Google and Rivals Focusing on the Ad Game

Paid search comprises mostly pay-per-click search advertising, in which advertisers bid for placement in the search-results page served to people who use Internet search engines; advertisers pay only when a user who clicks on their advertisement or listing visits their site. But paid search also includes variations such as paid inclusion, in which advertiser's listings are listed in order of relevance rather than the size of the advertiser's bid.

Keeping Track

Search-engine companies have made progress on tools enabling advertisers to set up their campaigns, says Kevin Lee, CEO of Did-it.com, a company that helps advertisers manage their search-engine marketing campaigns.

Where there's room for improvement, he says, are tools that are able to monitor the return on investment of particular campaigns, then automatically adjust those campaigns in response. These services -- which Did-it.com and other third parties offer themselves to search-engine advertisers -- can judge, says Lee, the performance of large numbers of search terms for advertisers.

That way, an advertiser can figure out, for example, whether a campaign is more effective at a particular time of day -- and respond by suspending the campaign during the time of day when it isn't paying off. This adjustment of an advertising campaign midstream, says Lee, "is where it becomes a little more challenging."

Automation is necessary, says Lee, because once advertisers start bidding on hundreds or thousands of search terms, changing bids manually and/or individually becomes logistically impossible. It's also preferable, he says, that one tool can work with a variety of search engines, so a campaign can be managed across several advertising vendors.

Exactly what Overture and Google will be delivering, however, is still unknown. Armstrong promises return-on-investment and keyword-management tools. Earlier this year, Overture purchased a marketing analytics company called Keylime Software.

"Keylime's technology for managing and analyzing the performance of search campaigns represents an additional step in offering advertisers a deeper understanding of their online-marketing effectiveness," Overture CEO Ted Meisel said on a company conference call last month.

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