A recent piece of research published in the US has questioned whether search advertising gets too much credit for converting online sales at the expense of other forms of brand building advertising.
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A new piece of research undertaken in the UK indicates that two thirds of small businesses are still working without any internet connection, email or website.
Google announced, and implemented, its move to ‘universal search’ results in the last month, which means that they are now combining all relevant search results into one place. This followed soon after the introduction of personalised search, so what impact will these changes have on search engine optimisation?
Pay-per-click advertising (PPC) has become a marketing phenomenon with exceptional growth in spend being reported over the last 4 years. Many web businesses are now using this method of search marketing as a primary source of business, but with increasing competition within many market sectors, what are the implications for the future?
PPC advertising was first developed at the end of the 1990’s as GoTo, having a limited circulation and no shortage of criticism as being too commercial within the field of Internet search. This early PPC model rebranded as Overture in 2001, by which time Google had also launched its AdWords product and it has been this tool that has driven the growth in this market (and Google’s revenues) over recent years.
PPC has been so successful because it has focused the power of search engine traffic into a controlled advertising model. We’ve compared the strengths and weaknesses of PPC v SEO, but a key advantage of PPC is that companies can easily achieve visibility on search engines, whatever their site design or optimisation may be like, and it can create highly relevant and cost-effective traffic for them within 24 hours. The ‘pull’ method of advertising means that people will find a company or product when they are actively looking for them, rather than the traditional offline advertising that ‘pushes’ a message out to a broad market using TV, press or radio.
This use of search can be so cost-effective and measurable that companies are now falling over (or, perhaps more correctly, out bidding) each other to get rankings through sponsored results. Consequently the average cost per click has been increasing over the last few years due to the increasing competitiveness of many market sectors, so that the huge success of PPC advertising is also now beginning to create barriers for many.
The entry costs for a PPC campaign are now becoming higher and many larger companies are now entering the PPC market to dominate rankings with higher bid levels, both to drive traffic and develop their brand, as well as to push competitors down the rankings. This process will begin to shut out those companies with smaller budgets, although there are still many ways to make this form of advertising successful.
Eventually PPC advertising will achieve a natural economic balance and advertisers will need to ensure that their websites convert visitors at a better rate to continue to achieve the best ROI (return on investment). There are some signs of a move back to search engine optimisation as a strong alternative to PPC costs, although we recommend a balance of both techniques to achieve the best opportunities for search traffic.
To find out more about the highly cost-effective business opportunities that still exist for many companies using PPC advertising, contact us for details.
The Internet Advertising Bureau have just released the latest figures on Internet advertising expenditure in the UK for 2006, which show that total spend broke the £2 billion barrier for the year, due to a 41.2% surge in growth as marketers continued to move their budgets online and away from other ‘traditional’ media.
Google have recently introduced some changes to their UK listings which allow websites to obtain better visibility at the top of the search results.
What do we see happening this year? Here are our 5 predictions for 2007.
1) A growing emphasis on site conversion: since search engine marketing has now gained a level of popularity that is making it much more competitive, both in terms of achieving ‘natural’ rankings and the average cost per click from pay-per-click advertising rising, there will be greater importance placed on converting visitors to a site into an enquiry or sale, so that the ROI (return on investment) for business websites can be maintained or improved. This will encompass many elements, from the site’s usability, to the effectiveness of copy and images, the checkout process for e-commerce sites, plus the response time and quality once contact is made.
2) Search marketing becomes a core discipline: the other main aspect from the growth of search marketing as a significant area of advertising spend is that it is no longer a niche sector but a significant consideration for inclusion in any website marketing plan. This will be reflected in new jobs and departments being established in mainstream agencies and large companies who want to develop this area, but will also be reflected in a growing skills shortage, leading to more training courses and demand for skilled staff who have a broad experience in this market.
