focus on
smaller companies with unique interesting technologies," said Scott
Kessler, an equity analyst with Standard & Poor's.
Searching beyond search
With that in mind, what could Google go after?
Michael Cohen, director of research with Pacific American Securities, thinks Google should stick to do what it does best: search.
"Here's a company that has the ability to raise cash and do anything they want. But I think they'd be ill-served if they didn't stick to their core strategy," Cohen said.
To that end, Google is said to have recently bought the rights to new search technology that allows users to view answers to search queries without having to leave for another Web site.
Still, Google is clearly broadening its scope beyond search. Google once noted on a corporate Web page about its philosophy that it did not "do horoscopes, financial advice or chat." Yet, Google now does two of those three things. (We're still waiting for the Google horoscope beta.)
As such, Bill Tancer, general manager of global research with Hitwise, an Internet research firm, thinks Google needs to make more deals in social networking. He said Google's biggest threat will not come from search engines like Yahoo! (Research), Microsoft's (Research) MSN or IAC/Interactive's (Research) Ask.com but from MySpace, the social networking site owned by News Corp (Research).
"Google's core business is helping people consume information on the Web. As we see Google grow out its content offerings such as finance and maps, I think they'd have to make a serious play into more social and user-generated content," he said.
Google already has some presence in this area - web log tool Blogger, photo sharing software service Picasa and social networking site, Orkut, for example. But Tancer thinks Google needs to make an even bigger splash.
Tancer said that Facebook, an online community site that competes with MySpace, could be a good deal for Google. Facebook is rumored to have turned down a $750 million buyout offer from another firm, and could be seeking closer to $2 billion, he said. YouTube, the popular online video service, could also make sense as a purchase, he said.
He added that online travel search is another area Google should target, with sites such as privately held SideStep, Kayak and Mobissimo being possible buyout candidates.
International expansion should be another priority for Google, especially in Asia. Scott Devitt, an analyst with Stifel Nicolaus, thinks Google's preference is to launch its own sites abroad and hope they wind up on top. But a fallback position is to follow eBay's lead and buy into new markets.
"If eBay couldn't
win a market on its own, they'd acquire the leader. I think it would be
logical for Google to follow a similar strategy," Devitt said, adding
that Google could buy China's Baidu or South Korea's NHN, which owns the
portal Naver.
More strategic investments on the way?
But Chris Sherman, executive editor of SearchEngineWatch.com, an influential Web site covering the search industry, points out that Google simply may be stockpiling cash in order to hire more engineers both abroad and in the U.S.
Sherman said if Google's ultimate goal is to be more competitive with Microsoft on several fronts, the company has a long way to go. Google had nearly 5,700 employees at the end of last year, up from about 3,000 at the end of 2004. Microsoft has about 61,000 workers worldwide.
"Google is still small compared to Microsoft in terms of employees and facilities, and expanding is not cheap," he said.
There are also Google's capital expenditures to consider. Analysts point out that Google is constantly rolling out new features. Also, Google's partnership with EarthLink to build a wireless broadband network for the city of San Francisco should have some high start-up costs.
Kessler adds that as Google rolls out even more features, it might make sense for the company to start promoting its brand more aggressively. The company has so far eschewed major marketing campaigns.
Google may also look to do more investments in strategic partners, moves like its $1 billion purchase of a 5 percent stake in AOL, the portal owned by Time Warner (Research). (Time Warner also owns CNNMoney.com.)
Sherman said Google might want to invest in a cable or telecom firm in order to ensure that it would not have to pay these Internet service providers fees to get its services delivered to broadband users at optimum speeds.
Google and other Web firms are arguing for so-called "Net neutrality," a promise from phone companies and cable firms that they won't give preferential treatment to their own online offerings or to others who pay for faster delivery. Sherman said Google could help make "Net neutrality" a reality if it owned a piece of the ISPs.
Finally, Sasa Zorovic, an analyst with Oppenheimer, argues that Google should pay a dividend, even though momentum investors might balk at the idea. (Dividend payments are often viewed as a sign of a mature company.) But with $10 billion, Zorovic thinks Google could afford to pay a dividend while continuing to spend on research and development.
"For sure, if Google said they are going to pay a dividend, the stock would get whacked. But I wish they would give some money back to investors," he said.
