First of all, it's now Search Engine Marketing, If You Please.

Danny Sullivan recently had a poll in his Search Engine Report, asking industry types what all-encompassing phrase they felt best described what it is they do. Traditionally, search engine positioning and search engine optimization have been the terms used for the practice of improving search engine rankings. Lately, with the advent of paid placement engines such as Overture.com, the role of the search engine expert has had to expand to include co-coordinating paid listings. In addition to manipulating code, these consultants have had to become specialized online advertising buyers.

With that in mind, the term "search engine marketing" has emerged as the clear winner. Respondents to the survey felt it most accurately described the nature of their business. You'll see consultants who make their living trying to move sites higher on the search engine adopt this new term and broaden their services. Increasingly, co-coordinating paid listings will play a bigger and bigger part in the daily routine of search engine consultants. The most successful of these will offer their clients sound, objective advice about how to get the most from their search engine marketing budget

Search Engine Marketing Emerges into Primetime

Thanks to Overture, search engines have emerged as the most effective online marketing alternative available. Ironically, now that you have to pay for it, marketers are finally realizing the true value of solid search engine rankings. While search engine positioning used to be the sole domain of spammers, ultra aggressive marketers such as porn sites and online casinos and a handful of SEO consultants, several main stream publications have recently run articles on the importance of being well positioned on search engines. As more search engines become profitable through either paid placement or paid inclusion fees charged, they will join the chorus with Overture, singing the praises of their listings as a paid advertising alternative that produces a superior return on investment. In one year, the number of companies that do some form of search engine marketing will rise from the rather abysmal current rate of less than 5% (according to numbers from Forrester Research) to a more healthy 10 to 15 %, and will continue to rise year after year.

Overture Blooms and Withers

Overture, fresh from inking new deals with Yahoo and InfoSpace (the purchaser of the Excite search portal) is currently flying high. If you can get into the top 3 for your keywords on Overture, you will enjoy coverage on search portals receiving over 80% of all search engine traffic. Almost all of the search partners have inked deals with Overture to prop up their sagging bottom line revenues. While this is a short-term gain for Overture, in the long run it will cause a significant amount of pain. Here's why.

If Overture is successful and steers significant revenues to their partner search portals, it's a matter of simple business economics for each of those portals to realize that they'd be further ahead taking the whole pie, rather than sharing it with Overture. The investment to set up a similar bid for placement back end for each of the main sites would be minimal compared to the extra revenue they would realize. Yahoo has already announced plans to do just this in the first quarter of 2002. Others will follow suit. Also, expect to see some of Overture's search partners wither away and die. I doubt that AltaVista is long for this world. I expect that starting around March, you'll see Overture's search partners begin to jump ship in favor of rowing their own paid placement boat. Although search partners (notably AltaVista and MSN) have tried to implement paid placement models before and were burned by consumer backlash, it seems that the ubiquitous results from Overture have preconditioned searchers to be more accepting of paid search results.

Overture's biggest appeal to advertisers is the wide coverage it gives. Once Overture loses its search partner network, they'll just be another paid placement engine, generating about 5% of all search engine traffic. In short, Overture will become a victim of it's own success. It has lead the way for paid placement engines, and now the partners it depends on will follow Overture's lead and start their own revenue generating programs, leaving Overture behind.

Consumers will Speak Out Against Paid Placement, But Won't Be Heard

Already, consumer advocate Ralph Nader has spoken out against paid placement rankings on partner search portals that aren't clearly defined as advertising. Many other industry spokesmen agree. It takes a pretty savvy searcher to sort out the paid placement listings from the ones coming from the search engine's index. One of the worst culprits I've seen is MSN, with it's misleading link on search results labeled "Get the Top 10 Most Popular Sites for (Your Search Term)". If you click on it, you get Overture's Top 10, and only if you scroll down do you see the most popular sites as determined by Direct Hit.

The outcry against misleading labeling by the search engines will probably gain momentum but I don't believe it will ever reach a level sufficient to cause the search engines to mend their ways. Rather, I believe that searchers will vote with their feet, moving to new, uncluttered, more relevant search tools, leaving the sell out portals with no traffic (see the next prediction) and no future.

A New Search Star will Emerge, and Has Been Search Portals will Fade Away

In the next year, we'll see the Google scenario repeated. With Google, it's clean, uncommercial interface and highly relevant search results made it the rising star in the search engine business. It quickly gathered a major share of the search engine market, while long time portals such as AltaVista, Excite and Lycos watched their market shares slip away. In their desperate bids to increase revenue, they sold every available square inch of screen real estate and searchers gave up in frustration. It's been 18 months since I turned to AltaVista for a search, and it used to be my favorite engine.

Today, even Google is inching towards commercialism, with AdWords and it's Premium Sponsorships. I predict that at least one new search site will follow in Google's footsteps, quickly gaining a significant share of market. Right now, Teoma looks like a potential candidate. I also expect to see at least one or two former contenders in the search portal market go down for the count. My money would be on AltaVista.

The Magic Revenue Bullet will Be Found

The biggest problem for search engines has always been lack of revenue. Since the dismal showing by banner advertising, it's been one disappointment after another for the search portals. So far, no one search portal has found a revenue source that manages to be highly profitable while at the same time not alienating the portals user base. The closest may be the paid inclusion program initiated by Inktomi and since instituted by AltaVista. Google has announced that they intend to initiate a similar program in the near future. Paid Inclusion, although it lacks the revenue potential of paid placement, does strike the balance of offering relatively unbiased search results while at the same time bringing money into the corporate coffers.

Long term, I believe search portals have to find subscriber based extra value services that users will be willing to pay for. For instance, MSN's eShop is a step in this direction. While free to the user now, it could develop into a subscriber based online price comparison tool. Here's an example of how this could work. A consumer search engine would combine the ability to simultaneously search many online stores, compare products based on consumer reports, find the best prices on the best products and place your order, all without leaving the site. As long as the site offered consumers a reasonable expectation of finding the best price, I believe people would be willing to pay a small subscription fee to use it. Also, retailers could be asked to fork over a small amount to have their online storefront included in the index.

Perhaps other value added services, including online travel bookings, mp3 downloads, etc could be added to build a suite of offerings. The online landscape will be significantly altered in the next year, with many currently free offerings becoming subscriber based services. The search portals, with their huge traffic numbers, may be able to use this to their advantage.

Back to the Future

So, it will be an interesting 6 months ahead, but what's new about that? If there's one thing that makes the Internet an interesting competitive playing field, it's the fact that the rules change constantly. Search portal de jour, anyone?