Alex,
To me the Stages of Search would more accurately be described as:
Stage 1 - Self managed through the engine back-end tools
Stage 2- Managed campaigns by 3rd party specialists
Stage 3- Software systems that allowed more sophisticated campaign management (a substage of this would be 3rd parties utilizing these tools to manage campaigns)
Stage 4 - Auto driven systems that managed a set of keywords based on pre-determined performance rules - they call these rule-based systems
Stage 5 - Algorythmically run systems that take a set of keywords and automatically optimize, evaluate, re-bid, and re-adjust constantly, utilzing an artifical intelligence system and fractional factorial analysis. This is where we are at today, and where all the big money is playing. These systems are capable of awesome performances, but do have some kinks. These systems are why there are some on-line retail sites realizing over 1000% Return on Ad Spend! Yes, I have personally seen the results.
So I originally miss-spoke (I apologize for that) when I said we are at Stage 4, we are actually at Stage 5.
Reach Local is actually a pre-runner system of a full Stage 5 system, but according to the experts that I have spoken with, it is, in their words - primitive compared to today's modern systems and their capabilities. And, no, I'm not making any of this up. I've looked at ReachLocals system and feel the bigger issue with their program (I'm not totally sold on it being all that primitive) is not necessarily the system, but their business model of how they focus their campaigns.
I can tell you with a high level of confidence that a manually managed program simply cannot compete with these sophisticated systems. The number of calculations and adjustments that they are capable of making in a day are inconceivable for a manually operated platform to undertake.
Alex, that is where Paid Search is today.