BRANDING THROUGH SEARCH: STRATEGIES & TACTICS
Amy Edelstein, Search Engine Watch, 04/19/2006
Savvy search marketers are increasingly leveraging search for branding purposes, and not as an afterthought, but deliberately blending both old and new strategies & tactics.
The "Branding & Search" session at featured Cam Balzer of Performics, Jessica Koster of Danskin, Jonathan Mendez of Digital Grit, Ron Belanger of Yahoo! Search Marketing, and Rand Fishkin, of SEOMoZ. The panelists spoke of the new branding trends online, and the as yet untapped potential of search marketing to build and strengthen brand recognition.
The Big Ad Agencies Start to Catch On
This year, marked perhaps most publicly on that galavanza of media marketing Super Bowl Sunday, ad agencies show signs of waking up to the power of Search as a branding tool. They're starting to integrate it with other more traditional media buys. And a few hiccups notwithstanding, they're seeing some pretty impressive results. This heralds some potentially big changes, and big opportunities for those SEMs who are ready to capitalize on this shift.
As deep pockets open their eyes-and coffers-to search's potential for branding, they could change the playing field of paid search marketing as we know it today. One panelist described one big brand client's relationship to capturing the #1 position on the SERP. They were prepared to bid whatever it took, no caps, no limits, and no need to justify the bid costs in relationship to clicks or orders to hold that top spot for the days surrounding their big media drop. Because their intent was brand awareness not sales or clicks.
New demographics are entering different vertical spaces, online. They're up-and-coming consumers, many in the 18-30 age bracket, who may not have been brought up with the tried and true brands of yesteryear's advertising media. Ad agencies need to learn how to find these searchers, know what they're looking for, and test the best messages that will leave a lasting brand impression with them.
Reconfigure Your Goals to Brand (Not Sell) with Search
Rand spoke of 6 basic Search branding goals. Simplistic as they may seem to veteran marketers, these oft-repeated goals are still the pillars of brand awareness:
1. Improve the
visibility of your product or company
2. Create brand association with events or product categories
3. Position against competitors in specific market sectors
4. Build buzz for viral marketing
5. Leverage brand awareness to support your natural and paid search campaigns
6. Reach the 18-39 year olds by branding within the online marketplace
Safeguard Your Brand Name
If you've built your brand name over decades, protect your message, look, and feel in the online space. Jessica Koster at Danskin is working to marry their traditional brand with the new online space. As a company that's built its reputation over 100 years, for loyal customers, Danskin means dance. They get over 30% of their online orders from brand related listings.
If You Brand It... They Will Come
Mendez took the audience through a case study with one of the master branders SONY. The campaign goal? Build buzz. Not sell product. Build buzz. The product was a new Vaio notebook and all media pointed to the same landing page. An informational page without a single call to action. Not bad if the goal is to increase awareness but still, you had to really work if you actually wanted to buy the product.
As you dissect current campaigns online, and you find-or design-these four elements, you'll be looking on a solid online branding campaign:
1. Consistent
creative messaging
2. One landing page collecting visitors from all media
3. Media or keyword buys in generic product or industry spaces
4. No specifically strong calls to action or promotions
Consolidate Your Message, Work At Higher Levels
Cam Balzer, Director of Search Strategies for Performics, has long been leveraging search for their nationally branded advertisers. Their clients have brand awareness in the public mind. But up until relatively recently, Balzer and colleagues leveraged search for ROI driven goals. That meant they looked for immediate click-through-rates or purchases to measure campaign efficacy.
But as they started to look more broadly at the metrics coming back to them, the behavior patterns indicated by search, and the potentials of this self-selecting medium, they realized Search could easily be used for purposes beyond ROI driven goals. They could extend brands and tap into more of the market and mindshare of the 60 million Americans who use search every single day.
As Cam simply said, "Search is becoming synonymous with being a consumer." As you go more deeply into analyzing large volume of search behavior, an interesting fact is unearthed. Consumers actually depend on search to build awareness, to learn about a brand or product, more than they use search to buy a product.
Work Online Ad Mediums Cooperatively
Ron Belanger of Yahoo! Marketing dropped a few nuggets of insight to wrap up the formal presentation of this session.
As a sign of our more accurate appreciation for Search as branding tool , Yahoo! has changed the names of its display ads. They used to call the display ads Brand Ads and keyword ads Search Ads. Now, more aptly, Yahoo! offers Display and Search ads, working with clients to find the sweet spot where the balance of ad spend in each compliments the other and builds a more robust campaign
Recently Yahoo! has seen, through their larger spend clients, a direct commensurate increase in search demand when clients purchase display, in conjunction with search. So next time your search ad rep calls, and tries to sell you more Yahoo! display, listen up. It might be more worth your while than you thought.
