Ask Jeeves’ sponsored listings portends fragmentation of search marketing

By Charlene Li

Ask Jeeves announced on Monday that it would start offering its own sponsored ad listings product that would appear at the top of search results, above similar paid search ads from Google. An excellent description of how it will all work is available at Search Engine Watch. I think this announcement is significant in what it potentially means for both the search engine industry and for marketers actively engaged in it.

First, there’s a fundamental problem with search ad networks like Google and Yahoo! that Ask Jeeves is addressing – that you can’t break out and buy sites separately from the rest of the network. If a marketer gets better results from a specific site, she should be able to fine-tune that buy and be more competitive. Ask Jeeves is hoping that it can give that benefit to more and more marketers – especially those sophisticated enough to manage a separate ad buy on Ask Jeeves from Google. Interestingly enough, Ask Jeeves is NOT going to allow the same sort of site selection within its own network (for example, being able to buy Ask Jeeves and not Excite).

Second, Ask Jeeves is being very smart to not fall far from the Google tree in seeding its new ad product. The ads are exactly the same format as Google and follow the same ranking rules, meaning that advertisers can easily import their existing ads on to the Ask Jeeves platform. Contrast that to MSN’s adCenter which takes search marketing to the next level by adding in demographic, geographic, and attitudinal data, but also makes it much more complicated. The contract between Ask Jeeves and Google expires at the end of 2007. And while I believe that Ask Jeeves hopes that their network will be strong enough that they can discontinue the relationship at that point and retain all of the listings, I think the reality is they will still want to retain some backfill for keywords that aren’t attracting enough advertiser interest. Why not? It’s still a win-win for both Ask Jeeves and Google as long as they are still both making money.

Third, I believe we will see more sites offer premium ad positions in their search results, while still using an ad network like Google, et. al. to backfill. This is especially the case if they have a unique audience that they believe would provide better targeting capabilities – think CNET.com or NYTimes.com. These sites are also eager to tie in their top brand-oriented advertisers, and would like to keep the relationship “in-house” rather have those marketers buy search positions from ad networks. Search marketing technology providers like Kanoodle, Quigo, and Industry Brains will provide the private search ad placement technologies for these independent ad networks.

What this means: Google and other ad networks have little to worry in the short run as these publishers continue to use them to backfill positions that they themselves can’t sell. And it’s unlikely that Google et. al. will use hardball  tactics to force these publishers – the publisher would simply go to another ad network for backfill. In the long run, Google will see some share decline, but more importantly, it will see decline in the echelons of the top advertisers – relationships that it will need to preserve if it hopes to successfully launch new ad products like Site Targeting. A crucial step will be for Google to unbundled its paid search ad networks and allow similar site-based targeting and pricing. It will take the defection of many top publishers before Google will take such a step, as allowing site targeting fundamentally degrades the forced network buy that makes Google so successful today.

Comments

[Wadim]

This very GooD idea IMHO :)