Searching high and low
When shoppers can’t find you maybe you need to pay to get their attention.
By Mary Wagner
Ten-year-old Lucky Brand Jeans never planned to nail down a particular market segment. Instead, it let consumer response guide its growth as it gradually found a niche among shoppers. Ten years later, it’s found a couple of niches, selling jeans at outlets as diverse as the 350 teen-focused Buckle stores and the traditional Nordstrom department stores.
“Our customer base is broad,” E-Commerce Director Bridget Belden says. “That’s our biggest challenge and our biggest opportunity. People have heard of us, but they don’t always know where to find us—brand awareness is a little off- kilter with our distribution.”
Lucky’s management believed that Internet sales could help close that gap. But as with the brand itself, Internet opportunity came attached to challenge: how could Lucky help jeans-buying web shoppers navigate through the online competition to find its products?
Belden turned to search engine optimization provider MoreVisibility.com. The 2-year-old Boca Raton, Fla.-based company applied its extensive database of the criteria various search engines use to rank search results listings when it created new pages for Lucky’s web site. Data from the thus “optimized” pages on Lucky’s site are recognized and grabbed more quickly by the targeted search engines as they crawl the web universe looking for relevant data and search results. That pushes Lucky higher up in results rankings. And that’s critical when 75% of online shoppers look no further than the first page of their search results.
As the web has become more crowded with merchants seeking shoppers, search engines are increasingly the battlefield where retailers vie for consumers’ attention. Vendors such as MoreVisibilty have sprung up to help online merchants understand search engine methodology and point shoppers toward their sites with web page optimization services that boost their listings higher up in search results.
But efforts to leap over the competition in search results haven’t stopped at optimization. Many merchants have been quick to adopt a simpler and more direct method of landing high in the search: pay for it. The pay-for-placement model, in which some search engines auction top positions in keywords to the highest-bidding advertiser, has soared in the past year. Revenues at Overture (formerly Goto.com), for example, the current leader in that space, increased 30% in the first quarter of this year from last year’s fourth quarter, even as revenues declined at other advertising-supported web destinations.
Paid search that simply buys its way around the complex algorithms used in search engine technology to rank search results was once scoffed at, says Jupiter Media Metrix analyst Marissa Gluck. “There was this inherent belief in the industry that a technology solution was better than paid search, but that’s changed,” she says. Both consumers and marketers are far more open to paid search now, for a couple of reasons, the single most important being, according to Gluck, that the model works.
Whichever approach a retailer takes, research verifies that improving search is crucial to a web retailing site’s success. According to a study at Georgia Tech, 87% of Internet users begin their online sessions with a search. More specifically, consumer data from Jupiter show that 42% of online shoppers start their sessions by typing a product, brand or store name into a search engine, nearly doubling the second most common way shoppers reach online stores, the 23% who type in a store’s URL directly. In the competition to attract traffic, the proliferation of banner ads has reached a well-documented point of diminishing returns.
Move on up
Further emphasizing the importance of search, Jupiter says only about 4% of consumers find the products they are looking for by clicking through on online ads. The sheer number of ads, along with experienced web shoppers’ growing pickiness about clicking on banners, means that consumers simply ignore many ads. The experience of online sellers such as travel web site Travelworm.com bears that out. The Nevada-based travel service, which specializes in finding hotel rooms at discounted rates, has been advertising on Yahoo for three years, using keyword-linked pop-up banner ads. “The click-throughs are about one-third to one quarter of what they were three years ago,” says CEO Brad Brownstein.
Lucky Brand Jeans’ experience with search shows that there is a pay-off in moving a site higher in the search rankings, however it’s achieved. “We ran a test on AOL in 2000 and found when we looked at our log files that the amount of traffic coming from search engines was increasing,” Belden says. “We thought, something’s working here. People are looking for us, and we have to make it easier for them to find us.”
The auction model on which paid search engines such as Overture and FindWhat.com operate sells keywords to the highest bidder at costs ranging from a few cents to a few dollars per click-through. Under pressure from declining banner ad revenue, other search engines that had bypassed pay for placement are now eyeing it with greater interest. Yahoo, for example, doesn’t sell keywords on its search engine but recently began offering advertisers the option of payment for expedited review of new web pages. The premise is that given the large number of web pages waiting to be indexed, search engines can take months to review a new site submission. The promise is that with expedited review, the sites of paying customers will be reviewed — and possibly indexed for inclusion in search results sooner, although Yahoo provides no guarantee of that.
Providers of both optimization and pay for placement search engine results are quick to point out the benefits of their model and drawbacks of the competition’s. Paid search engines cite quick results and easily measurable ROI on keyword placements, with the merchants paying only on performance. Optimization providers say payment at a high rate on click-through versus sale isn’t always a great deal for retailers, and that focusing search improvement efforts solely on paid engines misses opportunities on search engines that don’t use the paid model.
For many retailers, the solution is to use both as part of a marketing mix that may also include offline advertising, promotion and other efforts. In addition to working with MoreVisibility.com on optimization, for example, Lucky Brand Jeans pays Overture for positions in certain relevant keywords. That significantly extends Lucky’s reach in web searches because Overture, besides having its own web site where consumers can initiate searches, delivers results to search engines on AOL, MSN.com, and other major Internet destinations. And through agreements with those partners—on whose sites about 95% of the searches generated by Overture are initiated—Overture’s results receive prominent placement. “We’re trying for the maximum distribution so we use both methods,” says Belden.
