Internet companies have tough time with high search ad prices
High internet search ad prices
The price of advertising via the internet has gone up significantly in the past several years, especially during the holiday seasons. Because the internet has gained so much popularity the demand for controlling “keywords” in the more widely used categories has skyrocketed.
Chief Executive Mark Vadon of Blue Nile Inc. recently stated that the company’s top five keywords rose more than 80% in the fourth quarter alone last year. Blue Nile Inc. (www.bluenile.com) is an online jewelry store which includes services like interactive tools that let you build your own diamond engagement ring and boasts having over 60,000 diamonds in its inventory. Obviously this website does a lot of online advertising.
Ben Perry a director from www.iprospect.com (a firm devoted to researching and selling online search marketing) says that spikes like these price increases have been happening for the last few years. His company shows result like a 2.5% price increase for a keyword in the retail category in 2005 but a larger 7.3% increase in the year before. This shows that there has been an upward trend over the past few years. According to Perry, the most modest price jumps for 2005 we in the travel and entertainment keywords, while automotive keywords showed no rise and financial keywords actually fell last year.
The point of the article was to show that overall internet keywording costs have been increasing for a long time now. The problem that I see is that due to the increasing number of internet users the cost of adverting will continue to rise. This will be a problem for smaller companies that don’t have the resources to pay for expensive keywords on websites. Isn’t it the goal of the internet for everyone to be on the same playing field? Pretty soon small companies will have to avoid using the internet for advertising simply because they don’t have the capital. How will they compete when a few large firms buy up all the popular keywords?
2 Comments:
You make a very interesting point Stouffers. It seems somewhat ridiculous thinking that someday in the near future small companies will have a tough time not only affording traditional media advertising, but internet advertising as well. However, I feel that paying for keywords to become a sponsored listing on such search engines as Google and Yahoo is not a dire necessity to remain competitive. I feel that as long as a company performs some type of search engine optimization on their site (i.e. filling the body of the site with plenty of strong keywords), they will still find themselves with a high search results listing. After viewing some comments on my own blog, I found that many people, including myself, do not even pay attention to the sponsored search results listings (these are the people paying big bucks for keywords). We opt for the regular search listings, as they are often more related to the information we sought out to find.
I think you totally hit the nail on the head. The Internet isn't supposed to play favorites, and with issues like high advertising costs or Internet tolls, it seems like some companies will never have the chance to get ahead. However, I also agree with Nick that paying for keywords isn't imperative to become successful in the industry. If a company's product and brand name are really strong, and if they have a marketing campaign that is innovative and reaches people via other media, they still have a chance to gain a good chunk of the market. I also tend to not pay attention to any of the sponsored links on Google or other sites--I never find what I'm looking for, and I am usually directed to discount warehouses or similar sites that do not specialize in my needs. It will be interesting to see how search engines react to the increasing number of companies using the web, and it will be even more interesting to see how consumers respond.
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