I recently read Dennis Yu’s blog article Evolve or Die: 2010 Local Ad Agency Fiscal Models. Having met Dennis (2009 Search Marketing Expo in Sydney Australia), I have great respect for him as an individual and also for what his company does.

Many of the points that Dennis has made, are right on the money. Others, I feel, miss the mark.

At the centre of Dennis’s article, is a quote that local search marketing firms are seeing a 90% churn of clients every 6 months. When a client churns, one of the following occurs:

1. The client stops spending money on PPC and will never do so again;
2. The client moves to another SEM Agency; or
3. The client takes the learnings and does it themselves.

So while client churn from a particular agency may very well be 90%, the industry churn rate is far lower than that. By industry churn, I mean clients lost from the industry as per reason 1 as this is what I would consider to be “real churn”. Reasons 2 and 3 result in the client’s media spend staying within the SEM industry – a sideways churn.

Don’t get me wrong, the overall churn (real and sideways) is a worry for the industry as a whole and not just the individual agency – any poor customer experience is blight on the industry. This is where I agree with Dennis’s call for a code on ethics.

Where I differ on Dennis’s view is that the companies which are benefiting from this – the search engines themselves – should be the driving force behind setting up an industry watch dog and be responsible for providing the funding to back it. The search engines don’t loose out from sideways churn. In fact, I would strongly suggest they benefit from it due to the general increase in marketing spend.

An industry watch dog should also be responsible for monitoring the search engines themselves, to ensure that the practices that the engines have, encourage responsible management of clients. From my understanding, certain search engine reseller programs actively encourage companies to aggressively and ruthlessly recruit customers, and ignore customer satisfaction. The SEMs are measured and rewarded on acquisition of customers and not retention. The rewards assist in offsetting the costs of managing these clients.

If the search engines rewarded for new customers acquisition and provided a strong incentive for retention, then many of the issues that Dennis calls out would simply go away.

Many of you will ask why don’t the search engines bypass the SEM providers and go directly to the businesses – well they do. However, they have discovered that managing thousands of small to medium businesses is a challenge. SMBs can’t be treated the same as corporate’s. They want and require hand holding, not to mention a multi-vendor approach to marketing. They do not want a self service model and have extremely high expectations of the results. The biggest issue with dealing with SMBs is expectation setting and management.

The company with the best customer service, expectation setting/management and retention will win the game – not the company with the most numbers.

Happy New Year to one and all! It’s hard to believe it is 2010.

The web is full of predictions about what is going to happen in search for 2010 – some good, some obvious and some way out there. In the past, I have cast my predictions and even managed to get some right.

This year, I thought I would do something different – not what I thought was going to happen but what I want to happen this year. My 2010 wishlist if you prefer, with a bias towards search but also some general tech wishes as well:

• Microhoo! (Microsoft and Yahoo!) to finally get their act together and become a serious contender to Google’s dominance in both the organic and pay per click results.

• The search engines to realize that SEM/SEO firms are a valuable & genuine asset in helping them to grow and manage their businesses. Reputable SEM firms are responsible for generating many millions of dollars for the search engines. We are the online equivalent of media agencies – we have the power to control the media spend of our clients. Embrace us, support us, reward and ignore us at your own peril. But most of all, stop poaching our clients!

• Online spending to see growth of 62% like it did in the good old days of 2006. While I believe (as do most people) that the market will continue to grow, the rate will be no where near as steep. The worldwide economy will recover although I suspect it will be late 2010 rather than the first half of the new year.

• To see a year without a single post of “SEO is Dead”. I started in search in Feb 2003 and the “SEO is Dead” post outlives me by over a year. SEO isn’t dead and won’t be dead while consumers continue to spend money online and use search engines to find products. SEO is only dead if you don’t know what you are doing. To anyone writing an SEO is Dead article, you are only doing it for link bait – which is an SEO tactic – which is quite ironic really.

• Terms such as “Search 2.0”, “Web 2.0” and “Twittersphere” to go out of fashion in the mainstream media. Most people do not know what they mean (including the reporter) and they add no value. Surely the world can do without these?

• Apple to release the iPhone 4 which hopefully can get more than a single day out of the battery. Although this is not specifically search related, it is something which impacts me every day, especially if I am at a conference and on my iPhone all day.

