In its second-largest acquisition, Amazon buys the company for $970 million.
In search engine marketing, finding the right partner is key.
Two years ago, the two-person marketing team at HPshopping.com, the online sales arm of $80-billion-a-year Hewlett-Packard Co., was laboring so long and hard on details of the company`s search engine marketing strategy that they didn`t have time to grow the business the way they wanted.
Amanda Evans, consumer marketing manager, was juggling 1,000 keywords for paid search and using incomplete information to guess at their effectiveness. Meanwhile, her assistant spent much of his day typing product feeds in the differing formats demanded by shopping comparison engines. Nobody really knew the results of either activity, Evans recalls. And on top of that, HPShopping, with its dynamic site, wasn`t listed at all in natural searches. "Because it was so labor intensive, it prevented us from growing the program," Evans says of the way they were handling paid search and product feeds.
Today, HPShopping.com bids on 12,000 keywords and provides data feeds to 31 shopping comparison and affiliate sites. Hewlett-Packard`s new muscle in search engine marketing didn`t come as a result of beefing up its staff. Rather, it came as the result of a decision to outsource search engine marketing, an approach that more retailers are taking today as search engine marketing becomes more complex and competitive.
Between 350 and 500 retailers now spend $50,000 or more per month on pay-per-click paid search, says Ellen Siminoff, president and CEO of Efficient Frontier Inc., a Palo Alto, Calif. , search engine marketing provider. The number of retailers spending at that level has more than doubled in the last year, she says. Growth also is expected in spending on natural search optimization, vendors say. Already, some 52% of clicks are going through search engine marketing agencies, according to Michael Behrens, vice president of e-marketing for search engine marketing agency WebMetro of San Dimas, Calif.
The media spend for paid listing and paid inclusion for all advertisers, not just retailers, came to $1.9 billion in 2003 and grew to $2.6 billion last year, says Niki Scevak, Jupiter Research analyst. He says he expects the total to grow to $3.2 billion this year. Because of the labor needed to optimize natural search, Jupiter is unable to place a dollar value on that activity, Scevak says.
The average price for a retailing keyword used in paid search hit 60 cents in November as online holiday shopping got under way. And that`s for every click, not for every sale.
No job too big--or too small
As the Hewlett-Packard experience shows, no company is too big or too technologically advanced to ask for help with search engine marketing. The challenge comes in finding the right search engine marketing partner. As retailers and other marketers have flocked into the market, so have service providers. In fact, long-established vendors report that they routinely face competition from three or four other vendors on every job they bid on--and it`s not the same three or four every time.
For its search marketing assistance, Hewlett-Packard turned to Chicago-based Performics Inc. in April 2003. The company liked Performics` sophistication and size, Evans says. Performics measures revenue and products sold and doesn`t just track traffic, she says. And because it`s been around for some time, it`s got heft, she says. "There are some agencies that are very reputable but they can only be scaled so far," she says. "They have maybe one or two employees working for them."
Performics is working for HPshopping in three areas. First is paid search, the small text-only ads that appear along the right side of a page of search results. The top-to-bottom order in paid search depends on the price per click paid for keywords and in some cases on the number of clicks. Second are the natural or organic search results that are listed across the left two thirds of the search page. Search engine marketing agencies can help retailers design their web pages to increase the chance of prominent positioning there. Third are product feeds that retailers send to shopping comparison sites. Agencies can streamline that process and monitor the results.
Evans says Performics began producing measurable results almost immediately. It identified 12,000 paid search keywords and provided reports that show the return on investment for each. In the first year, average monthly revenue for paid search increased 419%. In the last few months, HPshopping has begun measuring profit margins on paid search keywords and profits have risen 12%, she says. Paid search has been expanded to second-tier search engines, something Evans didn`t have time to do before.
Meanwhile, Performics takes a single product feed from the site and translates it into the formats used at the various shopping search engines. As a result, the number of shopping search engines and affiliates HPshopping uses has increased from six to 31, and the number of products represented has increased from 600 to all 950 of the site`s offerings. And now, Performics is starting to work on getting HPshopping listed in natural searches.
Search engine marketing agencies number in the hundreds, retailers and vendors say. In addition, advertising agencies, the old-line firms that develop print, radio, television and direct marketing campaigns are getting into the market. Traditional ad agencies rarely develop their own search engine marketing offerings, preferring to outsource the job to agencies that specialize in search.
And so sorting through the options is crucial. The first step, many industry participants say, is to make sure that the search strategy--and its execution by an agency--fits with the retailer`s overall marketing strategy. As a retailer grows or comes to depend more on search engine marketing, needs change and the agency should have the capacity to keep pace, they say.
With the large number of vendors, checking references is indispensable, says Lisa Wehr, president of OneUpWeb, a Suttons Bay, Mich., search engine marketing agency. A few disreputable agencies have used practices banned by the search engines, such as stuffing hidden keywords into a page, cloaking the home page of sites or setting up link farms, says Tony Wright, executive vice president of sales and marketing for Zunch Communications Inc., Dallas.