Take a look at the Google graph. The graph shows Google’s revenues from search-related advertising rising from virtually nothing to nearly $1bn (&£545m) in five short years. It’s hard to imagine a single chart more pregnant with implications for marketers than this.
When Google first set up shop in the late Nineties, it was proud to announce that it was handling 10,000 searches a day. By February 2002, when it had reached 100 million searches a day, it stopped reporting such numbers. By that time, we’d got the point. Internet search was now mainstream.
Pew’s Internet & American Life project reported last year, for instance, that while 93 per cent of internet users went online to send e-mail, 88 per cent used search engines for general information searches, and 83 per cent used the internet to research products or services before buying. For a growing number of consumers, internet-based search is a new routine; a new habit.
The potential implications for marketers reach far indeed. Take channels. There is nothing new about consumers searching for product-related information per se. But the scale, reach and efficiency of emerging online search mechanisms point to an increasing unbundling of traditional shopping processes. In traditional shopping, search, comparison, transaction and fulfilment are all parts of a single integrated activity. Increasingly, however, consumers can and are separating the information-rich tasks of search and comparison from other aspects of the buying process.
According to research by Accenture partners Paul Nunes and Frank Cespedes, for example, half of all US shoppers now routinely search for information about products and services using one channel before buying via another.
Consumer-generated searches also have the potential to transform go-to-market processes. Marketing, as we know it today, is a process of sellers saying to buyers “Here we are, this is what we have to offer.” The origins of this process reach back into the mists of time, before the computer was invented and when the customer database was mere science fiction.
Given this complete lack of information about who might want to buy what and when, sellers had to find other ways to communicate. Broadcast “send-them-a-message-anyway” advertising was one response. Its underlying modus operandii: “waste, waste, waste, just in case”.
Direct marketing claimed to be a much more efficient alternative. But it isn’t that much better. A marketer seeking to sell, say, financial services or cars starts out with the wrong information (say, census data) and then seeks to make it less wrong by overlaying more wrong information (say, a subscription list). He then invests even more time, money and effort using all manner of fancy profiling, data mining and prediction techniques… all to make wrong data less wrong. Finally, he sends mostly wrong messages to the wrong people at the wrong time – and rejoices if he gets a five per cent response rate. How many other industries rejoice at 95 per cent waste?
Search-triggered messaging (like Google’s) sweeps these cumbersome, expensive and wasteful processes aside to effectively start with a clean sheet of paper. Instead of initiating the matching-and- connecting process by sellers saying “here we are, this is what we have to offer”, it starts with the consumer saying: “Here I am, this is what I want.” In one fell swoop it guarantees we’re talking to the right person, about the right thing, at the right time. Simultaneously, it neatly sidesteps all today’s fraught issues relating to intrusion, privacy, permission and so on.
In the process, it raises huge questions about the future relevance of legacy marketing mechanisms, processes, skills and efficiency. But the implications reach even further. Last week, Freeserve and search engine Overture were wrapped over the knuckles by the Advertising Standards Authority for not making it clear enough that the results it generated were paid for by advertisers.
This skirmish underlines another crucial aspect of the search phenomenon: to work, its underlying purpose has to be buyer-centric rather than seller-centric. Consumers undertake searches not in order to help companies search for customers (the traditional marketing mindset) but to search for better value for themselves. Search is about helping buyers, rather than the sellers, go to market more efficiently and more effectively. That’s why, even if it’s making a mint right now, Overture is backing the wrong horse in the long term. What’s the point of using a search mechanism that generates answers according to another party’s agenda rather than your own?
In fact, the real competitive dynamic is in precisely the opposite direction: increasingly sophisticated added-value buying services that go way beyond what Google is currently offering. How about linking consumer search to independent product and price comparison and review services, for example? What about adding a simple click to complete the transaction?
That’s the model behind burgeoning comparison shopping services in the US such as Bizrate, NexTag, PriceGrabber and Shopping.com. Last year, Shopping.com alone generated $1bn-worth of click-through transactions, prompting even Amazon and Wal-Mart to list their wares on its site.
One further point: by creating a new market for buyer-centric services, the search phenomenon also hands control of the go-to-market process from the seller to the buyer. It’s the consumer, not the marketer, who decides what information to volunteer and seek, via what channel, when. The net result? A tantalising prospect. On the one hand, the emergence of consumer-initiated “Here I am, this is what I want” go-to-market processes offers marketers their ultimate dream come true: the promise of almost complete communication relevance on a requested, permission-basis that eliminates a huge proportion of the waste, uncertainty and inefficiency that bedevils today’s set-up, while also sidestepping consumer concerns about privacy, intrusion and advertising overload.
But the price is also very high. Consumer-initiated matching and connecting renders many legacy marketing processes, skills, tools and techniques potentially redundant. A search-driven marketing environment also threatens marketing departments and their agencies with a severe loss of control. Many peoples’ careers and many agencies’ fortunes actually depend on consumers not taking control of the go-to-market process; and on sellers not finding more efficient ways of connecting with customers.
It’s not surprising, then, that the search phenomenon has emerged not from within the marketing establishment but far, far away, in a world beyond most marketing departments’ and agencies’ radars. It is a disruptive innovation that could fundamentally challenge the status quo.
Disruptive innovations tend to follow a pattern. Their early manifestations are crude, full of glitches, which may make them a laughing-stock – at first. If the basic idea is good, however, the innovation finds some niche to establish itself in, and uses the opportunity to perfect its technologies, business models, customer relationships and so on.
At this stage, it still seems irrelevant to the mainstream. Then suddenly, as if from nowhere, it races from the fringe to the mainstream as users – and potential competitors – wake up to its full potential. Suddenly, incumbents find themselves on the back foot.
Look at that graph again. Is this the first sign of a disruptive innovation at the very heart of marketing?
Alan Mitchell, firstname.lastname@example.org
For a more detailed analysis of the above, see “The buyer-centric revolution” by Alan Mitchell in Interactive Marketing, Volume 5 Number 4