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This morning I had the chance to talk to Julie Mason, general manager of Kellysearch. The site is a B2B vertical search engine and directory that mostly focuses on industrial products, services and equipment. Basic listings are free with the option for additional levels of paid enhancements and upsells, such as hosting a searchable product catalog (print or electronic catalogs are converted to HTML).

Interestingly, Mason asserted that most of its advertisers prefer flat annual pricing, rather than cost-per-click. Like most of the site's features and functionality, it has determined this through extensive usability studies and surveys with existing users and advertisers. These surveys have also, for example, determined that 70 percent of its users have B2B intent rather than B2C intent, and it has tailored the usability and specificity of ads and sponsored links accordingly.

But back to performance-based vs. flat pricing. It is interesting that Kellysearch's customer base largely prefers the latter, given the general move toward the former among SMEs (we projected in our most recent forecast that performance-based advertising will account for 26 percent of traditional directional ad revenues by 2010). It could have something to do with the proclivities of the specific verticals the company serves or that of the B2B industrial equipment market in general.

Nonetheless, Mason sees a slight trend toward increased demand for performance-based marketing among the site's advertisers. It will accordingly launch a pilot program in the near future that will involve a cost-per-click model. Eventually there will likely be a combination of pricing models or an option for the advertiser.

Interestingly, the affinity for performance-based pricing is greater in the U.S. Mason is in a unique perspective to make this observation given that Kellysearch was started in the U.K. and operates in several countries and languages (which raises a whole host of challenges with its taxonomy and site design). Generally speaking the U.S. is about six months ahead of the U.K. in terms of advertiser sophistication and demand for interactive advertising, and the rest of Europe trails about six months behind the U.K., according to Mason.

The site will undergo a front-end redesign in the next 60 days that will include better indexing of business listings. In addition to product category, vertical tags and behavioral tracking will be used to help it build a more robust ontology. We'll keep an eye on the company and check back in post redesign.

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