3) Local search gains prominence: the advances in local search opportunities by Google, Yahoo! and MSN will offer small businesses the chance to use search marketing effectively to reach their specific catchment areas. It will create an alternative to more traditional forms of local advertising as more people also use local search on the web to find businesses or other suppliers for their immediate needs. The technology for targeting local search traffic will improve and give smaller companies better alternatives to reach their audience.
4) The question of click fraud is tackled: one of the biggest issues for the pay-per-click providers and advertisers is the question of click fraud, whereby advertisers are maliciously targeted to increase their spend levels from irrelevant click activity. There will be increasing clamour to resolve this issue and although it can’t be stamped out entirely, the main players like Google and Yahoo! will introduce tighter controls to identify and combat this practice, despite remaining secretive about their methods.
5) Social networks become a new marketing challenge: the dramatic growth in social networks like MySpace and Bebo in 2006 was a significant new trend, with MySpace reportedly becoming the most visited US website by the end of the year, overtaking Yahoo!’s long-established top position. Other ‘virtual world’ sites like Second Life indicate the trend towards the web being used as a social interactive tool and one that marketers will begin to target more aggressively. However, the nature of these sites mean that marketing techniques will need to be more creative to reach these target audiences as the wrong strategy can quickly turn into negative publicity.
This time last year we made 5 predictions for 2006 and so here’s a quick summary of our list and what actually happened:
1) Internet growth continues: OK, so this wasn’t difficult to get wrong, but the rapid uptake in broadband usage, both in the UK, Australia and other countries, has demonstrated that the web is now a significant trading zone for both consumer and business spend. Improved access speeds have led to new creativity in advertising and the use of interactive sites, although search marketing continues to grow at a much faster rate than other forms of online advertising as more and more companies realise the potential of this form of cost-effective online advertising. It is becoming harder for new entrants to establish a successful business on the web, although better marketing planning and campaign implementation can help to ensure the best opportunities against established online businesses.
2) Search marketing gains recognition: as noted above, search marketing continues to boom and the introduction of Microsoft’s new PPC tool last year added another option to this section of the market in the US and UK. Both the optimisation and PPC market is now becoming more crowded and increasingly competitive in many business sectors, yet there are still good results to be achieved. Many large marketing agencies are now developing their in-house search marketing teams, whereas the older established specialists continue to do well as new entrants find it harder to gain a foothold. Just before the end of the year, the merger between one of the UK’s largest SEM agencies and a German search firm was indicative of the way this business sector has developed over the past 2-3 years.
3) The PPC market gains a new channel: Microsoft’s AdCenter tool launched in the US at the start of the year and then in the UK during the late summer, marking a significant change to the established PPC monopoly between Google and Yahoo! Although it has yet to demonstrate any significant volumes of traffic, the Microsoft service has introduced new levels of PPC management tools that have been replicated by Google, to some extent, and will also feature in Yahoo!’s new system to be launched in 2007.
4) Another big year for Google: yes, Google continued to grab the headlines and make lots of money over the past year, with new developments in its online ‘office’ tools, including a calendar system and spreadsheet. Although Google didn’t get to launch its own web browser yet, it did pull off a major purchase of the highly popular YouTube website and we will therefore expect more developments in this area soon.
5) Online viral attacks: thankfully our prediction didn’t happen in any significant form, although spam remains a major issue for business with reports that it grew by 30% last year and accounted for around 90% of all email traffic. The technological and legal developments have so far failed to reduce the volumes reaching most inboxes – if anything, December saw a particularly big increase in trashy automated messages. Microsoft did launch an updated version of the Internet Explorer browser, although this had to fix some potential loopholes within the first few weeks.
A recent report on the UK’s online retail market by Hitwise has highlighted the trends in the market, with a particular focus on the build-up to Christmas 2005 so that forecasts can be made about expected activity in 2006.
A recent United Nations Internet summit held in Athens has raised a number of issues about the growth and future development of the Internet, not least of which is the increasingly thorny issue of the international domain names (IDN) protocol that uses English characters and is therefore seen to exclude other languages and alphabets.
