The line between contextual ads and keyword search ads will blur even further as ads expand to more online real estate. To the average user, such a line is hazy to begin with. All the ads basically look the same - a couple lines of text, a blue link, that's it. However, paid search keyword ads, triggered by a user's search query, and contextual ads, appearing next to online content such as news articles, look very similar but tend to perform differently.
The reason all these ads work at all, is relevance.
First, consider paid search. An Internet user types "ipod" into a search engine, the search engine returns natural listings related to iPods, and alongside the natural results are ads from retailers and price comparison sites. Since many people searching for iPods want to buy one (or, during this season, want others to buy one for them), the ads are often relevant and help the searcher accomplish a goal.
Now consider contextual advertising. Here, the user reads an article about iPods on a news site, for example. The reader might not be in the market, but considering the demonstrated interest in the subject matter, there's a bit of self-selecting as to who views the ads. The relevance isn't as strong as keyword search ads, but it holds its own with many other types of advertising online and offline.
Now look at desktop search. Someone searches for "ipod" within his computer's files. Perhaps he's looking for an e-mail about it, or an instant message where a friend mentioned what songs she just downloaded. The commercial appeal isn't as strong.
Pay attention to the distinction. For the user, all that matters is retrieving the desired result in the quickest and most efficient way possible. With Google Desktop residing in the taskbar and the search itself ridiculously fast, Google's winning over the masses. My father called me up recently and said, "Google Desktop." I said, "What about it?" He said, "How come you never told me about this?" He says it's one of the greatest things he ever downloaded.
What happens when he uses it though? He's a gastroenterologist, and I've helped him prepare a few PowerPoints on the subject (I assisted with the technology; he did the content on his own). When he's searching for "colonoscopy presentation," all he wants is to find the file that never seems to be where he remembers saving it.
He has no interest in the 17,000 natural search results, and he surely won't pay attention to the search ads on the right, mostly hawking presentation improvement services. (As an aside, one of the sponsored links that came up for the search was entitled - and I swear this is real - "Sexy Colonoscopy Singles".)
The quality of search traffic diminishes when desktop searches are factored in. Instead of Web search where the ads and natural search results help the user accomplish a goal, with desktop search, everything else is hanging out there - either as a bonus or nuisance, depending on the user's mindset.
To a degree, this doesn't matter. One of the most appealing aspects of paid search advertising is that you only pay for clicks, not impressions. If your ad displays 50,000 times and only attracts 50 clicks, all that matters is that those 50 convert well. The other 49,550 impressions don't cost a cent, and they could deliver some subtle but measurable branding impact.
I've heard from marketers at some well known brands who espouse that philosophy, and right now, they sound like they're a few steps ahead of the game. Search engine marketing's influence on branding has been documented to a degree, though there's a dearth of compelling research. A willingness to embrace what the marketer deems as logical even before a wealth of data comes out shows foresight that will push the industry, as well as their brands, further. As a writer, I'd kill to draft their case studies.
In the meantime, marketers should be prepared for Google, Yahoo!, Microsoft, and others to rewrite the rules of search (again). Even though people may be able to soon search for any kind of content (Web sites, e-mail, files, multimedia, etc) anywhere and any way they choose, it doesn't mean all searches are equal.
The uniformity of it all for the searcher, nearing what John Battelle refers to as "perfect search" in his Searchblog and forthcoming book, actually presents greater challenges for marketers, though of course greater opportunities abound.
The key here is to not get so excited by the possibilities that you miss the challenges stemming from the birth of a new search paradigm. The labor pains of desktop search are coming. Let's wait to get through them before we pass out the cigars.