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TECH TALK: The Future of Search: Advertising and Innovations

March 4th, 2005 · No Comments

One of the by-products of the search frenzy is that an interesting new advertising model has developed. Advertising is becoming a service with the pay-per-click model. Advertisers can decide their budgets and the keywords they want to link their ad to, and they only pay for the ad when someone actually clicks on it. This makes advertising response much more measurable. The New York Times wrote in a story recently:

“In the past, advertising has been hard to track and hard to make accountable,” said Tim Armstrong, Google’s vice president for advertising sales. Now, he said, advertising has become a dialogue with the consumer.

A TV ad can put the company’s name and brand before millions of viewers, said Richard Castellini, the vice president for consumer marketing at CareerBuilder.com. But Google can direct prospective customers to his business by placing a CareerBuilder.com link on the screen of anyone using Google as part of a job hunt.

As for local advertising on radio and television and in newspapers, those media can still be effective ways to blanket large portions of the hometown audience with a uniform message. But individually focused Internet ads are already siphoning business away from locally oriented classified advertising and yellow pages directories – whether in their offline or online forms.

“You’re seeing advertising move into advertising that people can seek out, and moving away from mass advertising,” said Peter Sealey, a former Coca-Cola marketing executive who now teaches at the Haas School of Business at the University of California, Berkeley. “In the context of that shift, this little niche of Internet search will be a huge beneficiary.”

David Jackson: Microsoft and AOL both underestimated the importance and profitability of search. Search benefits from the natural growth of the Internet. One way of looking at this: the search business is the ultimate “user generated content” business. At the same time, the price of pay-per-click (PPC) ads is rising as more businesses establish an online presence, and improved conversion rates boost the return on investment for paid ads. Combine the two, and you find that PPC ad prices are steadily rising, and Google and Overture are sitting on remarkably profitable businesses.

Charlene Li: I believe that in five years time that marketers will be buying search and display ads in very similar ways. Marketers will be able to target display ads based on a combination of audience demographics and implied, contextual keywords. They will also be able to buy text ads that appear next to search results based on a combination of keyword search but targeted with different creative for men versus women, or customers versus non-customers.

Next Week: The Future of Search (continued)


TECH TALK The Future of Search+T

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