Finding Help

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."

Three areas

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.

Going natural

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.

Check references

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.

Then retailers can move on to other areas, such as examining the provider`s technology, reporting and account management, says Evans of HPshopping.com. When researching an agency`s technology, Evans advises making sure the vendor can automate the process. "It reduces human effort as well as keeps costs down," she says. Next, she says, see to it that the agency`s technology works with the retailer`s. "If they have a data feed solution in place but you can`t extract the data feed from your content management system, then you`ve got a problem," Evans says.

Don`t just make sure the agency has reporting, says Evans. Find one with reporting that helps build the bottom line. She says one factor that influenced HPshopping`s choice of Performics was that it measures down to the specific actions on a page and is flexible in how it reports information.

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Building relationships

When it comes to account management, it`s important to understand the relationship the vendor has with the search engine companies and with shopping comparison sites, Evans says. "The closer tie they have with the shopping sites, the more HP is going to benefit," she says, noting the same holds true with search engines companies such as Google and Yahoo Inc.`s Overture Services Inc.

Before signing on with Performics, Evans and her one-person staff managed paid search with the help of the Google and Overture teams. Evans managed to place her paid search ads high but not as profitably as she can with the vendor`s help, she says. Now, the return on investment is measured for each keyword, and the vendor manages paid search to obtain an agreed-upon ROI. "We`re not necessarily in the top ranking but it`s a much more profitable area for us," Evans says.

The help HPshopping gets from its agency in managing product feeds to shopping comparison engines has been of key importance. "Keeping those straight was not necessarily difficult, but it was labor intensive and something we weren`t staffed to do well," Evans says. The agency also monitors the feeds for errors, a task HPshopping didn`t have time to perform. The reporting system lists products sold, revenue, clicks and feeds all in one area, allowing HPshopping to keep a close watch on what`s working and to fix what`s not. Before, the analysis went only as far as the product line, but now it goes to the SKU, telling Evans exactly what`s selling. Making changes to product offerings in the data feeds to meet shifting requirements now takes a matter of hours, instead of the two to four weeks needed in the past.

Seeing the success of working with Performics on paid search and comparison shopping engines, HPshopping recently asked the agency to begin optimizing natural search results. Because HPshopping has a dynamic site, search engine spiders that crawl sites to find relevant content could not index the site. The relevancy observed by the spiders forms the basis of inclusion in search results. Performics converts the pages to a format that the search spiders can handle and submits them for review and possible inclusion.

The trend

By starting with paid search and then moving into natural search optimization, HPshopping is following a trend, according to Laura Thieme, president of Bizresearch, a Columbus, Ohio, search engine agency. Both steps are necessary to incorporate marketing into a single effort, some agencies say. 60% of shoppers at search engines click on natural listings and 40% on paid, says Stuart Larkins, vice president of partner services for Performics.

Schwan`s Home Service Inc., a Marshall, Minn., $3 billion-a-year company that offers home delivery of food, is taking that approach as well. Schwan`s hired OneUpWeb two years ago to manage natural search optimization on two sites, Schwans.com and ImpromptuGourment.com. By combining paid and natural search efforts, Schwan`s can place near the top of both searches at the same time, says James Siderits, Schwan`s marketing manager. "It reinforces our credibility when someone pulls up that results page and we are at or near the top in both columns," he says. "It creates a double impression."

Before hiring OneUpWeb, Schwan`s tried to optimize pages with a part-time, in-house effort but couldn`t devote the time to mastering the details of how search engine algorithms choose results. It also was hard to establish relationships with search engine companies and keep up with what Siderits calls the "ever-changing playing field" of natural search. "We weren`t showing up in the top 30 page results," he says.

Now, Schwan`s often appears near the top of the first page. In the past, the retailer worked to optimize the home page around a dozen or so keywords but it has now identified nearly 100. Monthly submissions of pages to the search engines have replaced the irregular submissions the company had been making. Reports from the agency also help the retailer keep track of how well natural search helps find new customers, a key goal for the company.

Understanding such objectives separates the best search engine marketing agencies from the also-rans, says Siderits. Any retailer hiring an agency should make sure that the agency is clear on the retailer`s goals. "The key is finding a partner who is willing to learn your business," he says.

Any search engine optimization company must develop a deep understanding of the enterprise to be able to write copy that provides the right customer experience and the right words, titles and parameters for search engines. However, having a productive relationship doesn`t require exclusivity on the part of the search engine, retailers say. In fact, many say they prefer their agencies to have the experience of working with clients in similar businesses. Some retailers, like Peter Dammann, director of online marketing for Redcats USA, the New York-based catalog and web site retailer formerly called Brylane, says he looked for an agency experienced with other apparel and home fashion catalog companies. Redcats brands include Chadwick`s, La Redoute, Lerner Catalog and Jessica London.

Dammann says his company has been using Performics for paid search for a couple of years and started using the agency for optimization in recent months. Hiring an agency brought discipline to Redcats paid search, which previously varied from one brand to another, with some engaged in small third-party deals, some managing it in-house and others doing nothing, Dammann says. Since hiring the agency, paid search has grown to 5% of the company`s web business, while maintaining a consistent cost structure. "We`re a multi-channel retailer with an established catalog business, so for us to get to that 5% figure is a significant chunk of change," Dammann says.

The fees that agencies charge for paid search often come to about 15% of the total ad spend, vendors say. Redcats has agreed with its agency on an undisclosed ROI goal. As long as that margin remains intact, the vendor can keep spending up to a cap that Dammann describes as "very liberal."

Single source

When Redcats decided recently to optimize pages for natural search, the company choose the vendor that had been managing paid search. Using a single company to handle paid search and page optimization makes sense, says Gary Stein, analyst at Jupiter Research, because each can feed the other. A profitable keyword discovered in page search, for example, could become a prominent word in titles and copy on pages to improve natural placement, he says.

Making both paid and natural search part of a total marketing effort also is becoming vital as costs and competition rise, says Fredrick Marckini, CEO of iProspect.com Inc., a Watertown, Mass., search engine marketing agency.

Marckini says retailers can improve their bottom line with a process he calls conversion enhancement. It begins with grouping people who are looking for similar things on the site. Some might be results-oriented and others might seek emotional reassurance, for example. The users are put together into personas, and paths through the site are created for each persona.

Users follow the paths by clicking on words or phrases keyed to their way of viewing the site, Marckini says. With keyword costs on the rise and competition heating up for natural search positions, Marckini says, retailers can protect their ROI by putting search in the larger context of a company`s entire marketing thrust with methods like conversion enhancement.

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