Piper Jaffray on the future of the search industry

An interesting report into the future of the search engine industry. What does the future hold for search engine marketing?

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Piper Jaffray and Co has just released a report which looks at the future of the online advertising industry, which includes some predictions about the future of search.

The report, entitled ‘The User Revolution: The New Advertising Ecosystem and The Rise of the Internet as a Mass Medium’, has identified five key trends in search:

Search is the new portal

The report says that, over the last five years, search has gradually changed from a tool for finding websites to become the new navigational platform, or portal. Use of search has increased as search engines have provided answers to users’ questions, queries, problems, and shopping needs.

For this reason, many internet users go to a search engine first when looking to carry out a task online. Piper Jaffray’s survey reveals that 41% of respondents use search to navigate to a website, a larger percentage than those either using portals or typing in a URL.

Search is becoming a branding tool

The report argues that search has gone beyond use as solely a vehicle to sell products and services into a method of spreading brand awareness, generating leads, and acquiring traffic.

Piper Jaffray identifies the use of search in enhancing brand awareness as potentially the largest area for growth in the search market, citing a recent Search Engine Marketing Professional Organization (SEMPO) survey, in which 77% of companies with 500+ employees are using search in this way.

Google’s dominance is increasing

In the past three years, Google’s market share of US search has increased from 34% to around 50%, and 60% globally. The report believes this trend will continue for the following reasons:

1. Word of mouth, and the popularity of Google is creating more momentum for the search engine.

2. Google’s relevancy and ease of use continues to be the best in the industry.

3. Once users have become accustomed to using Google, they are unlikely to change unless another search engine offers a superior service.

4. Google’s portfolio of products has created a virtuous cycle of brand affinity.

Local search remains a looming opportunity

Local search makes up between 10% and 30% of search queries, with Piper Jaffray’s 2006 Online Media Survey identifying local search as the second most popular online service.

The report predicts that local search may eventually make up 50% of all online queries.

New search technologies

The final key search trend highlighted by the report is the growing application of technology to the search process, which will eventually bring smarter, more personalised search results.

An interesting report and definitely worth a read.

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