Business

How to give the $20 billion search ad industry a kick in the pants

Image Credit: ShutterStock

Murthy Nukala is CEO and founder of Adchemy.

Search continues to be the dominant digital ad spending format with U.S. marketers expected to invest nearly $20 billion in paid search campaigns this year, according to eMarketer. While paid search still holds the top position, its potential for advertisers and search engines alike is hitting a glass ceiling.

What’s holding paid search back? The problem is that the senior marketers and search engine marketers (SEMs) executing the campaigns through Google AdWords and Bing Ads don’t speak the same language. Marketers speak in the language of products and SKUs, messaging, pricing, promotions, and target audience segments. SEMs speak in the language of keywords, match types, ad groups, campaigns, bids, budgets and product targets. The parlance is extremely different.

We need to make it as easy for marketers to advertise their products on search engines as it is to sell them on their own sites.

calvin klein dressHere’s how it works now: Let’s say you are selling the black dress on the right, “Calvin Klein Dress, Ruffled Asymmetrical Sheath” for an everyday low price of $50.

A retailer would place this dress in the online store and tag it based on its characteristics, e.g., size, color, material, length, and cut (e.g., scoop neckline). A search engine marketer has the much more complicated task of determining how consumers might search for this dress on a search engine. Would they refer to it as a “cocktail dress,” “party dress,” “evening dress,” or all of the above? Is it an “asymmetrical cut,” “asymmetric cut” or both? Is the length “just above the knee” or “above the knee”? Would this dress fit the bill for someone searching for a “sexy dress”? Should other products be placed in its product target and marketed similarly? For every product in their store, the search marketer seemingly has an infinite number of choices to make.

Businesses currently address the problem by hiring a specialized team of SEMs or pay an outside SEM agency, or both, to translate product catalogs into the appropriate terminology for search engine ad platforms. It’s not a light undertaking. Here’s why:

  • Having SEMs do the manual translation from products to keywords and product targets is expensive and time consuming. SEMs have to manually add keywords and match types, organize them into product targets and ad groups, and assign relevant ads to each ad group.
  • The sheer variety of possible searches makes search marketing a complex process. Even experienced SEMs overlook valuable matches between products, keywords and queries. This complexity causes retailers to miss out on sales. Deploying the wrong keyword or bid — which is easy to do — can also mean lost profit and faulty intelligence on campaign performance. Manual translation from products to keywords is a very inexact science.
  • Then the entire process has to be reversed: SEMs need to convert all the information from search engines back into language and concepts that marketers can understand. This manual and time-consuming process makes it difficult, if not impossible, to get real-time intelligence about how search campaigns are impacting the underlying business. Poor intelligence also affects the ability of marketers to convince executives of the value of these paid search campaigns and could put budgets at risk.
  • The above problems are already large on two paid search surfaces (keywords and product listing ads). These problems will grow as the number of search “surfaces” grows from both device proliferation (e.g., smart phones, tablets, and glasses) and the search interface proliferation (e.g., photos, gestures, and query-like behaviors in apps).

So what’s the solution? The industry needs to make it as easy for marketers to advertise their products on search engines as it is to sell them on their own sites. Creating a language that is shared across senior marketers, search engine marketers, and search engines themselves is imperative to solve these issues. I like to call this approach “Entity Ads.”

In a nutshell, Entity Ads enable marketers to express search campaigns using their own entities — i.e., the product they sell — which makes it easier to define, manage, and, ultimately, understand the impact of paid search campaigns.

So rather than getting campaign reports in Google’s language like this:

google ads

they would get performance reports in their own business language like this (with each category drilling down to the individual SKUs and keywords that contributed to that category):

category report

With Entity Ads, there would be no need to translate marketer entities into search engine constructs like keywords and product targets. The marketer would use his or her own entities (i.e., their own products) to specify paid search campaigns. In addition, there would be no need to reverse-translate paid search performance from search engine constructs back to the marketer’s entities.

Paid search performance data, already in the marketer’s language, would immediately be more understandable and essential to the rest of the organization. Imagine being able to see how every department is performing, all the way down to the individual SKU — and at every level in between. There would also be a ton of synergy across search surfaces, allowing marketers to take a “write once, deploy everywhere” approach to all forms of paid search advertising.

Entity Ads:  What Needs to Happen

Three things must happen in order for Entity Ads to be an everyday reality for advertisers:

  1. The end-user experience must be entity-centric.
  2. The marketplace for paid search ads (including the auction, bids, reserve prices, etc.) must be entity-centric.
  3. The advertiser experience must be entity-centric.

Making the end-user experience entity-centric is already well underway. Google is adopting and enriching its Knowledge Graph, and Microsoft is expanding Satori. Both companies have indicated that making search entity-centric (as opposed to link-centric) is the future of search.

In the marketplace, Google and Microsoft have already partially made advertiser entities the “unit of sale” in retail with Product Listing Ads (PLAs).  Given the success of PLAs, they are aggressively planning to make the marketplace more entity-centric in other verticals such as travel, autos, financial services and education.

Finally, rather than having a keyword-centric user interface, advertisers need interfaces where they can create and manage campaigns using their own entities, and “write once, deploy everywhere” across all paid search surfaces. There is much opportunity for improvement in this area, and innovative companies are leading the charge to make the advertiser experience more entity-centric. But companies like mine (Adchemy) and others cannot go at this alone. This needs to be an industry-wide push that includes participation from search engines, marketers and Fortune 500 brands.

The Entity Ads race is on. Entity Ads will cause a dramatic evolution in the coming years, and they have the potential to transform a plateauing segment of the digital advertising market into the next big thing (again) for marketers.

Murthy NukalaMurthy Nukala is CEO and founder of Adchemy and a veteran leader of innovative, technology-driven businesses. He was the founder of Digital Jones, which was acquired by Shopping.com, a $130 million company that was the best-performing IPO of 2004.


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