Search Envy is the Mother of Invention


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Admit it, you're jealous. The massive bounce-back in online ad revenues in the past two years has been driven—nay, commandeered—by search. For all of the talk about the branding value of the Web, the fact is that highly targeted, performance-oriented, direct marketing at Google and Overture/Yahoo! has been at the heart of the boom. To be sure, contextual ad partnerships with the major engines offer content providers a sip from this revenue gusher, but it's not the same thing as drinking directly from the new fountain of high-priced cost-per-click advertising. Pay-per-click search ad pricing is so high because the major engines are so close to the consumer's purchase decision. Google just issued an admittedly self-serving study claiming that business technology buyers use search 30% more frequently than they do trade pubs when shopping for new business goods. Even if half true, that should be scary to B2B consumers and publishers. And from what I am seeing in the online ad market lately, fear and envy breed creativity.

The trick for publishers always has been bringing buyer to seller, but online search has upped the game. Content sites now need to deliver someone who is ready to buy directly to that seller's order-taking mechanism. Several companies recently launched programs that try to fill that void for publishers with novel ad models that are worth considering.

If pay-per-click works so well for search, then pay-per-call should work even better for publishers, right? "We see four to eight times the price on a call basis as you would achieve on a click basis," says Ari Jacoby, CEO, VoiceStar. In his system, already used at ValueClick and InsiderPages, the publisher gets paid by the client every time a visitor uses the toll-free number seen on an ad to contact the vendor directly. "We see rates that range from $3 a call at the local level for a yoga studio to in excess of $45 and $50 a call for mortgage and specialty lawyers," he says.

Jacoby, who previously did consulting for Google, was looking for an ad model that helped publishers one-up search by offering a unique product with superior effectiveness and accountability. Click-throughs may get someone to someone's site but a call-through is better for high-consideration, "high-touch" items like mortgages and big-ticket purchases. By giving each ad a unique toll-free number and monitoring every call, VoiceStar's system also provides granular metrics about which ad campaign is more effective, how well an ad converted viewers to purchasers, etc. If you are going to take on search's metrics, then come to the field with bigger guns. Lead generation has always been a part of B2B publishers' mix, but if a pay-per-call approach takes hold it can put a publisher that much closer to the point of sale, the place they can demand higher fees.

Or, just put the point of sale on your site. In yet another creative attempt to give publishers access to search's direct marketing model, contextual targeting, and cost-per-click pricing all at once, startup Chitika is planting "eMini-Malls" on content sites. In place of a traditional banner, the technology works like AdWords to interpret the context of a given page. In this case, however, Chitika delivers an interactive ecommerce unit with targeted merchandise, comparative prices, and even product recommendations. Publishers get paid on a per-click basis when users click through to a merchant. You can see the technology in action at www.cookingmadesimple.net, and I must admit it sports remarkable interactivity in a small space.

In a beta test, Chitika ad units saw CTRs of about 1%, "and the CPC we are seeing in online merchandising is in the range of $1 per click," says Venkat Kolluri, CEO. "Publishers can use the service to squeeze out revenues of up to $4 CPMs in some cases."

For certain publishers, mini-mall or pay-per-call models could be appropriate, creative responses to search. For instance, VoiceStar can work as well with print creative as it does with online banners, so it could be attractive to local newspaper and Yellow Pages publishers that are trying to bridge the online/offline gap and give clients something that drives in-store traffic and business. Chitika's mini-malls will appeal to small and medium sites as an alternative to low CPM banners. Bigger publishers who are enjoying higher CPMs on brand campaigns may be able to use Chitika deeper in their sites as a way to monetize less lucrative banner inventory.

Content business models need to get creative to stay relevant. Some analysts say that if you take away search revenue, growth for other ad platforms is likely to flatten in coming years as Google, Yahoo!, and now MSN start pulling in some of the brand and B2B advertisers that content sites still control. Publishers better start looking to take some pages from the search play book, because that is the team that's winning.