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Does Search Advertising Need to Change to Grow?

NEW YORK -- Companies that buy and sell search ads are looking for value beyond the click.

That might seem to contradict the highly trackable, click-based pricing model on which the industry today hinges. But it's a major change now facing the search market, potentially pitting clients and search engines against agencies, according to a panel discussion here at the Search Engine Strategies conference.

While few doubt that search's traditional model remains highly valued by marketers, advertisers are seeking to squeeze more out of their campaigns -- namely, improving brand awareness and developing greater tie-ins with offline ads.

The focus on doing more with search comes as the market remains one of the few areas in advertising where customers are not slashing budgets. "People aren't cutting their search budgets," said Robert Murray, CEO of search engine marketing firm iProspect. "If anything, they're cutting other areas."

"They do, however, want more efficiency from their search spending," he added. "Some are using their display ads and other offline media to drive people to search."

But the industry isn't quite there yet, some panelists said.

While panel moderator Kevin Ryan explained that many customers are looking to cash in on the fact that consumers often perform a search after a TV commercial or a word-of-mouth endorsement, the process can still go awry, according to Jon Diorio, group product manager for AdWords and monetization products at Google.

Diorio said that a major brand that was No. 2 in its category produced a quirky ad that achieved notoriety and significant YouTube traffic. But the company had only 2.7 seconds of exposure of their own name, so that when people searched for the product, they went to the brand leader instead. The ad ended up driving Web traffic to the No. 1 brand.

Still, iProspect's Murray said that search had worked well with cosmetics company Avon's first Super Bowl ad.

But not everyone sees the shift to less measurable metrics -- like those focusing on brand awareness -- as a positive development for the search market. For instance, although companies are still paying for search, they are increasingly imposing metrics on performance that panelists found restrictive.

"Acquisition is where the advertising spend comes from, because it's measurable and accountable and so you're able to justify the ad spend," said Steven Kaufman, senior vice president and media director at agency Digitas. "Selling branding on search is hard because you're comparing a little text link to a branded rich media ad on an iPhone."

Does search's shift mean good news for Google?

Search engines, meanwhile, want marketers to believe that their ads are valuable even if people don't click on them -- thus increasing the value they see in search advertising, and the amount they're willing to pay. Diorio said that Google has conducted focus group research that shows that people unconsciously remember the links they saw but did not click on.

But Kaufman retorted that an ad that's not clicked on gets demoted by Google and can get an agency in trouble with clients. Still, Ryan, who serves as chief marketing officer of small business search consulting firm WebVisible, praised Google for conducting research in difficult economic times and exposing the results.

As a result, search companies may need to use another argument to sell their wares. A more likely argument in favor of search is the quality and immediacy of the data it delivers to marketers, which they can then use to optimize other media spending and messaging, said James Colburn, group manager for Microsoft digital advertising solutions.

Google's Diorio added that a car company's search team had purchased several key words and found that "fuel efficiency" was beating the others (such as "cup holder"). They told the TV ad team and the car company re-cut their ads to focus on fuel efficiency.

"Walk your data down the hall, and you'll look like a superstar," said iProspect's Murray.

But Ryan joked that this isn't always wise in agency life: "Maybe someone will take your data, knife you in the back, get your fired, and somehow manage to get your car repossessed," he quipped. "I'm not saying that happens at agencies, but I spent the bulk of my career in them."

Emphasis on streamlining and mobile

In addition to greater emphasis being placed on non-traditional ways of looking at search, further shifts are taking place in the industry, panelists said.

Diorio said Google recognizes that companies are finding it difficult to manage their increasingly elaborate search engine campaigns, and is designing tools to automate the process. There will be a keyword tool that can search a company's Web site and suggest keywords, and a bidding tool to manage a company's bids so that they stay within a cost per acquisition metric.

The company also hopes to sell more of a set of generic keywords that companies may not be investing in at this time.

Still other expected shifts failed to materialize. There's just one new significant entrant in the marketplace, with about 1 percent of the market: Facebook. That's in spite of the fact that just two years ago, many were projecting that social media would overtake search, Ryan said.

Meanwhile, as mobile phones with Web browsers become standard, they will present a new challenge to marketers.

But they'll also be an opportunity that many may ignore, the panel said.

"In a recession, mobile is seen as innovative and experimental," Diorio said. "Budgets for innovative and experimental ads get cut first. We won't see a budget for mobile until we pass this stone of a recession."