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Web Search & Marketing Newsletter - January 2011

Welcome to the first issue of our monthly newsletter for 2011 and we would like to take this opportunity to wish all our customers and readers a happy and prosperous New Year.

As usual with our first newsletter of the year, we try to predict some of the main trends that we expect for the online market over next 12 months, with a particular focus on the web search and marketing sector. We also review the predictions we made a year ago to see how they shaped up over the last 12 months. We have been reporting the main news stories during the past year in our regular web marketing blog and will continue to do so each month during 2011, as well as posting links and summaries through our Twitter account.

The online sector continues to be an area of rapid growth and regular product development, with the landscape looking quite different now compared to 12 months ago. This past year saw new PPC advertising opportunities, with Google AdWords in particular introducing a new range of tools, reports and services. The merger between Microsoft and Yahoo search advanced, personalised search and Google Instant made a mark, and local search marketing options continued to improve. On the social media side, Facebook and Twitter continued to be signficant players and for 2011, more is expected to develop in the social networking and mobile marketing field.

You can read more below, or you can also browse through previous editions of the newsletter, either by month or by subject .

On to this month's edition...

What happened to our predictions for the online sector in 2010?

We made 5 predictions for 2010 last January, so here we review these and assess what actually happened during the year:

1) Pay-per-click advertising opportunities increase: there was probably no question that PPC advertising would continue to grow at a rapid rate, and in Australia this largely means Google AdWords which continues to dominate the market. The quarterly IAB figures showed double-digit growth both quarterly and annually, with the search marketing sector expected to reach $1bn in spend during the current year - however, this data is estimated as Google doesn't release these figures and much of their turnover is 'hidden' within their Eire billing office. In some ways the PPC opportunities increased through reach and advert formats, but the core of the AdWords offering remains much the same with the main search space becoming increasingly competitive as more companies use this medium. The Yahoo! PPC service in Australia continues to be low-key and covers a much smaller share of the market, but this may change once the merger with Microsoft is completed (see below).

2) The Bing-Yahoo merger takes effect: the ongoing acquisition of Yahoo's search service by Microsoft developed during 2010 and both the natural search and PPC services on Yahoo! started to display Microsoft's results by the year end - at least in the US. This rollout will continue into 2011 and is expected to happen in Australia during the first half of 2011, although the joint ventures between the two search engines and Channels Nine and Seven will still need to be resolved. Early reports from the new merged PPC model in the US have been limited, and although Microsoft / Bing appears to be gaining some market share there, there is still some way to go before they significantly challenge Google.

3) Personalised search impacts search marketing: there has been no data published by Google into the level of adoption of personalised search, although this is likely to be more extensive now than a year ago through a gradual 'creep' of this facility for anyone using a Google account. Although some of the tools that were originally provided to searchers to personalise their results have disappeared, Google is undoubtedly tracking individual's search behaviour and site's visited to help adapt search - and paid search - results. The more notable change during 2010 was the introduction of Google Instant results, which is likely to change the way people search by generating suggestions and instantly displaying changing results as users type or adapt their search on the screen. Changing search behaviour is also likely to impact search marketing activity, although the underlying targeting of relevant search traffic remains the same basic aim.

4) Twitter's make or break year: 2010 really didn't go either way for the popular micro-blogging site. Twitter certainly survived any acquisition activity, at least for the time being, and became ever more popular as a communication tool, although many companies have still to see the real benefits of this. Twitter signed deals with Microsoft and Google to integrate content within the search engine results, and also started to offer 'Promoted Tweets' as a first move into generating advertising revenue from the massive user base. However, this balance between commercialisation and the whole premise of this service has yet to be met but a recent funding injection of $200m may herald the launch of further new services in 2011.

