Sunday, March 18, 2007

Transcript of BriefingsDirect Podcast on Future Trends in Search and Advertising

Edited transcript of BriefingsDirect[TM] podcast with Dana Gardner, recorded Jan. 23, 2007.

Podcast sponsor: ZoomInfo.

Listen to the podcast here.

Listeners of this podcast are invited to learn more about B2B advertising opportunities with ZoomInfo. Just go to www.zoominfo.com/adpodcast to learn how Zoominfo's business search portal provides a rich online B2B advertising opportunity.

Dana Gardner: Hi, this is Dana Gardner, principal analyst at Interarbor Solutions, and you’re listening to a sponsored BriefingsDirect Podcast. Today’s discussion focuses on the future of search and search marketing; and how businesses, corporations, companies, marketers, can better avail themselves of the tools that are now available through search.

We'll discuss the incredible power that’s now being leveraged through access to people’s information, company’s information, market collateral and data -- a rich trove of information. Now is the time to figure out the best way to approach it and to leverage it.

Joining us on this call are an analyst and an executive from ZoomInfo. Let me introduce Shar VanBoskirk, a senior analyst at Forrester Research. Welcome to the show, Shar.

Shar VanBoskirk: Hi, Dana. Thanks so much for having me.

Gardner: Also Bryan Burdick, chief operating officer at ZoomInfo. Welcome, Bryan.

Bryan Burdick: Thanks, Dana. Thanks for having me.

Gardner: We want to look at where we are, but, more important, where we’re going with this whole notion of search as applied to marketing and business -- getting things done in a new and innovative way. I suppose that in order to know where you’re going, you have to have a strong sense of where you are. I’ll throw this out to either of you. What is the state of search marketing, and how did we get to this point? I’m principally interested in business drivers and technology drivers. What has gotten us to this point of where people are starting to look at search for business purposes?

VanBoskirk: I can start off. I’ll just weigh in by saying that what has made search so popular today is that it's proven both very effective at getting users to take action, and very effective at giving marketers a way to measure their effect on advertising and consumers. If we look at the history of the interactive medium specifically, around 1999 advertisers were really looking for the next big thing. They had gotten a good result and a good return from display ads, but no one was very clear about what was the sweet spot of the online channel. Overture had a couple of attempts with some paid search ads, and the people who gave it a try realized that they could put some money in and see some immediate returns. That's the kind of cost effectiveness that has lead to the boom that we see today in search marketing.

Gardner: Overture is part of…

VanBoskirk: Now part of Yahoo!

Burdick: I agree with that, and also would add to it that one of the business-model effects of search engine marketing is the ability to very cost effectively try new things. You can try new keywords, see how they work, get immediate response, understand the ROI, do more of what works, and try new things along the way.

Gardner: So, it seems that advertising online and in all the other modalities and channels for advertising often required a gut instinct as to what was going to work and what wasn’t. You could see what went in at one end and you could just look at the results, but figuring out how they came together was sort of guesswork. It seems to me that search, using contextual ads and keywords, removes the guesswork and it gives you clarity and visibility into the thought process that brings people from research to an actual business decision. Does that make sense?

Burdick: It really does, and it also really shortens the time cycle of that whole process. You can try keywords and paid-placement advertisings on Google or Yahoo!, or wherever, today and get results literally in a day, sometimes even in hours, depending on the overall volume.

VanBoskirk: I think search works, because it catches people at the point where they are raising their hand for information and for marketing messages. So, the guesswork of advertising that search doesn’t apply to was always assuming, "Hey, maybe my user is interested in my product or if I catch them at this time, it looks like they might be really responsive." Search took all that guesswork away, because it basically said, "I, as a user, am actively searching for more information about something I’m interested in. If you, Mister Advertiser, can actually give me the information that I want, I’m going to respond to that."

Gardner: When we think of search, we often think about people looking for maybe medical information. "I’ve got a wart on my hand. How do I get rid of it?" or "How do I get rid of the fleas on my dog?" -- consumer research and questions. I think more and more we’re seeing search being used for real business research. People could have $20 million or $30 million budgets and be looking for procurement efficiencies and new avenues for finding products, services, personnel, partners, and ecologies. How does this translate into business? Did the consumer use lead to the business use, and is business catching up? Is that what’s going on?

