Australians have been warned that their unwavering loyalty to Google as their default
search engine risks triggering huge price rises for paid search advertising, a trend
that has forced some advertisers in Britain out of the boom category.
An estimated 40 percent of the $1 billion Australian internet advertising sector is
spent on paid search.
John Tawadros, the worldwide chief operating officer of the search engine marketing
group iProspect, warned that Google's market dominance meant prices could only
escalate in Australia.
"It's an auction-based system so it can only go one way," Mr. Tawadros said while in
Australia to launch the company's first office in the Asia-Pacific. "If you look at
the US market, Google's prices were up 12 percent in the third quarter over quarter
two."
Google North America controls 62 percent of all search requests, followed by Yahoo!
with 25 percent and MSN on 4 percent.
"The biggest difference in Australia is that google.com.au has 72 percent [of all
user search requests] and google.com has another 17 per cent," Mr. Tawadros said. "So
that's 89 percent of all search activity which goes to Google [in Australia]. That
is massive."
Yahoo! and MSN in Australia account for 4 percent each of search requests. In Asia,
Yahoo! was the lead player. Miva dominated Korea and Baidu was the top player in
China and Hong Kong.
One of the few options to ease demand and pricing pressure on Google's paid search
platform in Australia was for advertisers to be smarter in managing their "natural"
or "organic" search engine listings, Mr. Tawadros said.
In North America 72 percent of Google users opted for "organic" search results versus
28 percent who clicked on paid listings.
The ratio in Australia was similar, Mr. Tawadros said.
While Australian internet users were nearly as sophisticated as Europeans and North
Americans in their search techniques, Australian advertisers were about two years
behind their counterparts in marketing techniques.
"While paid search is important, 70-80 percent of your traffic volumes are for
organic search," he said.
"There is substantial growth in paid search, without a doubt, because it's the easiest
thing for advertisers to get their head around. … But you're going to get those price
rises."
David Holmes, iProspect's Australian chief executive, said Australian companies
should heed the lessons from the paid search market in Britain. "It's a more advanced
market but it [ignored] search engines other than Google … it is almost too expensive
for some brands to actually advertise in search, whereas in this market search is the
cheapest media unit we've got — at the moment."
