No, Chicken Little, The Sky Is Not Falling

By Aaron Goldman, VP Marketing & Strategic Partnerships

I’ve been on the warpath in the blogosphere of late, adding my 2 cents in a variety of places it wasn’t asked for -- after all, isn’t that what blogs are for?

Having submitting comments, nay… rants on a number of posts I’ve come across in various industry rags, I thought I’d share my POV with the readers here as they all relate to our common quest to find resolution.

Let’s start with this piece from iMediaConnection which nearly sent me into a conniption -- Beware: The Search Advertising Sky is Falling.

Sandeep Krishnamurphy, Associate Professor of E-Commerce and Marketing at University of Watchington-Bothell, argues that we’re living in a paid search bubble that’s about to burst.

He starts with a focus group of 11 students in his class and determines that no-one clicks on paid search ads.

He then points to a study that was done by Starcom about “Natural Born Clickers” that shows 50% of all clicks on online ads come from 6% of the population (and a younger, less-affluent demo to boot). And Sandeep reminds us of the click fraud issue to further emphasize the poor quality of paid search clicks.

He then proceeds to shows graphs illustrating traffic to search engines and number of unique visitors being flat, while paid clicks are increasing. He speculates that this is due to those “superclickers” and/or fraudsters doing a lot of clicking but no buying.

Finally, Sandeep shows that traffic to blogs is on the decline and it’s becoming tougher for bloggers to make money. He surmises that this will cause less content to be created by which contextual search ads can be shown.

Now for the big payoff - with supply down and demand high, Sandeep concludes that paid search rates will rise and conversions will drop as only superclickers and bots respond to the ads. And this, of course, will lead to marketers pulling their budgets and the bottom falling out of paid search altogether.

In reading this, I was appalled by the incomplete data Sandeep bases his case on and the misguided extrapolations he makes from that data.

That said, I’ll give Sandeep the benefit of the doubt that his experience with search may be solely academic and, having never actually managed a search campaign, he may not understand the ecosystem. Regardless, iMediaConnection is a well-read publication so it’s important that all the marketers out there are reassured that paid search is far from bottoming out.

The most glaring fact missing from Sandeep’s analysis is that marketers are able to track activity on their website post-click and adjust their paid search bids based on the return they are seeing. So, it doesn’t matter if superclickers or fraudsters are inflating clicks -- if the traffic wasn’t converting, marketers would stop paying for it.

The fact that Google’s paid clicks and revenue are steadily increasing shows that some of those clickers out there must be buying (or registering, or downloading, or watching videos, etc.) -- otherwise marketers would be lowering their paid search budgets.

At Resolution Media, we have hard evidence that paid search ads are indeed working as our clients boast positive return on ad spend and continue to expand their programs. And there are no signs of supply diminishing as we see impressions increasing across many verticals due to the engines aggressively growing their networks.

So, no chicken little, the sky is not falling. And we’d appreciate it if you stop running around squawking about it until you’ve actually spent a day in the paid search henhouse.

Stay tuned next week for more rants.


Copyright © 2008 Resolution Media, Inc. All rights reserved.