5) Local search options see new developments: local search has certainly gained more opportunities in 2010 and is expected to grow further in 2011 through the use of social networking tools (see below). The biggest change from Google in the past few months was the way in which local search results are now presented, with a closer integration between the Google Places listings and the optimisation of a website. For locally-targeted business, search remains a huge opportunity for many and the new features in Google Places (including Google Hotpot) as well as the use of mobile technology is something that should be a core part of their marketing strategy.

What do we predict for 2011?

We have made some more predictions for the main trends we expect to see this year in terms of web search and online marketing. As usual, the online market continues to develop at a fast rate and new websites or services can change the landscape in a short space of time, but these are our expectations for 2011:

1) Rising CPCs encourage more creativity: the gradually increasing Cost-per-Click (CPC) within PPC advertising campaigns - notably on Google - means that companies have to become more creative to get the best results from their advertising spend. This means getting more targeted with the use of search terms and also increasing the conversion rate from the visitors to the site. With the former, Google already provides a good collection of tools to improve the targeting of an AdWords campaign and to test the best approaches, plus new data segmentation and keyword tools introduced in 2010 should provide more focus. When it comes to conversions, the use of website analytics and conversion testing tools can help companies improve their conversion rates and so maintain the cost-effectiveness of their search engine marketing activity, despite more competitors entering the field.

2) Mobile marketing becomes more prominent: we've predicted this before several times and it still hasn't really happened yet, so will 2011 be the changing point? The signs are certainly there, the technology is in place and the use of Internet-capable mobile phones is rapidly growing. It seems to be more of the mindset of advertisers to harness this new area, particularly for local advertisers, yet with the combination of social media tools (see below) and the integration of PPC advertising on the mobile platform, the opportunities are there. It's now more a question of the creativity of using mobile marketing and, in some cases, adapting websites to be more accessible on mobile phones, which will herald the rapid growth of this sector, which is forecast by some to grow at a faster rate than the initial take-up of web usage.

3) Location marketing will be a big new opportunity: in the same way that local search marketing has developed over the past few years, companies that are targeting a local catchment area now need to take advantage of location tools - that are accessed through mobile phones and via social networking sites - to attract new business. The initial use of sites like Foursquare started to gain some traction, but the launch of Facebook Places at the end of 2010 is likely to really shake up the market for local businesses. As users of these social networking services identify their location to friends, companies can now use this geo-targeting to provide offers and rewards in a flexible and targeted way that hasn't been possible before.

4) The line between social media and search becomes blurred: as the previous 2 predictions have shown, we are expecting big changes for this year to come from mobile marketing and social media tools. Social media - now dominated by Facebook - is undoubtedly changing the way people use the web and therefore it provides new opportunities for advertisers, although few have yet to find a solution that can be as cost-effective as search marketing. However, social networking tools are clearly going to develop, by introducing new tools and services to users and advertisers, and therefore can't be ignored. Microsoft's Bing search results are now integrated within Facebook, while Google is looking at ways to get more involved in the social networking sector and is therefore likely to become a bigger player, either by innovation or acquisition. Google has also confirmed that social media 'signals' are now being used to some extent within search results, so that companies need to consider how to use search and social together, in the most cost-effective way.

5) Video marketing and advertising gains market share: although still a relatively small share of the online advertising sector, video advertising is growing at a rapid pace and provides many new opportunities for advertisers to reach their market in different ways - either through the use of the medium of their websites, or through viral marketing, or by advertising to the online video audience. Google has provided new advertising opportunities and tools through YouTube so that companies can target this massive user base, although of course targeting of the right audience remains essential. Video can also be used as an information or marketing tool on a website, and although different techniques have been tested over the past few years, companies need to find the best use of this medium to suit their market and users.

Recent articles from The Marketing Workbench

The Marketing Workbench is our regular web marketing blog covering news and comment on Internet marketing events and trends. If you want to keep track of current stories you can visit this section of our website on a regular basis, or set up an RSS feed. These are just some of the items posted over the past month:

We hope you've enjoyed reading this month's issue and found some useful information for your business. Please contact us if you need any more information 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 to us.