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Web Search & Marketing Newsletter - September 2009

Welcome to the new issue of our monthly newsletter covering the latest web search and marketing news, trends and advice.

This month we look at Google's announcement of their next-generation search architecture, dubbed Google 'Caffeine', and the implications for website rankings. We also review how Australia's Internet advertising sector continues to grow, from the latest IAB quarterly and annual figures. Finally this month, we cover the launch of the new Bid Simulator Tool for Google AdWords, which can be used by advertisers to view the potential impact of a different bid level within their PPC advertising results.

Read more about these stories below, or you can also browse through previous editions of the newsletter, either by month or by subjects covered. If you'd also like to keep up with the latest developments during the month, don't forget our web marketing blog - we've included a summary of some recent stories from the past month at the end of this newsletter. You can also now follow us for regular updates on Twitter.

On to this month's edition...

Introducing Google Caffeine

The Google Webmaster blog recently announced a 'secret project', since dubbed 'Google Caffeine', that the company has been working on over previous months. It is supposedly the next-generation architecture for Google's web search engine and, in an unusual move, they have opened up the test site to users, requesting feedback on the performance of the new technology.

The new Google Caffeine search engine can be viewed and tested here . There are no obvious differences to the look of the search interface because Google has been working on changes 'under the hood', targeting improvements in the size of the search database, the indexing speed, accuracy and comprehensiveness of the search experience.

Although Google makes almost constant changes to its search algorithms and infrastructure, it hasn't made an update of this magnitude since 2006 and cynics note how this announcement of the new Caffeine search indexing tool has come so soon after Microsoft launched their new Bing search engine and combined with Yahoo!. However, Google say they have been working on these latest developments for many months and not surprisingly, such an announcement has generated much press interest and comment, as well as some initial good reviews about the performance of the new tool.

The impact of the new indexing infrastructure does seem to have increased the speed at which the results are generated for some searches, although of course the test site isn't yet under the usage pressures of the main site, plus there doesn't appear to be so much integration of the 'universal' results at this stage, such as videos, images and news stories. Tests of the results being generated are showing notable differences in some areas and very little ranking changes in others, depending on the type of searches made.

Of course the test site is still undergoing development and feedback, so Google will do a lot of fine tuning before making Caffeine mainstream, but there's a suspicion that social media will be playing a bigger role in Google's results. Those in the search engine optimisation industry are keeping a close eye on how this will affect ranking positions but the basic principles of SEO are still likely to apply in a significant way.

Once the developments from Google Caffeine are finalised and rolled out to the main search market, Google is hoping that the relevancy of results will be improved for the user and so maintain their dominant position in the search market, whatever attention and search enhancements Bing achieves. There may well be implications for the ranking visibility of some companies who depend on their Google rankings for their site visits, but this is an accepted risk of achieving natural rankings on search engines.

We will continue to review and assess what wider impact these changes at Google may have on the search and online business market, but if you would like any further information in the short term, please contact us now.

Further growth in Australia's Internet advertising sector

The latest Internet advertising figures published by IAB Australia in August show continued growth in the online advertising market, which is bucking the general advertising market trends. This comes at a time when new figures from Nielsen's research panel show that the Internet market in the country has reached 13.8 million online users.

The Online Advertising Expenditure Report (OAER) is published by IAB Australia using data compiled by PricewaterhouseCoopers. The new figures for the April-June quarter and the past financial year in Australia show an 18.5% year-on-year growth for the 12 months to the end of June and a 9.8% increase for the quarter. Online advertising expenditure for the year ending June 30 2009 exceeded $1.8 billion and totalled $453 million for second-quarter 2009. This means that Internet advertising is still expected to hit the $2 billion spend level for this year.

In the past financial year, Search and Directories accounted for 49% of the total advertising expenditure and saw a growth of 25% year-on-year. General Display Advertising accounted for a 27% share of the market and grew by 19.6% and Classifieds held a 24% share and grew by just 6% over the previous year.

For the second quarter of 2009, the Search and Directories category increased by 19% on the same period last year, with General Display increasing by 10% and Classifieds saw a decrease of 5.9%. The IAB commented on the report that these latest figures demonstrated the continued confidence in the market for online advertising at a time when the economic situation is challenging.

