June 28, 2007, 12:00 AM

In a complex web universe, search marketers hunt for the right formula

There are myriad ways marketers can spend search dollars, and options expand continually.

Paid web search is one of the most measurable advertising vehicles going, online or off. Marketers can put up a keyword, track the traffic it brings to a site and the sales it generates, stack that up against what they’ve paid to secure that ranking, and calculate a precise return on investment.

However, while the metrics of measuring the outcome of keyword and campaign performance are straightforward and easily understood, what goes into the front end to produce outcomes worth measuring is anything but. There are myriad ways marketers can spend their search dollars, and the options expand continually.

Weighing searches

For starters, marketers must weigh paid search against natural search to see where each applies in their program. They must balance the quick return of paying for position on keywords in a search engine against the slower return on less-expensive optimization efforts aimed at attracting search engine spiders naturally. Marketers also must decide whether to outsource management of the search program or run it in house, with each presenting different demands on staff and resources.

When it comes to designing a search campaign, different objectives require different executions and demand different answers. For example, is the goal to build brand awareness by maximizing traffic or to focus on sales by attracting shoppers farther along the decision process and nearing a purchase? There is also the question of which and on how many search engines to pursue paid listings. And then there’s the question of results to be gained by spending on search marketing vs. other online ad opportunities, including some emerging formats in Web 2.0.

Search marketers are looking for the winning combination by trying every possible permutation-one reason that search advertising continues to dominate online ad spending. The overall revenue of all Internet advertising will grow from $16.9 billion in 2006 to $31.3 billion in 2011 at a compound annual growth rate of 13.5%, according to a recent report by research firm IDC. And at 40% of that, search advertising represents the largest share.

As more marketers crowd into the search arena to bid on keyword positions, the price of high positions on keywords is rising. Fathom Online’s Keyword Price Index shows average winning bid prices for top keywords across several industry segments including retail rose more than 5% between Q1 2006 and Q1 2007.

Many retailers can relate to a comment of Geoffrey Robertson, vice president of e-commerce at auto parts and accessories dealer J.C. Whitney. With competition for placement under coveted terms pushing up keyword prices, “A dollar sale might cost you 50 cents” on keyword price, he observes.

Another complicating factor in search marketing beyond rising keyword prices is that the expansion of the web-searchable universe is making it harder to be found in organic search as well. Market leader Google, for example, indexes hundreds of millions more web pages than it once did, driving the competition to gain a high position in natural search rankings to a new level.

It all makes grabbing the brass ring a more complicated proposition than ever for search marketers. “Web retailers originally tried just to learn the business and handle the volume they had. At this point, paid search has escalated in complexity, and everybody is looking for more scale,” says Suzy Sandberg, managing director of PM Digital, the online search marketing division of list media specialist ParadyszMatera.

Bigger universe

With search becoming a bigger universe and keyword positions on major engines becoming more costly, marketers are responding by looking for strategies that maximize dollars and raise brand and product visibility to the customers that matter most. One such strategy getting attention from search marketers now is geo-targeting. Recently, major search engines have started to offer this option to advertisers bidding on keywords.

Using a geo-targeting strategy, “Marketers take their marginal keywords-those that fall just outside their scope of profitability-and launch them only in the geographic areas where they perform best,” Sandberg says. It’s a strategy that can mean less than the broadest exposure, and fewer eyeballs on search listings. But a marketer selling snowblowers online may have little need for a universal reach that includes consumers searching from the Sun Belt.

Another way search marketers are looking to increase their return on spending is by contextual targeting. Search engine Google’s contextual ad network, for example, serves relevant ads to visitors at partner sites, such as media sites. The idea is that web users viewing specific informational content online are also more likely to be responsive to ads about products related to that content. For instance, an ad touting the availability of a designer’s fall collection at a department store web site might be served up alongside a New York Times online story about fall fashion trends.

Sandberg says many of her clients have never tried contextual advertising. But that’s changing, she adds, since Google in the past year has allowed marketers to pursue separate bidding strategies for contextually served ads and for keywords on the Google engine itself. “We are leveraging that more for our clients,” Sandberg says. “We have some clients that are getting 20% of their volume from contextual ads.”

Yet another way search marketers are attempting to drive results is by extending campaigns to niched and second-tier search engines. “Most advertisers are concerned about the rising cost of keywords and they are looking for a way to improve the ROI of their campaigns. One of the primary ways they do that, according to our Search Engine Marketing Executive Survey, is to focus on expanding campaigns to multiple engines,” says Kevin Heisler, analyst at JupiterReseach. “It’s a natural evolution for companies to target more narrowly the visitors that might be looking for what they offer.”

Smaller engines

While mature companies still need to be on major engines to support brand presence, marketers are finding out there is a lot of good traffic to be had from shoppers who don’t typically use the larger engines, according to Charles Meyer, director of business development at pay-per-click search engine 7Search.

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