In its second-largest acquisition, Amazon buys the company for $970 million.
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For many retailers, the solution is to use both as part of a marketing mix that may also include offline advertising, promotion and other efforts. In addition to working with MoreVisibility.com on optimization, for example, Lucky Brand Jeans pays Overture for positions in certain relevant keywords. That significantly extends Lucky’s reach in web searches because Overture, besides having its own web site where consumers can initiate searches, delivers results to search engines on AOL, MSN.com, and other major Internet destinations. And through agreements with those partners-on whose sites about 95% of the searches generated by Overture are initiated-Overture’s results receive prominent placement. “We’re trying for the maximum distribution so we use both methods,” says Belden.
So does niche marketer Headsets.com. The company pays for placements on selected keywords at Overture and at FindWhat.com, which also distributes search results to other engines. Headsets CEO Mike Faith says the larger part of his online marketing dollar now goes to paid search engine placement. The San Francisco-based multi-channel marketer of audio headsets says he’s found the paid placement more effective at driving sales than banner ads and affiliate marketing programs, and he considers the monthly $6,000 cost of click-through from paid search engines to be money well spent.
Faith has elected to do Headsets’ page optimization in-house - a challenging proposition when search engine algorithms change frequently. Faith says the company has spent time and money figuring out how the search engines operate and how it wants to be listed on them. But the simple pay-for-placement model is, for Headsets, at an average 70 cents per click across a number of different keywords, the least expensive route to higher rankings. “You don’t have to spend six months trying to figure out how the search engine works,” he says. “With pay per click, I know I can just be number one. It costs us, but it has terrific value for us.”
In non-paid models, search engine criteria are based on algorithms, proprietary formulas that in turn are based on components such as relevancy. The engines use different algorithms to collect and rank data in search results. Search engine Google, for example, focuses more on link popularity than it does on metatags, the coded descriptions embedded in each page to give search engines a read on what’s on the page. The engines send out robots or spiders to collect data, generally, in the form of HTML text, although Google can now collect data from PDF files as well.
“The spiders at different search engines crawl at different intervals,” says Joe Laratro, chief technology manager at MoreVisibility.com. “Some crawl to make sure the links are still alive, some crawl randomly to find links to increase their database, and some crawl only because someone has submitted a request to crawl their site. The web grows every day and loses web sites every day, and the search engines try to provide their customers with fresh and relevant information.” To stay on top of frequent changes, MoreVisibility maintains a database of search results that reveal patterns in what different engines look for, and employs a technical staff to stay current on search engine algorithms.
Marketers like Travelworm’s Brownstein say optimization plays a role in online marketing along with paid search. “About 85% of searches are done at 10 major sites, including AOL, Lycos, Yahoo and others,” he says. “The other 15% include smaller engines like About.com. You need to do that indexing because 15% is still a significant number, it’s 15% of hundreds of million of people who use the web. Optimization gets you customers you may not otherwise get, like people who use smaller search engines that are outside the mainstream.”
The long lag
But optimization has limits. It takes time to produce an effect, and the results are less directly measurable than on keyword purchases. “It may take search engines weeks or months to digest newly submitted data and rank it accordingly,” says Andrew Wetzler, CEO of MoreVisibility. Or longer. One web merchant says he spent nearly $1 million in advertising on Yahoo for three consecutive years, but was indexed by Yahoo’s search engine only this September, meaning that during that time, his company wasn’t even showing up in non-paid results on Yahoo.
“Optimization is a pipeline effect of creating quality submissions, getting them to the engines, and then waiting for the engines to index them, which we aggressively monitor for our clients,” says Wetzler. MoreVisibility, which optimizes its clients’ pages for several major web sites it follows, guarantees its clients a number of top-20 positions throughout the engines it tracks, based on the number of client keywords. Under a six-month contract focusing on 15 words, retailers typically will pay $750 per word or phrase; $1,050 for a year. For a 50-word program, the prices are typically $575 and $850. But when clients seek to optimize pages on very highly competitive keywords, Wetzler will often advise them to pay for placement on those words rather than go the optimization route. “The two complement each other,” he says.
But in the increasingly competitive world of online retailing, some simply aren’t willing to wait for results. Travelworm.com does page optimization, recently contracting it to an outside company. It also spends about $100,000 a month on 2,500 keywords at Overture and FindWhat.com, at 1 cent to upwards of $2 per click. “Keywords and pay per click are the most effective advertising I can do online,” say Brownstein, who notes that the conversion rate among consumers who find the company through Overture is 2% to 3%, about twice the rate of conversion among consumers who reach the site through other sources.
Particularly for new online businesses, every month spent waiting for search engines to find and index their site is a month they’re not producing much traffic. That’s one reason the paid search model has enjoyed a boom over the past several months. Not only have revenues been up at Overture, for example, but so have click-throughs; they’ve nearly doubled over a year ago, driven in part by recent search results distribution agreements with AOL and other major engines. The auction dynamic also works on keywords: retailers are bidding up keyword prices (and Overture’s revenues) by monitoring traffic to top bidders and in many cases upping their own bids to regain top positions.