Burdick: We’re definitely starting to see some of those trends. Consumer advertisers were certainly the first to adopt, and jumped on to the search-engine marketing and advertising bandwagon. In a lot of ways, it goes back to their ability -- as Shar was just saying -- to present a very targeted message, and get an immediate response and ROI, whereas the B2B sales cycle tends to be longer.

As the model is proven out on the consumer side, B2B advertisers are starting to find ways to leverage those same technologies and those same avenues. New avenues are developing. We see new vertical search engines that are really targeting the business consumer or the "prosumer," as the case may be, and delivering even more targeted results to the B2B searcher.

Gardner: I suppose companies think of this in two ways. One being, "I want to use search to improve how I gather information, research, do business, find partners, and find suppliers." But they're also saying "I want all the people who are looking for my goods and services to be able to better find me." What should companies be doing now in order to be better found?

VanBoskirk: The fact is that 71 percent of users are using search engines to find Websites. So, thinking about your question of which came first, the business need or the consumer behavior, I think the answer is that we’re all users of the Web. Whether we’re using it for personal or business reasons, search has become just a natural way for us to begin finding information. What that has led to then is a need to capitalize on that behavior, whether you are a B2C marketer or B2B marketer. There are similar best practices for both.

I always tell marketer clients to think first about their natural search engine optimizations. So, really they should be thinking, "Is the content on my site related to the searches that my users are doing for me, and is it presented in a way that’s easy for Web crawlers to get around?" That’s work that, if you do it once, can pay off for you for years to come.

Then, you can think about some paid search ads that might be really related to the specific, more timely searches or the specific offers and timed programs that you might be running. They should think of all within this notion of, "Who is my user? What are they looking for from me? What is the language that they’re using to conduct that search or to find that information?" You need to understand who those users are, how you can optimize your site to meet their needs, and then look at the paid search ads. It’s the same best practice that works for either a consumer or a B2B marketer.

Gardner: I suppose a consumer doesn't need to have a presence on the Web in order to use it, whereas for a business, their presence, and the amount of content, trackable media, and information that they put out is what’s going to help them get into this mode of being a part of online commerce.

VanBoskirk: That’s an interesting question, because we’re seeing a lot more consumer-generated content appearing in search engines. While it’s true that you have to have some sort of Web presence to appear in search results, what you have to do to create a Web presence is much different today then it was even a year ago. You might actually have information that is about one consumer talking to another consumer about a product, as opposed to that product’s Web page appearing as the most relevant search result in a search results page.

Burdick: That raises the ante for businesses that need to control brand image across the Web, and need to control their digital image. It’s not just about what goes up on their own Website, but, as Shar was saying, it’s about what the blogs are saying. It’s about what the press is saying. It’s about what review sites are saying.

As search engines go to the next generation and do things like semantic search, like we’re doing here at ZoomInfo, we actually are able to aggregate that content across these entities and pull together a complete picture of people and companies. That same technology will start to apply to other entities and other search engines down the road.

Gardner: So, whether I’m a business buyer or a consumer, when I do a search on "buggy whips," I’m not just going to see results from Acme Buggy Whips Co., I’m going to see chats and blogs and all the information about the state of buggy whips.

Burdick: Right, and it will move from buggy whips as a keyword to buggy whips as a concept or entity. A great example that I like to use is, if I search for "enterprise router" on one of the traditional consumer search engines, I’m going to get lots and lots of results. They will include everything from Enterprise Rent-a-Car to the latest episodes of Star Trek, including a lot of results about enterprise routers. They’re looking at those as keywords versus a more semantic search that understands that an enterprise router is a product. "Here are the companies that sell enterprise routers" is the kind of result you get from a semantic engine like ZoomInfo.

Gardner: So, the search can be better for me if it knows that I’m a business user in a business mode.

Burdick: Exactly. Again, "router" is a great example. If I search for "router," as a consumer I might be interested in a woodworking tool, but if I’m doing it for my business perspective, I’m clearly interested in networking connectivity or the like.

VanBoskirk: Bryan is touching on the next phase of search and the next phase of search marketing that a lot of marketers haven’t yet prepared for. If we look at the most sophisticated marketers today, they’re very good at understanding the broad suite of keywords that they need. They’re probably purchasing a lot of keywords, and they’re maybe even doing some smart bid management to figure out how much they should be paying for certain keywords, based on the profitability of the traffic that they’re getting from each of those term.

