Hi all,

I'd love to hear what predictions people have for SEM in 2004 in terms of industry trends, technologies that'll come to the forefront, and any other interesting thoughts about how things will change in the SEM world next year.

A few predictions of my own:

1) MSN will make clear how & when they'll compete with Google and Overture, and what they'll do to set themselves apart. Look for their special sauce to involve leveraging OS dominance and huge cash hoardes to make an irresistible offer to SEM advertisers.

2) At least one company will productize an integrated SEM management suite that will include keyword generation, copy/title generation, bid management, mgmt for multiple SE's, reporting that actually provides value. A lot of the pieces currently exist, but no one has integrated them.

3) Keyword competition will become intense for the long tail. Today most companies compete on the top 5-10% of their keywords, but 2004 will see intense competition for keywords that today have only 1-4 bidders all near the minimum. This will change the ROI picture for paid search and force out more and more of the smaller players.

4) By end of 2004 Nutch will have 5-10% of global search traffic. Haven't heard of them? They're an open-source effort to compete with Google.

5) Search engines will find a way to get their users to do much more well-defined searches. This will result in higher traffic for the 2nd and 3rd-tier keywords in everyone's keyword portfolios - and more competition.

6) Someone with deep pockets will make an attempt to roll up a number of the 20-100 person SEM agencies into one mega-SEM agency. Those of you who've developed thriving small businesses in the SEM space, you'll have a chance to find dumb money to finance your retirement, but remember - TAKE CASH.

7) The branding value of PPC will become sufficiently quantifiable that dozens, if not hundreds, of brand marketers will throw $100K-$1M/month spends into PPC not even worrying if they get a single transaction.

C'mon everyone, pontificate!

Nutch? Could we have a URL please??

nutch.org

Thanks. Let's get that linked up: http://www.nutch.org

BTW, where's the search engine? (URL please?)

I really like #7!!!

Online businesses BIG or small are doing it right now as you are reading this thread. They are absolutely convinced beyond any reasonable doubt that PPC advertising still works...with or without a single sale.

Every morning, I tell myself..."Self...this cup of coffee will keep me awake!" It's no different with PPC advertising.

Fact: ALL of the PPC search engines thrive on affiliates to click on their ads. Even if the clicking of the ads never resulted in a single sale for their advertisers.

It doesn't matter. What does matter is..."Did YOU click on my ads I you promised me in our affiliate agreement?"

In an ideal world, all of the affiliate sites would be paid a monthly stipend. If they exceeded a threshold of legitimate traffic, then you'll pay them based upon a CPC model.

That's my 5 cents per thread.

re: Nutch - from their "status" page.

As of June, 2003, we have successfully built a 100 million page demo system. Unfortunately, we do not yet have enough hardware to support a public demo. Hopefully we will be able to add that in the next few months. Stay tuned.

No update since June? I have my doubts as to whether it will happen.

Paid search ads will not be a branding play until they include logos or some form of eye candy. People spinning paid search as branding are just going after the last bit of dumb money out there.

My big prediction in 2004 is that eBay will do something big!!! They will begin to diversify and maybe even acquire a shopping.com. eBay will try to morph itself into a destination portal and become less reliant on search engines for getting new users.

Yahoo! will try to grab more user share by becoming all things to all people. One comment for Yahoo! - I never eat at JackintheBox because there is no way that the $4.50 guy behind the grill can cook all of the s**t they are selling. Instead of becoming more relavent, Yahoo! will bloat itself out of existance and become the next AOL. BTW - AOL is now selling Netscape as a low end ISP to compete with the likes of Juno/NetZero. I could have sworn that Netscape was once a browser.

Which brings we to good old MSFT. Yes, search will be intergrated into the OS. Everyone will be ranting about how good or bad this is. MSFT looks at this as free publicity. I use MSFT applications because they are just there, so most likely I will do the same with MSFT Search.

Google will IPO. Larry and Serge will become so repuginated about being under public investor scrutiny that they both leave the company even though they are contractually obligated to stay for PR reasons.

The big issue in 2004 will be not about control of the browser (i.e. Gator/Claria, the myriad of browswe plug ins) but rather the control of the OS (i.e. Norton). Imagine having Dell purchased computers already presinstalled with S/W configurations that dictate the user's Internet experience.

An open source search engine is a horrible idea, it will probly be the absolute worst search engine ever. Just imagine how bad google would be if every spammer had access to Google's algorithm, it would be unusable. Every single query would result in "CLICK HERE FOR THE PARIS HILTON SEX TAPE!!!" .

Kodak, thanks for your predictions, I appreciated them. I agree with all of your predictions except the branding comment. Improved unaided brand awareness (UBA) is a clear way to measure branding building value, and even with today's text-only search ads, paid search is improving UBA 50-100%. While it's certainly dumb money if people don't know what they're doing, I wouldn't necessarily agree that branding budget put into PPC is money poorly spent. I would, however, say that not enough is known about the topic, and simply think the indicators are there's value there that will be discovered and subsequently invested in.

The eBay prediction's an interesting one. I learned a month ago that eBay has 2.4 billions searches/month on its own site, which is an absolutely huge number. To a certain extent, they're already a search portal, but what's unique about them is they don't want to ship anyone off their site as is the case with Shopping.com, BizRate and the like.

Shorebreak - you are drinking some bad koolaid. Paid search brainding is just propoganda. Branding is an overused term invented by agencies as a crutch to justify that what they do adds value.

The premise of having a strong brand image is that consumers will be inclined to choose product A over product B for no other reason than they "feel" product A is better based on some subjective feeling manifested by viewing commercials, looking at print ads, hearinf radio spots, see flashy banners, or even in some cases seeing clever product placements in movies. In order to establish brand awareness you need to engage the user. The current form of paid search ads do not engage users. The only companies to say otherwise may be Amazon or eBay who have in essence made the top 3 positions in paid search results their own piece of realestate.

Ask 1,000 people who search Google on a daily basis and how many will even remember 1 adword they saw or walk away from the keyboard with a brand image.

Anyway, this discussion is just rhetoric. The fact that UBA is valid or not is unimportant. If I can get more $ out of an Advertiser by telling them that there is brand value and they believe it, then whoopdido.