• by Josh Shatkin-Margolis , May 17, 2010

Search advertising is a $20 Billion industry ruled by algorithms. However, one of the biggest reasons why search is as successful as it is has nothing to do with technology -- it's the fact that search marketers have become experts in targeting users online. Search marketers know the terms that lead to customer acquisition for their brands and they know how to target users in purchase mode. Over the past few years, search marketers have perfected their craft. So what's next?

Let's assume the same audience that exists for search ads also exists for display ads. What would happen if advertisers could apply the performance marketing strategies they use every day in search to the world of display, the fastest-growing segment of the online advertising industry?

Because demand-side platforms (DSPs), ad networks and agencies have started integrating search data into their campaigns and using this concept of search re-targeting, an opportunity exists for advertisers to take what they've learned in search and apply it elsewhere. More and more, advertisers are starting to realize search and display do not have to exist in silos. Check out what Efficient Frontier is doing for example.

Search re-targeting -- the method of applying search data to display campaigns -- funnels primarily through the ad exchange. Ad exchanges exist for the same reason the stock exchange exists -- to make it easy to buy a share of something. In this case, ad exchanges make it easy for advertisers to buy ad inventory at scale. Agencies and ad networks compete to get the best prices on the multiple exchanges that exist, creating a whirlwind of opportunities and a cut-throat buying environment. With DSPs coming along to erase the friction on the exchange, they have given advertisers one entry point into the world of display advertising. However, here's why the concept has taken a while to develop -- for search marketers, the platforms used for buying display are unfamiliar and it is difficult for them to prove ROI on branding. It's a completely different world.

The search re-targeting concept is now evolving at a quick pace so that advertisers who buy on an exchange can apply search data to whatever platform they're buying from (DSPs, agencies, ad networks, etc.) to increase performance. This gives advertisers the ability to target people with the same level of precision as Google Adwords or any other SEM solution by creating display campaigns based on search intent. For example, a company selling netbooks can target display campaigns to users who searched for 'PCs,' 'laptops' or even 'iPad.' The performance on display campaigns can be monitored via the keyword searches.

Note that search re-targeting is aimed at users who have most likely never visited a brand's site, which is different than re-targeting aimed to draw back users that have been to a storefront. In other words, site re-targeting helps marketers find users only after they've been on their sites while search re-targeting opens the opportunity up to anyone who has ever searched for a keyword anywhere on the Web during those crucial steps through the purchase funnel.

Here are a few specific opportunities search re-targeting offers that traditional SEM does not:

• Cast a wider net -- re-targeting allows advertisers to reach people at different stages in the purchase funnel. For example, a credit scoring site like Experian can target ads at people looking for 'mortgages' on any site with any content. Experian would not be allowed to do this on Google AdWords if it were not an ad relevant to the search.
• Conquesting -- Many advertisers would like to target users searching for a competitor (Verizon Wireless would probably like to reach iPhone users, for example), but SEM platforms have limits to this kind of competitive targeting. Search re-targeting allows marketers to advertise against competitors directly and more aggressively.

In the past, marketers interested in performance metrics have only been able to reach people who are actively searching for their product through SEM or who have visited their site and are close to a purchase. It would be fair to say that the biggest opportunity with potential customers exists in-between the time when they start thinking about buying a product and when they're ready for a sale. Search re-targeting helps advertisers reach people at those crucial points.