• by Chris Zaharias , February 9, 2007

In the business world, getting ahead of the curve is a life-or-death situation. And, it's no different for advertisers, who are charged with deploying new and innovative strategies to find, reach and acquire the greatest number of potential customers -- wherever they may be.

Search advertising has proven to be fertile ground for customer acquisition. A recent study by Piper Jaffray & Co. entitled, "The New eCommerce Decade: The Age of Micro Targeting," indicated that the average CPA for search was $8.50, considerably lower than the CPA for the Yellow Pages ($20), online display ads ($50) and direct mail ($70).

How long search advertisers can maintain attractive CPAs depends on many factors, but one thing is clear: competition is the overriding threat. In fact, there's been some noise lately on keyword inflation and lower conversion rates driving some advertisers out of the market.

Now, a few stories in the media don't make it a trend. In fact, prognosticators are very bullish, predicting another beefy increase this year in paid search advertising, including Merrill Lynch, which forecast a 27% rise in spending in 2007. But it does beg the question: Where are the opportunities in search? Where's the beef -- i.e., the untapped markets on the menu? Is it vertical, local, video, mobile, etc.?

My suggestion is to look internationally. It's a super-sized market.

Let's start first with Europe.

Okay, I am by no means suggesting that the U.S. paid search market is tapped out or even reaching a tipping point. In fact, advertisers haven't even scratched the surface for generating the type of ROI that exists in the marketplace. Many still are adjusting from the old days of an open marketplace to the current opaque environment of quality scoring. In addition, search engines keep going and going, drumming up innovative ways to provide more relevance to both consumers and advertisers. The sky is the limit.

But, if you look at the big picture, the international markets have incredible potential. There are millions more customers just waiting in the wings.

For starters, consider these two facts from a recent survey by ComScore World Metrix:
1. The current U.S. Web population is 152 million, just 21% of the 726 million users worldwide.
2. More than 70% of the search traffic on Google, Yahoo and MSN is from non-U.S. Web users.

The rapid growth in paid search internationally shouldn't come as a surprise. First, the U.S. market has served as a successful litmus test, demonstrating to advertisers that you can get both large volume and great ROI. Second, broadband connections are more the standard in some countries, making Internet speeds faster and ubiquitous, which leads to more searches. In fact, ComScore estimates that 90% of the population in Europe uses search (versus 86% here), and Europeans are performing more searches per month. In France, ComScore notes that searchers average 73 searches per month, versus 44 in the U.S., and they review more results pages per search (1.81 vs. 1.57).

Suffice to say, the consumer base is there.

Though each European country is at a different life stage, the overarching opportunities remain constant to reach these customers. First, keyword prices are generally lower, for now. In addition, there's a plethora of opportunities to leverage tail terms. In the U.S. the average number of keywords per advertiser is 17,000, while in Europe it's closer to 3,000-4,000, according to MarketingSherpa. And lastly, with the official launch of Yahoo Panama, the paid search markets will be fully opaque, providing significant advantages to advertisers that have the tools (i.e. sophisticated optimization technology) and experience to compete in this environment.

So, how do you deploy and manage a campaign in different countries? It's much easier said than done. Each country is different -- in many ways. Some countries are further along than others. While Google dominates Europe with 80-85% market share in most Western European countries, each country requires very specific strategies for language, linguistics, dayparting, landing-page, etc.

It's a lot to swallow. But, it's really the same "think globally, act locally" marketing principle that is being applied with other marketing mediums. I'll share more insight on this topic in my next column.

In the meantime, if you aren't yet convinced of the potential of the international markets, consider this quote by Eric Schmidt, CEO of Google, during the company's Q2 2006 Earnings Conference Call last year. We all know Google can smell out opportunities. "The world is a very big place and Google has very much a worldwide mission," said Schmidt. "You're going to see more and more international focus, international expansion, international growth."