Online advertising has undergone various shifts in recent years—beginning with email, followed by display ads and click listings, and now with terms like "programmatic," "social," and "native" popping up all around today's ad landscape.
In addition to those emerging channels, however, there's another channel growing in prominence and impact: vertical search advertising.
Consumers perform a vertical search when they are in the process of actively trying to purchase a specific product or service. The notion of vertical search includes focused shopping sites (e.g., Amazon), integrated search and discovery sites (e.g., Kayak, Yelp), and sites tailored to high-consideration purchases, such as auto insurance, life insurance, and financial services.
Amazon is an excellent example of the emergence of vertical search. Although many may consider Google to be the search juggernaut, 45-50% of online product searches in the US are actually initiated on Amazon.com. Compare that with the 34% of online consumers who use search engines like Google to start their search, and it quickly becomes clear that consumer behavior has shifted and vertical search sites play a critical role in helping consumers find what they want.
In fact, Google even acknowledged the trend in a recent financial filing, specifically identifying vertical search sites like Kayak, Amazon, and Yelp as potential threats to its core business.
Vertical search is a powerful marketing channel that brings marketers closer to their customers, and in doing so opens new doors of opportunity for generating business.
The following are four reasons vertical search marketing is unlocking new value for advertisers.
1. Vertical search signifies high intent
As consumers identify specific products of interest or decide to make purchases, the likelihood that they will rely on vertical search increases dramatically.
For example, those prepared to purchase insurance, book a hotel, or buy concert tickets will almost always perform a search that identifies their intent. They might bypass a horizontal search engine and instead rely on a site that caters to that specific product, or they might add specific keywords to their query. Therefore, companies that buy ad units targeting vertical search will provide their brand with more valuable customers who are close to making a purchase.
The ability to determine consumer intent to such a degree can be transformative to the advertising business model.
Often, consumers take further steps to establish high purchase intent. When consumers take the time to complete a form to disclose personal information about themselves, they are demonstrating a strong willingness to be visible to brands and advertisers. As one can imagine, the value of reaching those specific customers at the time they intend to purchase is at the pinnacle of value-driven advertising.
Adtech companies, including mine, armed with information on demographics and category-specific spending habits, are capitalizing on this group and creating a bridge between brands and high-intent consumers.
2. Vertical search is data-driven
A key promise of digital advertising for marketers has been the ability to accurately identify and engage the right audiences. Whether doing so has been through location data, contextual advertising, or semantic analytics, using data to refine targeting to maximize ROI has been a goal for years.
In this regard, vertical search offers tremendous opportunity to advertisers because the very nature of the consumer search brings delivers detailed data about the person and the exact purchase intent. Consumers engaged in high consideration vertical search are providing structured data—information such as demographic, geography, products preferences, etc.—that enables highly targeted advertising. Quite simply, vertical search is a highly data-rich form of media.
Kayak, for example, has earned significant recognition recently because of its ability to take this type of vertical search data to more effectively convert consumers into sales. That is an example of the potential with vertical search.
As an industry, we're just scratching the surface of how to purpose vertical search data to enhance the consumer experience and the effectiveness of the ads delivered to those audiences.
3. Relevance is built in
Native advertising is receiving significant attention because it delivers on the promise of showing ads that feel relevant and "in context" for consumers. In the native experience, branded content is inserted onto websites in a way that looks and feels as though it is consistent with the other content on the website.
One of the key benefits to native advertising is that it draws a consumer to act. By aligning with the look and feel of the content with the site, native creates a sense of credibility that helps make the click a natural progression from actual site content to advertised content.
Vertical search advertising is thus a form of native advertising. Vertical search ads are delivered exactly within the context of what the consumer is looking for (a consumer is shopping for auto insurance and they are shown auto insurance ads) and is designed to fit within the experience of the site to ensure that consumers have the trust and comfort to click on the ads.
It's all about relevance. Vertical search provides a highly relevant and contextual consumer experience that encourages higher conversions and more sales.
4. Vertical search advertising is accessible
In July 2016, comScore published a report called The Halo Effect, which looked at how advertising effectiveness might shift depending on where an ad was placed. Essentially, the report points out that in many cases advertising is more effective when a consumer sees the ad on a premium publisher's site (comScore's "premium publisher" consisted of member of the Digital Content Next, an industry group of well-known publishers).
Some of the findings of the report are intuitive. For example, an ad on the Wall Street Journal site carries more weight with consumers than an ad on an unknown blog page, and often results in higher recall. But, interestingly, the report also highlighted that there is very little performance uptick for consumers who were further down the sales funnel and ready to purchase.
One conclusion here is that high-priced premium sites are not necessarily the best places to target in-market consumers. Instead, vertical search can play an important role in targeting those consumers via highly relevant ads.
In the past, the limitation for many advertisers has been the lack of accessibility to this media and these consumers, as many vertical search sites are fragmented across the Web and are often not well-known "beachfront properties." But the advent of new technology and tools has helped to aggregate this fragmented market, allowing advertisers of all sizes to access this cherished consumer pool in a scalable and efficient fashion.
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When users go beyond traditional search in favor of sites that offer in-depth knowledge of a specific subject, and then take an action that identifies them as high intent, a lucrative opportunity for marketers presents itself.
Vertical search is thus a disruptive and growing advertising channel. There have been many iterations of online marketing, but this emerging channel enables brands to engage with their prospective buyer at the best possible moment.