Guest Blogger: Kevin Heisler on AOL Search Marketplace

Nate Elliott | April 12, 2007, 12:26 PM

There's been lots going on in search this week. SES New York was apparently bigger than ever, and there were some key announcements that affect not just US companies but the European search marketing industry as well. In a further sign that old-school agencies are increasing their focus on search, global agency network IPG announced its acquisition of Reprise Media. But perhaps the biggest announcement of the week was that AOL will now be able to sell Google AdWords directly to their advertisers, rather than forcing those advertisers to run through two separate systems.

This news doesn't just offer advertisers greater convenience and control -- as JupiterResearch Search Marketing analyst Kevin Heisler points out in this insightful take on the news, it's a key step in Google's efforts to transorm itself from an advertising sales company to an advertising infrastructure company:

"AOL Search Marketplace enables advertisers to buy Google AdWords directly from AOL. As part of their Dec. 2005 partnership, Google invested $1 billion for a 5 percent stake in AOL. Google powers AOL's search engine and serves up sponsored search links. Google also agreed to allow AOL to white-label their AdWords platform and sponsored listings. That gives advertisers the ability to buy search advertising that targets the AOL Search audience on the AOL client apps and AOL.com.

"The benefit to advertisers is further customization and integration between search and display advertising, including segmentation and optimization. Advertisers can integrate search ads with third-party display ads from AOL's Advertising.com division, as well as video advertising and performance ads. AOL’s agreement leverages a growing trend toward more advertiser choice and more control over campaigns.

"For years, savvy marketers have used search engine referrer data to determine what syndicated Google partners performed the best. Now when advertisers buy keywords in the AOL network they can see how that search buy compared to the Google AdWords campaign. As my colleague, David Card points out, conventional wisdom holds that AOL searchers convert better than average.

"Last year, AOL advertising revenue grew 41 percent from 2005 levels. Ad revenues for the fourth quarter of 2006 increased 49 percent year-over-year.

"Google CEO Eric Schmidt said in a Wired Interview think of Google first as an advertising system, second as an end-user system, Google Apps. For AOL, Google now serves as an advertising operating system."