New Frontiers in Search Marketing

Search Marketing (both paid and organic) is very big part of the expansion stage software companies’ marketing arsenal. In fact, for many companies, it is the main marketing channel, simply because most potential buyers are corporate users who would do careful online research and review before buying a new software license to serve their business needs. For these relatively young companies, being found in the organic search results is typically harder, as they have not yet have the time to establish their content and “authority” in the search engine indexes (but content marketing services like Compendium Blogware, which powers this blog, are helping to address that). Thus, many of them have to rely exclusively on paid search placements to attract the high quality visitors to their sites. Being found is incredibly important, but with increasing pay per click costs due to stiff competition, software companies are seeing their paid search marketing budget skyrockets and thus their own core business growth strategies in precarious situations.

As always, problems/difficulties lead to breakthroughs. Very early on in the development of the search marketing industry, there are software created to help ease the process of managing search marketing, from the keyword discovery process to bid management and copy optimization. However, sophisticated search engine marketing remains that province of power players – large companies with ample budgets or advertisers who can hire expensive SEM agencies who manage their programs for them. The smaller companies (such as our expansion stage software companies)

More recently, there has been some interesting developments in this area that hopefully can allow smaller advertisers to compete more effectively in this marketing channels, and hopefully also bring about more innovation to the market.

Kenshoo is a SEM management software company based on Israel. Having raised some capital last year, they have since established themselves as one of the leading vendors of PPC (pay-per-click) management software. It is built with a powerful data parsing and analysis engine that helps automate bid management and ad copy creation, so that the management of huge campaigns with thousands of adwords become streamlined and almost totally automated. Kenshoo also offers local SEM management, which is becoming very important in any company’s search marketing strategies.

WordStream is another new player in the space, having just raised 2 rounds since 2009. From the look of it, what sets them apart is that they offer a lot of tool for keyword management, discovery and organization all of which are leveraging a lot of data on the back-end. The common theme between Kenshoo and WordStream is that there is a lot of valuable data out there to help optimize SEM – the users just need the tool to make sense of that data or automate the analysis of the data to create better PPC campaigns.

The most innovative approach is espoused by a brand new company called Trada. Trada is creating a marketplace for crowd-sourcing/outsourcing SEM management – from the copy-writing perspective. Trada allows advertisers to hire SEM experts to optimize their campaigns, based on a set of keywords and some benchmark cost per click. The experts are incentivized to do better because they profit from the difference between the benchmark and their actual cost per clicks. Better copywriting is actually the greatest missing part of any good SEM management solutions – good keywords can be found with tools like WordStream’s, but good copywriting will lead to better conversion and much lower cost per lead. A combination of keywords and great ad copy help improve the conversion dramatically.

Trada’s marketplace will allow smaller companies access to sophisticated SEM expertise, while potentially lowering the overall cost of such sevices. This level the playing field and lead to the final commoditization of search engine marketing. I for one will recommend this to all of our portfolio companies.