Sourced from Search Day

When most people talk about pay per click (PPC) search engine advertising, Google and Overture (Yahoo!) take center stage. But in reality, there are hundreds of smaller “Tier Two” search engines that offer compelling PPC opportunities.

Google’s network currently holds about 53% of the paid listings distribution on the Web, said Peter Hershberg, Managing Partner of Reprise Media, while Overture’s networks holds 45%. That leaves only a fractional remainder, which is split between hundreds of Tier Two providers.

“But,” he said, “that 2% represents hundreds of millions of queries. And with click prices up 25% in the last three years, many advertisers are looking to the second tier for affordable traffic. For people who are priced out of the big engines, or are looking for additional incremental traffic volume, it’s worth exploring.”

Hershberg said that the alternative PPC networks fall primarily into three categories:

  • General search
  • Verticals (e.g., Industry Brains, Travelzoo)
  • Shopping (e.g. BizRate, Pricegrabber,

One value proposition that Hershberg said he found with the smaller networks is that they provide hands-on customer service, and lots of guidance for their customers. It’s a welcome relief for many smaller advertisers who are segmented into self-service mode on Google and Overture.

Generally, he said, “there may be a lower conversion rate on these engines, but the cost is so much lower that it makes up for it.”

Fellow panelist Chris Churchill, president of Fathom Online, agreed. The search marketing firm puts 18% of their media mix into Tier Two engines. Why? Better buys, he said.

Churchill said that in a recent data sample covering a six-month period across 218 campaigns and 6.8 million clicks, the highest conversion rate on the Tier One networks was 2.92%, and the lowest was 0.03%. The buys on the Tier Two networks yielded a smaller top conversion rate of 1.12%, but the lowest conversion was only 0.89%.

Frank Watson of FXCM, an online currency trading platform, said his company buys Tier Two placements for competitive reasons, to “protect their turf.” He said that competitors can shore up their budgets through cheaper buys on secondary engines, then use their savings to kill you on Google and Overture.

“Prices are 1/10th or even 1/50th the amount you pay on the top networks,” he said. And, for international campaigns, alternative engines may actually have more volume than Overture and Google.

But, he warned, “you must track your ROI or you’re [potentially] wasting your money.”

Hershberg concurred. He said that the downside of Tier Two engines can be irrelevant traffic, suboptimal distribution, and fraudulent clicks. He reported a 5-7% variance between the traffic reported by the engines vs. the amount a 3rd party tracking solution reported.

“It’s incumbent on advertisers to get their own tools,” he said. “Advertisers must take responsibility for tracking fraud and conversion metrics.”

Representatives for two of the leading search networks in the Tier Two space, FindWhat and Looksmart, spoke on the panel as well.

Dan Ballister, VP Sales of FindWhat, said that customers use FindWhat in their mix to create a different footprint from their competitors, and to reach new spaces. It’s easier to reach their ROI goals, he said, through lower cost per click and less bidding competition.

Damian Smith of LookSmart echoed that statement, saying “Having more bidders in an auction does not create more winners, only more losers.”

FindWhat is expanding its reach into vertical and local markets, said Ballister. The network now includes such partners as Lycos Insite, Verizon Superpages, Thomas B2B, and Mitsui (Japanese search), as well as merchant services through acquisition of Miva Merchant.

In addition, FindWhat announced a new “pay per call” service, which would function in a similar manner as text link auctions, but would feature toll-free numbers. The separate feed, Ballister said, would be segmented in different areas, local vs. national.

Looksmart also announced a new feature, an “ad discounter” feature similar to Google’s. That is, if an ad achieves a higher click rate than its competitors, it may be displayed at a higher rank than an ad with a higher bid.

Looksmart’s Smith said that the market share numbers are misleading. “This market is more than 100%”, he said, “since most people use multiple products. It’s not a winner-take-all game. There is increasing fragmentation as in the cable industry, and more verticals being made all the time.”