Challenges Facing PPC Industry

Seeking Feedback

[darkmule]

In the past year, the PPC industry has seen the introduction of Google's Quality Score initiatives, Yahoo's upgrade to Panama and the advent of MSN's adCenter. I'm curious what everyone thinks will be the 3 biggest challenges facing PPC in the next few years?

[shorebreak]

1. Shortage of skilled workers, both on advertiser and agency sides.
2. Overvaluing of PPC ads due to 'last-click' ROI models.
3. Lack of R&D on the part of SEM players due to acquisitions.

[darkmule]

2. Overvaluing of PPC ads due to 'last-click' ROI models.

I'm not familiar with the idea of a 'last-click' ROI model. Could you elaborate on this a bit?

[shorebreak]

Google has thrived largely because power buyers use search to find things they're looking for, and advertisers can see the hand that feeds them, but no further.

As a recent Atlas Institute study showed, users whose last pre-conversion ad click happens in search are [drumroll please] impacted by other non-search advertising, to a significant and measurable degree. It also appears clear from this study that a minority of users make up a majority of conversions, and that today those conversions mistakenly appear to short-sighted advertisers to be driven solely by search activity when in fact other non-search advertising contributes significantly to the search conversion.

Because users have no way (or desire) to tell an advertiser the effect a banner ad had on them, most advertisers attribute 100% of the value by default to the last touch point, which is usually search (high volume generic or brand keywords at that). This has led to advertisers overvaluing keyword inventory, IMO, and undervaluing banner and portal [and, most importantly, offline] inventory that does generate consumer interest.

With website tracking quickly becoming de rigueur, and behavioral targeting finally gaining mainstream acceptance, it's only a matter of time before it starts to dawn on advertisers that conversions that appear to come from search should be more appropriately attributed to multiple consumer touch points, only one of which is search. Perhaps that helps to explain why Google bought Doubleclick, and why MSN bought Aquantive - both realize their inventory is overvalued and the acquirees' undervalued, and without that non-search inventory their own search business might suffer the wrath of a coming wave of smarter advertisers.

Interestingly, this is all made possible by Internet marketers' ignorance of classic multi-channel marketing techniques.

-Shorebreak