Web Search & Marketing Newsletter - January 2006

Welcome to the first web search and marketing newsletter for 2006 and may we begin by wishing you a happy and prosperous New Year.

This edition of the newsletter is the one where we try to predict trends for the coming year and also to look back at 2005 to see which of our predictions from 12 months ago came true. So read on below and see how accurate we were.

You can also browse through previous editions of the newsletter.

On to this month's edition...

Which predictions for 2005 came true?

This time last year we made 5 predictions for 2005 and so we can now look back on them with a mixture of outcomes, as they were a mixed batch! Some did take place, as predicted, and others were some way off the mark - at least last year - so we review what really happened.

These were our predictions (you can read the originals in more detail in our January 2005 Newsletter):

1) Online spending increases: this was admittedly an easy one to predict as the market continues to grow at a rapid pace, but the scale of increase continues to surprise and last year it raced ahead of the forecasts from the Internet Advertising Bureau. We won't see the full year figures for several months yet, but they are expected to exceed £1bn for the first time and therefore to be ahead of spend levels on the traditional categories of outdoor advertising and radio.

In the first half of 2005, the IAB reports that online advertising spend was £490.8m, up 62% on 2004 and comprising 5.8% of total advertising spend. Paid search accounted for 40% of this spend, at £197m, followed by display advertising at 34% and classified at 26%.

We believe that much of the increase in spend within paid search marketing reflects the increased number of advertisers now entering this field and, as a result, pushing up the average bid levels, despite the changes made by Google AdWords in mid-year that has enabled some advertisers to reduce their spend in less competitive markets.

Certainly online advertising is becoming more 'mainstream' now and attracting the attention of larger London advertising agencies who are setting up dedicated departments to handle this business. This trend will continue to grow, along with the increasing coverage of broadband connections throughout the UK.

2) MSN's new search engine: this appeared in the Spring as expected and although it constitutes an impressive search tool, it will still struggle to take share from Google in the short-term, despite an extensive advertising campaign.

The growing animosity between Microsoft and Google became apparent during the year as Microsoft became rattled by the rapid growth and product expansion of the relative newcomer . Google now appears to be taking the lead from Microsoft in the online field - the one area that Microsoft was slow to take advantage of and assert a prominent position.

Google didn't immediately react with an algorithm shift as we predicted, although MSN Search was very active in the first few months building its new search index. However, Google did implement a major change in November that predominately tried to remove the impact of link spam from its search results. The impact of this change wasn't so noticeable on legitimately optimised sites, as previously experienced.

3) Specialised search engines: there was a mixed result here, as the introduction of new shopping search Froogle and local search options by the main search engines were made and, although attracting an increasing share, these tools still have to shift usage away from the mainstream search engines.

Google was very active launching new tools, including the highly impressive Google Earth which is so much more than a local search engine, Google Base and Google Book Search, which marks the first stage of its major book digitisation project.

Our other predictions on specialised search did not really appear last year although all the main search tools are experimenting with different filtering techniques as well as personalisation of search results.

4) SEO market stabilises: there are no official figures on this trend over the past year although the impression is that many of the companies that have been around for some years remain and the number of new entrants are less prominent in 2005, plus some companies that did promote themselves heavily in recent years have now disappeared from view.

The most high-profile casualty in 2005 was TopPile, who had been around since the early days offering a dubious optimisation service, including its Salsa product. The company closed in February once Google failed to rank its clients because of the techniques being used. Subsequently its business collapsed, which should be a warning to a few of the other hard sell, poor delivery services, that still pray on unsuspecting website owners.

The other main development in the past year has been the growth in the awareness of search engine marketing within London advertising agencies, who now recognise the importance of search advertising in the marketing mix, although most of their efforts currently revolve around pay-per-click advertising for their clients.

5) Make or break for e-mail spam: unfortunately email spam is still a major menace and although there were fortunately no high-profile virus infections in 2005, there were still plenty of junk e-mails in circulation, plus the rise of 'phishing' e-mails to trick unwary recipients into revealing their bank details continues to grow.

There have been a few high-profile prosecutions this year on both sides of the Atlantic, but as long as email spam is can still make some money from this technique, it is likely to continue.

So, 2005 saw a mixed bag of predictions coming true and missing the mark - or as we would prefer to say, they were just ahead of their time!.

Our predictions for 2006

And so what of 2006? As before, the rate of change over the past 12 months has been very fast and the Internet search market is significantly different to that which we saw 12 months ago. However, here are our predictions on what we might see coming up this year.

1) Internet growth continues: the increasing use of broadband and both consumer and business spend online will continue to fuel the growth of Internet business in 2006. We are likely to see some high spending entrants into the market this year, probably in the travel and shopping markets, plus the football World Cup in June will also provide another big impetus to the use and awareness of the web. Consequently, as the bigger companies start to dominate their markets, new entrants will find it harder to build share in the mainstream sectors and will need to focus budgets on niche sectors.

2) Search marketing gains recognition: yes, the secret is now out and search marketing will grow as a significant discipline of both online and general marketing strategy. Consequently the market will become more crowded, both with optimised sites and also in the area of pay-per-click advertising spend. As a result, companies will need to measure the results of this activity in more detail and channel their advertising through the most effective channels to achieve the best market share for their available budgets. The focus on website content and conversion rates will also become critical as user comparisons with others in the market - based on areas like price, service and presentation - will make all the difference.

3) The PPC market gains a new channel: the expected launch of MSN Search's PPC tool in the Spring will add another level to this market and seriously undermine Overture's share of the US and UK markets. The level of control being offered to advertisers by MSN's new tool will be replicated and expanded upon by Google AdWords, which is compiling a huge amount of information on search usage patterns and traffic statistics.

4) Another big year for Google: there will be more new products and services launched by Google in 2006, although to make many of these work it will also need to encourage changes to search usage and techniques in a market that can be very conservative based on habit. We predict that Google will launch its own web browser (or acquire Mozilla's Firefox browser for its own use) in the summer to challenge Microsoft's Internet Explorer and to take some publicity away from Microsoft's launch of its next operating system, Vista.

5) Online viral attacks: we don't like to predict a doom laden event, but a big viral infection across networked computers is probably overdue. Computer users are now more wary and anti-virus packages are more widely used, so the next big challenge will be to stop a browser based virus spreading across the web at a reckless speed. This could strike in the second half of this year as Microsoft fails to block a potential exposure in the security of Internet Explorer.

We hope you've found this month's issue useful. Please contact us if you need any more details on the items covered, or our advice on any aspect of your website's performance. Also, if there are any issues you would like to see in future editions of this newsletter, please submit your suggestions.