What’s next is this notion that Bryan’s talking about around creating an increased relevancy in the results. It’s not determined by some sort of magic algorithm that counts how many mentions of a word are on a page or how many links are linked to that page. It has a bit of a learning embedded in it.

It can understand that if this user has searched for these things in the past, we know that this is the type of user they are, or other people have found satisfying results from these types of searches or these types of results. We know that they’re going to be the most relevant for people who are just like them. There’s a lot of evolution that’s happening that we're going to see evolving in 2007 around figuring out how to increase the relevance of search results.

Gardner: I suppose for consumers there is generally some reluctance to put too much personal information out there that might help them in their searches, but might have detrimental effects otherwise. For businesses, that are in business mode, they might be a little bit more willing, and it might be in their best interest to get more information out there about what kind of business they are, what sort of activities they’re involved with, what their direction is. Is that what you’re alluding to, that the companies can start sharing more information, and therefore empower search and marketing through search among and between different businesses?

VanBoskirk: Sure, the most important information is less personally identifiable information and more relevant information about the types of searches you’ve done. It might be just a catalog of the history of your searches. On some of the social search sites you can actually vote or tag pages that have answered a need for you in a past search. So, on del.icio.us, which is a part of Yahoo! you can actually tag pages that you feel are related to a search. Go back to the example of enterprise routers. I do that search. I find a couple of results pages that are really going to meet my needs. I tag them "business routers," but then I do another search that has something to do with my "Star Trek" interest and I tag those pages "Star Trek."

Now, I’ve got them cataloged in my own del.icio.us page, and somebody else who wants to use del.icio.us can view my tags and realize, "Hey, this is someone who likes Star Trek. I’m going to check out the pages she found that were related to her interest in that particular topic." It’s less about actually giving up personal information about you as a searcher and more about just being willing to share the searches that you’ve done, and even voting for pages that you felt like were relevant answers to your question.

Gardner: So, either voluntarily, or as part of the process, we’re creating a layer of metadata on top of the search activities that then makes the next search activities even richer and more powerful.

VanBoskirk: Exactly.

Gardner: One of the things that’s interesting to me about this business approach for the future of search in marketing is that it’s not just for the big subjects. It can be for something extremely specific.

For example, suppose I’m an engineer designing a cell phone, and there is an integrated circuit that I just want for a very specific task on a very tiny circuit board I’m designing. If I want to make sure that it’s a supplier that’s trusted and so forth, I can do a very discrete search on the SKU, on the actual number of the circuit, almost like taking a serial or model number and then finding out who’s got them and where. This could be very discrete in terms of how search can aid commerce. Is that sort of a long-tail effect we should expect?

Burdick: Definitely. In fact, the search engine marketing space has evolved, as both advertisers and searchers have gotten more sophisticated, and that long tail has continued to get longer and longer.

The other thing that it’s driven is the proliferation of more vertical search engines, because it's relatively simple for somebody who’s developed a new search capability to drive into a particular vertical and start to monetize that right away. With the different ad networks that exist out there, even if you haven’t put together an ad sales force on your own, you could put Google AdSense or one of these other networks up on your site very quickly and start to monetize that. This is going to drive more people to have more niche sites available for the targeted search needs.

Gardner: It sounds like this could hypothetically scale down to a single buyer in the world and a single seller actually finding each other.

Burdick: One of the things that Shar and I were actually taking about a couple of weeks ago was: Is there a future where eBay meets Overture, and you actually have classified ads being placed by individuals in a search engine marketing type of a format?

Gardner: Now, let me understand this. If I go out and do a “search,” in a sense I’m also offering an auction saying, "Here is what I’m looking for. Who is ready to bid on it?"

Burdick: Potentially.

Gardner: What do you think of that, Shar?

VanBoskirk: One of the nicest things that search marketing introduces is level playing field for the little guys to compete against the big guys. It provides a way for a small local advertiser to find the customers that are actually engaging in information that they can provide.