SEARCHER BEHAVIOR RESEARCH UPDATE
Chris Sherman, Search Engine Watch, 04/11/2006
Two new studies examining how people search show that internet users are becoming more discriminating, with important implications for search marketers.
As part of ongoing work conducted by Jupiter Research and sponsored by iProspect, "The iProspect Search Engine User Behavior Study" found that 62% of search engine users click on a search result within the first page of results, and a full 90% of users click on a result within the first three pages of search results.
These figures were just 48% and 81% in 2002, based on similar research iProspect did at the time.
Search marketers should take note of these findings, as they emphasize the importance of appearing on the first few pages of search results, whether in natural or sponsored listings. The message is clear: You can't simply rely on search engine optimization or search advertising if you want qualified prospects to find you. You must invest the time and resources in both types of search marketing, or risk being overlooked.
These findings, while interesting and important in themselves, raise several questions:
* Are searchers
getting more sophisticated and demanding—or conversely, getting
lazier and more easily satisfied?
* Have search engines improved so significantly over the past four years
that most people find what they want on the first page of results?
* Apart from "quality" search results, how have user attitudes
toward marketing and branding messages changed?
Partially answering the first question, results of the iProspect study suggest that at least a certain percentage of searchers are getting more sophisticated and demanding.
For example, 41% of search engine users who continue their search when they don't find satisfactory results on the first page do one of two things: Change engines or change search terms. Four years ago, just 28% did.
Even more determined are users who don't find what they're looking for at all on their first try. Fully 88% of these users change engines or change their search terms, up from 78% in 2002.
But these figures mask a somewhat paradoxical finding related to loyalty: 82% of search engine users re-launch an unsuccessful search using the same search engine used initially, adding more keywords to their query. Just 68% stayed with the same engine in 2002.
This suggests searchers are not only loyal, they're increasingly going out on the "long tail" using lengthier queries. For search marketers, this means if you're not targeting both simple keywords as well as lengthier keyword-rich phrases you're likely missing out on a significant amount of traffic that simply wasn't there a few years ago.
iProspect also concludes that with more searchers persisting with the same engine despite failed initial searches, that user loyalty has been earned. In other words, in staying with the same engine and using a different or longer query, searchers are implicitly saying that the problem is with their own search strategy, not with the search engine.
What about the branding aspect? The study found that 36% believe that companies whose websites are returned at the top of the search results are the top companies in their field. Slightly more (39%) felt neutral on this question. At the other end of the spectrum, just 25% said that top search engine rankings had nothing to do with market or brand leadership.
Net, these findings reinforce what search marketers have instinctively believed for years: If you're not ranking well for your desired search terms, brand names and other important key words and phrases, you're missing out on significant, highly qualified traffic.
A full copy of
the iProspect Search Engine User Behavior Study can be downloaded from:
http://www.iprospect.com/about/searchenginemarketingwhitepapers.htm
(no registration required)
A UK Perspective on Searcher Behavior
In a separate study, UK based online marketing firm Harvest Digital surveyed "experienced" internet users about their attitudes toward search. Unsurprisingly, a majority of people reported using Google, but notably, only 24% reported using a single search engine. A full 20% said they regularly used four or more search engines.
Why use so many? UK users, despite relying heavily on search engines as a significant source of information, don't trust the results they get. Just 22% of users reported that they were confident that search engines would always give them the information that they needed.
But users blame themselves, not the engines. Just 8% said the problem was poor search engine performance. Many more said the problem was caused by their use of the engine, with 36% saying that they were not using correct terms and a further 32% said that they were looking for information that was too specialized.
The remaining 24% blamed search advertisers, though it's not clear whether this result related to sponsored links or whether survey respondents thought advertisers were buying their way into the top of natural search results (the study didn't attempt to answer this question).
Supporting but also in contrast to the iProspect findings, 43% of searchers said that the most important reason for clicking on a result was that it appeared on the first page, with just 8% saying that the brand name or website looked reputable. 32% said the relevance of the description was most important, with 17% saying that a result at the top of the first page was the most important criteria.
The Harvest Digital
searcher behavior report can be downloaded from:
http://www.harvestdigital.com/fact_sheets.cfm
(registration required)