A short time after the advent of the Internet, early search engines set the stage for search engine marketing, commonly known today as simply SEM. OpenText Corporation debuted the first pay per click ads paving the way for an early form of SEM, but it wasn’t called that yet. In fact, it didn’t even have a name. It wasn’t until technologist and entrepreneur, Danny Sullivan coined the term search engine marketing in a 2001 article on Search Engine Land that the field became recognized in its own right.
A few years after the first PPC ads were launched, GoTo.com began an auction-based system that operates in a similar fashion to how the search engines of today run their paid advertising business. As more devices capable of browsing the Internet came into our pockets and into our homes, people began spending more time on the web, guided to the content they wanted by search engines. These cultural developments allowed SEM to explode in popularity.
But how did we get here? There were many steps along the way. In this article we dive into the history of SEM; how it came into existence and how it has developed into the billion dollar industry it is today.
SEM versus SEO
To better understand the history of SEM, it’s important to first understand what it means. Over time, the definition has changed: where once SEM was an umbrella term that incorporated search engine optimization (SEO) and paid search, it now stands alone. The term today is used solely in reference to paid search and includes marketing areas like display, shopping, and pay per click (PPC). SEO contrarily is all organic and is based on making changes to websites,
Foundation For SEM: Internet and Search Engines
Upon the invention of computers, the first question was how to connect them. The Advanced Research Projects Agency Network (ARPANET) began working on what we now know as the Internet in the late 1960s. According to History.com, on January 1, 1983, researchers began to assemble the “network of networks” that became the modern Internet.
A need quickly arose of how to search through all the information available. The first well-documented search engine was originally named Archives, later shortened to Archie, debuting in 1990. Created by Alan Emtage, a McGill University student, Archie was used as a way to index FTP archives and it worked by curating a database of webfile names that it would match with queries.
Archie was soon followed by new search engines created at other schools in the United States, namely Veronica which focused on plain text files and a Jughead which worked similarly. These two got their names from characters in a widely popular comic book, Archie Comics. Later in 1990, computer scientist Tim Berners-Lee invented the World Wide Web, and throughout the years that followed websites increased in number and became more prevalent in everyday life.
Early SEM Evolution
With the Internet growing by content and reach, more and more information was readily available and people wanted better ways to search and access it. Early search engine companies were working to monetize their businesses and this fueled OpenText, a search engine based in Canada, to run the first pay-per-click ads in 1996. The ads sold showed up on the search results page and were called preferred listings.
Fast forward two years to 1998 – a big year for search – and enter Larry Page and Sergey Brin, two graduate students studying at Stanford and the founding fathers of Google. GoTo hosted a TED presentation about the first auction based PPC program, discussing their move to auction their results to the highest bidder of a word or phrase. Those paying the most would top the search rankings while lower bidders would be displayed further down the page. GoTo changed its name to Overture in 2001 before eventually selling to Yahoo! in 2003.
In little over a year, Google was processing 500,000 queries per day and at the turn of the Millennium growth skyrocketed when Google became the client search engine for Yahoo! Google Ads were on Google search results beginning in 2000, at first selling as a monthly service to advertisers. In 2004 Yahoo! ended the engagement with Google at a time when it was being searched 200 million times per day.
Google’s advertising system, Google Adwords was launched in 2000 with 350 customers. In 2018 Google rebranded this offering to Google Ads to better encompass the types of ads they work with, and it is today the leading publisher in the search space.
SEM Next Stages
In 2005 Google, Yahoo!, and Bing Ads supported manual bidding which increased SEM’s popularity. According to an old article published by The New York Times, SEM was growing faster than traditional advertising as early as 2006. With new personal computing devices added to our lives and the introduction of the iPhone in 2007 and iPad in 2012, the web became more accessible to an increasing number of people. SEM was no longer tied to the desktop but open to people on the go via mobile or tablet.
SEM began changing as the way people were searching evolved, allowing segmentation between devices and geo-targeting. To assist advertisers, bid automation platforms like Google Smart Bidding were launched and this was later followed by bid optimization platforms. The next trend was incorporating big data in bid adjustments in 2015.
For more information on the history of advertising as a whole check out our latest infographic, American Advertising” From Mad Men to Silicon Valley.
Today, at $40.6 billion, paid search holds the largest share of digital ad spend in the United States and it’s showing no signs of slowing down any time soon. Google’s market dominance in the search space is still maintained today, with more than 70% of worldwide online search requests being handled by Google, making it a significant part of how many people find content on the Internet.
Search advertising has become so pervasive it was even apart of crafting this article. As I write, I have been fact-checking and confirming information by using Google. It was written across three different devices and you can bet I encountered search ads along the way.
The Future of SEM
An increase in digital advertising spend is projected for 2019 with projections rising from $45.81 billion to $48.49 billion. If recent trends continue, spend will continue rising. While we don’t know exactly what is next for SEM there are some pioneering new techniques in the field such as applying predictive engagement, machine learning and data science methodologies including natural language processing and bid-landscape data to the bidding process.
The QuanticMind solution is one such example. Built upon a foundation of data science, Bayesian modeling, and predictive performance methodology, the platform empowers digital marketers to gain greater scale, higher granularity for targeting and faster, more-profitable performance for paid advertising campaigns and programs.
One thing is for sure, our devices are here to stay and, with