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Old 07-19-2004   #1
garyp
 
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A Drop in Search Engine Ad Supply

From the NY Times article:

Quote:
Search engines like Yahoo and Google have spawned bidding wars among a growing number of marketers who want to place their ads next to search results. That is a beautiful thing for Yahoo and Google, of course, but in the long term, some analysts think it could haunt them. According to a report to be released today by the Internet research firm Nielsen//NetRatings, the demand for search advertising is growing far more quickly than the supply of available advertising spots. The report's author, Kenneth Cassar, said the implications could be far reaching.

"In the long term, we'll hit a wall where a lot of the search buys that make sense today won't make sense anymore because prices will have risen so high," Mr. Cassar said. "So for the search engines to grow their revenues, they'll have to increase supply."
A bit more including a chart in this news release.

Last edited by garyp : 07-23-2004 at 05:18 AM.
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Old 07-19-2004   #2
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While I agree with the Mr.Cassar's comment from Nielsen/Netratings, so do the engines... that's what their contextual advertising platforms are all about. Google and Yahoo! know that even with the monster growth the search market has – and will continue to – demonstrated they are still dealing with a finite amount of inventory. Contextual, even with all it's flaws, represents an opportunity for these engines to capture almost 20x they're generating through search.

Search marketers who have already been pushed out of their allowable bid range can also fight competitive forces by capturing breadth, through aggressive keyword list expansion and the use of alternative, or “Tier II” engines. While these tactics require systems for creative generation, bid management and tracking, they represent great ways to continually acquire customers at aggressive rates, even in a time of inflation.
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Old 07-20-2004   #3
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many people still are not tracking. there is a ton of room for improvement and the system still has a ton of fat in it.
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Old 07-20-2004   #4
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Quote:
Originally Posted by seobook
many people still are not tracking. there is a ton of room for improvement and the system still has a ton of fat in it.
I couldn't agree more. Click costs aren't necessarily being bid up by lack of inventory more by people not tracking and not knowing how to bid properly.

For example, if you place a max bid well over the next bidder down you might only pay a cent more and guarantee your place... that is until someone else comes in with a similar tactic and out bids you. If three or more people do this then the actual 'market space' cost for terms is inflated and it can take weeks or more to get it back down to equilibrium.

You could almost guarantee that one or more of these individuals using these tactics isn't tracking their activity (this would concur with eMarketers statement that only 1/3 of marketers using search are using some form of tracking) and therefore unaware that these escalated costs have dramatically affected their ROI and that of others.
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Old 07-20-2004   #5
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Thumbs up SearchADS

One answer to this problem can be to utilize alternative means of presenting search ads. We developed a platform that does just that. SearchADS are high-impact rich-media ads that appear as a result of a search inquiry. The SearchAds appear in a custom interface box that is placed on your website, the advertisement plays instantly and are capable of being viewed in full screen for an even greater impact on your audience. Click through rates are six times higher than those of non-rich media ads. Check it out at http://www.searchads.tv. Search engines using it are men.com, os.tv, searchtube.com. Any comments or suggestions welcome,.
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Old 07-20-2004   #6
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>Click through rates are six times higher than those of non-rich media ads.

Largely because the close button is so small.
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Old 07-20-2004   #7
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Thumbs up SearchADS

I didn't write that I think it came from an article that talks about rich-media ads (floaters, pop ups, etc..) that stated that rich media ads are six times more effective than text ads.
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Old 07-20-2004   #8
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Quote:
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Largely because the close button is so small.
yet another gem...
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Old 07-20-2004   #9
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I don't think you understand the product or the concept of click throughs. The close button would have nothing to do with click through rates or percentages. The users make the choice to click on the rich-media ads just as users make the choice to click on text ads. We are talking search engine results here, not pop-up ads. Our "SearchADS" are only presented when a user is looking for information or products - they are not thrown at users like the standard rich-media ads on the market today. SearchADS are happening and trust me when I tell you... you will be seeing a lot more of them in the next few months. It's has been said that this new for of search is bigger than Google, but that's just a few engineer's opinions. We will see...

