• by David Berkowitz , November 27, 2006

Search engine marketing might seem old-hat and mainstream compared to emerging social media channels, but search's auction-based media buying is far more revolutionary. Despite the hype surrounding the new social advertising channels, however, some of the largest deals lately have involved sites that rebuild barriers to entry that search marketing demolished. The future of advertising might look like a mashup of the past.

One of the most radical things about search engine marketing is that anyone can take part in it. To start, you generally need a credit card, $5 for a setup fee, a basic Web site, and Internet access. For just $1 a day, you can start making the phone ring, and if your business can scale, you can wind up spending over $1 million a month with search.

Spending more money on search marketing (not factoring in the use of agencies or technology) buys more reach and frequency, rather than perks or discounts off the rate card. For search advertising itself, the market sets the price, and advertisers can only buy more or less of it; beyond that, advertisers can then work to buy it more efficiently.

The populist dreams of search marketing haven't been perfectly realized so far in terms of every last mom-and-pop business joining in, but the search engines have come a long way. Additionally, through services like pay-per-call advertising and some types of mobile marketing, advertisers don't even need a Web site, dropping one more barrier to entry. With any advertiser being able to take part in the efficiencies of auction-based media online, the democratization of marketing is undeniably real.

While search marketing is still in its early stages--it's hardly a decade old--much attention now is turning toward social media, which is hailed as the future. Yet the future, by some indicators, looks more like the past when compared to the auction-based system. As examples, we'll turn to MySpace and YouTube, which together have reached $2.5 billion in deals with Google this year (the former through an advertising partnership, the latter through acquisition). There are some notable differences between buying with the new players and buying on Google.

The biggest differences are evident when you consider what more money buys you. On a basic level, it's possible to run text-based contextual ads on YouTube and MySpace for little money and with little effort. Yet by buying well into the five figures of display media on MySpace, you can have a custom profile that includes videos, mobile downloads, IM content, basic Flash content, and other features; six-figure spending levels buy even more features, including mashups, personalized photos, and RSS and podcast feeds. Similarly, YouTube is looking to do media deals at a certain five-figure threshold, and it sets six-figure thresholds to let marketers own custom channels.

It's a far cry from the auction-based system, and these buys lend themselves much more to martini lunches than market efficiencies. That should be very comforting to some. It's a sign that while every medium will likely flirt with the auction-based system and perhaps even adopt it for a large chunk of inventory, media buying and planning skills will remain relevant. Some media, such as a souped-up MySpace profile, don't lend themselves well to auctions. If that means some smaller businesses can't advertise there as well, those advertisers will still be welcomed by the search engines.

Auction-based media, as exemplified through search engine marketing, won't replace the old models. To enable online properties with an audience and a compelling advertising vehicle to reach users en masse, a traditional media deal established at a set price and settled with a handshake may be the most efficient kind of buy. The bigger challenge will be for Google, which has earned its billions through auctioning media and now finds itself selling media the old-fashioned way.

That the future will resemble the past shouldn't be so surprising. Social media is media, after all, no matter how you sell it.