• The Google Toolbar to stop displaying the page rank indicator. Page Rank is an outdated measure of your site’s success in the SERP’s. It causes more problems than it is worth. The true measure of your online success is by how much traffic you get from the SERPs and how that traffic converts.

• TechCrunch to go back to posting quality articles instead of quantity. Although the TechCrunch team does still publish quality posts, currently we have to scan through several irrelevant articles to find the gold.

• Ecommerce fraud to become less of an issue (rather than a bigger one as it is currently doing). Any company which runs a decent amount of ecommerce knows that fraud can put a significant strain on a business – in terms of cashflow and also time to respond to the problem. A worldwide solution to this problem is required to protect businesses and consumers alike.

• 2010 to be the year that Local Search actually starts to work for businesses and consumers alike. The current local solutions by all the players are clunky and do not provide a local view – for example, why does Google show me a Laundromat located several kilometers away from where I wanted? (See pins F, H, I, G and J on the map). Local search needs to get smarter and start to look at the context of the search, and auto scale the map to suit that search.

• The walled garden that is Facebook to continue to break down and allow complete external access. This will assist individual and companies in building their reputation and brand, but also with their SEO efforts. There will be at least 2 major privacy “scares” which are blown out of proportion by the main stream media which will dampen the efforts to by Facebook to open up.

So those are my wishes for 2010 – feel free to share your own wishes below.

Microsoft has released a beta version of their new contextual advertising product, to compete directly against Google AdSense and Yahoo’s Publisher Network. AdSense is the clear market leader for one clear reason – Google pays the highest fees to publishers.

The actual details are light on as the product is still in private beta. However it appears the main feature will be the ability to display Microsoft ads next to Google or other third party ads.

The challenge in any contextual advertising (at least for advertisers) is getting decent click through rates and generating a positive ROI. Anyone who has accidentally left on the content network when setting up a Google Adwords account, will tell you the quality of the traffic from the content network versus the search network are like chalk and cheese.

Microsoft may be able to win the mind share of publishers by offering higher revenue splits than Google, which may very well be the tactic behind their bigger search strategy.

By getting publishers on board, the number of page views will increase which will naturally attract advertisers and drive ad inventory. As the inventory increases, so should the competition and click prices will increase. It just depends on how deep Microsoft is willing to go to fund this initiative – their pockets are very deep after all.

Then there is still the quality problem for Microsoft to solve!

Is this a sign that Yahoo! is fighting back against Microsoft takeover bids? Last week Yahoo launched the DIY “Build your Own Search Service”(BOSS), which is a series of APIs that allow anyone to create their own search engines.

The totally unrestricted program uses the Yahoo search infrastructure and technology to allow users to do things such as:

1. Present search results in any format they wish
2. Re-rank search results
3. Mash up search results with other data
4. Unlimited access to data sources such as web, news and image search

Whilst BOSS is a great innovation for Yahoo! and the search community, do not think that Yahoo! is doing it totally out of the goodness of their heart. BOSS does require the display of ads, so provides another revenue source for Yahoo!, provided the developer community responds.

There is no reason why the developer community wouldn’t take to this product. The big draw card is the unlimited queries, which is different to the Google Custom Search Engine, which does impose API limits.

I, for one, am looking forward to the various mash ups that developers are going to dream up. Some will be useful, others frivolous whilst some will be just cool. Perhaps some enterprising developer will build a BOSS for the iPhone?

Last week, I attended the Perth leg of the B&T Bootcamp. It was great to spend a full day immersed in all that Digital Marketing can offer, above and beyond Search Engine Marketing.

The day started out with a great presentation by Mike Walsh regarding the future of Digital Marketing. Mike focused a lot on the Asian social networks. Made me realize how advanced Asian networks are compared to their western counterparts.

Marc Loveridge from Market United was next with a snappy and clever presentation on what is essentially a dry topic – Digital Marketing Definitions. Would love to see a video of Marc’s presentation as it was not only informative but entertaining.

SearchWorlds‘ Andrew Beecher was next, talking about something I was very familiar with, that being Search Engine Marketing and Optimization. Andrew’s slide deck also included some basic hints for starting out in optimizing your website. Whilst they may appear to be overly simplistic to an experienced search marketer, they are the real basics which unfortunately a lot of people miss.

Covering off the analytics was Nielsen Online’s Megan Clarken. I had been looking forward to this topic (it brings out the search geek in me!) but found the flow of the presentation quite hard to follow. Too many slides with over use of graphs and data. It ended with an overview of all the products that Nielsen offers. At the end of the talk, I was still not any wiser as to how Nielsen differs from Google Analytics for visitor information or Hitwise for industry stats.

