Search Engine Marketing (SEM) Trends and The Future of Search in North America Ashmanov and Partners Conference 2008 Jeffrey Pruitt iCrossing Executive Vice President, Search SEMPO President

“Search and Search Engines are the collective consciousness of today’s World giving equal access to anyone, anywhere.”

The Gold Rush

Level the Playing Field

COPYRIGHT ICROSSING / PROPRIETARY AND CONFIDENTIAL 5 Optimization.ru Conference 2008 | Moscow Internet Connection: Anyone, Anywhere at Anytime

Equal Opportunity

Your Choice

Agenda A New Digital Paradigm for Brand Success Search: Past and Present –Search Marketing Statistics Search is Evolving –Digital Asset Optimization –Performance Media Digital Agencies –How organize for trends in search

Always-on Network

COPYRIGHT ICROSSING / PROPRIETARY AND CONFIDENTIAL 10 Optimization.ru Conference 2008 | Moscow Network of Human Beings

COPYRIGHT ICROSSING / PROPRIETARY AND CONFIDENTIAL 11 Optimization.ru Conference 2008 | Moscow Brands need a new model to be successful Creating connected brands. Brands must be aware of their world - using their “senses” to understand their environment, especially their customers. Brands must live in their networks, always-on, agile and adaptive – they must participate and engage with their customers. Brands must behave in ways that are authentic, and earn the trust of it’s customer. Brands must contribute to their networks, providing tools and content that are relevant. AwareActiveTrustedUseful

Agenda A New Digital Paradigm for Brand Success Search: Past, Present & Future –Search Marketing Statistics Search is Evolving –Digital Asset Optimization –Performance Media Digital Agencies –How organize for trends in search

COPYRIGHT ICROSSING / PROPRIETARY AND CONFIDENTIAL 13 Optimization.ru Conference 2008 | Moscow Source: eMarketer,,US Online Advertising Spending,Report, October 2008 $3.85b (38%) $10.78b (42%) U.S. Online Advertising Spending Total Dollars in Billions by Format, * Projected PAST $19.65b (47%) FUTURE $0.25b (3%)

COPYRIGHT ICROSSING / PROPRIETARY AND CONFIDENTIAL 14 Optimization.ru Conference 2008 | Moscow Source: eMarketer,,US Online Advertising Spending,Report, October 2008 U.S. Online Advertising Spending Year-over-Year Percent (%) Change by Format, PASTFUTURE

COPYRIGHT ICROSSING / PROPRIETARY AND CONFIDENTIAL 15 Optimization.ru Conference 2008 | Moscow U.S. Advertising Spending Total Dollars in Billions by Media Type, * Internet includes yearly totals for Display, Paid Search and Natural Search Sources: eMarketer,,US Online Advertising Spending, Report, October 2008; TNS Ad Spending by Media Report,

COPYRIGHT ICROSSING / PROPRIETARY AND CONFIDENTIAL 16 Optimization.ru Conference 2008 | Moscow U.S. Advertising Spending Year-over-Year Percent (%) Change by Media Type, * Internet includes yearly totals for Display, Paid Search and Natural Search Sources: eMarketer,,US Online Advertising Spending, Report, October 2008; TNS Ad Spending by Media Report,

COPYRIGHT ICROSSING / PROPRIETARY AND CONFIDENTIAL 17 Optimization.ru Conference 2008 | Moscow Annual Advertiser Spend Forecast By Vertical, Source: Forrester U.S. Interactive Marketing Report, 2008

COPYRIGHT ICROSSING / PROPRIETARY AND CONFIDENTIAL 18 Optimization.ru Conference 2008 | Moscow Organic SEO Most Popular of SEM Programs By Advertiser Respondents, Source: Search Engine Marketing Professional Organization survey of SEM agencies and advertisers, December Global Results. Copyright © 2005

COPYRIGHT ICROSSING / PROPRIETARY AND CONFIDENTIAL 19 Optimization.ru Conference 2008 | Moscow Rank AgencyHeadquartersSEO/SEM Revenue Percent ChangeNumber of Employees 12iCrossingNew York$63m$46m37%350 27Avenue ASeattle$30m$12m156% iNew York$28m$19m48%175 4NAWebsite ProsFlorida$25mNA22%700 5NADoubleClick/ Performics Chicago$24mNA58%242 6NALeapfrogIllinois$21mNA 85 76Efficient FrontierCalifornia$20m$13m96%140 83iProspectBoston$16m$23m- 30%115 98ImpaqtPittsburg$14m$11m18%87 10 Acronym MediaNew York$12m$10m20%65 Top 10 Search Marketing Agencies Source: Advertising Age DATA Center, Top Search Marketing Agencies Fact Pack, 2006, 2007

