Search Marketing Predictions for 2008

Posted on January 7, 2008
Filed Under general |

It's tough to make predictions, especially about the future. Yogi Berra

There seems to be no shortage of predictions around this time of the year.  I find them very enjoyable to read, though I don't take them very seriously.  That's no disrepect to the authors of the predictions, just that forecasting the future is very difficult for even the best informed.

Take a look at this graph of Jupiter forecasting for example:

jupiter_forecasts.png

Notice the spread for 2008.  The 2003-09 forecast puts European Online Ad Spend at €4.3bn, less than half the 2007-12 forecast of €9.1bn.  I'm not trying to embarass Jupiter here; I would expect a similar comparison graph for any other research firms.  My point is that it's just too hard to make these forecasts accurately.

But where's the fun in giving up because it's difficult?  Here's three predictions of my own, in order of least likely to happen in 2008:

Yahoo will close or outsource many of its search marketing operations in Europe. It seems to me that the YSM network across Europe is dying a slow death from which it seems unlikely to recover.  The Yahoo partner network is plagued by low quality partners, meaning that for many campaigns the percentage of traffic that actually comes from Yahoo itself is less than a third.  Yahoo is making the same mistake that MIVA made a few years ago by sacrificing quality for volume.  In Europe, at least, they've lost the war against Google.

Google's gross advertising revenues in the UK will surpass ITV. In Q3 last year Google's gross ad revenues (ie before payments to partners such as Ask and AOL) exceeded ITV1, ITV's flagship channel.  Although ITV's digital channels account for a significant amount of additional revenue on top of ITV1, I expect Google will beat that by the end of 2008.

New business activity for SEM agencies will reach new highs. Next year is the last year for Google's Best Practice funding and I expect the shake-out will start.  Too many agencies add no value and merely exist (and win business) because of the size of their BPF percentage.  When that's gone they will be laid bare.  Advertisers know it and will want to make changes sooner rather than later.  This will gain significant momentum in the lead up to the new financial year in April.

Do you agree with the above?  Or should I have heeded Yogi Berra's warning?

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Comments

2 Responses to “Search Marketing Predictions for 2008”

  1. Tristam on February 6th, 2008 5:06 pm

    Interesting. What do you think about changes to pricing models as used by the Search Engines?

    Google now offers CPA pricing and can optimize to a max. CPA goal. That could put pressure on SEM agencies who optimize to CPA goals.

  2. searchbeest on February 6th, 2008 6:27 pm

    I’m not really concerned by Google’s move into CPA models for three reasons:

    1. Whether the pricing metric is CPA, CPC or CPM, it’s still a lever that you move up or down to get more or less traffic and hence transactions. Over a portfolio of keywords, you’ll have a set of possible CPAs that you need to balance out to hit your blended CPA target for the whole campaign. So you have the same problem of low CPAs, but limited converions on some keywords, and high CPAs but lots of conversions on other keywords. Working out the best way to manage this to maximise transactions at a given CPA is still a complex mathematical challenge. Efficient Frontier’s technology is well suited to solve this problem.
    2. Secondly, Google hasn’t had much uptake from its publishers for the Pay Per Action (PPA) model. I understand that volumes are extremely limited.
    3. Thirdly, I don’t believe Google’s Conversion Optimser will be useful to advertisers who require any level of sophistication. I’ve elaborated on this in another post about the conversion optimiser. You’ve also given an excellent analysis of it yourself in your blog.
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