Not surprisingly, search advertising continues to do well and is driving the growth in the industry due to its targeted and measurable nature, although the bulk of the figures in this sector remain estimated since Google does not reveal these to the IAB researchers. Display advertising is also showing continued support as a growing medium as Internet usage continues to develop. Not surprisingly, however, is the decline in online classified spend which has been impacted by the declines in the employment, real estate and automotive markets.

The new figures from Nielsen come from their revised NetView measurement system which is used by online advertisers. The higher estimates of the national market size have been welcomed by the industry and places the online marketplace in a stronger positions against other established media channels, such as TV and radio. Google takes the top ranking publisher position with a unique audience of around 11 million users per month, followed by NineMSN at 9.7 million users, Yahoo!7 at 7 million, News Corp sites at 5.5 million and Fairfax Digital close behind at 5.3 million.

If you'd like to know more about these figures and the implications for your online advertising strategy, please contact us now for a discussion.

Google introduces Bid Simulator tool for AdWords

The Bid Simulator is a new tool that has recently been introduced by Google as part of their new AdWords management interface. The tool can be used by advertisers to view the potential impact of a different bid level within the advertising results for each search term being used, but what value does it really offer?

Using data from the past 7 days, the Bid Simulator tool re-calculates the number of impressions for which an advert could have shown had the advertiser chosen a different maximum CPC, as well as how many clicks the ad could have received for those impressions and how much those clicks could have cost.

According to Google, the new feature provides "increased transparency into the AdWords auction and provides the insight to make more informed bidding decisions about advertising objectives". The figures are, of course, estimates based on expected behaviour and recent trends, and the initial feedback from professional PPC marketers has been mostly negative about this new tool's real intentions.

The way in which the tool regularly indicates the benefits of an increase of bid levels has been treated with wide-spread scepticism. It often shows that raising bid levels by large amounts can increase the number of impressions (which doesn't necessarily correspond to a rise in clickthrough rates). So it would seem to be more beneficial to focus upon improving quality scores to lower cost-per-clicks and improving advert copy, rather than just manipulating bids levels to increase impressions.

A Google spokesman stated, when questioned about the high frequency of raising bid levels within the tool, that "shown bids are not recommendations but are simulations for various bids to give insight to the advertiser. The feature aims to show missed opportunity". Also that "past performances cannot guarantee future results so the simulations should not be taken as exact, they are simply predictions".

It's an important point that an advertiser should keep in mind when using the Bid Simulator so that the predictions need to be viewed with a pinch of salt, like most of Google's PPC projections. In other words, rather than being recommendations, they are just projection models with a large frequency of incredibly high simulated bids.

Professional PPC marketers have the impression that Google created this tool to take advantage of 'rookies' and other irregular users of AdWords by encouraging advertisers to bid highly in order to simply make more money from their clicks - so not encouraging the creation of highly optimised campaigns, or the reduction of cost-per-clicks through improved quality scores.

Thus, it is suspected that many full-time search marketers will find the Bid Simulator will only demonstrate the projection that they really don't want to pay any more than they already are, and so the focus on bid management needs to be placed in different areas.

If you'd like to know more about this new bid management tool and the implications for your AdWords management, please contact us for further information.

Book Review - Don't Make Me Think!

As part of our series of book reviews featuring web design & Internet reference books, we look this month at a recognised classic text in this field, Don't Make Me Think!, by Steve Krug. The second edition of this respected handbook clearly presents the principles that are important to keep in mind when evaluating site usability to enhance a visitor's experience and should be read by anyone designing or marketing a business website.

Recent articles from The Marketing Workbench

The Marketing Workbench is our regular web marketing blog covering news and comment on Internet marketing events and trends. If you want to keep track of current stories you can visit this section of our website on a regular basis, or set up an RSS feed. These are just some of the items posted over the past month:

We hope you've found this month's issue useful. Please contact us if you need any more information on the items covered, or our advice on any aspect of your website's performance. Also, if there are any issues you would like to see in future editions of this newsletter, please submit your suggestions to us.