COPYRIGHT ICROSSING / PROPRIETARY AND CONFIDENTIAL 20 Optimization.ru Conference 2008 | Moscow Current Economic Condition “91% are using online advertising, and over one-half (+50%) indicate that their companies plan to maintain or exceed current levels where possible” Source: eMarketer, U.S. Online Advertising Spending, Report, October 2008 “55% of marketers said they’re cutting expenditures on traditional media, precisely in order to increase funding for online efforts” According to a McKinsey & Co. survey of 340 senior marketing executives worldwide…

COPYRIGHT ICROSSING / PROPRIETARY AND CONFIDENTIAL 21 Optimization.ru Conference 2008 | Moscow Current Economic Condition The Internet… Is inherently more measurable and accountable than are traditional channels Allows for better, more-granular targeting Is interactive, thereby allowing for a higher degree of engagement Is accounting for a larger share of total media time Plays into the consumer-in-control movement Provides marketers with the potential to gain rich insights into consumer behavior Allows marketers to reach prospects throughout the entire consumer buying cycle “In the recession of 2009, marketers will be making cuts almost across the board, and will seek safe harbors and cost efficient alternatives.” - Jack Myers, Media Business Report Source: JackMyers Media Business Report, October 13, 2008 What is behind the bullish projections for online ad spending?

Agenda A New Digital Paradigm for Brand Success Search: Past and Present –Search Marketing Statistics Search is Evolving –Digital Asset Optimization –Performance Media Digital Agencies –How organize for trends in search

Digital Asset optimization

Platform Content Digital Asset Optimization

COPYRIGHT ICROSSING / PROPRIETARY AND CONFIDENTIAL 25 Optimization.ru Conference 2008 | Moscow Google Universal and Ask3D Search engines are now integrating multiple media types in the results pages, including: –Video –News –Blogs –Images –Maps

COPYRIGHT ICROSSING / PROPRIETARY AND CONFIDENTIAL 26 Optimization.ru Conference 2008 | Moscow Google Universal Search and Video Ads

COPYRIGHT ICROSSING / PROPRIETARY AND CONFIDENTIAL 27 Optimization.ru Conference 2008 | Moscow Search and Social Impact

COPYRIGHT ICROSSING / PROPRIETARY AND CONFIDENTIAL 28 Optimization.ru Conference 2008 | Moscow Purpose of Search Engine Marketing Use "What is your company using search engine marketing to accomplish?" Source: Search Engine Marketing Professional Organization survey of SEM agencies and advertisers Brand, Sales, Leads and Traffic Are Top Objects of Paid Placement Programs Among Advertisers

COPYRIGHT ICROSSING / PROPRIETARY AND CONFIDENTIAL 29 Optimization.ru Conference 2008 | Moscow Methodology: Testing the Brand’s Placement 1.Control (No branding: “Honda” does not appear on the SERP) 2.Side Sponsored Honda appears in side sponsored result only 3.Top Organic Honda appears in top organic result only 4.Top Sponsored Honda appears in top sponsored result only 5.Top Sponsored and Top Organic Honda appears in both top Sponsored and top organic results Subjects entered an unbranded query and saw one of the following search engine results pages (SERP): Source: Enquiro Search Solutions, Inc., July 2007.

COPYRIGHT ICROSSING / PROPRIETARY AND CONFIDENTIAL 30 Optimization.ru Conference 2008 | Moscow A 2.2x Lift in Aided Brand Recall When Brand Is in Top Sponsored and Top Organic Results Which of the following brands do you remember seeing in the search results page you just viewed? Side Sponsored Top Sponsored Top Sponsored & Top Organic Top Organic Listing 2.2x 1.5x x Test Brand Other 0% 10% 20% 30% 40% 50% 60% 70% Source: Enquiro Search Solutions, Inc., July Query: Unbranded (i.e., “fuel efficient cars”)

Performance Media

COPYRIGHT ICROSSING / PROPRIETARY AND CONFIDENTIAL 32 Optimization.ru Conference 2008 | Moscow Advertising Platforms Ad Platforms include: Panama, Google Adwords, AdCenter The digitization of all content will lead to new advertising methods across multiple forms of content. Advertising platforms will be utilized to manage cross channel campaigns “Performance Media”

