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Brand bidding

Written by equimedia | 19-Nov-2008 11:24:00

From May, Google will no longer protect trademarks in the UK & Ireland now it is allowing open keyword bidding. This decision, meaning competitor brands can appear in sponsored links when a user searches on a trademarked term, has certainly caused controversy and is a telling sign of where the search industry is going.

Despite more brands continuing their commitment to search marketing, search engines like Google face tremendous competition from aggregators – comparison sites and affiliates – especially in the commoditised financial services and travel markets. Google’s own research through Comscore shows aggregators are the starting point for 75% of searches for insurance products.

It’s a worrying trend for search engines as it impacts on the number of searches and subsequent clicks, ultimately eating away at revenue streams.

You can’t blame users for seeking alternative information sources. After all, there is a discrepancy between users’ expectations of search engines and what they can actually deliver. Search engines provide information on content, whereas users looking for car insurance or holidays are mainly interested in prices. Comparison sites and affiliates have filled this gap and attracted large user numbers interested in the information packed onto one site. They have less need to return to the search engine for subsequent queries.

But how can search engines safeguard future revenue streams? Open keyword bidding is one way but a more fundamental change is needed. Pay Per Click (PPC) remains the most favourable billing model, but in today’s gloomier economic conditions, marketers face more pressure to deliver accountable campaigns. And while online advertising’s measurability is lauded – it is easier to relate sales back to Cost Per Click advertising than to a TV ad – I foresee marketers will demand even greater accountability.

By moving from PPC to as close to a Cost per Acquisition (CPA) or Cost per Sale model as possible, marketers will only pay when the desired outcome has been delivered. This has always been the aggregators’ model.

Google is heavily reliant on its PPC model, but a move towards CPA is not unthinkable, especially as it now owns DoubleClick; it’s in a much better position to track online user journeys.

The search industry is maturing rapidly, but can’t rest on its laurels. It will be interesting to see how the landscape changes – and how Google attempts to maintain its dominant position – over the next few years.

By Gavin Sinden

May 2008