Not a lot of other media can do that. You’re limited in how much television you can afford, and there is no way that a small local bank can compete against Citibank. In this case, a small local bank could actually buy more specific keywords for their target audience in their geography than could a large national bank. Why couldn’t an individual seller of apartments available in particular areas, or used equipment, use search as a way to reach out to people who are willing to find their specific product?

Burdick: You’re already starting to see some of that evolution, particularly in the help-wanted space. Companies like Indeed and SimplyHired, and some of the other job-board aggregators, have started to put together pay-per-click models that are driven off the same types of platforms, the same auction-based model as the consumer advertising in the traditional search engines.

Gardner: Let’s take one of the points we made earlier. We have more visibility into what’s actually taking place in this marketing-to-sales activity. Then, we’ve got this long-tail effect, where I don’t need to take an ad out on the super bowl for $2.5 million. I can find my audience for fairly short money. If we combine these two, can’t even very small mom-and-pop shops demonstrate an ROI for an advertising or marketing approach on the Internet, even if we’re only talking about a few hundred dollars? Is it that granular?

VanBoskirk: It could be. We haven’t seen a real solid local effort from any of the big players. Google and Yahoo! have been really working to develop a local presence and local set of marketing services for individual local advertisers. I don’t think it’s quite there, but as we see smaller search engines unfold, they may be more niche focused on a particular type of user or on a particular vertical or industry.

Also, as we start to have mobile search unfold, where I’m traveling through a certain area and I’m searching for information, we’re going to start to see local opportunities play out in a bigger way for some of these mom-and-pop advertisers. They can purchase keywords on national search engines today, but the commerce opportunity may be more difficult for them. If I’m in San Francisco and I see a paid search ad for a regional restaurant in Boston, they may show me the ad, but they’re probably not going to get my business.

Gardner: So, it's a waste of time and waste of money.

VanBoskirk: This year we’re going to see some more opportunities that will actually help realize that local opportunity for the local advertiser better than it has been to date.

Gardner: Another major trend is globalization. While there’s local commerce that might aid and abet certain business, there are other businesses that are happy to be expanding their potential market to anywhere, anybody that can find me. I can put it on a UPS or a FedEx truck and it’s off, out my front door and it’s in your front door two days later. Is this business opportunity and a long tail and globalization somehow related?

Burdick: I think that it is. In the B2B world, where you’re really not trying to reach a local consumer, you’re trying to do business anywhere in the country or the world. As different vertical search engines evolve and create more targeted inventory, those companies are going to be able to better leverage the keywords in those vertical search engines, versus competing for the same keyword in the consumer engines, where they're competing with the consumer advertisers.

Gardner: Because they’re doing this through search and contextual ads, they’ve got more visibility. They can say, "Wow, I just spent a $1,000 on keywords, but I generated $4,000 in new business from customers that I never knew existed."

Burdick: The model will be slightly different in the B2B space than it has been in the consumer space. The consumer space really is about direct marketing, it’s about driving a transaction. I’m Circuit City. I buy the keyword "DVD player." I’m trying to sell a DVD player. In the B2B space, there will be some of that, but it’s largely going to be more lead generation. I’m looking for somebody who is interested in the product category that I’m trying to sell.

I’m trying to bring them in as a lead, send them more information, and not necessarily close a transaction online right then and there. You’re also going to find that the number of searches, done in the B2B space are smaller in terms of total number of transactions, but the transaction value is a lot larger.

So, I think as B2B -- and Shar, you might have some numbers around this -- but as the B2B advertisers move online, the opportunity is actually bigger in the B2B space. A smaller number of transactions, but bigger dollars per transaction.

VanBoskirk: I can chime in too with some stats to support that. We know that 46 percent of B2B marketers use search engines during the awareness phase of their purchase process. If you think of the purchase funnel going "awareness - consideration - preference - purchase," consumers typically use search engines in the consideration phase. I already know what I want and I’m just going out to compare one provider to another. Or, I’m going out to do a little bit more research around price and features.

In the B2B environment, people are engaging with search engines before they have even created their shortlist. They’re actually using search engines to help them decide who they should be conducting additional research with, and then that research could happen online, through a sales call, or through any kind of the regular in-person sales channels that a business marketer might leverage.

