Spending on search marketing will continue its robust growth over the next five years, nearly tripling by 2009, according to a Jupiter Research forecast released Monday.
Paid search is expected to grow 189% from $1.9 billion in 2003 to $2.6 billion this year. By 2009, Jupiter forecast, the market will hit $5.5 billion.
One reason the medium attracts advertiser dollars is its ability to target. Seventy-seven percent of marketers surveyed by Jupiter used search marketing as part of their online strategy in 2003, said Gary Stein, a senior analyst at Jupiter, in his remarks at the company's Advertising Forum in New York on July 28. "This is a direct medium," Stein said. "There's a really core focus on selling."
Online advertising spending overall will increase 144% over the next five years, from $6.6 billion in 2003 to $16.1 billion in 2009, according to Jupiter. Online ad spending is expected to rise to $8.4 billion this year. Much of that increase is being fueled by paid search, which is projected to grow at a compound annual rate of 30% over the next two years.
Nevertheless, return on investment (ROI) has begun to fall as prices for desirable search keywords rise. The average cost of a click from paid search has risen from $0.29 per click in 2003 to $0.36 per click this year.
"There's a lot of overbidding in search," Stein said, adding that ROI will go from "great" to "good." Jupiter said that in a recent executive survey, marketers complained of rising keyword prices and declining ROI. A quarter of the respondents said they saw a declining ROI from search marketing.
Not surprisingly, an increased focus on measurement is accompanying the rise in keyword prices. "The word of the year is accountability," Stein said. "Accountability is the new ROI."
Search engine marketing tools can help, Jupiter said. SEM tools, which are becoming more sophisticated, help marketers more easily measure and optimize campaigns. Unfortunately, the most popular tools among marketers are the free conversion-tracking tools offered by search engine leaders Google and Overture, which Jupiter said lack detailed site analytics.
Jupiter recommends paying attention to order value and creative. Tracking order value will give marketers an accurate picture of how much revenue was generated by dollars spent and is the only way to make informed bidding decisions, Jupiter said. Jupiter also recommends marketers track which ad text (creative) generates the most clicks, rather than tracking click-through rates provided by the search engines.
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Question: When it comes to trademark law and search marketing, what does a company need to be aware of and what can it do to protect valuable intellectual property assets?
Answer: There is no doubt that in today’s red-hot search marketing climate, some companies have resorted to questionable business practices in an effort to boost search engine rankings—for example, using competitors’ trademarks to elevate their own results. Companies must be aware of what their competitors may be doing—or even, what their own overzealous search marketing employees and consultants might be cooking up—with regard to trademark infringement and its legal ramifications.
You might think the search engines themselves could avoid confusion by refusing to let companies bid on trademarks they themselves do not own. Sure they could—if they were content to give up the revenue they make on these keywords, which are often hotly contested and thus commensurately high priced. And cracking down on pay-per-click keywords—if the search engines were inclined to do so—would still leave open the question of using competitors’ trademarks to influence natural [organic] search results.
This issue—the responsibility of the search engines themselves—may soon be resolved in the courts, as a retailer recently filed a trademark infringement lawsuit not against its competitor but against Google, for facilitating the practice. While you might think a lawsuit would result in Google’s becoming more conservative in this area, in fact the opposite has occurred: Google recently announced it was allowing anyone to bid on trademarked words, with no restrictions. Its legal strategy is to wash its hands of any responsibility for policing trademarks (much as community forum sponsors, for example, take no responsibility for reviewing or editing user postings, thus relieving themselves of liability for libelous or slanderous language).
There are concrete steps any organization must take in order to proactively defend its trademarks.
Implement a complete organic SEO campaign on your site to protect the free organic space and compete with the costly paid listings.
Create a cease and desist policy to enforce your rights when a violation of your trademark occurs.
Put a strong statement of your trademark protection policy on your Web site and provide a place for people that have been led astray by a violator to report the violation.
When creating an affiliate agreement, include a keyword “do not purchase” list covering trademarks.
As the world of search develops with new products such as local search, it becomes increasingly important to make sure trademark policies are firmly in place. The issues discussed here can be dealt with through proper upfront planning and a clear definition of how to best protect individual trademark rights.
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Matt Naeger is VP-operations at search engine marketing company IMPAQT. http://www.impaqt.com
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