January 20th, 2009

Marketers Take Search Ads Beyond Search Engines

By Emily Steel
The Wall Street Journal

Facebook, MySpace, iPhone Figure in Efforts by Pizza Hut, Others to Boost Online Exposure While Controlling Costs

Marketers, seeking to boost their online exposure while keeping a lid on costs, are looking beyond Internet search engines such as Google and Yahoo to find new places for their search ads.

The trend reflects a change in the way consumers are navigating the Web. More online searches now take place on YouTube, the popular video site owned by Google, than on Yahoo, the No. 2 Web-search property. The change has companies including Pizza Hut, Universal Pictures and Monster.com rethinking their search marketing strategies.

Even as No. 1 search engine Google’s share of the online ad market—including search ads—continues to grow, marketers have started shifting ad purchases to other digital media, from social-networking sites to mobile phones. “Search is being redefined in a lot of different ways,” says Peter Hershberg, managing partner at Reprise Media, a search marketing agency owned by Interpublic Group.

In search-engine advertising, marketers bid on key words in a continuous auction. When a consumer searches for any of the words, the marketer’s ad appears above or next to the results, depending on the amount the company bids and an algorithm the search engines use to determine an ad’s relevance to a particular search.

For the past few years Pizza Hut has bought ads on the major search engines tied to pizza-related searches, such as “cheese pizza” and “pizza delivery.” Placing bids on those terms pits the Yum Brands restaurant chain against many competitors, including Domino’s Pizza, Papa John’s International and even local pizzerias, which have made search advertising an important piece of their own marketing. The auction system for the ads ultimately increases the price each pizza marketer pays when a consumer clicks on an ad.

Lately, Pizza Hut has started working with its agency, WPP’s Group M Search, to expand its search-ad buys to new areas. The chain started buying mobile search ads to pitch its products. And to publicize the launch of a new whole-grain pizza, Pizza Hut is creating a promotion and buying ads through Facebook. While the Facebook ads aren’t technically search ads, they are part of a broader effort to boost the company’s profile in the nonpaid search results consumers get when seeking online information.

Over the past decade, search has evolved into the biggest category of online ad spending in the U.S. Despite the popularity of social-networking sites, social media has had a hard time generating significant ad revenues, because marketers haven’t gotten comfortable showing their ads next to user-created content that could be in dubious taste. Recognizing that concern, sites such as YouTube, Facebook and News Corp.’s MySpace have created systems that let marketers create and bid on ads through a self-service Web site, similar to the way they buy ads on search engines. News Corp. owns The Wall Street Journal.

On Facebook and MySpace, marketers don’t buy ads tied to search terms. Instead, the ads are linked to information that users reveal about themselves on the sites, such as their age, hobbies or other personal interests.

Universal Pictures, a unit of General Electric, has started working with its digital agency 360i to buy sponsored video ads on YouTube to promote its recent film releases. Recent YouTube searches for “horror film” or “scary movie,” for instance, display a link to a sponsored video for the supernatural thriller “The Unborn.” Clicking on the ad takes visitors to a spot on YouTube where they can watch a movie trailer or other promotions for the film.

Job-listing site Monster.com, meanwhile, is testing a search-ad program for mobile searches done on Apple’s iPhone. “It just seemed like a no-brainer, that we would want to be able to access users on their smartphones and do that through a proven environment,” says John Federico, vice president of global media at Monster.com.

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