Is Search Dead? This is from an email I sent to clients today. Thanks to Rebecca for the great article.
After Google’s CFO commented on a slowdown in the growth rate of search earlier this week, great rumours are circulating that search has stopped growing - even stopped making tons of money for search portals. Of course, this is not the case. I think it may be true if you narrow the statement down to the following: in the US, in English, where Internet adoption is close to peaking, the rate of search volume growth is slowing. So, advertising growth based on true searches is slowing accordingly. That is a very narrow statement. What isn't slowing is worldwide growth – or the huge opportunity in contextual advertising and other offshoots of search advertising. All the research and analysts agree that online advertising will continue to grow substantially over the next five years and search will continue to be a major driver of that growth.
Here are the comments from Rebecca Lieb - the ClickZ Editor - http://www.clickz.com/experts/brand/buzz/article.php/3588886
"Contextual advertising from the search engines is another burgeoning marketing. OK, so it's not exactly search. But revenues from Google AdSense, Yahoo!'s still-in-beta Publisher Network, and the service everyone expects MSN to release sometime this year will all be counted as search advertising in financial statements. The major search players know this and are rolling out inventory-creation opportunities for their users in the hopes of monetizing these services. These include blogs on MSN, Yahoo! Small Business, and the latest entrant, Google Page Creator."
"Meanwhile, a wealth of features is being developed for contextual. I had a peek yesterday at what Google and Yahoo! are doing to tailor and customize ads for publishers. Features include adding a media kit page to ads with seasonal features and the ability to run ads on tiny site sections, such as individual blog entries. About.com's SVP of product management Dae Mellencamp is fairly certain behavioral features will be integrated into future contextual products to target ads on a more individual level. I doubt she's wrong -- not that the engines are telling right now. If she's right, behaviorally targeted contextual ads open up a premium-priced product for the search engines."
"Like contextual placements, classifieds aren't exactly search, either. But still. Google Base is up and running, and this week MSN launched a beta of its own classified ad product. They're going up against the craigslists and eBays of the world. After all, eBay does bill itself as the world's largest shopping search engine."
"Then there are the barely-off-the-ground specialized search products from the majors: shopping, mobile, and local. Local search alone is forecast by the Kelsey Group to be a $13 billion industry by 2010."
So the price-per-click for true search advertising is definitely going to rise, as demand exceeds supply. And maybe the really good Search Engine Marketers have done their job so well that they are buying all they can in search and returning an amazing ROI. But that leaves contextual as a wide-open opportunity. Even if the ROI is a little lower it still leaves it as a highly effective lead generation and branding tactic, with an ROI that far exceeds that of banners and other forms of online advertising.