Specialists in other marketing disciplines are suddenly rushing to claim their share of the lucrative search marketâa trend thatâs expected to continue at a brisk pace.
The sector theyâre entering is booming. JupiterResearch forecasts the market for paid search listings will increase from $1.6 billion in 2003 to $4.3 billion in 2008, as advertisers continue to flock to the medium. The percentage of search marketers buying more than 100 keywords increased from 19% in 2003 to 56% in 2004, according to JupiterResearch.
In mid-May, DoubleClick announced it will acquire Performics, a search engine and affiliate marketing company, for $58 million in cash. The deal will give DoubleClickâs clients a more comprehensive suite of services, while Performics customers will gain access to DoubleClickâs marketing services, including online advertising management, e-mail marketing and Web site analytics.
Performics will retain its brand name, as Abacus did when DoubleClick acquired the catalog list company in 1999.
"Itâs natural a lot of companies will try to find their way to this space," said Gary Stein, senior analyst at JupiterResearch.
In another entry to the red-hot market, Digital Impact, an e-mail marketer, said it plans to launch a search marketing service later this year. Stein said this is a logical extension for Digital Impact. "Thereâs so much litigation around e-mail acquisition, so it made sense for them to move into that space," he said.
Another newcomer is Market Central, which announced last month that it was changing its focus from call center system integration to search.
There has also been at least one example of a search engine marketing company and an ad network banding together to promote search. Kanoodle and 24/7 announced last month that they have teamed up to enable behavioral targeting for sponsored links.
DoubleClick move expected
Stein said industry insiders knew it was just a matter of time before DoubleClick made a major move into search. "If youâre an ad network, youâve got to pay attention to search because it [search marketing] is turning into a network itself. Itâs kind of the same business in the broad definition of what an ad network is."
DoubleClick CEO Kevin Ryan said the company had been building a bid management product in-house for the last several months. While that product was still in development, DoubleClick began negotiating the deal with Performics. "We decided to buy a company as well as integrate our product," Ryan said. "It wouldâve taken us a while to build it up [organically]. Weâre so excited about the market that we decided to go bigger faster."
There is a significant amount of client overlap, Ryan said, as well as DoubleClick customers that may be interested in Performicsâ services.
Ryan said other ad networks will likely jump into the space because "this is just an extension of that business."
Advertising.com has been providing search engine management services to clients for almost two years, and 24/7 Real Media launched 24/7 Search last August.
Digital Impact said search fits well with its existing e-mail marketing business. "We think e-mail and search naturally go together because the No. 1 way to acquire a customer online right now is search and the No. 1 way to retain them online is e-mail," said Kevin Johnson, senior VP-products and marketing at Digital Impact.
Johnson said Digital Impact has the expertise to migrate into search marketing.
"To do a good search campaign requires the same discipline and the same skills required to do a good e-mail campaign," he said. "Thereâs a great opportunity to manage the whole [search marketing] process the same way you do in e-mail."
Johnson and Stein both predicted that consolidation will soon occur in the search sector.
"[Search] is totally ripe for consolidation," Stein said. "Weâll see more of the search engine marketing agencies begin to either merge or be purchased by larger, traditional advertising companies."
Stein said search engine marketing services companiesâsuch as Fathom Online, iProspect and iCrossingâare getting visits from venture capitalists and ad agency holding companies. "Everyone is interested in talking to those guys," he said. He predicted that "a few of the big ones will get eaten up by the bigger agencies, and some of the smaller ones will band together."