|Search engine advertising pricing has taken a sharp turn upward.
As online advertising spending surged 27% during the first six months of 2005, according to the Interactive Advertising Bureau, the demand for keywords has increased, and publishers have not been able to keep up with the demand, said Gregg Stewart, senior VP-channel management and marketing, Fathom Online, which puts out a monthly keyword price index.
Sharp leap in prices
Prices in many ad categories leaped sharply. Keywords for consumer services, which include education, fitness and entertainment, jumped 78% from September to September. Consumer retail went up 44%, and consumer travel and hospitality words rose 42%. Wireless grew 12%. The price range among keywords in the study is from about 46 cents for automotive terms to $3.39 for finance and mortgage-related words.
One reason for the increased demand for search is that brand marketers have flocked online to use search for branding campaigns, Mr. Stewart said. “Advertisers had been looking at it as a direct marketing tool,” he said. “Now that marketers are becoming more aware of the lifetime value of search consumers, you see more branded messaging. That’s why advertisers are moving more into contextual search advertising [placing sponsored links on pages with content that relates to their product] that give them more traffic.”
Mr. stewart said that the "best advertisers are moving toward conversion optimization” -- that is, if a marketer is advertising digital cameras, make sure the consumer lands on a page that features the exact camera mentioned in the search ad copy.
Fathom’s monthly keyword index studies eight categories with a minimum of 500 keywords.
Certain sectors that have the longest experience marketing online are benefiting from more stable pricing. Automotive -- a fairly mature online category -- remained almost flat with only a 2% growth. Finance/mortgage increased 7%. On the other hand, pricing in two categories, broadband and telecom/broadband/Internet service providers, each decreased 14%, reflecting the consolidation in those businesses.