Australian paid search spending patterns are following a similar pattern to the UK which could lead to bidding wars for premium keywords and click fraud, Iprospect chief executive David Holmes has warned.
In a report the search engine marketing firm is set to send to clients, it also predicted pay-per-click advertising is likely to grow beyond 50% of Australia’s paid digital advertising pie this year.
Holmes said the reasons for the prediction included iProspect research and spend data showing that search was at or above 43% of digital advertising spend in 2007. In addition, current growth of search was significantly greater than the growth in display advertising, although the latter was also growing strongly.
Holmes said the interest in search from clients was currently very strong. “The Australian market is following the UK market and the UK has just reported search at 57% of digital ad spend,” he said. “Australia is not that far behind the UK but is on a two year lag compared to the US.”
Iprospect has predicted that if Australia continues to follow the search spending patterns of the UK, with the emphasis on paid search rather than natural, the danger is it will experience similar problems to that market. If this transpires, bidding wars for premium keywords will see costs per click skyrocket, while click-fraud will become more prevalent.
Click fraud, which according to Iprospect is not a problem in Australia, occurs when a person, automated script, or computer program imitates a legitimate user of a web browser clicking on an ad, for the purpose of generating a charge per click.
However, Fionn Hyndman, head of DGM Asia-Pacific, said the increase in prices for premium keywords still had a way to go.“If you look at the competitive areas, they've gone up hugely in the last couple of years,” Hyndman said. “The whole thing comes down to sustainability for advertisers, and people need to look at not only the cost of a keyword but the value that keyword delivers. There’s a big difference.”
“As the search marketplace becomes more competitive, people will either have to understand the value of the terms on which they're bidding, or they will be priced out of the market.”
But with an auction model it was always going to be an open marketplace, he said. “As long as people are willing to pay it, the price will continue to rise.”
Hyndman also downplayed the threat of click fraud. He said all the technology and monitoring that were going into defeating click fraud in places where it was more of a problem, such as the US, meant that anyone who was trying to commit this crime in Australia, where it was practically non-existent, was unlikely to succeed.
“I don't see it as being a problem in the foreseeable future,” Hyndman said.
As well as this warning about costs, Holmes said the Australian search industry is nowhere near as sophisticated as it is in the US and “there is no excuse”.
While the US had three to four search engines that must be included in order for a campaign to be successful, Google had greater than 90% of the search marketing spend locally, Holmes said.
“It should be a lot simpler here because agencies are optimising one search engine rather than four, but that isn't the case,” he said. “There is no reason why the Australian market shouldn’t be as sophisticated as the US in paid search,” he said.
The other major difference between Australia and the US was the local industry’s reliance on paid search rather than organic, Holmes said.
According to Jupiter/Iprospect research conducted last year, over 70% of click traffic on Google Australia is organic, so all the money is being invested in 30% of the audience. “A search engine marketing firm needs to use both paid and organic and integrate them,” Holmes said.
News provided by B&T
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