Not only is the opportunity for the end transaction greater in a B2B environment, but it exploits the channel more completely. It’s not just relying on, "I’m researching the product, get me while I’m doing that and get me to buy," it’s actually using the medium to brand a company and introduce a new brand into a market. It’s using the medium to provide information and help a user research the product.

It may even be using the medium to qualify users. They’re actually going to be able to determine, "Is this the person making the decision on the product, or is this just the person who is the research assistant doing a little bit of the homework to pass on the info to their boss who’s actually the one buying the product.

Gardner: So, we’re really automating a marketplace regardless of geography, regardless of budget. We’re really matching up buyers and sellers, but with this much more powerful insight into when they show up and what caliber of seller are they. Do you want to put a sales person on this call or not, or do you just want to zap them a brochure URL of some kind? This is really almost an extension of what we’ve know as commerce. Right?

VanBoskirk: The risky thing in taking that perspective is that search engines are still, first of all, a tool for finding information. We can’t completely turn them into a marketplace, because consumers are pretty savvy these days too, and they know that they’re being used as a marketing audience when they’re conducting searches. They’re also aware of declining value in search results. The more ads they see or the more they feel like they’re being promoted to, the less relevant they feel like the results are.

The caution kind of lands on the marketer to understand that this is an extremely valuable medium for reaching very targeted customers, but that they have to actually facilitate the user accomplishing their goals, to get them the information they need. If that’s to provide information or if it’s enable a purchase, both are valid user goals that the marketer sometimes doesn't want to acknowledge. They’re focused on purchase. We have to hang on to this notion that the search engine is still a user tool for finding information. It's not just a marketplace between buyers and sellers.

Burdick: That actually points to a really interesting evolution that we’ve seen particularly in paid-placement ads. When you think back to 1999 or 2000, when Goto, now Overture, was just rolling out, and others started adopting this paid-placement model, there was huge uproar about "How could you put sponsored links above natural organic search results and the relevance of those?"

Overture, Google, and the others were really smart about saying, "We’re going to make sure that these advertisers, these sponsored links, are relevant to the user." Now, you actually find that for certain types of searches people view those ads as the most relevant results -- "That’s exactly what I was looking for." Shar points out that advertisers need to be careful not to go too far the other way on that.

Gardner: So trust is an essential ingredient or people won’t go back for more. It won’t become a marketplace. It will be gamed. It will be jaded. Now, we’ve seen many attempts at gaming these systems already. Is there a necessary "Switzerland" of B2B online commerce that can, in a sense, protect and provide some neutrality to the goal of this commerce, and therefore be trusted by both the buyers and sellers?

VanBoskirk: A part of that is the focus on increasing relevance that we were talking about earlier. Google will maintain that its goal is to organize the Web and to continue to always focus on providing user relevance. It does that now through kind of a formula of figuring out which sites are the most related to keyword searches that are being done. But, there are a lot of other ways to add relevance.

Bryan was talking about what ZoomInfo is doing around creating entities and some intelligence around what is actually meant by the search. There are also a lot of these tagging and voting technologies, understanding who is searching for the same type of information.

Rather than thinking about a board, if you will, that will determine who is trustworthy and who is not, that community of searchers will weed out the folks who are just not generating relevance for them. They will force search engines, like they are with the big guys, Google and Yahoo!, to reevaluate what they’re doing to determine relevance. If the big guys can’t adjust to it, then a lot of smaller search engines are going to come into mainstream use, simply because the results that they provide are going to be a lot more relevant. It will be the user community that determines that, rather than an entity on high that kind of establishes, "These are the good guys -- these are the bad guys."

Burdick: The whole premise of search engine marketing is that the market forces are so efficient to begin with that they will weed out the wheat from the chaff very quickly.

Gardner: Okay, so we’ll have a market force that can help segment search into different niches for B2B relevancy, and we’ll have a self-monitoring effect in that people won’t get burned twice, and they know how to exercise and vote with their attention, with their dollar, with their business. So, what’s the opportunity for a company like ZoomInfo? How do you enter into this with a preferred business search and marketing capability. What’s the secret sauce that you have?

Burdick: Our secret sauce is actually this semantic search model that I was talking about before. In one sense we're similar to regular search engines in that we have crawlers and spiders that go out on the Web and find information. But, then we’ve got a series of about 15,000 different natural-language processing (NLP) algorithms that can understand the content and then create relationships between the entities, even relationships that aren’t explicitly stated anywhere on the Web.

