In a recent posting I celebrated the fact NZ online advertising spend continues to grow & that paid search is now the major component.

However compared to Australia, NZ is still well behind the curve in terms of adopting online marketing.

According to latest IAB figures NZ online spend accounts for only 8% of total advertising spend, whereas in Australia it is around 25%.

The difference in the NZ & AU markets is very obvious when paid search spend is examined.

• In NZ paid search for the year ending June 09 was only NZD$67 million (36% of total online spend).

• In stark contrast paid search spend for the same period in Australia was AUD$884 million (49% of total online spend).

• Reduced to a per capita basis, Australian paid search spend is AUD $42 per person. By comparison NZ’s is only AUD $13.  So proportionately the Aussies are spending 3 x more than we are in NZ.

Damn, I hate it when the Aussies beat NZ!

A lot of ad agencies have been resistant to paid search, despite its unquestionable effectiveness when compared to other media. I think there are a number of factors for this:

Commission (or lack of)
Google PPC media charges are non-commission bearing & this would have to be the number one reason most agencies have actively ignored search until now. The view many seemed to have was that every dollar spent on search effectively cost them lost commission they could earn on traditional commission-bearing media. As a result media plans that should have included search didn’t, or at best it was token.

Obviously the advertising world remuneration structure is changing dramatically. Ad agencies are having to adapt & come up with alternative charge models, such as a transparent management fee on top of media charges.

Measurability
Search is highly measurable & some cynics suggest that not all agencies have liked the associated accountability this brings.

Skills Shortage
There’s a shortage of truly skilled search marketing practitioners in NZ, as there is in other markets. Google have done a great job making the AdWords interface relatively easy to use & training agency staff. However running complex search campaigns takes significantly more time & effort than most agencies realise. As a result many struggle to make money from paid search compared to other ’set & forget’ type media.

Client Ignorance
Until recent times search has been a relatively arcane subject & many clients simply weren’t aware of the benefits of search. This has changed & smart marketing managers are increasingly demanding that media plans from their agencies feature a decent search component.

The good news is that things are gradually changing & increasingly agencies are being compelled to factor search into the media mix. This sea change is clear when you look at the latest IAB figures which show advertisers are shifting spend online & a major part of this is search.

According to IAB, New Zealand television ad revenues were down 13.3% for the first half of 2009 compared to the same period last year. In stark contrast online advertising grew 7%. Online represented 8.3% of all NZ adspend in 2008, and given the current trends, IAB expect it to exceed 10% for the full 2009 year.

One of the key drivers in this growth has been paid search. It’s now the biggest online advertising channel & as at Q2 paid search accounts for 36.3% of all online spend (up 26.14% on the same period last year).

The IAB expects growth in paid search to continue and eventually account for about 50% of online spend, as in other more developed markets like Australia & UK.

Love it or loathe it, advertising agencies really can no longer ignore search. As a result many ad agencies have either been trying to develop skills in-house to manage paid search campaigns (not as easy as it sounds), or have decided the better path is to partner with independent specialist agencies like SureFire Search (shameless plug). An example of this is Ogilvy who use SureFire to provide search marketing services to their clients.

This week I’m going to get straight into things. Not because I’ve nothing to say (the reverse in fact) but there’s so much good stuff this week my views will have to wait till next time!

One of my big issues with Google is the fact that it makes its products, such as AdWords appear to be so simple a four year old could work, when the reality is that they are incredibly complex. Well, whilst I concede that it is hardly rocket science there are myriad different factors to take into account when building or running an AdWords account. One of the key ones is “quality score” which I have touched on before but think it is worth looking at again as Google have released an article which explains the basics of paid search. So please have a read of the article below as it will give those of you out there who aren’t completely au fait with AdWords to a handle on the basics… Quality scores and ad auctions

Clutter is a massive issue on the internet. And it is at its worst in the social media space. Social media sites require massive buy in (mostly in time) and unless your friends also use the particular site then your interest will invariably wane quite quickly! I’ve always felt that the “killer app” will be finding a way to connect all these social media sites and to integrate new ideas into a Central hub, for lack of a better phrase. Google around a month ago launched “Google Friend Connect” which is still in beta and not much seems to be happening. However Facebook this week released the launch date for “Facebook Connect” which is a product that ties a user’s Facebook account to other sites on the Internet. Watch this space as I have a feeling that this will be the app that will reignite people’s interest in Facebook! Checking In On Facebook Connect

