July 1, 2010, 12:00 AM

Search Engine Marketing/SEO

Search marketing looms large in retailers' growth plans

Online retailers are opening the spending spigot for search engine marketing this year as they look to entice consumers doing more of their shopping online. The web retailers' rekindled passion for buying paid search advertising and natural search marketing services has dovetailed with the upturn in consumer buying on the Internet.

Retailers listed in the 2010 edition of the Internet Retailer Top 500 Guide grew their web sales in 2009 despite the economic inertia that characterized retailing in late 2008 and most of 2009. Last year, Top 500 retailers' web sales climbed by 8.7% from $116.28 billion in 2008 to $126.38 billion. And one of the key tools they used was search marketing.

A recent Internet Retailer report shows 73.3% of online retailers either increased or maintained the portion of their e-commerce marketing budget spent on search engine marketing during the 12-month period through April 2010. Those results are from a survey of 102 web-only retailers, chain retailers, catalogers and consumer brand manufacturers.

In fact, almost 45% of respondents increased the percentage of their online marketing dedicated to search engine marketing. 26.7% reduced that percentage.

SEO spending

On a larger scale, global spending on search engine optimization is expected to increase by 43% this year, with 52% of companies worldwide saying they will spend more this year, according to a report by Econsultancy.com Ltd. and the Search Engine Marketing Professional Organization. That compares with 9% that expect to spend less and 39% that expect to spend about the same amount of money on improving their rankings in natural search results.

One-third say they spent between $25,000 and $150,000 on SEO last year, 43% spent less than $25,000 and 9% of companies spent nothing on SEO last year, according to "State of Search Engine Marketing 2010." The report was based on an online survey of almost 1,500 advertisers and agencies in 68 countries in January and February 2010.

For paid search, respondents say they expect to spend an average of 37% more this year, the survey found. Half of respondents plan to spend more on paid search in 2010, compared with 16% that said they will spend less. 34% expect spending on pay-per-click search ads to remain the same this year.

About 20% of companies spent at least $1 million on paid search in 2009, the report says.

New approaches

As e-retailers up their search spending it's a good time for them to review all options, says Gary Smith, vice president of worldwide sales and marketing at YourAmigo Ltd. "People are coming out of the global financial crisis and getting back in the game and they realize they have to try new ways to generate sales," he says. "Merchants are starting to spend again, but they are being more careful about the return on investment of their search campaigns. Now they are trying to be more focused on ROI and more cautious about the campaigns they run."

YourAmigo specializes in organic search, which is not to be confused with SEO, Smith says. The company's organic search capability is based on knowledge of consumer search habits gained over a decade in the search field that has yielded algorithms that can be applied to consumer search behavior. The technology can be overlaid on existing SEO technology, Smith says.

"Organic search has evolved significantly over the last few years," Smith says. "The search behavior is what we are concerned with. Businesses need to have an affinity with searchers, to understand how and what they are searching."

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