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Search Marketing After the Google, AOL Deal
ClickZ News, By Pamela Parker | December 22, 2005

The expanded alliance between Google and America Online brings new possibilities for search marketers; both the potential to add graphics to paid listings and buy ads from AOL directly. It also keeps Microsoft's MSN in the also-ran position at a time when many had been rooting for a stronger third player in the marketplace.

Search marketers who spoke with ClickZ News felt the most important aspect of the deal was what it left out: MSN.

"Microsoft not winning this is a huge setback for the uptake of [ad management platform] adCenter," said Andy Beal, president and CEO of Fortune Interactive. "So while they'll still move forward with their plans, and I'm sure they have other avenues to explore for expanding their PPC product and distribution...Winning this would have been a double whammy."

MSN's loss was particularly hard felt in a community that would welcome a strong alternative to Google and Yahoo!, which currently dominate search.

"We think this market has needed a legitimate number three," said Peter Hershberg, managing partner of SEM firm Reprise Media.

Hershberg and others note MSN has raised the stakes in search marketing by adding demographic targeting and tracking to its adCenter product. But, so long as MSN remains an also-ran, Yahoo! and Google may not feel pressure to ante up their own new targeting features.

But should Google, or AOL, choose to follow MSN's lead, Impaqt's Melissa Burgess notes the partnership puts them in a good position to offer demographic capabilities.

"If they're going to open that vault [AOL subscriber data] up in a way to look at specific demographics," she said, "that's going to be a huge run on what MSN is doing right now in their adCenter program."

One of the more surprising aspects of Google's deal with AOL, adding graphic elements such as logos to paid listings, drew little interest from search marketers. Though Google says it may offer such logos to all advertisers, some wonder if such a feature would improve listings' effectiveness.

"I don't think that would have any impact whatsoever. My gut feeling is that people already associate the logo or image with the brand," said Impaqt's Burgess. "I don't know if there's going to be any incremental gains from having a logo there, that would have an impact on click-through rate."

Some search marketers question whether adding such logos might represent a step away from what's made Google successful with consumers thus far.

"As an advertiser, my initial reaction is, yeah, let's have that opportunity. But I need to be conscious of what has made Google great over the last five or six years, and that is the clean interface," said Beal. "It could be the demise of a very stable and profitable model."

Marketers see a bit more promise in the prospect of buying search inventory from AOL directly. A 2003 study by FutureNow and WebSideStory found 3.04 percent of traffic from AOL's search engine converted, making it the highest converting search engine studied. Meanwhile, traffic from Google.com only converted at a 1.74 percent rate. The data suggest that buying AOL inventory directly could be a bargain, or perhaps worthy of a higher bid.

"For most, it will be a good investment," said Bryan Eisenberg, co-founder of consulting firm Future Now, "and for some it'll be incredibly more powerful than they've seen beforehand."

http://www.clickz.com/news/article.php/3572781