In his most recent research note, Piper analyst Safa Rashtchy says based on conversations with advertisers and industry executives, the average “click charge” (or cost per click – CPC) could double from where it is now, at about .45 cents. He points out that advertisers are getting more sophisticated in their approach to paid search, and in fact are willing to “go negative ROI” in their campaigns, in order to gain a lifetime customer.
According to Beal, Yahoo’s new CAP (paid inclusion) program is not going over that well at the SES show. I can’t imagine it would – after all, Yahoo is asking folks to pay where before they didn’t feel they had to. The boards are negative on the move, though at least Yahoo is out there explaining itself (and Jeremy adds his two cents here). This might all blow over as the market adjusts to the realities of capitalism, but…
…before Yahoo made this move, I suspect that many marketers could get by on organic Google crawls and targeted AdWords/Overture buys. Now, because Yahoo is in a duopoly position, the stakes are raised, and marketers feel like they *have* to be part of the Yahoo club. They fear, I am sure, that if they do not pay, somehow they will be treated as second class citizens by Yahoo’s Slurp! crawler. Yahoo insists that its organic crawler is going to be “aggressive” and that paid inclusion is an add on of sorts, it insures that your site is crawled thoroughly and in the manner you choose (in particular, you can specify dynamic content, get fresher crawls, get reports, etc.).
But the company seems a bit tone deaf to the more primal forces at work here. First, the timing. Yahoo got a lot of mojo for the new engine it rolled out recently. Why taint that credibility so quickly with this announcement? The company could have waited a month or so, prepared the market for this in stages (for example, it might have cultivated an influencer network prior to the announcement, as I point out in my current 2.0 column). Secondly, it’s predictable that marketers would feel like they have no choice, that they are being forced to enlist in CAP. That is not good for a company’s reputation long term. If I were Yahoo, I’d monitor this closely, and adjust a bit if need be. Perhaps soothing words and assurances will be enough while the market swallows this new dose of medicine. But Google can and will make a PR killing portraying Yahoo as the Big Evil Biased Bully. Ask Jeeves already has: yesterday it cancelled its paid inclusion program …. I am sure the timing was pure coincidence.
As, er, a thought experiment of sorts, take a look at what each search service (Google and Yahoo) bring up when you search for “yahoo “content acquisition program”":
Algorithms have no bias? Draw your own conclusions.
Update: Resourceshelf has direct quotes from Ask spokesperson on why they ended the PI program here…
It must be the SES show, but there’s a lot of “online advertising rocks” stuff out there of late. Jupiter released a study with figures claiming that 7 of 10 paid search advertisers plan to increase their spending this year. Also, the percentage of marketers buying 100 keywords or more increased from 18% last year to nearly 50% this year. (via Wonk)
More data supporting the decline of television and print, and the rise of the web as an advertising vehicle. Self serving though it is, Doubleclick’s “Touchpoints” survey has some pretty impressive findings, according to Mediapost (scroll down to sixth item):
The survey analyzes how media affect initial product awareness (First Learn), research and information gathering (Further Learn), and the final purchase decision. Consumers were asked about their purchases during the last six months for products in the following categories: Auto, Credit Cards/Retail Banking, Electronics, Home Products, Mortgages/Investments, Movies, Personal/Household Care, Prescription Drugs, Telecom Services, and Travel.
TV advertising plays a major role in establishing early awareness of Movies, Personal and Household Care items, Telecom products, Autos, and Prescription Drugs. However, Web sites and online marketing make bigger dents when it comes to building awareness of Travel and Mortgages/Investments. In the First Learn phase, the survey found that TV’s influence dropped 8 percent in the Electronics category and 7 percent in the Movies and Automotive segments in the past year. In comparison, print drives First Learning in the Personal/Household Care and Home Products segments, while direct mail most heavily influences awareness of Credit Cards/Retail Banking offerings.
The Internet is most important later on in the buying process, during the Further Learning and Purchase Decision stages for products in the Travel, Auto, Credit Cards/Retail Banking, Consumer Electronics, Mortgages/ Investments, and Prescription Drugs categories.
One of the news items buzzing here at SES is Yahoo’s announcement of its paid inclusion program, covered by the Times here. That they intended to shift to paid inclusion index-wide is not news (discussed in more length here), but it is a clear signal that Yahoo has no trouble being labeled as the “commercial” search engine. Google continues to differentiate as “pure.” More later on this…(meantime, good and deeper overview at SEW here).
BTW, posting will be light today. On a plane later, traveling home. SES continues apace for the next three days…I’ll have to cover it remotely.
I know, I know, you’re all waiting breathlessly for my report on WebFountain, but to be honest, the stuff I saw there last Friday was rather complicated, and it’s going to take me a bit more time to figure out how to relate it. Given that I’m swamped at SES, I’ll hope to get to it sometime later in the week. Meantime, I did get a chance to swing by Google’s NYC offices, which are near Times Square, in the old About.com space (you gotta love this trend of taking over space from once-highfliers). I met Craig Nevill-Manning, the engineer responsible for Google’s 30-odd NYC-based engineers. Craig is the man behind Froogle, and we had a good chat about approaches in the shopping space. Net net: watch the space. Work continues apace. My old colleague Patrick Keane, late of Jupiter, who now works in the NY office, was out with some nasty food poisoning. Get well soon…
The NY office is dominated by a large sales force, mainly late 20s, busily hawking AdWords or its variants. Clearly a happy group, but a very different feel from the Googleplex in Mountain View. The colors scheme and lava lamps are the same, but this is New York, after all. Sell, sell, then…sell some more.
Another press release, promising a revolution, this one from “AOMI,” a Fort Worth, Texas company that will “revolutionize the way we search” by using “behavioral profiling, predictive modeling, and Neuro Intelligence…rendering existing search functionality obsolete.” Oh, please. They’re even code-naming the product “HAL.” They promise, PROMISE, that “a prototype of this product will be completed in the coming months, and the public Beta will be released soon thereafter.”
The site is “under construction” and all I have is the release, which is in the extended entry below. The company is a division of Markettrix, which from what I can tell is an SEO/marketing services holding company (their site is very sketchy on details). So here’s my question: If you’re about to revolutionize search, why not just wait till you have the goods and open up your site to all comers? The word of mouth will get around in about a day, if not an hour. Why huff and puff in a press release? Why? Oh, yeah, now I remember.
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It’s not easy to post from here, as the show does not have wireless coverage (I am sure by the next one, they’ll realize the importance of wireless to coverage of the blog/press kind). Anyway, missed most of the sessions today due to other meetings, but I did run into an old friend in the media investment banking business. His presence marked an interesting development in this homegrown industry – the money folks are starting to pay attention. Today there was a session track devoted to the financial side of running a SEO/SEM business, with titles such as “Coping With Growth,” “Valuing Your Company,” and “Cashing Out.” My investment banking friend, a media business specialist, said he got plenty of leads and interest after he spoke, and he mentioned more than one person had approached him with the idea of rolling up the SEO space. It’s happening already, and will continue apace – maybe this time we can avoid the Razorfish/USWeb/Sapient syndrome…