Following is also my latest MediaPost Spin column…Â
Sophistication Will Be Search Industry’s New Master
February 8th, 2008 by Max Kalehoff
A colleague of mine who helped build one of the earliest proprietary online services wisely noted that one of the most significant and inevitable forces shaping the Web is sophistication. That’s right – no matter which new, promising service you consider, it’s only a matter of time before its users mature, inherently changing the dynamic of the entire marketplace. Search advertising, the foundation of the online advertising economy, is no exception.
Sure, search is a revolutionary concept, and it’s proven itself through undeniable performance. It is not a stretch to imply that search is the operating system of the Web – even while a relatively new utility, and evolving at a rapid pace. Regardless, the search landscape will be significantly shaped by the inevitable sophistication of its stakeholders, where their behaviors, expectations and loyalties will shift by way of their familiarity and skill set. We’ll see sophistication influence the search landscape especially in two key segments: users and advertisers.
First, it’s important to note that search advertising’s early monetary performance probably benefited (and still does) from a relatively immature consumer base. Back in 2005, the Pew Internet & American Life Project reported that 62% of searchers were unaware of the difference between paid-for and organic results – a maturity state ripe for accidental, experimental and inflated search-advertising clicks. As searchers become savvy, as intuition would suggest, they’ll click with greater precision and intention. It appears they’re doing that today.
With greater precision and intention come greater expectations of quality and consistency for both organic and paid search results. On the organic side, higher relevance and less spam is a must. We all know this; it is the primary, never-ending battle of the major search engines. But the relevance and utility of paid results will become just as important as the organic, and, in some cases, more. For many categories of searches, the paid ads are far more useful, because the organic results have become so spammed up with the remnants of SEO black hats, Wikipedia entries and other contextually relevant irrelevancies, especially in categories like travel and finance. The advertising increasingly will become product. Therefore, more intensive ad-quality scoring by the search engines is inevitable to drive more meaningful ad results and better overall user experiences.
While search is likely to become more important, sophisticated Web users will rely on it less for spontaneous and random discovery. As my aforementioned colleague noted, humans are creatures of habit. Over time, once they build trust with specific sites and sources, they’ll tend to frequent them directly, with less reliance on intermediaries like major search engines. In fact, the latest generation of social networks is likely to provide growing utility where search has recently excelled – as a trusted source for information discovery and referral. Not surprisingly, social search remains a promising vision.
More Savvy Advertisers
On the flip side, the growing sophistication of advertisers will become influential in shaping the search landscape. Search is complex and has been mystified by geekery. That’s the biggest reason why search as a marketing function still exists in silos, if at all, in many marketing organizations. But over time, advertisers will become savvy and aided by tools and fundamentals that simplify the landscape. As a result, advertisers will gain the upper hand to drive more transparency and accountability, and shape search-ad models on their terms.
Perhaps one of the biggest shifts we’ll see as advertisers mature is a growing tendency to own and control their data the way they want to. This includes leveraging their own and third-party tools to plan and manage spend, as well as tracking and holding proprietary their own conversion and customer data. Larger advertisers will be especially aggressive in pushing this trend, though small and midsize ones, representing half the search advertising market, will follow suit.
Maturity Invites Disruption
Finally, it’s important to remember that maturity in markets breeds opportunity for disruption. As my aforementioned colleague emphasized, search was the disruptor that overturned the notion of proprietary online services by offering sophisticated users the ability to branch out onto the Web – on their own. The rest was history.
What exactly will disrupt search? I’m not quite sure. But I am sure that growing maturation among users and advertisers will eventually redefine how we view the marketplace. Search became what it is today precisely because of low sophistication among users and most advertisers. But that is changing.