Search Engine Marketing History and Benefits

10 years ago, the internet landscape was very different. Google was just very much in its conception phase, and some of the largest sites that are around today (YouTube, FaceBook and MySpace) simply did not exist. It was, perhaps, a simpler time, when the “world wide web” was still not truly mainstream, and more of a “proof of concept”. Dial-up modem access ruled and although the hype had started to build, few companies had managed to actually capitialize (in terms of revenue) this new-fangled thing.

It wouldn’t be long before the ever increasing dot.com “bubble” would burst, much like the financial markets are today collapsing. While many dot.com companies had created a fevor of hype, few were raking in the big bucks. Online advertising was still massively overshadowed by traditional advertising, and how to reach consumers via the web was still largely unkown.

Fast forward today, and things couldn’t be more different. Online advertising spending has been outstripping traditional advertising growth for several years, and will continue to do so for the foreseeable future. Perhaps one of the biggest innovations and drivers of the current growth in online advertising came from the introduction and widespread adoption of search engine marketing, otherwise known by the acronym SEM.

Of course, SEM really took off with Google. And no, contrary to popular belief, Google did not actually invent pay per click (PPC) search engine advertising. Initially Google had tried displaying its advertising using the CPM method (cost per mili), which was then the dominant format of online advertising. pay per click advertising was actually first introduced by GoTo.com – later named Overture – and as hard as it is to believe, in 2001 Google managed to only earn a measley $85 million versus’ Overture’s $288 million revenue. What’s less known in the anals of pay per click history is in that fact both companies – Google & Overture – were actually beaten to the punch by adult companies, who were actually the first to introduce the company. Of couse, online porn was certainly not mainstream back then, and this fact has faded into history. But it’s interesting, nonetheless.

Looking back, it’s hard to see how Google came to be the dominant monster of search engine marketing that it is today. If it didn’t invent search engine marketing, how did it come to dominate the space like it does today?

Firstly,  Google’s primary ace card was its search engine, which was revolutionary at the time. None of the other search engines could compete with its technology. So, slowly but surely, Google managed to accumulate more and more repeat visitors, and more importantly, a continually expanding base of loyal and repeat users. Then, they perfected the very new art of search engine advertising.

Taking GoTo/Overture’s model, they enhanced it. Overture’s bidding was simply based on price, the highest bidder could always get to the top, regardless of the ad’s content or the destination page. Google took search engine marketing a step further, by actually analysing the relevance of both the PPC ad and the destination page itself. Google also looked at other factors, such as bounce rates. If 100 people clicked on an ad, and then 99 clicked their back button, the target page was not obviously very relevant to end users. If 100 people clicked on another ad, and only 50 clicked their back button and continued to browse the advertiser’s website, then that ad was given more preference.

Essentially, Google marred the concept of bidding with relevancy, and melted together with it’s innovative search engine technology, managed to take the online advertising market by storm. The rest, as they say, is history. Google now commands over 80% of the search engine advertising market, and has yet to be toppled. Many competitors have come and gone, but none look to usurp the search giant right now.

In order to understand the rise of search engine marketing, we need to look at it’s benefits compared to traditional advertising, both online and offline.

Benefits of Search Engine Marketing

Primarily, search engine advertising works because it actually reverses the traditional advertising model. With “old school” advertising, the key emphasis is on building a brand, enticing the consumer to believe that one product or service is better than another. A lot of this brand messaging is sub-concious, get the idea in the consumer’s mind, and hope that when they eventually need such a product or service, they will remember the marketing message and then act accordingly.

Search engine marketing is different. It’s not really focussed on building a brand (although that factor can come into play). It’s about targetting users that are actively goal orientated. When someone searches for something – and then clicks on a pay per click ad – they allready have a desire about a product or service. They’re not necessarily interested in the brand or history, rather about fulfilling their desire with what they consider to be the “optimum” solution. In this respect, branding plays a much less significant role.

Once an end-user has clicked on a search engine ad, their primary concern focuses around two issues: the proposition, and the value. Branding comes a very distant third consideration.

The Proposition

The proposition factor is simple enough: are they enticed to buy, purchase or make an enquiry? In web terms, this boils down to how well the advertiser can “sell” their product or service. Why should the consumer choose product “A” when they have knowledge of product “B”? Don’t forget, on the web, anyone can easily research dozens of websites within a short time, so comparing one product to another is simply a matter of a few mouse clicks and keystrokes.

To use the good old “bricks and mortar” analogy, a web user is not just enterting one store and browsing a selection of brands that store holds. They are not even on a street with many stores, each with their own particular brands of producs. Rather they have access to a whole world of stores, and can pick and choose between them all. The web reduces the need for a consumer to spend a lot of time evaluating the proposition of the benefits of various products and services. They can get so much access to information within a quick period, that one of the core critera is the advertiser’s “proposition”. Is this product or service right for me? Is it exactly what I want? Am I willing to make this purchase over another? These are the crucial elements.

Value

To go back to the old bricks and mortar metaphor, value is often hard to determine in the real world (known as “meat space”)  if a consumer is out shopping. Sure, they may think they’ve come across a real bargian, but how can they really be confident that is the best deal? The only way for them to know is to either physically visit multiple stores or to ring those stores. Even then, in real-world retail stores, salespeople will often try to strike a bargian. Therefore the shopping experience can become very convulted and time consuming, as the consumer “shops around” to get the best price. Not at all convienient.

Online, however, it’s a different story. Within 10 minutes your typicall web surfer can do many, many, searches are quickly compare prices. Same products, same services, but all with different price tags. It’s very easy for a web user to quickly establish what is the best value for them. After all, it only takes a few clicks to check out a competitor’s offering. This has led to the widespread behaviour of “online window shopping”. It’s so much quicker and easier for the end user to get the best possible deal.

So how does this tie into search engine marketing? Well, essentially, it means businesses need to re-approach their marketing when it comes to the online space. Businesses cannot simply try to fall back on their  branding when it comes to SEM. Consumers no longer fall for that old trick, rather they will evaluate both the proposition (is this good, do I need it, can I get better) and the value (this website sells it cheaper, this website throws in free shipping etc.) factors.

In the end game, online advertisers need to start paying more attention to both their proposition and their values that they present to online consumers. To rely too much on brand is not going to end well. That’s why search engine marketing has come to the fore as the pre-eminent way to advertise online.