August 30, 2004, 12:00 AM

Right This Way

Successful search engine marketing no longer stops at a retail site’s front door—it carries shoppers deep into the store.

The rising cost of coveted keywords is a topic that has more than a few e-marketers grumbling these days. Take the case of the one who recently called to complain to search marketing firm Atlas One Point CEO Dave Carlson. Incredulous that he was suddenly being outbid by a competitor at $5 per click on a keyword for which he’d been securing top position at $2.50, the marketer told Carlson that the competitor must be losing big money on his larger bid.

“I looked at the site of the marketer who was calling me and then at his competitor’s site and told him I thought his competitor was probably doing the right thing,” Carlson recounts. “Based on the look of the caller’s site, I guessed that his competitor’s conversion rate was two if not three times better. It didn’t make him happy, but it woke him up.”

The point is not that there seems to be no ceiling in sight for the cost per click on top keywords, but that as those rates escalate, getting better conversions off those top terms, rather than simply throwing more money at them, is going to be marketers’ only way out. Only those with conversion rates that actually support such spending will see any gain from continuing to pay top dollar; for anyone else, it’s a losing proposition.

A broader view

That fact is driving new interest in on-site “conversion enhancement” at search engine marketing companies that historically have focused primarily just on getting traffic to sites. At the same time, it’s causing web design companies to broaden their view of conversion enhancement beyond navigation and check-out that grease the wheels for the purchase transaction at the end of the buying cycle. Now, some see conversion enhancement as a process that can start before shoppers ever get to a site, and they’re expanding their role accordingly.

Surprisingly, 19% of retailers recently surveyed by Chicago-based The e-Tailing Group Inc. still don’t know their conversion rates-but that’s changing. “We’ve seen a lot more focus on how well the site is performing in conversions from any executive or general manager who’s looked over a site’s P&L;,” says Andy Liu, vice president and general manager of NetConversions, a conversion enhancement technology and service company acquired by aQuantive Inc.’s advertising technology company, Atlas DMT, in February. “Previously, people had been spending blindly to try to improve conversions without really knowing what would work. It was like throwing darts at a dartboard.”

Some search marketing firms are launching conversion enhancement initiatives that extend their role deeper into areas such as page redesign and architecture. And web designers and developers are looking beyond the on-site shopping tools that have been their bread and butter to pay new attention to what’s happening in search marketing at the very top of the conversion funnel.

Teamwork

It’s key that that the two sides work together if marketers are to benefit from keyword buys in proportion to their rising cost. According to a recent report by Nielsen/NetRatings Inc., the demand for search advertising now outstrips the supply of search terms. Between May 2003 and May 2004, the number of searches generated by U.S. web users grew by 30% to 1.2 billion sessions. That pales in comparison to the 184% growth in search advertising spending reported by the Interactive Advertising Bureau. The growing imbalance of supply and demand is driving keyword prices up.

Search marketing company iProspect.com Inc.’s CEO, Fredrick Marckini, underscores that point with the story of a b2b client whose average bid for a top position across 50-80 keywords on Overture’s search engine was $1 per click last year. That client is facing a marketplace of $4 per click for the same keyword set today. “Whoever’s got the highest conversion rate can bid more than his competitors and get the lion’s share of the audience,” Marckini says. “If you are maxing out at $2 per click, and the marketplace goes up 400%, you are no longer even on the first page.” And as iProspect’s own data suggest, being off the first page of search results is the equivalent of being in search Siberia-41% of web users don’t look any deeper than page one.

In Carlson’s view, maximizing conversions has always been a tenet of good site management. Now, more e-marketers who’ve been fixated on traffic are refocusing on conversion as well. To assist clients in that regard, Atlas OnePoint (formerly, Go Toast) last fall debuted Campaign Optimizer, a tool that allows e-retailers to model online campaigns and then continuously optimize them based on parameters they set. Parameters include cost per acquisition, return on advertising spend, total sales target and other metrics. Soon, the tool also will incorporate the ability to model campaigns based on target margin.

While Atlas OnePoint’s existing tool set has a feature that shows conversion rates, “That’s a baseline. How you change things to improve conversion is really the big question,” Carlson says.

NetConversion’s product suite tackles that with a tool called True Usability, which goes beyond many analytics products to capture on-page user behavior in minute detail-everything from mouse movements to scrolling to how much time users spend on each field.

According to Liu, that level of detail draws a tighter circle around the site alterations that could actually improve results. Otherwise, “You might see that users are bailing out at checkout, but you might not know exactly why. We might notice that they are not even scrolling down to see the checkout button, or that they are spending a lot of time reading text. We look for friction points and compare it to benchmarks. Then we’ll identify ways to fix it.” An automated testing product speeds up the validation process.

One client, for example, learned that 80% of conversions were originating through its home page search box, even though its location was minimized on the page, Carlson says. By giving the search box greater emphasis, conversions increased fivefold. Atlas expects to rollout a new version of NetConversions’ enterprise-scaled product suite, for mid-sized to smaller retailers, shortly.

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