Nearly 250 million Internet searches are conducted each day in the U.S., and the search market is expected to reach $7 billion by 2007, according to a March 2003 report by U.S. Bancorp Piper Jaffray.
"Search is becoming a part of the overall marketing mix," said David Karnstedt, senior VP-general manager for Overture Service's direct business. "It's about as efficient as you can get because a consumer is declaring their interest."
At 1-800-Flowers.com, search accounts for a good chunk of the Internet marketing budget, according to Mary Rider, senior advertising manager. "Search helps increase customer awareness that we have more than just flowers," Ms. Rider said, referring to plush animals, gift baskets and other goodies. "Search is a great place for us to leverage those products and put advertising on a cost-per-click basis," she said. 1-800-Flowers.com buys search listings from Overture; the listings then show up on Yahoo!, Microsoft Corp.'s MSN and other portals.
"The beauty of paid search is you can manage your listings and content and select your level of exposure to key words," said Eric Opel, Gateway's online advertising manager. Gateway's approach involves paid-inclusion programs, natural-search optimization to display relevant results based on its Web site content where results are not influenced by payment, and the company's internal search engine on Gateway.com. Mr. Opel said spending on search marketing varies by quarter, but it can comprise as much as a third of overall online marketing spending, depending on product launches.
"Search is really heating up as a category," said Peter Daboll, president, comScore Media Metrix-driven he says, by advertising and the success of ad words and the purchase of key words.
Major land grabs among industry heavyweights Overture, Yahoo!, Google and Microsoft's MSN, which is poised to launch its own search product, are bound to raise the stakes. Overture, Yahoo! and Google vie for contracts with the Internet portals and online publishers. Overture's Pay-For-Performance and Google's AdWords Select programs are responsible for generating the majority of Internet searches on America Online, MSN and Yahoo!.
Analysts contend that smaller players such as LookSmart, Ask Jeeves and FindWhat are ripe for the picking. Yahoo!'s acquisition of Inktomi closed last month and Overture acquired Alta Vista and the Web search division of FAST.
Aegis Group's Carat Interactive, whose clients include Pfizer drugs Lipitor and Zyrtec, finds search a good match for the high-involvement pharmaceutical category. "If you don't have a big interactive-advertising budget, it's probably better to do search," said Sarah Fay, president, Carat Interactive, who says $120,000 is enough to run an effective program.
Google's content targeting product is designed to help online publishers monetize pages that are difficult to monetize. "Search has a very high conversion rate in terms of transactions and leads, but advertisers can run in a content environment and get the same return on investment results as they have in search," said Tim Armstrong, VP-advertising sales, Google.