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Ed Stevenson is the European MD of Marin Software, which provides paid search management technology for advertisers and agencies.
I've been talking to Ed, who is also a guest blogger for Econsultancy, about his predictions for the paid search market, and the impact of the Microsoft / Yahoo partnership...
Can you tell me about Marin Software?
Marin Software was founded in 2006, and we starting selling our main paid search management application in October 2007. We developed our search marketing technology to allow advertisers and agencies to manage their PPC campaigns more effectively, by taking away menial tasks and saving them time.
This greater efficiency should help advertisers and agencies to concentrate on more important aspects of their campaigns. In the US, we quickly became one of the leading suppliers, and now manage $650m of search spending worldwide.
We're now expending into Europe, and opened our first London office in March this year, initially employing three people, though we now have eight staff, and are having to move to new premises.
Why is this kind of paid search management necessary?
Marin Software was created to solve an infrastructure problem for search marketers, as so much time, up to 40% - 50%, can be spent on Excel, calculating cost report for publishers, and bringing in data from various sources to see what is trending up and down.
Our CEO Christopher Lien saw the opportunity to address this issue by developing better technology, and saving this time dedicated to data reporting means that more time can be made available for more strategic thinking.
Also, there were fundamental flaws with the existing technology; there are ad server and analytics tools, as well as different interfaces from Microsoft, Yahoo and Google, and the problem is that none of these interfaces can talk to each other. Our technology leads to a streamlined work flow and allow marketers to manage Yahoo, Google and Microsoft campaigns through a single interface.
The other benefit is that we can play well with other technologies, which helps advertisers who want to understand what is happening across channels, such as the relationship between banner ads, paid search and SEO. We look to specialise in paid search and allow the option to integrate with other channels.
How do you see the search market developing over the next year or so?
It's an interesting situation at the moment, and the paid search market has had to grow up recently for a couple of reasons.
For one, the removal by Google of European best practice funding meant that agencies were forced to take a hard look at what they were doing, and some have become more efficient as a result, learning to manage the same amount of business with fewer resources than before.
As we come out of recession, as seems likely now, the market should become more buoyant, and the companies who have done the hard work this year will be in a very good position to deliver search campaigns and scale them profitably. This hard work should pay off.
Another key area is integration. Search will not happen in silos, as was often the case in the 'golden years' between 2004 and 2007, when paid search budgets didn't have to be justified against other channels such as SEO and affiliate marketing.
The attitudes of big advertisers look set to change as well. There is a battle between third party and first party cookies and tracking. Big advertisers have a lot of data but control of it is owned by the companies, such as Atlas or DoubleClick, that are selling the media. I think in future advertisers will be looking to own their own traffic tracking and take control back.
How has the recession affected the paid search market?
Overall, the search market has been resilient during the recession, and the same levels of spend were not falling out of this market as was the case with other sectors, so the recession has had more of an indirect effect on search marketing. It's a direct sales tool, and, even if you are cutting back on other resources. you don't get rid of your best sales people.
How will the search partnership between Microsoft and Yahoo affect the market?
Traffic levels and share of searches are the main reasons why Google is so strong, and the big question is whether Microsoft and Yahoo are stronger overall when you put the two together, i.e. will they turn out to be more than the sum of their parts?
The quantity of advertisers is a key aspect, and the question will be whether the combined Microsoft and Yahoo package will attract more advertisers to its auctions to push average CPCs up.
From some of the figures I have been looking at, it seems that 96% of the top 200 advertisers are using Google, Microsoft and Yahoo together at the moment, so there is not enough uniqueness here to suggest that there will be a big influx of advertisers to the combined product, and therefore CPCs won't change significantly.
It's good for advertisers though, as it means that there is one less interface to manages. Also, more traffic on the combined product means more knowledge about trends, so while the quantity of advertisers and hence CPCs won't change much, it will be good for advertisers, though overall the jury is still out.
Does Google need competition?
Google has done a really good job overall at improving search, like introducing the quality score which makes for more relevant ads and thus a better user experience, and is deservedly number one.
However, competition is a healthy thing which should help to drive the industry forward. Personally, I think there should be more competition to Google, and I wish the Microsoft / Yahoo search deal well.
Things rise and fall online quickly, so anything is possible, but Google is so entrenched that it is hard to see the sliver surfers who habitually type Google into their browsers changing to a competitor anytime soon.
The mobile space, and who wins this battle will have a big impact on how the market develps over the next few years.