Happy Holidays!

Happy Holidays and a Successful New Year!
To all my friends, family and colleagues around the world.

Search Engine Marketing Defined - Version #2

Search engine marketing, or SEM, is a form of Internet marketing that seeks to promote websites by increasing their visibility in search engine result pages (SERPs). According to the Search Engine Marketing Professional Organization, SEM methods include: search engine optimization (or SEO), paid placement, contextual advertising, and paid inclusion.[1] Other sources, including the New York Times, define SEM as the practice of buying paid search listings.

Market structure

In 2006, North American advertisers spent US$9.4 billion on search engine marketing, a 62% increase over the prior year and a 750% increase over the 2002 year. The largest SEM vendors are Google AdWords, Yahoo! Search Marketing and Microsoft adCenter.[1] As of 2006, SEM was growing much faster than traditional advertising and even other channels of online marketing.

History

As the number of sites on the Web increased in the mid-to-late 90s, search engines started appearing to help people find information quickly. Search engines developed business models to finance their services, such as pay per click programs offered by Open Text[4] in 1996 and then Goto.com[5] in 1998. Goto.com later changed its name[6] to Overture in 2001, and was purchased by Yahoo! in 2003, and now offers paid search opportunities for advertisers through Yahoo! Search Marketing. Google also began to offer advertisements on search results pages in 2000 through the Google AdWords program. By 2007, pay-per-click programs proved to be primary money-makers[7] for search engines.

Search engine optimization consultants expanded their offerings to help businesses learn about and use the advertising opportunities offered by search engines, and new agencies focusing primarily upon marketing and advertising through search engines emerged. The term "Search Engine Marketing" was proposed by Danny Sullivan in 2001[8] to cover the spectrum of activities involved in performing SEO, managing paid listings at the search engines, submitting sites to directories, and developing online marketing strategies for businesses, organizations, and individuals.

Ethical questions

Paid search advertising has not been without controversy, and the issue of how search engines present advertising on their search result pages has been the target of a series of studies and reports[9][10][11] by Consumer Reports WebWatch. The Federal Trade Commission (FTC) also issued a letter[12] in 2002 about the importance of disclosure of paid advertising on search engines, in response to a complaint from Commercial Alert, a consumer advocacy group with ties to Ralph Nader.


Youth Lifecycle Strategy

Lately, several global CMO's have asked my opinion regarding marketing strategies for engaging the youth segment.

I would suggest that the fundamental principals of a lifecycle engagement strategy hold up when one considers youth marketing. There are however, as you can imagine, a few key fundamental differences.

One school of thought suggests that by engaging the youth, you are extending the customer acquisition funnel to include an earlier pipeline building phase. This is true for traditional adult "anchor" products where brand loyalty has historically played a major role in product selection. Examples would include consumer electronics with brands such as Sony for cameras and televisions, Nokia for mobile electronics, and BMW or Mercedes for cars. A second motive for engaging youth obviously, is for products that are to be targeted and consumed almost exclusively by the youth "segment".

As you consider a youth engagement strategy, it is appropriate to borrow the concept of Decision Making Units (DMU) and Decision Making Process (DMP) from the realm of B2B marketing. Youth product and service purchase decisions are made by a compound DMU, initially with the youth taking on the role of the influencer and the parents taking on the role of the buyer.

When one thinks about youth marketing, it is important to move beyond the tendency to think of youth as age segmentation. From an age perspective, it is important to think of age segmentation in four distinct phases:

  1. Preteen Phase – products and services selected exclusively by the parents
  2. Teen to Legal to Contract Phase – the period of time where youth take on an influencer role of the DMU in most purchases. This period exists immediately post preteen until the “Legal age to Contract” is reached. The legal age to contract varies by local and country and will affect the boundaries of age segmentation for this group. During this phase, parents maintain the buyer role in the DMU, typically adhering to the rational elements of a decision making process.
  3. Legal to Contract to Traditional Adult Segmentation Phase – there is a formative phase between when an individual is legal to contract and when the rules of traditional adult segmentation take hold when the DMU is still a compound entity. The youth begin to take a more assertive role in the DMP, taking on the persona of decision maker or buyer, moving the parents into an influencer role. It is important however not to overlook the role reversal when crafting a marketing strategy targeting this segment.
  4. Traditional Lifecycle Marketing Phase – At this phase, our subject has entered the role of a traditional adult purchasing unit and all of the typical lifecycle rules apply.


It is also important to note the consumer information that is available at each of these phases.

In Phase I, a full suite of consumer information is available from vendors like Acxiom Corporation for your marketing efforts. You can use key data attributes such as age, income, life style, and attitudinal information to segment your audience. The key indicator in this phase is “presence of children in the household.”

When entering Phase II, before the youth are of a legal age to execute contracts themselves, one should be careful to only collect behavioral information and not any Personally Identifiable Information (PII). If your product or service requires a contract, you can naturally identify the buying unit, the PII of the parent. It is important to link the behavioral tendencies exhibited by the youth to the PII of the parent. This will allow you to develop use Personas that will be very predictive of future product and service consumption.

As you enter Phase III, and your buying subject becomes of majority age to execute contracts themselves, you can begin to collect PII and acquire third party consumer data. However, due to their relatively short tenure as a contracting individual, the amount of data that can be collected thru primary methods or procured thru third parties will be very limited. One strategy to supplement the profile of this consumer is to encourage self identification of their parents. You can link consumer information about the parents to behavioral patterns of your new to contract prospect, thus building a predictive model.

With Phase IV, as in Phase I, a wealth of consumer information is available for purchase.
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