As Advertisers Expand Online, Covario Adds Web-Based Tools to Measure Their Success

A new generation of corporate marketing executives was in attendance last week when San Diego-based Covario convened its fourth annual corporate partners conference at the downtown Hard Rock Hotel. As a rock band jammed onstage, the gathering crowd included JP Morgan Chase’s vice president of search governance, Amgen’s senior marketing manager for oncology, and the consumer insight manager for Sony Online Entertainment.

Search governance? Consumer insight? Welcome to the world of corporate search engine marketing.

Covario, a startup backed by Seattle-based Voyager Capital, Dubilier & Co., and FT Ventures, specializes in interactive marketing technologies and services. It holds the meeting each year to discuss the latest trends in the highly specific world of search engine marketing and online advertising.

Search engine marketing, which promotes websites in search engine results by paying to ensure certain search terms are displayed (and by other techniques), is a highly profitable business dominated by Google, Yahoo, and Microsoft. Covario operates in a different segment,  providing Web-based tools, analytical software, and other technologies that enable companies to optimize their websites and to measure just how much bang they get for each search-term buck they pay to Google and the other big boys.

Search engine marketing is growing much faster than traditional advertising. For all its precision, however, search marketing remains a relatively small slice of the hundreds of billions of total marketing dollars that are spent in the United States every year—which raises a nagging question for companies like Covario: Why hasn’t spending on advertising followed the consumers who now spend most of their time online?

Covario CEO Russ Mann suggests that the answer may be generational, and that more advertising dollars will move online as the baby-boomer generation retires from the upper ranks of corporate marketing departments. The Gen-Xers—who grew up with computers, went to college and graduate school during the Internet boom, and use social media today—will assume command of the corporate marketing budget as they get promoted.

When he opened the conference, Mann told the crowd that the industry’s key trend this year is “search-powered marketing,” a concept that integrates search advertising into a company’s overall marketing campaign strategy. Mann explained that search engine marketing is increasingly being tied into other forms of interactive marketing, which means that online TV ads, website display ads, social networking, and even mobile ads all help funnel users to the core business in search-based marketing. “Search is the lead vocals,” Mann said, “and everything else is the band behind it.”

Search marketing already represents the biggest chunk of interactive marketing, according to data presented at Covario’s meeting by industry analyst Shar VanBoskirk of Cambridge, MA-based Forrester Research.

VanBoskirk says companies spent an estimated $15.4 billion in the United States on search marketing in 2009, or more than half of the $25.6 billion total spent on all forms of interactive marketing, which includes online display advertising, e-mail marketing, social media, and mobile marketing. She projects that total will more than double, to almost $55 billion, in five years—with search marketing accounting for $31.6 billion of the total.

The expanding market for different categories of interactive marketing also helps to explain why Covario recently acquired NetConcepts, a Madison, WI-based specialist in search engine optimization for retailers and e-commerce websites.

Covario originally was focused on search analytics, and provided software-as-a-service to help big Fortune 500 companies optimize their websites, for example, by identifying the search terms that users most frequently use when they are shopping online. But Covario now is moving to help companies understand how effective their interactive marketing is in terms of spending for online TV, display, and social media advertising.

Covario spokesman Paul Borselli told me the NetConcepts deal enabled Covario to launch a new Web-based service, called Mobile Site Optimizer, that makes advertisers’ websites “mobile friendly” for the RIM Blackberry, Apple iPhone, and other major mobile devices.

During its conference, Covario also announced the release of another software-as-a-service program designed specifically for large corporate advertisers and their agencies. The Web-based service, called Display Advertising Insight (DAI), enables advertisers to measure the effectiveness of their online display advertising. Covario says that advertisers who combine its DAI service with Covario’s existing Web-based programs that measure paid search advertising and organic search will have a comprehensive view of how successful their online marketing really is.


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