What’s Ahead For Paid Search?

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In addition to focusing on today’s issues, smart marketers keep trends and likely future developments in mind. That’s why I’ll share how I see paid search evolving in the reasonably short term.

To start, let’s cover trends that will shape the future of paid search.

Intuitive Search And The Influence Of Mobile

Searching per se will become a thing of the past as Google and others players get better at intuiting the information we’re specifically looking for.

To intuit our needs, companies will use first-party data, like what people are searching for when logged in. In addition, we’ll see companies use third-party data they have on similar users and likely use various big data sources, as well.

We see intuitive search developing like intelligent personal assistant tools like Google Now and Cortana. With such tools, it not about search so much but more about supplying contextual info and functionality for your daily tasks, providing you with needed information before you even know you need it.

For example, the assistant could remind you of an upcoming flight and ask if you need transportation like a cab to get to the airport. The suggestion of a cab would be based on past search activity (or purchase activity) before a flight.

As these devices become better companions and better able to predict our next moves, where is the monetization? There’s obviously a serious gap here.

1. Larger “Mobile” Devices

At a simple level, the issue of screen real estate scarcity on mobile is being solved with the trend toward larger “mobile” devices. Larger devices will:

  • Make It Easier For Users To Browse & Shop: Depending on what people are searching for, they could start on a mobile device and end on a desktop device because it’s easier to transact on a larger screen. Larger mobile devices could curb this trend and help people transact directly on their mobile device.
  • Make More Space For Prime Ad Real Estate: In the current environment, there are only a few paid ads per page on a smartphone-type device — typically two ads at the top of the page and two ads at the bottom of the page. (Note: Here, I am excluding tablets from the present discussion of mobile devices).

As we increasingly use our mobiles as our primary devices, Google and others will find themselves with less profit from paid search. Currently, there are quite a few bigger devices on the market.

For example: the Samsung Galaxy,  the new iPhone 6+, the Blackberry Passport, etc. We’ve also seen the introduction of “phablet” devices (a device that’s a cross between phone and tablet).

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2. Scrolling From Side To Side (Swiping To The Right)

We’re seeing this already with Google Shopping results on mobile devices. In this example, we see “shop on Google” results and then a Google ad at the bottom of the page.

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Google’s new Gmail app, Inbox, along with Google Now, also liberally use the side-to-side swipe as an interface element.

3. More “Organic” Results Becoming Paid Ads (Listings)

In the past, Google has converted organic results into paid results by moving what once was organic info to the paid search side – a la Google Shopping. Those results used to be free, up until late 2012, when Google made it a paid product.

I could see, for example, local results on a SERPs page becoming local paid results. With enhanced campaigns, there has certainly been a big push by Google to get advertisers to bid by specific geographic location. This is some of the most significant real estate on the page (as was Google Shopping) so there is significant opportunity for Google to make a boatload of cash by making changes here.

This general trend could play out in a lot of other ways, too.

4. Paid Ads Embedded In Organic Content (AKA “Native Advertising”)

The most likely scenario is that Google will intersperse paid ads in the organic results. I think we’ll see this on mobile devices, especially.

For Facebook, the introduction of in-stream ads has been a runaway financial success, despite complaints from users and “organic-stream-squeezed” companies alike. Facebook’s record profits are a direct result of the company perfecting this model.

In its most recent earnings report (Q3 2014), Facebook reported $2.96 billion in ad revenues, a 64% increase from the third quarter last year and a 10.4% increase over last quarter’s $2.68 billion.

Facebook mobile ad revenue made up 66% of the total; last year at this time it was just 49%. Facebook said it had 1.12 billion mobile users, including 456 million mobile-only users. It has 864 million daily active users and 703 million mobile daily active users.

We could see also see the Google Shopping box remain a paid product but be moved back into the main column of the SERPs. It currently is either on the top of the page or on the upper side right rail of the paid listings.

5. War Of Functionality (The Backup Plan)

The worst case scenario for paid search marketers would be if Google, Microsoft and Apple opt to get into a less-monetized “war of functionality” and build free features and services to hook people in.

Obviously, the companies need to make money somehow, but they all make quite a bit. They can certainly afford to compete by subsidizing unmonetized elements of the user experience, as Google has done with G+.

6. Hedging With Other Types Of Ad Units

Google, Microsoft and Apple could also be hedging with other plays like video advertising, in-app advertising and display. Personally, I think advertisers are paying for mobile phone video ads that people don’t see much of.

According to a presentation from Google covering recent stats on video advertising, 79% of smartphone users watch video and 24% use video at least once a day.

Note: Facebook is moving into video ads, and comScore recently reported that the social network overtook YouTube in desktop video views. Earlier this year, Facebook launched Atlas, a tool for marketers to target people across devices, platforms and publishers, and to measure how well the ads work.

The launch of Atlas, along with the acquisition of online video ad platform LiveRail this summer, signal that an “important shift is underway at Facebook,” Debra Aho Williamson, an analyst at research firm eMarketer, was quoted as saying in an AP story last month.

Final Thoughts

As search moves toward providing intuitive results and anticipating user needs, marketers might want to keep the following stats on application use in mind:

  • When people are on their mobile phones, they spend an average of 80% of their time inside apps. The launch of new in-app advertising will obviously help monetize some of this traffic.
  • The future of search will likely be a combination of all of the points above.

Which points do you think will have the biggest impact? Let us know in the comments.

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