• by Cory Treffiletti , Featured Contributor, July 16, 2003

As we enter into the 3rd Quarter there are a few questions plaguing me and one of the most important that I am trying to answer is what happens next when search inevitably becomes less efficient?

Search is still one of the best tools for driving customers and reaching your audience in the online space and it will surely continue to be an important part of the media mix as we progress, but just by a cursory examination of the trends in our industry it is glaringly obvious that it is destined to level off if not decrease in its effectiveness.

Some of these signs are already becoming apparent as we are starting to see signs that the performance of Search is starting to decrease. Overture has been hit the most by this fact and many of the other Search providers are starting to follow suit. The decrease is due to a combination of syndication and hype. As more and more people have realized that they need to be using Search as a part of their media mix, the bid prices have begun to be driven up with no increase in conversion rates. As conversion rates stay the same (which is understandable as they are still as strong as they used to be), the overall cost per action that the clients are trying to achieve is starting to skew slightly higher. This is compounded with a phenomenon that I lovingly refer to as the "dumbing down" of the audience due to syndication. Sites such as Google who typically drove the highest user base directly from their site which consisted of savvy users are now being syndicated to numerous partners and the less savvy users are going to have an effect on the conversion rates for advertisers, potentially driving the performance down for those sites.

What does this mean for Search?

Search will work in the long run, but we will start to quickly see the point of diminishing returns wherein the prices will be driven too high and the advertisers will not be able to consider the tool the Silver Bullet that it has been to date. The eventual result will be that some advertisers will come out of the Search space, the prices may decrease slightly, and we will find a middle ground whereby search is a portion of the mix for some advertisers and a larger portion for others. Search will balance itself out, but what will advertisers do with the remainder of those dollars?

This is the million-dollar question, and the one that the agencies are going to truly start to have to think about. I recently listened to a speaker state that agencies need to be more strategic and that they need to add value beyond the supposed efficiencies of consolidated buying. Agencies need to truly forecast what the media mix is going to be down the road and how advertisers will find the balance that is most appropriate to them. As our industry evolves into a larger portion of the budgets, we need to realize that there will no longer be a silver bullet. There is no sure thing. The strategy is what drives the efficiency and the strategy is what drives the effectiveness.

As Search will still be an important element in any advertisers' campaign, it will indeed be just one element. It is not a stand-alone strategy, but rather a piece of the puzzle.

Some ideas on what may be coming down the road...

Increased attention being paid to brand development. Brand development as a necessary line item as more advertisers come online and the categories become crowded.

Pre and Inter-stitials. Webmercials and full-screen formats in exchange for decreased ads on a page. Less clutter, more impact, more "captive audience" model.

Sponsored content will make a comeback. The "product placement" of the Internet will come back into vogue as a means of separating the advertiser from the pack. This is certainly happening in the offline world and will come strong online once again.

I have a few more ideas of what the next wave will be, but I think the key element will be balance. I truly do not believe that the ad units themselves are going to change (what we have is here to stay for awhile), but I think consolidation of sizes and the incorporation of true strategy into execution and placement will drive the coming "Renaissance".

What do you think?