Search to become the most successful marketing method for all businesses
MediaPost SearchInsiderGord Hotchkiss uses the story of search revenue projections by Jaffray analyst Safa Rashtchy to illustrate his theory that " Search is likely to become the most successful marketing method for all businesses."
Hotchkiss reckons local search is going to be the huge growth area - I see this as having gigantic implications for the online travel industry...different to those for FMCGs and retailers in general
"ON NOVEMBER 9, 2004, PIPER Jaffray analyst Safa Rashtchy dropped a bombshell on a small handful of people at the New York Ad:Tech show. He doubled his search revenue projections for the next five years. And, he bumped these projections less than two years after they originally came out. "
Hotchkiss notes that earlier projections created huge buzz but the multi million $ figures barely caused a ripple either on or off line.
The "high points of Rashtchy's announcement:
First of all, the growth numbers. In March 2003, Rashtchy estimated that worldwide search revenues would hit $7 billion by 2007. Just a few months later he was quoted as saying that these numbers are likely too conservative. With last November's presentation, he had the opportunity to bump those numbers up.
Rashtchy now feels we'll not only hit that target, but surpass the 2007 - $7 billion mark this year. Next year, he predicts search revenues to top $10 billion, and then hit $13.5 billion in 2007, $16.2 billion in 2008, $19.8 billion in 2009 and top $23 billion in 2010."
Hotchkiss summarises Rashtchy's on the main revenue drivers fueling the growth:
• The increasing use of search by big business
• A second wave of small business just discovering search
• The international growth of search
• Discovery of the branding value of search
• The growth of contextual search, with local search perhaps poised to take over
Rashtchy identifies four basic drivers of search growth - T.C.P.C.
• T Traffic - More people doing more searches, especially commercial searches
• C Coverage - Expansion of keyword baskets, monetizing more search terms
• P Price - Increasing prices per click
• C Conversion - As we get better at converting clicks to buyers, advertisers are willing to bid more
Hotchkiss sums up:
• Search is likely to become the most successful marketing method for all businesses
• Local search is a huge force that could change the dynamics of search for online-only merchants, putting them at a big disadvantage
• Concepts like broad match could make search an effective soft sell, suggestive advertising mechanism
• Merchants should focus on customer conversion and extending the customer life cycles
• Search providers should focus more on merchant conversion rates and offer lower charges for broad match and contextual search.
• Search providers should also focus heavily on local and international expansion
His conclusion about local search comes from a different angle to my travel centric POV - he reckons online merchant or retail sites could face stiff competition from "local" bricks and mortar businesses providing retail goods.
So what is the impact on online only travel sites likely to be?
The structure of the British and Australian Totaltravel sites - granular - is a match made in heaven
The industry in general may focus on geo-targetting all SEO and SEM campaigns to fit with local search a la Google or Yahoo
Destination marketing: geo keywords prices soar, taking over from cheap, cheapest - but how will users react?
What do search phrase trends show users are doing?
posted by Jen @ 5:30 AM
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