Commentary

Vertical Search--The Ideal Customer Point of Entry for Marketers

In the past few years, there have been many articles, blog postings and opinion pieces written about the viability of very specific niche vertical search engines, and how paid search advertisers actually will be able to reach customers through a more targeted approach. There's hardly a doubt that the major search engines, such as Google, Yahoo, MSN and Ask.com, as well as the new upstart engines, will become more specialized in their efforts to help advertisers more directly target a particular segment of the marketplace. Google has launched vertical engines targeting health, finance and local to extend more effectively its reach and targeting of paid search ads to users. Yahoo also has its own vertically focused engines that specialize in health, shopping, real estate, travel and career search. And MSN, with its adCenter platform, invariably will get in the vertical game with its own targeted set of vertical sites.

However, the engines will need to hedge their bets on which verticals will draw the most traffic in efforts to help them sell targeted paid ads. Verticals like travel, finance, home living and health, appear to be leading the way in attracting hoards of searchers. And paid search advertisers will have to be careful not go all in with their search marketing dollars betting on singular success with the verticals.

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I believe vertical search to be one of the more significant developments within the search industry in recent years, due to its ability to help advertisers target potential customers with advertising messages that directly relate to what they are searching. You may recall that in the early days of Yahoo, the platform was set up to cover many specific verticals. Then came the rise of the horizontal search engine giants, offering access to a wide variety of general information. And now we've almost come full circle with the rising popularity of the vertical search engines, especially when it comes to paid search advertising. As advertisers--especially the established brand advertiser--look for better ways to target their messages and reach specific demographics, vertical advertising will become increasingly more important.

In my writings and interviews about search engine marketing, I talk about reaching potential customers at the "point of entry." Search engine marketers always must strive to reach the right customer at the right time with the right message. And search engines must try to provide their advertisers with a higher value of distribution to the consumer, which is the point at which they first enter the marketplace to get their information. If you can reach customers at the exact place where they are researching information that is closely tied to your product or service, you are more likely to convert them. It's marketing 101.

Compared to the general search engines extensive reach, vertical engines offer powerful market segmentation and the ability to build a long-term relationship with the customer who may really be in the market for your product or service. Vertical search offers paid search advertisers the ability to measure and track transactions more easily; there is a high transaction value within many key verticals; and a single lead can potentially have a much longer follow on life cycle. Let's take, for instance, the finance vertical, which is one of the most popular verticals for numerous online lending, stock trading and financial management advertisers (and other non-finance marketers) looking to market their services to consumers and businesses.

Finance is a highly attractive vertical for advertisers for a number of reasons. First, there is a high-value transaction potential, given that transactions, such as home loans or stock trades, can be measured easily. Secondly, there is often a longer life cycle for financial customers giving advertisers the ability to up-sell other services (i.e. someone looking for a home loan may also be interested in services related to moving). Thirdly, beyond the typical finance advertisers, the finance vertical is highly valuable also to non-finance advertisers (i.e. car companies, electronics manufacturers, and other high-end goods and services) to target their messages, because the demographics of financial customers skew favorably to people with high income and a high propensity to spend.

Specific to SEM campaigns, the vertical engines claim to help paid search advertisers better target their campaigns and hone in on a more effective set of keywords specific to the engine's vertical offerings or their audience's demographics, values and interests. As opposed to the general engines, it would make sense that your keyword portfolio can be further synthesized and focused on a smaller universe of more highly qualified prospects that are more likely to convert since they are already searching for a related product or service within that vertical and potentially become repeat buyers.

However, the vertical engines' allure of niche targeting of ads for marketers could backfire in a costly way if paid search advertisers don't remember that vertical search should only be one component in an overall SEM strategy. I spend a good deal of my time talking to my customers about the importance of a holistic or portfolio approach to managing the numerous variables in their paid search campaigns, and that doesn't change when you figure in vertical search to the equation. For paid search advertisers to make the most of their vertical search spend, they need to track closely their ad performance from keywords to the ad copy in order to use vertical ads to successfully target different demographics. As I mentioned earlier with the finance vertical, a specific vertical can be an opportunity for advertisers to reach a key demographic even if their product or service isn't directly related to that vertical. But you must first look historically at vertical ad performance and make sure that it is worth your money to delve deep into the verticals.

Vertical search is undoubtedly changing the search landscape for the better, offering both consumers and advertisers a more focused and relevant search experience. But, as with all new developments in the search engine business, we search marketing professionals must figure out how to incorporate these new variables into our overall paid search strategies and learn how they affect campaign performance. However, reaching the consumer at the exact point of entry through the vertical engines is great and will continue allowing paid search marketers to better target their ads to the most effective demographics to maximize campaign ROI.

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