Search decoded: Search pays off

Yet figures from the Internet Advertising Bureau and
PricewaterhouseCoopers still manage to astonish: UK spend on paid-for
search shot up by 52 per cent in 2006. That's £1.2 billion spent
by advertisers to secure the sponsored links that appear at the top of
search results pages - and 57.8 per cent of the entire ad budget spent
online during the year.

Despite the enduring "Wild West" nature of the search market, where
deals are fast-paced and much territory is still largely uncharted,
marketers are happy to hitch their wagons to search engines.

One compelling reason for advertisers to spend so much money on search
is that it appears to work. It is direct marketing in its simplest form:
a consumer is searching for a product, and if they can find your
business, you've got a good chance of making a sale.

Evidence shows that offline advertising boosts search activity online.
Recent research, published jointly by Yahoo!, Hitwise - which measures
search and web traffic - and the digital media agency i-level, analysed
data from brands including the AA and Sky over a six-month period.

It showed that when TV spend doubled for the AA, for example, there was
a 70 per cent increase in the number of internet searches that included
the terms "the AA" and "car insurance".

"Search grew up on pay-per-click and direct response, so it's no
surprise that categories such as finance and travel spend so much on
it," Guy Phillipson, the chief executive of the IAB, says.
"Increasingly, advertisers are understanding that their offline ads
encourage search.

"When it comes to search, if you're not there, one of your competitors
will be. It's not surprising that eBay and Amazon pick up business from
offline competitors that haven't optimised their search."

Even FMCG brand owners, many of whom are convinced that consumers don't
search for them online, may have more reason to invest in search than
they might realise. While few people might go on to the web to hunt
down, say, Colgate or Flora, they are definitely searching for "teeth
whitening" and "healthy diet". As Phillipson says: "Brands have to
understand how to own their brand territory online."

It is the same drum, inevitably, that is being beaten by Google, which
handles nearly half of the web's global search queries. The search
engine has deliberately plundered traditional media and ad agencies to
build a team, under the UK sales director Mark Howe, which is going out
to digital and full-service agencies evangelising about the power of
search.

Howe believes Google can show advertisers how incorporating search at
the beginning of campaign planning can stimulate more consumers to
search for their brands online. So, bidding on an ad campaign's tagline
(such as Norwich Union's "Quote me happy") can guide potential customers
more directly to the advertiser's site. The argument finds tangible form
in developments such as the acquisition by the Engine Group of the
search agency Eyefall, to sit alongside disciplines such as advertising,
in WCRS, and digital at Meme.

However, other commentators believe the dream of search experts sitting
side by side with the creative team at brand strategy meetings is more
the preserve of a few, more forward-thinking brands, rather than the
norm - at least for now.

And some, such as Andy Bush, the publishing director for Europe, the
Middle East and Africa at The Fortune Group, which includes the website
CNNMoney.com, views the drive to "keyword" ad slogans largely as a
revenue-boosting ploy by search engines. Surely consumers are most
likely to search by brand name, or, failing that, by product sector, he
argues.

"It has to be about what consumers want, rather than advertisers making
that call for them," he says. "That's the danger."

So, what trends are underpinning the exponential growth in search?

Jim Brigden, whose agency The Search Works handled around £50
million in search billings last year, notes that clients are taking a
far more strategic, long-term approach.

Another noticeable trend is the "uncapping" of budgets as marketers
realise the efficacy of search advertising. Paid-for search works by
advertisers bidding for keywords and phrases that they think will drive
relevant customers to their websites. The search engines receive a
payment every time a customer clicks through on one of the sponsored
links.

In the past, there had been fears that advertisers that had bid on
expensive keywords - a term such as "car insurance" can cost as much as
£15 per click, for example - could end up paying high amounts
without necessarily converting the clicks to sales.

But Brigden says: "Advertisers are saying that if (search experts) can
deliver a positive ROI, then marketing budget is uncapped."

He predicts search will eventually move to a cost-of-goods-sold model,
alongside other fixed necessities such as the electricity bill or
staffing costs. "You don't close your shop at 6pm if you have got a
hundred shoppers inside," says Brigden. In just the same way, marketing
directors will not cease their search marketing programmes if they still
deliver customers.

One of the ways in which experts are improving their understanding of
how consumers search - and, therefore, finding the most effective
keywords on which to bid - is by following their "click journeys".

New Artemis software from Media Contacts, the digital arm of the media
agency Media Planning Group, is claimed to track the entire route a
customer takes from the beginning of an online search to making a
purchase.

Someone might be searching for a holiday, and then narrow that search
into holidays in Spain, and then holidays in Spain with a particular
company - a process that can sometimes take three months and up to 15
clicks. Previously, the advertiser may only have known the final search
term on which the customer clicked before making the purchase. Artemis
makes the whole journey visible.

"Instead of attributing all the return on investment to the final
keyword, we can see what a user types in. You really need generic terms
to trigger a journey," Grant MacFarlane, Media Contacts' head of search,
says.

One of the most significant developments will be the long-awaited launch
in the UK of Yahoo!'s Panama, which is a new system where search
rankings will be based on a combination of the amount paid and a
"quality" score. The aim is to improve advertisers' keyword bidding, and
make search results more relevant for consumers. The quality score is
derived from a combination of elements, including the number of
click-throughs that a search result achieves. Previously, ad rankings
were determined solely by price.