One Stop Shop Ad Platform Centralized Search Driven Media

COPYRIGHT ICROSSING / PROPRIETARY AND CONFIDENTIAL 34 Optimization.ru Conference 2008 | Moscow Buying Search and Contextual Ads (past) Media Buyer

COPYRIGHT ICROSSING / PROPRIETARY AND CONFIDENTIAL 35 Optimization.ru Conference 2008 | Moscow Buying Search and Contextual Ads (present) API Bid Management Tool Media Buyer API Examples: - Blondinka.ru - SmartContext.ru - iCrossing’s Merchantize

COPYRIGHT ICROSSING / PROPRIETARY AND CONFIDENTIAL 36 Optimization.ru Conference 2008 | Moscow Buying Display Ads (today) Media Buyer Ad Network

COPYRIGHT ICROSSING / PROPRIETARY AND CONFIDENTIAL 37 Optimization.ru Conference 2008 | Moscow Buying Display Ads is about to get easier! API 3rd Party Ad Management & Serving Tool Yahoo - RightMedia API Google - Doubleclick Network API Microsoft - AdECN Networks, Exchanges and APIs Media Buyer

COPYRIGHT ICROSSING / PROPRIETARY AND CONFIDENTIAL 38 Optimization.ru Conference 2008 | Moscow + API Cross Media Bid/Buy Tool Media Buyer API 3rd Party Ad Management & Serving Tool Bid Management API Ad Exchanges = Radio TV Print Display Video Exchanges Search Performance Media Buying Search, Contextual, Display Ads & Video

COPYRIGHT ICROSSING / PROPRIETARY AND CONFIDENTIAL 39 Optimization.ru Conference 2008 | Moscow One Stop Shop for all Search Driven Media Ad Networks | Ad exchanges API’s Bid Management System

Convergence of Search and Display

COPYRIGHT ICROSSING / PROPRIETARY AND CONFIDENTIAL 41 Optimization.ru Conference 2008 | Moscow Performance Media (CPA/CPC) Convergence of Search and Display Search Display Site Targeting Contextual Exchanges PAST Branding (impressions/CPM) Performance Branding NOW

Credit Band of Moscow: Convergence of Search and Display

Case Study: Dove ®

COPYRIGHT ICROSSING / PROPRIETARY AND CONFIDENTIAL 45 Optimization.ru Conference 2008 | Moscow DOVE Campaign Assets Click to Play Video Flash Banner Text Ad Source: comScore / Nielsen NetRatings ®

COPYRIGHT ICROSSING / PROPRIETARY AND CONFIDENTIAL 46 Optimization.ru Conference 2008 | Moscow DOVE Nielsen//NetRatings: Sales Impact 96% new buyers entered the Total Brand +25% more dollars spent on the Total Brand Incremental dollar impact to the Total Brand was significant, (for every $1.00 invested with Google, consumers spent an incremental $1.43) $ $ $ Source: comScore / Nielsen NetRatings ®

Agenda A New Digital Paradigm for Brand Success Search: Past and Present –Search Marketing Statistics Search is Evolving –Digital Asset Optimization –Performance Media Digital Agencies –How organize for trends in search

COPYRIGHT ICROSSING / PROPRIETARY AND CONFIDENTIAL 48 Optimization.ru Conference 2008 | Moscow Program Management Research Experience Planning OptimizeAdvertise Integrating the digitization of all content PROGRAM MANAGEMENT

COPYRIGHT ICROSSING / PROPRIETARY AND CONFIDENTIAL 49 Optimization.ru Conference 2008 | Moscow Digital Agency Strategic Model

COPYRIGHT ICROSSING / PROPRIETARY AND CONFIDENTIAL 50 Optimization.ru Conference 2008 | Moscow Multi-Channel Reporting

COPYRIGHT ICROSSING / PROPRIETARY AND CONFIDENTIAL 51 Optimization.ru Conference 2008 | Moscow Multi-Channel Conversion Funnel

“ The digitization of all content will lead to new advertising methods across multiple forms of content. As the Engines develop these new products and media types, it is imperative that Search Engine Marketers stay in lock step with the engines in our technology integration and service line expansion ”

Jeffrey Pruitt Executive Vice President, iCrossing President, Search Engine Marketing Professional Organization (SEMPO) direct mobile iCrossing SEMPO Thank you