• by Erik Sass  @eriksass1, July 21, 2006

KEYSTONE, COLO.--Prices for premium search terms will probably rise steeply in the next few years, according to Chris Sherman, executive editor of SearchEngineWatch.com. Sherman, the keynote speaker on the first day of MediaPost's Search Insider Summit, predicted that this inflation will be caused by the entry of more major brands into search marketing.

"I think we're going to see explosive keyword inflation in the next couple years," Sherman said. "I think the missing piece is that big brands have barely started to play." Sherman noted that a recent study pegged search advertising at about $5.75 billion, but worldwide ad budgets are currently around $500 billion. "What happens if the big brands decide to move just 10 percent of that half trillion dollars into search marketing?" Sherman asked.

He added that most large marketers that turn to search will likely pour money into brand-oriented keywords--without regard for performance metrics like click-through and conversion rates. "A lot of these brands aren't going to care about the things we do--they're not going to care about conversions and click-throughs. They'll just want to block their competitors and get their brand out there," he predicted.

But even if premium search terms become more expensive, marketers can still achieve their goals by strategically bidding on less popular terms, Sherman said. "Start aggressively bidding on the 'search tail'--there are literally millions of those terms, and I think they're going to become far more effective. They won't give you the frequency, but in the end it's magnitude of results that matters. If you get the magnitude, you'll get the huge payoff."

Sherman also advised marketers to devote more resources to making sure their sites were optimized for organic search results, saying that many U.S. consumers report that they distrust paid search advertising.

Click here to view photos and listen to panel discussions from the Search Insider Summit.