May 8th, 2006

Will Search Advertising Be Winner Take All?

by Scott Karp

Reading about Yahoo’s new search-advertising software code-named Project Panama, I can’t help wondering whether any other form of advertising can compete with search advertising’s projectable ROI and hyper-efficiency:

But as advertisers enter each bid, they will see an estimate of how many clicks they will receive each day. More important, a graph will show how many more clicks they can expect for each increased bid.

“One of the primary complaints we get is users can’t explain to their bosses what they could get for spending the next $1,000,” said Steve Mitgang, the Yahoo senior vice president who oversaw the development of Project Panama. “Now they can take this to their bosses to justify spending more.”

While Yahoo, Google, and Microsoft pour millions of dollars into perfecting search advertising efficiency, TV, magazines, and other old media dream up ways to scam advertisers into believing that old advertising models can still “work” — as if there were ever any real evidence that they did work.

Comments (2 Responses so far)

  1. Search advertising will be displaced as advertisers come to realize that social networks define target audiences better.

  2. I think that’s a great point, Scott — about how much better search advertising looks when compared with the smoke-and-mirror show that advertisers have traditionally gotten from the media.

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