NEW YORK (AdAge.com) -- New kinds of media shops that specialize in search engine ad buying have outdistanced larger general market agencies to control the lion's share of money spent by advertisers on "search marketing," according to a study by JupiterResearch.
|The new study indicates that search-based advertising has become a mainstream media buying venue.
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In effect, the study documents the rise of a new sort of media-buying agency focused tightly on the unusual "medium" of Internet search-engine function.
The study is based on a survey conducted this past August of 538 marketers across all sectors.
51% of all spending
The survey found that 51% of the total spent for search-related advertising this year went through new kinds of agencies that arrange the search engine ad purchases on behalf of their marketing clients as well as advise marketers on their search-marketing strategies and logistics.
The findings indicate search-engine marketing, which was once dominated by mom-and-pop shops spending $20 a month on credit cards, has matured into a mainstream media-buying venue, said Nate Elliott, associate analyst at JupiterResearch, who wrote the report.
The agencies making search-related media buys include Decide Interactive/24/7 Search, Did-It.com, Impaqt, Performics and Avenue A/ Razorfish Search.
And while only 31% of search-engine marketers use such a specialist agency, those same marketers control 51% of the total search-engine advertising outlay.
$2.6 billion this year
Jupiter forecasts that $2.6 billion will be spent on search-related marketing in the U.S. this year, and $3.2 billion is forecast for next year. The area is expected to continue growing into 2009.
Many general advertising and media-buying agencies "want a piece of it," Mr. Elliott said. "This is a huge online ad spend."
But operating in the search-engine venue is not as easy as it may look, he said. Search-engine marketing requires its own peculiar expertise, he points out. "You are not going to acquire it overnight."
Another issue is that search-based ads are a form of direct marketing, and traditional agencies tend to be more attuned to branding. Also, the bidding and cost-per-click environment is unfamiliar to traditional agencies. "They say, 'What do you mean there's no budget?'" Mr. Elliott said.
Unlike traditional advertising placements, which generally involve purchasing a set space for a set period of time, search-engine advertising is based on more fluid concepts of interactive engagement with consumers. The marketer sets a bid price on keywords used during Internet searches based on the "pull" the marketer feels each word or phrase may have on his target demographic. The bidding process often pits marketers against each other in battles for the most meaningful words related to their products. The fee the winning marketer ultimately pays is then dependent on how many "click-throughs" the keyword ad actually generates.
General advertising agencies have largely dealt with the new area of online media buying by hiring experienced professionals to handle search-based campaigns for clients. Industry observers say the industry seems ripe for consolidation. But until now only online shops such as DoubleClick, 24/7 and aQuantive had bought search companies.
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