PetSmart acquired Pet360 for $130 million in cash and up to $30 million more in future performance-based payments.
(Page 2 of 2)
Search marketing has been riding a rocket since one of the first big industry reports to hang numbers on what had been a quietly growing market surfaced a few years ago. That’s when Piper Jaffray forecast that spending on search would soar from $1.4 million in to nearly $7 billion by 2007, a prediction that’s since been eclipsed by more recent forecasts such a Forrester Research report that predicts search marketing spending will hit $11.6 billion by 2010, accounting for 44% of all online advertising spending.From simple beginnings in which typing in a word or term would pull a list of links from the web content crawled by a search engine, search engine marketing has blossomed into a complex set of tools and approaches all aimed at the same end game. For retailers, that’s been: to get as many visitors as possible to click from web search to their site vs. someone else’s as possible, and to accomplish that as cost-effectively as possible.A tangled roadmapThat’s the desired destination, but the roads to it have begun to resemble a metropolitan city map-there are many ways to get there, and the best route changes, depending on the starting point and other variables. So-called natural search, the original basis of all search engines, depends on engine-specific algorithms to determine relevancy and ranking in the search results it presents after crawling the web content in the engine’s index. To improve their rankings, online marketers study engines and their algorithms and try to craft their web pages accordingly.But engines also started offering top positions for sale in marked sponsored results. The auction model in which top positions on engines under sought-after terms go to the highest bidder on a cost per click basis has been a key driver of ballooning search spending. With some online marketers trying to rein in keyword spending, search engines such as Google and Yahoo have found additional ways to offer an edge over the competition-for a fee. Paid inclusion guarantees that an engine will review a marketer’s site and content, rather than waiting the weeks or months it may otherwise take for the engine’s spiders to discover that content in the web universe, crawl it and index it for possible inclusion in natural search results. Direct XML feeds from a marketer’s product database, a service offering of some search marketing companies, automate the process; essentially, making it easier for the engine to locate the listing and deliver it in search results. New advertising products classified under the heading of search are rolling out of companies whose primary business has been search. Google’s AdSense, for example, serves up sponsored links on relevant content pages of non-commerce-focused web sites. A deluge of possibilities“They’re not really search; they’re contextual,” says Tony Wright, chief interactive marketing officer at search engine marketing company Zunch. “”But it’s called search because it comes from Google or Overture/Yahoo.” The deluge of search possibilities-including funds spent on optimizing web content for natural search-related site design and development-are one reason that search marketing will represent a projected 39% of all online advertising spending this year and keeps on growing. And as Forrester’s recent report points out, revenues will keep growing as additional innovative products emerge that will permit marketers to more specifically target online ads based on factors such as demographics, behavior, and previous searches.But it’s not just the development of new and better tools that will keep spending on search on the rise. Offline media still gets the lion’s share of the multi-channel retailer’s marketing dollars because that’s where the majority of sales are transacted, but that’s a rationale that could shift as chief marketing officers come to recognize that search exerts a much bigger effect on a company’s fortunes than what can be measured online, according to search marketing company iProspect’s CEO, Frederick Marckini.For example, a recent study by comScore Networks and Yahoo Search Marketing found that of all purchases of computer and consumer electronic products among those surveyed that had searched for the products online in the past 90 days, 92% were ultimately transacted offline. The findings, according to comScore, underscore the importance to marketers of considering search engine usage when planning search engine marketing investments, according to comScore vice president James Lamberti. A hole in the funnel“Search marketing is going to move toward full integration with offline and traditional marketing,” says Marckini. “Without that, there is a hole in the funnel where they are creating awareness and interest and then losing it online because they can’t be found. They have to stop treating search as a purely online tactic. They have to realize search is filling their funnel offline as well, and if they relegate it to the online group and treat it like direct marketing with the only measured outcome on the web site, they are missing possibly the bigger opportunity.”Marckini says this will drive the online and traditional marketing groups within companies to communicate more, sharing calendars, for example, so online campaigns reflect other initiatives in such a way that online spending peaks at the times when other initiatives are generating the most interest in search engines.Some marketers are already there. On the night the Red Sox won the World Series, for instance, iProspect’s campaign managers for client Lids.com, retailer of baseball caps, went online and raised bids on keywords relating the Red Sox paraphernalia, resulting in a jump in the sales of those products. Marckini notes that conversion rates tend to increase as volume increases, so there was an event-driven effect on conversions and not just the volume of traffic. “Going forward, this client will be alerting us to regional rivalries and other things that will drive volume. They have seen what it can do,” he adds.Achieving that full integration between search and traditional offline marketing will require a change in mindset among senior marketing executives to whom a company’s Internet group may report-and that takes evidence. Marckini expects that will be served up across major vertical markets over the next two years in the form of case studies and additional research from iProspect and other industry players. The store challengeOne challenge in assessing the true impact of search marketing on multi-channel sales has been the difficulty of tracking specific search-driven activity out to the store level. To that end, comScore surveyed its consumer panel to capture search-driven store purchasing activity. Marckini expects that as offline marketers participate more in online search, they’ll develop new ways to track that activity; for instance, gauging the effect of a keyword search campaign by strengthening localized search efforts in a targeted region and using it to assess the keyword campaign’s effect on store sales in the region. Wright offers other ways to tackle the problem of tracking and quantifying the effects of online search in the offline world. “One of the things you can do to see if search is working is create offers that are available only to those who have come in through search to see how well they do in the brick-and-mortar store,” he says. “If you are Best Buy or a Circuit City, offer a digital camera at a price you can get only if you bring in a coupon from a search query.”While increased synergy between online and offline marketing, new search-based advertising products and better targeting capabilities on old ones are driving growth in search marketing, they aren’t whole story. Providers of search marketing services are beginning to expand their role beyond getting more traffic to a marketer’s site to getting more conversions once those visitors get there. Among them, iProspect, for example, has filed for a patent on a methodology that aims to create different persuasive buying paths for different types of web site visitors so as to better move them toward conversion. Zunch offers services in conversion consulting, which involves page architecture, usability enhancement, and other elements of web site operation. “Search engine marketing is becoming about more than just getting rankings,” says Wright.