Search Marketers Should Brace For Industry Consolidation

The search engine marketing industry should brace for consolidation this year, as enterprise brands look for a variety of SEM services and support from one company. The move could even consolidate a few small platform providers to compete with larger agencies, such as Havas and GroupM.

SEM firm BoostCTR, a performance-driven ad optimization firm, recently launched an offering for enterprise businesses, following a move by BrightEdge late last year.

The enterprise service from BoostCTR -- ad copy optimization -- won't compete with traditional offerings at Adobe, Google, IBM, Microsoft, Oracle, or Salesforce.com, but complement them, according to BoostCTR Co-founder and CEO David Greenbaum.

Naming Google, Bing, Facebook and others in the same sentence, Greenbaum said BoostCTR will soon kick off a pilot to optimize ad copy that will improve click-through rates and return on investments for an unnamed engine that can control the algorithms around search results, but not the click-through rate profitability related to ad copy.

When asked whether this type of thinking makes BoostCTR an acquisition target, he skirted the question by adding that the engines are looking for companies that can add these types of services.

IgnitionOne President Roger Barnette also believes this year will bring consolation, attributing fragmentation of services to enterprise companies, in part, to the change. "The stakes are high right now," he said. 'Marketers are suffering. They are trying to sell stuff, and there are too many different companies offering services and industry jargon to get the job done correctly. You have 15 different companies."  

Enterprises want companies that can support all their needs. This trend, along with established companies with sophisticated or niche services, such as Boost, BrightEdge, and Kenshoo, an Israeli-born digital marketing agency, will drive consolidation in the SEM industry. Large brands want one expert to support search engine marketing needs, and companies like Google and Microsoft that may not offer these services likely will gobble them up.

Late last year, the Israeli publication, Calcalist speculated possible acquisitions by Google, Microsoft and others led by venture capital firm Sequoia. The author suggests these companies were in negotiations to acquire Kenshoo, but discussions halted after a disagreement in the $300 million price tag. It's the sign of a maturing and saturated industry.

Kenshoo declined to comment.

1 comment about "Search Marketers Should Brace For Industry Consolidation".
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  1. Henry Blaufox from Dragon360, April 4, 2012 at 9:49 a.m.

    The companies mentioned here provide specialized software applications to handle some of the tasks in different niches, such as keyword research, page and keyword ranking, paide search bidding, and so on. But while there is some streamlining of workflow, this is still a labor intensive business. It requires constant attention from dedicated staff. The blending of social media programs into the campaigns adds to the labor intensive efforts. So enlisting software firms will not likely be enough for brands to maximize results. They'll need to rely on dedicated, efficient and eager specialty agencies to execute the campaigns.

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