The concept is pretty fully embraced by now: U.S. search-ad spending reached $10.7 billion in 2008, according to eMarketer. Search is one of a few marketing bright spots in a recession. Forrester Research suggests 51% of marketers plan to increase search spending and only 8% plan to decrease it.
What's the difference between SEO and SEM?
About 40% of search budgets go toward organic search optimization, known as SEO, and the remaining 60% go toward paid-search marketing, or SEM. SEO involves making sure the content on your site can be read by the search engines and, increasingly, making sure it's getting traction in the social-media space (see Peter Hershberg's piece on this emerging idea in this week's issue). And while it's not technically called "paid search," it's definitely not free. You're still paying for the consultants or people making sure your site is optimized.
SEM involves buying the ads -- or sponsored results -- that run along the top and right side of a search-engine-results page. The existing paid-search format is still somewhat limiting for many brands -- what can you tell people with 70 characters of text -- but we're starting to see some new formats emerge.
New formats? Like what?
Yahoo is beta testing a search format that includes images and video. And while the giant in the space, Google, hasn't rolled this out yet, many industry watchers suggest it might, believing that its year-old Universal Search results, in which video and image results appear in search results, is a prelude to such a move.
If search-ad buying is an auction, why doesn't the highest price always win?
Why is everything always about money with you? We kid -- this is about the money, of course. You see, search-engine advertising is sold on a cost-per-click basis. That means a search engine only gets paid when an ad gets clicked. So now ads show up next to search results based on a combination of price a marketer is willing to pay and quality of the ad. Quality is determined by an algorithm that takes into consideration things such as an ad's click history and landing page. The higher the ad's quality, the less a marketer needs to pay to appear toward the top of results.
It's a system that not only maximizes revenue but also tends to give users more relevant ads. The problem some marketers have is that the algorithm determining the quality score, often referred to as Google's "black box," isn't transparent.
How do the search players stack up?
Google is the biggest search engine, by a lot, with 63.3% of all consumer searches. Yahoo has 20.3% share and Microsoft has 8.2%, according to ComScore. When it comes to where dollars are spent, it's even bigger.
Is Google too dominant?
Depends who you ask. There is a general sentiment that marketers would like to see more competition in search. Even combined, Yahoo and Microsoft make up less than half of Google's search share. But marketers will follow consumers, and, for now, consumers prefer Google.
Of course, Google points out that it is an auction and that marketers can choose to spend up until they are no longer getting a return on their search outlay. And in some ways, having consolidation in search makes it easier to buy -- smaller players who can't afford more sophisticated bid-management systems often stick to just buying Google.
Whoa -- bid-management system? That sounds complicated.
The idea is that they make search less complicated, actually. There are many vendors in the search space aiming to help marketers allocate and optimize their search spending. Forrester pegs this $2.8 billion search-vendor market at 1,700 players. The best ones help big marketers and agencies expand the number of keywords and search engines on which they're bidding. There's a lot of competition for bidding on the word candle, for example, and less when bidding on the series of words "red taper dinner candles." But expanding your keywords only makes sense if do it all the way.
"If you have 100,000 expanded keywords, then you pick up many crumbs, and, in aggregate it becomes important," said Marc Barach, chief marketing officer of Marin Software.