• by Gerry Bavaro , June 30, 2008

We can debate in-house versus SEM agency, SEM nomenclature, the definition of strategy, and whether "to integrate or not to integrate," but the one point we can all agree on is the fact that approximately 50% of online ad spend is now dedicated to paid search. The empowering force behind this un-sexy, "hard to believe it's winning" media is data.  Data is also what's driving high valuations in social media and at the heart of the battle of the big three engines and the greater media world. 

Why Data Drives Everything
Paid search marketers live and die by data to make campaign bidding, testing, creative, budgeting, and other decisions.  If we're following the fundamentals and best practices of intelligent direct-response marketing, we're also aggressively leveraging data to segment campaigns and target better, using proprietary and third-party bid management systems.  Most of us in paid search understand that deeper data can be leveraged in ways that increase conversion rates, decrease CPAs (or increase ROI/ROAS), and scale campaigns through constant analysis, strategies, and tactics that drive business results.  The more data we have, the more intelligence can be acted on in real time.

The New Creative Canvas
Search marketing is a far cry from traditional media.  In TV, print, and radio, the path to a killer campaign is great creative (otherwise known as the "big idea").  Creative is the primary driver of performance, and creative variation largely explains why accounts go into review at agencies.  The canvas of a creative director or designer in traditional media is the lifestyle, beliefs, values, behaviors, and preferences of the target audience; how each one of these elements is leveraged drives creative ideas, designs, and messaging.  Conversely, for paid search marketers the canvas is performance targets, keywords, ad copy, landing pages, match types, impressions, clicks, CTR, conversion rates, positions, CPC's, Quality Score, geo, time of day, engine, engine syndication partner, and more.  This data is changing, or creating influence, in real time, all the time. One must design and execute changes that happen instantly in order to manage, improve, or test performance.  The data never stops, and broadens significantly as new channels (including display, video, TV, etc.) emerge.
 
All Hail the Google Data Dashboard?
I'm a big fan of Google Analytics. Yet, while Google's new Ad Planner product has some great sizzle and hints at what its inevitable dashboard will include for media management and optimization, let's not forget that Google (and Yahoo and Microsoft) are media sellers, so don't expect features in these new dashboards to drive CPCs down and Quality Score up all too much. While we can expect Google -- plus the other engines, exchanges and new self-service models in social, mobile and other channels -- to provide deep data in the most usable fashion, none of these companies are optimization engines. Consequently, bid management, landing page optimization and other technologies that maximize real-time APIs for intelligent automated decisioning based on data and rules will be needed to act on the wealth of data at the core of these new, integrated platforms. 

Targeting and Control, Not Reach, Is Driving The Growth of Exchanges and Networks
With eCPM' for major publisher Web sites (over 100 million page views per month) declining, companies like Fox Interactive and the New York Times are developing self-service models, and over 95.5% of U.S. agencies and advertisers planning to work with ad networks in '08 (up from 81.5% in '07, according to Collective Media's 2008 Ad Network Study ), it's hard to deny the inevitability of more inventory moving to networks and exchanges.  Achieving high CPM sales while advertisers are aggressively looking for a return, comparing their return in display media to search, and  understanding clearly that CTRs are dismal - all these factors are driving networks, major publishers, and social media players to re-tune themselves for transparency, better segmentation and targeting, and inventory quality. 

Media buyers consider inventory quality and targeting the most important differentiators of networks, according to Collective Media's study.  Today, advertisers are demanding the same measurability, control and targeting options across the networks they buy from, and networks and exchanges are tackling the inventory quality issue by moving premium inventory onto their platforms.  Advertisers are no longer being swayed by a network's claims of being able to serve multiple billions of impressions: what matters is targeting options (including behavioral) that rely on data breadth and quality.  Sure, sites such as Yahoo have content and 500 million users, but what has Microsoft and Google salivating are Yahoo's growing user profiles and behaviors that can be leveraged in a cross-media, dashboard-based world of media planning and buying. 

Get the picture? Every player in the industry, from early-stage startup to multibillion-dollar powerhouse, is scrambling to base its differentiation points on data mastery. Is this "targeting thing" really that powerful? As search marketers, we know the answer to be "yes" -- and will you please pass the data ?