Retailers overspend on search-based marketing, Forrester says

Search engine marketing can be critical to online retailers, as shown by the fact that 15% of online shoppers typed in search terms at major search engines when making their last retail purchase, according to Forrester Research. Even so, too many retailers are paying too much, even paying double, by a less than judicious use of keyword purchases, according to Forrester.

Comparison shopping sites have mastered keyword bidding at major search engines such as Overture Services Inc. and Google Technology Inc. These sites deliver consumers from major engines to selected retail sites so as to collect on each referral. That strategy can be quite effective, says Forrester, which found in a recent analysis that comparison shopping sites drove about 2% of all visitors to Sears.com and Walmart.com. Though it may seem like a small number, notes Forrester analyst Carrie Johnson, the 2% delivered directly from comparison-shopping sites represented highly qualified shoppers ready to buy.

Yet retailers paying both for keywords on major engines and on comparison sites may be paying twice for exposure to the same shoppers. To spend more effectively, retailers should limit pricier spending at major engines where bidding drives up the price on top keywords to specific strategic activities, and they should put more resources into the more qualifying comparison shopping sites.

Other strategies to limit search engine spending for retailers include testing the placement of cheaper keyword buys, an exercise now more feasible with the availability of new analytic tracking tools. Forrester’s additional advice on the topic to retailers is to buy their own brand names. “Incredibly, some retailers still don’t own their own brand names,” says Johnson. Those who don’t are forced to engage in expensive bidding wars on their own store names and keywords to keep affiliates and others from taking those top spots on major paid search engines.

“It’s especially important for retailers to own their own names because the 7 million new households that will start shopping online this year will use search most actively, and they often type in a retailer’s name just to find the URL,” says Johnson.