So does niche marketer Headsets.com. The company pays for placements on selected keywords at Overture and at FindWhat.com, which also distributes search results to other engines. Headsets CEO Mike Faith says the larger part of his online marketing dollar now goes to paid search engine placement. The San Francisco-based multi-channel marketer of audio headsets says he’s found the paid placement more effective at driving sales than banner ads and affiliate marketing programs, and he considers the monthly $6,000 cost of click-through from paid search engines to be money well spent.
Faith has elected to do Headsets’ page optimization in-house — a challenging proposition when search engine algorithms change frequently. Faith says the company has spent time and money figuring out how the search engines operate and how it wants to be listed on them. But the simple pay-for-placement model is, for Headsets, at an average 70 cents per click across a number of different keywords, the least expensive route to higher rankings. “You don’t have to spend six months trying to figure out how the search engine works,” he says. “With pay per click, I know I can just be number one. It costs us, but it has terrific value for us.”
Spidering
In non-paid models, search engine criteria are based on algorithms, proprietary formulas that in turn are based on components such as relevancy. The engines use different algorithms to collect and rank data in search results. Search engine Google, for example, focuses more on link popularity than it does on metatags, the coded descriptions embedded in each page to give search engines a read on what’s on the page. The engines send out robots or spiders to collect data, generally, in the form of HTML text, although Google can now collect data from PDF files as well.
“The spiders at different search engines crawl at different intervals,” says Joe Laratro, chief technology manager at MoreVisibility.com. “Some crawl to make sure the links are still alive, some crawl randomly to find links to increase their database, and some crawl only because someone has submitted a request to crawl their site. The web grows every day and loses web sites every day, and the search engines try to provide their customers with fresh and relevant information.” To stay on top of frequent changes, MoreVisibility maintains a database of search results that reveal patterns in what different engines look for, and employs a technical staff to stay current on search engine algorithms.
Marketers like Travelworm’s Brownstein say optimization plays a role in online marketing along with paid search. “About 85% of searches are done at 10 major sites, including AOL, Lycos, Yahoo and others,” he says. “The other 15% include smaller engines like About.com. You need to do that indexing because 15% is still a significant number, it’s 15% of hundreds of million of people who use the web. Optimization gets you customers you may not otherwise get, like people who use smaller search engines that are outside the mainstream.”
The long lag
But optimization has limits. It takes time to produce an effect, and the results are less directly measurable than on keyword purchases. “It may take search engines weeks or months to digest newly submitted data and rank it accordingly,” says Andrew Wetzler, CEO of MoreVisibility. Or longer. One web merchant says he spent nearly $1 million in advertising on Yahoo for three consecutive years, but was indexed by Yahoo’s search engine only this September, meaning that during that time, his company wasn’t even showing up in non-paid results on Yahoo.
“Optimization is a pipeline effect of creating quality submissions, getting them to the engines, and then waiting for the engines to index them, which we aggressively monitor for our clients,” says Wetzler. MoreVisibility, which optimizes its clients’ pages for several major web sites it follows, guarantees its clients a number of top-20 positions throughout the engines it tracks, based on the number of client keywords. Under a six-month contract focusing on 15 words, retailers typically will pay $750 per word or phrase; $1,050 for a year. For a 50-word program, the prices are typically $575 and $850. But when clients seek to optimize pages on very highly competitive keywords, Wetzler will often advise them to pay for placement on those words rather than go the optimization route. “The two complement each other,” he says.
But in the increasingly competitive world of online retailing, some simply aren’t willing to wait for results. Travelworm.com does page optimization, recently contracting it to an outside company. It also spends about $100,000 a month on 2,500 keywords at Overture and FindWhat.com, at 1 cent to upwards of $2 per click. “Keywords and pay per click are the most effective advertising I can do online,” say Brownstein, who notes that the conversion rate among consumers who find the company through Overture is 2% to 3%, about twice the rate of conversion among consumers who reach the site through other sources.
Particularly for new online businesses, every month spent waiting for search engines to find and index their site is a month they’re not producing much traffic. That’s one reason the paid search model has enjoyed a boom over the past several months. Not only have revenues been up at Overture, for example, but so have click-throughs; they’ve nearly doubled over a year ago, driven in part by recent search results distribution agreements with AOL and other major engines. The auction dynamic also works on keywords: retailers are bidding up keyword prices (and Overture’s revenues) by monitoring traffic to top bidders and in many cases upping their own bids to regain top positions.
Greater complexity
FindWhat provides optimization services in addition to offering pay for placement in search results, but while its pay-for-placement business has grown to include more than 10,000 clients, its optimization business has dwindled to 100. “The algorithms are becoming much more complex,” says FindWhat CEO Craig Pisaris-Henderson. “The second you figure it out, they change. It’s labor-intensive to stay ahead of it, so to make money, search engine optimization providers have to be selective in who they work with. There’s only so much you can do for some companies with optimization.”
Maybe that’s why, as competition online continues to rise, Jupiter’s Gluck describes pay-for-placement as “a win for consumers, retailers and search engines. It aligns the interests of all of them.” Retailers get qualified customers; consumers get relevant results because retailers don’t pay for keywords that don’t produce sales. And since the search engines are paid only on a performance basis, that’s fine with them.
Under pressure to produce new revenue streams, more search
engines will look to variations on pay for placement or pay for expedited review
as they seek ways to monetize their search technology, predicts Gluck. “The
pay for placement model on search engines has definitely taken off just in the
past year,” she says. “It’s gained acceptance by delivering relevant results.
Consumers have shown they don’t really care whether search results are paid
for. They care far more about whether they’re relevant, and they’ll use whatever
search engine gives them the most relevant results.”
mary@verticalwebmedia.com