Last edited by dannysullivan : 07-21-2004 at 05:32 AM. Reason: unnecessary link removed
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Old 07-20-2004   #10
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Quote:
Originally Posted by Darlene
It's has been said that this new for of search is bigger than Google, but that's just a few engineer's opinions.
but that's just a few engineer's opinions.
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Old 07-21-2004   #11
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If people have more questions about the SearchAds concept, we've got a thread going on them over here already: Check out Rich-Media "SearchADS"!. Feel free to follow up with Darlene about her product for any specific questions over there.
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Old 07-21-2004   #12
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Quote:
According to a report to be released today by the Internet research firm Nielsen//NetRatings, the demand for search advertising is growing far more quickly than the supply of available advertising spots.
From what I've read, it doesn't really identify where the shortage is. It just states it as a whole for the industry.

IMO, I think there are plenty of opportunities out there that still have over 80% or 90% of un-used supply in search advertising, and that is with the Multilingual Search Markets, both within the U.S. for Hispanics or Ethnic groups and Internationally with the rest of the world. There is a lot that can be done there before "Demand Exceeds Supply in Search Advertising", it's just a matter of looking in the right spots.
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Old 07-22-2004   #13
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the many sides to supply

as was mentioned previously, things like contextual advertising serve to increase the apparent 'supply' of searches, albeit at completely different economics.

two things have not been mentioned:

1-- the progression of approaches used to increase the coverage of searches. last time i heard, coverage was about 60% -- i.e. 40% of searches are not bidded on by advertisers. if we throw out the 10-15% of searches with are probably nonsense, then there is an opportunity to add 10-20% in inventory based on different ways to match the user intent to an advertisement. things like the matching approaches of Google and Overture. what do people think of these approaches, and whether there is more juice left there.

2 -- none of the definitions of search inventory seem to make sense. if (as google claimed several months ago) google was doing 200mm+ searches a day, and the rest of the world is about that, then we would have a daily inventory of over 400mm searches. i ain't no rocket scientist, but that equates to 12 billion searches a month. are people claimnig that 10 'searches' are performed per search session? the definition of the number of searches has always been problematic.

my $0.02
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Old 07-22-2004   #14
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Quote:
Originally Posted by Nacho
There is a lot that can be done there before "Demand Exceeds Supply in Search Advertising", it's just a matter of looking in the right spots.
I agree with you, Nacho, that demand exceeding supply -- in general -- is still a ways away.

But I also think it's not hard to imagine that search advertising will eventually mirror broadcast advertising. On TV, it's the Big Boys who can afford to pay for prime-time spots on CBS, NBC, etc. To me, that's the equivalent of a what a first page placement on a competitive search term will become. Local folks will have to settle for local-based search advertising, just like they do on TV, radio, etc.
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Old 07-23-2004   #15
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Digging into the actual report, one of the things that surprised me is that inventory isn't being measured by actual searches but by search "sessions." That means if you do multiple searches presumably within a short session period of time (this isn't defined -- could be a few minutes, hours), you still only count for one "session." The end of the article I posted Wednesday covers this a bit more: Report Says Search Needs More Inventory
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Old 07-23-2004   #16
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Good point Danny! Then, until there is a report that is measured by actual search queries, their opinion can not be considered as a fact. Right now, it all seems just like a prediction from what they have as available information.
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Old 07-23-2004   #17
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>we'll hit a wall where a lot of the search buys that make sense today won't make sense anymore

That seems a long winded way to say busted flush

To me it's real simple, just follow the 80/20 rule. I think the 80 is already well covered, the 20 is unlikely to be profitable.

My view is that PPC as both a cost to the webmaster and as a business model is just shy of it's peak.

How the model copes with recession will be interesting to see, my guess would be that it will bomb like you have never seen before.
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