Talking about social media this article is definitely worth a read as it explains that social media can be used as a direct sales tool but only if used correctly! B2B Marketers Struggle With Social Media

Sorry to all of you that have no interest in social media as this week seems be turning into a social media newsletter but backing up my argument of the current web2.0 Holy Grail of inter-site integration is news that Google has teamed up with OpenID. For those of you unfamiliar with OpenID, it is the idea that Internet users should be able to use a single username/password combination to login at any site, all via an open source protocol. Microsoft joined OpenID last week and now Google has joined the party. OpenID is far from perfect but again keep your eye on this as I think with the support of both Windows and Google it may start to make more sense! Google Now Supporting OpenID

I often find it difficult to explain the importance of having a digital “strategy”. Search in particular is often marginalized in media plans which for some businesses makes sense, but if your business relies on web sales or web based leads then your search needs a strategy. And that means balancing paid search with organic optimization. Please, please read the article linked below but if you don’t have time then just take this thought away with you:

“Paid and organic search listings work synergistically, providing entry points to your site and showing the user that you’re serious about search. They must be balanced carefully, however. Buy sponsored listings on keywords that may be difficult to obtain (or maintain) organic rankings for, and ease up on search terms for which your organic presence is firmly rooted. This will help you make the most efficient use of your marketing dollars.”

Couldn’t have put it better myself! The Organic and Paid Balancing Act

Finally for those of you like me were completely underwhelmed by Windows Vista take a sneak peek at Windows 7. Come on Microsoft!!! MS offers peek through Windows 7

And for my website of the week I’m going to recommend you check out last.fm. If like me you get a little bored of your music collection you can simply type in your favourite artist into the box in the middle of the page and in an instant the site develops a playlist based on that artist. Brilliant, and free!

This week I’m excited to start our news round up with some news from right here in New Zealand. Google announced yesterday the ONE News YouTube Election Debate between Helen Clark and John Key, a history-making initiative with New Zealand’s public broadcaster, TVNZ. This marks the first time the head of a national government and a challenger will face YouTube video questions in an official live TV debate. The debate will be broadcast live on TV ONE on October 14. For your question to be included in the broadcast check out the NZ You Tube Blog.

I’ve been asked a number of times over the last couple of weeks my take on the Yahoo / Google Advertising Agreement. I’m afraid like most people I was a little confused about the whole arrangement so if like me, you are at all interested check out this site for a better answer than I can ever provide! http://www.google.com/yahoogooglefacts/.

We are at any one time running a multitude of pay per click campaigns for different markets, countries, industries and we are always amazed at the huge difference in CPC charges from as little as $0.05 to as much as $35. This has got a lot to do with the industry and the market but also a great deal to do with what Google calls “Quality Score”. In the same way that Google scores a website for organic search the same is true for paid search. By ensuring that your quality score (which includes factors such as: landing page relevancy, historical click through rate, page load time) you can start to see a major decrease in your CPC and thus an increase in your ROI. More on this here: Google Quality Score Explained

I guess it would be difficult not to mention the economic downturn and the effect it may, or may not have on digital marketing. I’ve been reading lots of contradictory information from people trying to speculate on what will happen to the advertising industry globally in the coming months. I like the article below as it uses what we as marketers understand best: trends. This article looks at what we should expect based on the outcomes of previous downturns… Economic Depression 2.0

One of the truly amazing things in my opinion is the way Google takes conformity and throws it on its head. A shining example of this is Google’s vision for our wireless future. “Earlier this week, the search giant filed a patent application with the U.S. Patent Office describing its vision of an open wireless network where smartphones aren’t tied to any single cell phone network. In Google’s open wireless world, phones and other wireless devices would search for the strongest, fastest connection at the most competitive price. Essentially, wireless operators’ networks would be reduced to “dumb pipes”. Google reveals wireless hopes in a patent

So, you’ve decided to start a new business, or you want to extend the business you have. One of the first things you’ll need is a domain name. As we know Google tends to give weight to keywords in the domain name. This increases the importance of selecting a good name. This article gives you a step by step guide to choosing an SEO optimised domain name: How To Choose Domain Names For SEO

Finally a couple of fun little posts: It was bound to happen but the headline from this BBC article made me chuckle: Google ‘Goliath’ Microsoft says. And, to celebrate its 10^th birthday Google is giving us the chance to step aboard a Time Machine: Search like its 2001.

Have a great weekend and ’till next week!