After a break for lunch, David Green who is the Head of Mobile Advertising for Vodafone Australia presented. I found this session to be more of a “vendor push” than anything else, as he covered all of the mobile advertising options available on the Vodafone network.

Hitting on a topic which is of interest to any company who sends out email communications or newsletters, e-services communication’s Simon O’Day spoke about the key differences between managing it in-house versus using a professional agency. The key take away for me, was if your revenue comes from these communications, then the question isn’t can you afford to outsource but rather how can you afford not to? If you are going to do your email communications in house, make sure you test how the email will look in a variety of different mail system i.e. Outlook with images off, Lotus Notes, Gmail, Yahoo and Hotmail.

Simon te Brinke (Director of Gramercy Park Consulting) talked about Social Networking in Plain English. During the presentation, Simon admitted he was one of the many thousands addicted to “crackbook” (Facebook). The key takeaway for companies – if you are going to use Social Networks to market your products and services, then make sure you engage your audience. Be proactive in claiming your company’s social space.

The final session of the day, was perhaps the lightest on – appropriate as the audience was getting quite tired. Rich Media was presented by Carlo Bertozzi, who used it to showcase a number of cool interactive videos and games. It was a good end to a long day.

Thanks to B&T for putting on the event. Looking forward to future events!

If you, like me, are sick of the endless discussion regarding the Microsoft and Yahoo on again and off again acquisition talk, then finally there is some positive news from the Microsoft Search Team. Microsoft has bought semantic search technology company Powerset. Semantic search extends from traditional keyword based search, by using the science behind language (in particular the intent) to deliver results.

At the heart of Powerset’s technology is their exclusive licensing of natural language processing technology from Xerox’s Research Labs. This is the same lab credited with providing the first WIMP (Windows Icons Menus Pointing Device) operating system, which was the forefront of the Apple and Windows operating Systems.

Two other jewels in Powerset’s crown were enough to attract Microsoft’s money – namely the power to combine the natural language processing with the ability to actually search and the people behind all the technology.

With Microsoft so far behind in the search race, hopefully the addition of the Powerset technology and people can close the Google-Gap. Only time will tell.

Many veteran search marketers have used and abandoned the Google Content Network due to the poor quality targeting (and resulting low quality traffic). The newly launched Google Ad Planner is touted as “a research and media planning tool that connects advertisers and publishers”.

The concept is quite simple – an advertiser simply enters in the demographics associated with your target audience and AdPlanner presents a list of sites that your target audience is likely to visit. Websites that are both part of and not a part of the Google content network are included.

For the media buyer, this tool is a great addition to help ensure they are reaching their target audience. Unfortunately, for ComScore, the tool is not so great, as it is direct competition. ComScore does (or perhaps used to?) have a business model built around providing media buyers with this sort of information. Google has just made this business a lot harder and the ComScore share price has reacted appropriately – down over 17% on the day’s trading immediately after the announcement.

The data to accomplish this is coming from a series of data sources, such as Google Analytics, AdSense data, Google Search data and third party external sources which are used in an aggregated manner, which does not use any personally identifiable information. The amount of information that Google has at its disposal is quite staggering and very scary.

Within days of the 3G iPhone announcement, Yahoo! has made its own announcement in the mobile space. Yahoo! has extended the reach of its mobile services, by signing of a number of key advertising partnerships with Australasian telecos. Having announced partnerships with India’s MTNL, Hong Kong based CSL and others, Yahoo! has also launched “Yahoo Go 3.0″ in to Australia, India and South East Asia.

The Go 3.0 software allows users to access a variety of online services straight from their phone, such as photos, news, weather and finance in their local language. As part of the deal, Yahoo! OneSearch will be the default search option for mobile users on those networks.

Mobile is certainly an important growing space and winning market share is critical. It is vital for the major search engines as it allows them to reach more eyeballs through a different medium, but perhaps more importantly for the teleco’s, it drives increased usage of their data networks (over and above just voice and text) and that means new revenue.

The Yahoo! deal is a key strategic move for the fledgling search engine, however it has been undermined by the introduction of the 3G iPhone in the Australasia market. As the vast majority of networks through Australasia run on the GSM framework, with most having 3G capabilities, the 3G iPhone will have an immediate impact on the effectiveness of this deal, as users choose the iPhone over other mobile platforms. 3G provides high speed internet to mobile devices.

