Impact of Online Search on Advertising Agencies
There was an article today in Canada’s national newspaper about the impact of the online search market on ad agencies.
I came across it on Andrew Goodman’s blog and I’m linking to it because I think it’s relevant to the Australian market. The paid search market in Canada is cheaper and less competitive than in the US. There are parallels with the Australian search industry in this respect. We are a couple of years behind the US and this creates opportunities for businesses and agencies.
Google’s president of marketing and commerce makes the point that advertising agencies shouldn’t see the dominance of Google as a threat but as an opportunity. He concludes with the message that (in Canada) “we’re underinvested compared to what the opportunity is.”
Andrew points to Gord Hotchkiss’s post on the same topic. Substitute “Australia” for “Canada”. The post is very relevant to our market as well.
Posted in Paid Search, Search Marketing Industry, uncategorised
October 3rd, 2007 at 7:21 am
My focus is the travel/accommodation market. PPC advertising faces a point where there is no profit that can be made from a successful campaign when the bid price gets too high.
Perhaps the definition of an auction based system is that there are no real bargins as the market equalizes?
It is also interesting to see how the intermediaries are often the most prolific bidders. Perhaps the direct sale will sustain a higher profit and therefore give advantage to the actual creator? But who wins that battle? Google.
For now, we (Australia) may still be in a period where the market hasn’t equalized and there are bargains to be had. Even that statement must be qualified by the specific market. A while back I noticed the Townsville Visitor Info Centre holding the highest bids - perhaps even excessive bids. (That is always curious to see government money spent to out bid private enterprise.) Anyway, it was clear that you could not set a national strategy without seeing specific competitive markets take the lion’s share of spend. As we work with businesses in regional Australia there are certainly bargains to be had. Perhaps that is the frontier where profits lie?
It is fun to look into the future by seeing what happens today in the US and Europe, and know it will eventually play out here. A good strategy. Seems too simple, but….
October 3rd, 2007 at 6:58 pm
Hi Mark,
One thing to bear in mind is that the auction isn’t equal as in the highest bid doesn’t “win”.
The ad ranking system gives considerable weight to quality score and I’ve seen several examples first hand where advertisers bidding on the same keyword, same average ad position, can pay vastly different amounts, more than double for example.
Also, the profit (or loss) depends on the cost per acquisition not the cost per click so a bid price can be seem cheap for one advertiser and be too expensive for another. It depends on the business model and how well the website converts.
The intermediaries in travel are definitely the early players. This is a good post on the different type of bidders in PPC.
October 3rd, 2007 at 7:13 pm
I meant to say as well ..
I totally agree with your last point on taking advantage of seeing what has happened in the US and knowing that it will play out here.
The same point was made on a PPC Affiliate blog. After attending Affiliate Summit London a week or so ago he says:
Here’s the link to the full post.