Search for a way forward

Nearly 60% of online spend is invested in search marketing but do the results justify this or have brands become victims of hype? Industry experts discuss the medium’s true worth

Stuart%20Smith%20120x120Stuart Smith (editor, Marketing Week): Search is an immense issue in all sorts of ways and whoever you are in marketing, you can’t ignore it. The latest Internet Advertising Bureau figures suggest that online spend is just over £2bn in the UK and it is growing by 41%. What is really interesting is that search is 58% of that, so by my calculation that makes it bigger than radio, cinema, and posters. Although 41% is quite miserly compared to previous years, it is still a massive growth rate and it suggests there is still growth there. But has search grown too big for its boots?”

Matt%20BrocklehurstMatt Brocklehurst (Latitude marketing director): “This anecdote illustrates what happens if you don’t look after search. Virgin Media spent millions of pounds casting Uma Thurman and producing an ad campaign. But after it broke, if you typed her name into Google, Sky.com popped up instead of Virgin. If the two things – traditional media and search – don’t work together, there’s potential for a catastrophe.”

Mark%20Price%20120x120Mark Price (managing director of Waitrose): There’s no doubt that in the early dot-com years search was hugely important. There were so many start-ups that nobody had heard of, so having a high search engine rating was very important. If you typed in “holiday”, for instance, you hoped you would get the major offline operations, but that wasn’t necessarily the case. That is changing and you can now go to the internet and type in John Lewis or Waitrose or Tesco and you will find them.

“In the early days there was massive growth on the back of the fact that in online you didn’t know who was selling what and you couldn’t necessarily rely on trusted brands. Our customers now assume they can find us online – and they do – and we still put a lot of emphasis on online, but we are spending more on putting ads on other sites and driving traffic in a more traditional way. If you are a big corporate I think you are going to start spending less on search, which is why I suspect the growth rates have started to fall.”

Richard%20GregoryRichard Gregory (chief operating officer of Latitude): “It made sense for companies to allocate their budget to it so that people found them first. This meant a lot of money got shifted into what you could call ‘direct performance’ because search is so transactional and transparent. It is not going to be like one of the growth curves seen during the last dot-com boom because it is built on very solid metrics.”

Hugh%20BurkittHugh Burkitt (chief executive of the Marketing Society): “I read in MW that there is a move from pay-per-click to pay-per-action. Is it a wonderful new era or is it that the current model isn’t working? I am also intrigued to know if you can actually monitor pay-per-action?”

RG: We work on a pay-per-performance basis. It means the client has an objective to sell product and a metric to work to. It then puts the emphasis on us to make search work. I would say about 70% of our business was signed on that model. But in the past 18 months we have found that clients want more flexibility, and they have started to attribute other values to a search campaign other than sales, such as brand awareness. Our split is now probably more 40/60 towards a more general management fee basis.”

HB: Isn’t that supposed to be behind Google buying this new company?”

RG: I think Google’s angle is primarily to use the cost-per-action (CPA) model for SMEs.”

SS: “We talked about Doubleclick there and Google making a $3.1bn acquisition bid – twice the amount it paid for YouTube. The major assumption is that Google has pretty much sewn up the search market globally and has moved on to display. We talked about fulfilling the requirements of people who know what they want, what about people who don’t know what they want, which is what display does? It creates the desire and search can then help consumers to focus that. Google seems to have seen this coming. I suggest it is now a bit of a competitor to traditional media buying agencies.”

Neil%20JonesNeil Jones (chief executive of Carat): “Google doesn’t own search marketing globally in some markets, such as South Korea, which is very advanced. Yahoo! has an 80% share, so don’t believe all of the hype. But in the UK, Google is dominant, it has about a 60-65% market share.

Andrew%20Harrison%202Andrew Harrison (chief executive of RadioCentre): “Search is unusual in that a search engine will have 100% share by user. So the market share isn’t made of an average of millions of computers, it is 100% or nil. You are either Googling or you are not. If Yahoo! says it has a 20% share of the UK, it doesn’t: it has a 100% of share of 20% of the people, which is very different from a 20% share in other markets.”

AH: “That is what drives the business model. Google’s acquisitions of YouTube and Doubleclick are driven by the fact it already has a 100% share of a user’s search requirement, so it can’t grow its business with that consumer other than by expanding its services.”

SS: “That’s a worry for marketers.”

AH: “And for search engines because the only way to grow business is to keep adding services.”

Louise%20WallLouise Wall (head of integrated at Kendall Tarrant): “In terms of brand values, can search damage a brand as well as enhance it?”

NJ: “Bernard Matthews is a good example of that. It did nothing in terms of search; it was all blogs and negative news. He could have been very smart there for a very low cost, but he did nothing and that damaged the brand.”

HB: “If you put most big brands in, you will find something negative about them quite quickly. The opportunity is among the SMEs. I once heard Mike Tildesley (Direct Line marketing director) say that he tried putting car insurance into Google and got 260 million responses. He has paid for Direct Line to be right up there. A general search like that is useless, so brands become important.

MP: “The big brands only pay to be listed. It is the small brands and SMEs that take the full-page ads, the boxes, the flashing lights because they need to be brand building.”

SS: “Neil, presumably you advise clients on how they can bridge traditional with new media?”NJ: “The biggest property in commercial TV is Coronation Street, with 9-9.5 million viewers. The biggest circulation newspaper is The Sun, which has a reach of about 6.5 million people and a circulation of 2.9 million readers. If you do a MSN homepage takeover you can reach about 66.5 million people. Digital is no longer a bolt on; it is a mainstream medium. How you use search is how you blend it into your overall communications plan with other media.”

SS: “Do you think brand awareness over the past few years, given the growth of digital, has taken a back seat?”AH: “Not neccessarily. I think Churchill is a good example of how search can help build brand trust. RBS invested in an insurance property that was unknown in a sector where some brands have been around for 100 of years. Out of nothing in five years, it created a brand with an assumed heritage and an assumed trust level so that when people do type in insurance and Churchill pops up, they know what it is, they trust it and buy it.”

Sonoo%20SinghSonoo Singh (news editor, MW): “Isn’t it easy for brands like Churchill to invest in search marketing as consumers find it much easier to go online to compare prices?”RG: “Recruitment, finance, travel are the biggest spenders online and in some instances will be spending more than 58% on search. But search is moving to other areas.”

LW: “What are your views on data. I spend a lot of time with agencies and they are all caught up in direct, digital data.”

RG: “Search engines don’t necessarily pass on personal data because they don’t always have it. They only pass on search data – this many clicks at this time of day. We don’t know a lot about the people and their search histories. The danger is that the more you cut up the data, the less decisions you can make. And Google is facing a challenge about what it does with search history data; there are privacy implications.

MP: “We have 8.2 million customers a week and have data on all of them, but working at a too granular level is not worth the investment. What you want is large trends: for instance who is purchasing toys? Then we know who to send toy catalogues to.”

AH: “Other than first-mover advantage, there is nothing about Google that makes it a better search engine. Over time, as technology improves and natural search gets better, you can argue that the revenues for paid search will go down. Google’s downside is that when you type in car insurance you get 25 million entries back; it can’t decode what it is you really want.”

NJ: “The average number of words people put in when they search is 3.2 and it is increasing all the time as people understand better that what you put in that search box really does have an impact on the results.”vThe faces around the table

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