Panama is the result of two years of conversations with advertisers and
the input of 400 engineers, according to Richard Firminger, the regional
sales director at Yahoo! Search Marketing. "Before Panama, lazy
advertisers could become the top search just by paying for it, but the
new system won't let an advertiser hog a position solely on price," he
says.

"What will rise to the top are good-quality ads based on how consumers
rate their relevance."

Yahoo! is banking on the system to help it fight back against Google
(which already ranks search in a similar way) and reassure shareholders.
"It's built to be scaleable," Firminger says. "It doesn't matter if
mobile search is the next big thing or something completely different we
don't even know about yet. Everything can be sold through this one
platform."

There are also somewhat less concrete developments on the horizon. Alain
Portmann, the global media director of the full-service digital agency
Web Liquid, is anticipating the growth of "social search".

This is broadly defined as search that leverages collective
intelligence. At its most simple, it can be a site such as Yahoo!
Answers, where people ask questions and then rank the responses that
other users provide, in terms of usefulness and relevance. In the 18
months since its UK launch, Yahoo! Answers has racked up 90 million
users and is claimed to be one of the fastest growing internet
properties.

"As people become more adept and experienced with the internet, they
realise that their requirements from search engines are evolving,"
Portmann explains.

And, as more and more people spend increasing amounts of time on search
engines, brands will need to find ways of harnessing their changing
behaviour - behaviour such as "Wilfing", or "What Was I Looking For?"
(see box, left).

As MediaCom has identified, the advertising fraternity has had to move
from an era of "interruption" of consumer activity to one of
"engagement", and is now moving to a further period of "dialogue".

Finding the right tone of voice with which to "dialogue" with consumers
is crucial. Some advertisers are getting it right. Others, less so. But
for all, the search must continue.

WHEN SEARCH GOES WRONG

When Pontiac challenged TV viewers in a US ad campaign to "Google" its
brand, a Mazda executive did just that, and realised that Pontiac hadn't
bought the sponsored search links. He snapped them up for Mazda.

Although there haven't been such high-profile incidents in the UK, a
quick survey of an ad break on ITV1 during The Bill reveals that
advertisers aren't always making the most of potential search spikes
that their ads may generate.

For example, the yoghurt brand Muller's latest campaign asks viewers "do
you lick the lid?". But typing those words in to Google links to a story
about the campaign, but not to any Muller site.

Type in the strapline,"Lick the lid of life", and Muller's microsite is
the fifth and sixth link to appear in the natural search. But the links
don't work - at least they didn't on 3 May.

Howard Brown has returned to TV screens in an ad for Halifax's tax-free
savings. Typing "Halifax ISA" in to Google shows that the brand has the
number one paid-for search result and the top natural result; but a
search for "Halifax tax free" reveals that the number one paid-for spot
has been bought by you, the taxpayer, to promote the Government's
website direct.gov.uk.

SEARCH GLOSSARY

Affiliates - Websites that derive income from sending traffic or
customers, or delivering sales, to other websites.

Brand-term leakage - The percentage of searchers who use your
brand-term, but do not immediately arrive on your site, going instead to
a competitor or affiliate site.

Click fraud - The phenomenon of affiliates generating revenue by having
people or automated systems repeatedly click on links to artificially
drive traffic to a site.

CPA - Cost per acquisition, or the amount of money paid for each
customer acquired.

CPC - Cost per click, or the amount of money paid every time someone
clicks through on a sponsored link. Also known as PPC (pay per
click).

CPM - Cost per thousand, or the amount of money paid every thousand
times your ad is served.

Natural search - Results generated by a search engine's algorithm,
rather than those that are paid for.

Paid-for search - Results that are usually featured at the top of a
search page under sponsored links, and are generated for whoever has bid
highest on the search term or keywords entered by the webuser.

Search optimisation - The practice of developing a website to ensure
it's listed as high as possible in natural search rankings.

Trademarking - Making sure search engines recognise brand names and
trademarks so that other brands cannot bid on them for sponsored
search.

TEN MINUTES 'WILFING' WITH ...

"Wilfing" ("What was I Looking For?"): A term coined by
moneysupermarket.com to describe the habit of being distracted from the
website you were first searching for. "I don't particularly want to
write this as I'm amusing myself reading an article about internet boot
camps in China.

"Apparently, addiction to the net in China is so rife that it has been
given equal status to alcoholism and gambling. Now, I'm no ice-hearted
nasty, but I can't imagine finding the sympathy to sponsor a colleague
to cycle backwards across the Andes to raise money for all the poor
ickle web junkies in Hackney. It's the internet, for God's sake. Turn it
off.

"Why am I reading this anyway? Hit the back button to return to what I
started searching for - wilfing, the art of surfing the web without any
real purpose. Find myself looking at an article I read earlier about an
engineer from Wisconsin who has invented a 70mph Portaloo. Spot link to
Chinese internet boot camps article. Hit back button again.

"Different site now. This time it's about the Scumball 500, the
alternative Gumball rally for the financially challenged. Make mental
note to ask for a pay rise. Spot link at bottom of article: Modern
fangled water closetry. Hit the back button again.

"Here we go. Wilf.com. With lots of pictures of pretty thirtysomethings.
In lingerie. Looking compromised. Quickly check address bar: Milf.com.
Hit back button, frantically ..."