I predict the adoption rates in Australasia of the 3G iPhone will mirror that of the iPhone when first introduced into the USA. Thousands of users will move across to an iPhone which already has a great mobile browser, effectively making the need for OneSearch, and Go redundant. The default search engine for the iPhone is in fact Google which is not surprising given that Google’s CEO sits on the Apple board.

Whilst it is possible to change the default search engine (to change your default settings on an iphone follow these simple instructions – http://www.tuaw.com/2007/08/31/iphone-101-change-your-default-search-engine/) most users are lazy and will go with the default. That alone will prevent Yahoo and MSN from accessing a huge number of users – at least Microsoft have their own smartphone operating system and can steer users to their web properties via that, leaving Yahoo! to try to secure deals with whoever is left over.

Yahoo! has effectively surrendered in the online race to win advertisers PPC dollars, with the signing of an agreement to allow them to syndicate Google ads within their search results. So if you can’t beat em, then join em! The Yahoo!/Google agreement means that Google’s dominant position in the Pay Per Click market, is now even more dominant.

There is no doubt that Yahoo! was under pressure from shareholders, after rejecting Microsoft’s outright takeover bid, or the alternative proposal to work with Microsoft on search. Several high profile share holders are calling for major management changes while others have filed lawsuits due to the rejection. The deal is meant to assist Yahoo!’s under performing revenues.

Putting aside the details of the deal (or even the no deal with Microsoft) Yahoo! has abandoned the PPC market, its users and advertisers. Google have increased their already dominant position and bought even more market share which has the effect of stifling competition.

Competition breeds innovation – for both search consumers and also the advertiser. The paid search market is still relatively young and going through rapid changes and growth. The incentive for Google to “win at all costs” by outgunning their competitors with product innovation is gone. Microsoft may very well have the deep pockets, and ownership of the enterprise desktop but they lack search traffic to be a true competitor – at least in the short to medium term.

A lack of competition also means that advertisers are likely to pay more for each click. Advertisers will be forced to pay for Google, rather than the cheaper Yahoo! rate. Whilst this is great for Yahoo! and their shareholders, it is not great for anyone who is already struggling to make PPC ROI effective.

Whilst a combined Yahoo!/Microsoft might not have been perfect, it at least would’ve provided competition for Google, benefiting advertisers and searchers alike.

Hi everyone,

Thanks to Nancy for posting the photos – I was absolutely flat last night when I got back from the fun that was Google Dance, so I sent Nancy the photos because I wanted to share straight away. So now some text.

Google Dance
A lot of fun and a great chance to catch up with some of the people I have mentioned previoulsy. The dance was held at Googleplex with a theme based on the periodic tables. Lots of food and drinks for everyone to share in.

As you can see by the photos (and as soon as I get a decent net connection a video) there were lots of fun to be had. Dunk Google Guy, robot fighting, radio controlled cars and also a very cool video system that super imposed people’s heads onto dancing figures controled by a computer.

Calendar Review
Thanks to WebMasterRadio (Darin and Brandy) I was given a tour of Google Calendar. Being a very proficient Microsoft Outlook user, I know the advantage of taking control of your calendar. My thoughts and obversations were also broadcast on WebMasterRadio.

There are some very impressive features such as:

• Appointments from email – contextually reading a gmail email to determine appointment details.
• Calling up publicly listed calendars and being able to overlay them against your personal calendar. You can even search to find a particular event calendar.
• Private and public calendars.
• Publish your calendar (or parts of it) to colleagues, business partners or even your friends, so they can see what you are doing and make plans around that. Imagine being able to share your schedule to arrange when you are going to go jogging with a colleague rather than playing email “ping pong”.
• Calendar Overlay – run a separate calendar for different parts of your life and turn them on and off as you require. Awesome!

So whilst I will not be abandoning my Outlook Calendar, I am going to import my calendar in (in sync with Outlook) and that way, I can share it with various people I wish. It will make my life easier but it is not going to revolutionize it.

Tonight off to the WebMasterRadio bash. Some further posts on the sessions are still to come once I get a chance to collect my thoughts. Including the keynote session by Google CEO.

The main buzz? Social search is going to be hot! A way that Yahoo!, Google and MSN are going to try to solve the this thing called the “search puzzle”.