A simple example would be, we know that this person is the CEO of ZoomInfo. We know that ZoomInfo is located in Waltham, Mass. Therefore, we know that this guy works in Waltham, Mass., even though that content was never stated anywhere. That’s a simple example of what we mean by semantic search that allows us to create these connections between entities.

The net result of that is when you come into something like the zoomlist.com, which is our preliminary company search product on the Web. You can do a search for "venture capital," find all 2,800 companies in the U.S. that are in the venture capital business, and it automatically creates drill downs into different types of venture capital. Were you interested in life sciences or technology or different branches of venture capital, the search engine and the algorithms completely, automatically drive all of that. There’s no human involvement in creating those links.

Gardner: So, a lot more context around what's going on, taking advantage of what metadata and other inference materials are available. Shar, where do you think this can go? What would be the next steps in the evolution of this B2B, Internet-based and search-based marketing?

VanBoskirk: We’ve talked a lot about the relevance need, and this is poised squarely in that. We’re going to see a lot of change this year, just in the name of helping to refine search engine results. Most users are feeling like it’s almost too much now to search the entire Web. I don’t really need the entire available universe of information. What I need is an answer to my question. It’s almost as if the search engine becomes a bit of a concierge, and the Zoom model is poised very well for that.

We’re also going to see an exploration of other media, and how search can help catalogue information that’s available in other media. Bryan and I were talking about this a couple of weeks ago, as well. The mobile opportunity for search is poised to take off this year.

We see a lot of helpful examples in that space too. I might be doing a mobile search, and I’m looking for Bank of America ATMs, when I’m traveling somewhere, and I get an ad for a Wells Fargo ATM. That's a keyword-based ad that they’ve purchased that’s just like you would place on a online search, but it’s related to the mobile search that I provided.

So the next place for Zoom and for any search engine is to think about what happens beyond the Web. Are there ways that the same sort of search capability can move into other media that also needs the same functionality, the same type of cataloging and information provided back? Why not extend the kinds of information searches that we’re doing on the Web into other media that we’re using just as actively.

Gardner: What would be some other examples of media that a company might be able to bring into this to add even more context, to make them a richer source of information and therefore a contextual relationship through search?

VanBoskirk: A couple of thoughts come immediately. Mobile is here now. We also see RSS content being searched and being used as place-to-place contextual ads.

Gardner: You mean like podcasts?

VanBoskirk: Podcasts, RSS feeds, if you’re getting actual text content delivered to you. I think television is the next logical place for search to go. That one’s not here yet, but as people start to store digital files of video on their cable boxes or on their digital video recorders, we’re going to want to search that information. So, there will be another kind of catalogue that will evolve, where we can search information. Why not allow that to be sponsored and have paid search ads that are adjacent to the video content you’re storing as well.

Gardner: So, more opportunity to bring rich content into this mix that can help provide a richer contextual binding of interest, between perhaps buyers and sellers in a B2B sense or even just discovery, just information.

VanBoskirk: Sure.

Gardner: Very interesting. Well, thanks. We’ve run out of time. We’ve had a very enjoyable and deep discussion about the future and some of the implications for search and marketing and B2B, and how B2C is morphing and providing some tools to business. Joining us on this discussion we’ve had Shar VanBoskirk, a senior analyst at Forrester Research. Thanks for joining, Shar.

VanBoskirk: Thanks very much, Dana.

Gardner: Also Bryan Burdick, he is the chief operating officer at ZoomInfo. Thanks, Bryan.

Burdick: Thanks, Dana. This was great.

Gardner: This is Dana Gardner, principal analyst at Interarbor Solutions. You have been listening to a sponsored BriefingsDirect Podcast. Thanks for listening.

Listeners of this podcast are invited to learn more about B2B advertising opportunities with ZoomInfo. Just go to www.zoominfo.com/adpodcast to learn how Zoominfo's business search portal provides a rich online B2B advertising opportunity.

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Podcast sponsor: ZoomInfo.

Transcript of Dana Gardner’s BriefingsDirect podcast on future trends in search and advertising. Copyright Interarbor Solutions, LLC, 2005-2007. All rights reserved.