There’s no doubt that consumers are turning to web search more than ever for the products they want to buy—or research—online. In just the past six months, for instance, consumers have conducted more than 1 billion retail-related searches at Google.com. In the past year, paid-search provider Overture Services Inc. has provided results on more than 2 billion commercial searches.
And so the big question for retailers today is how best to harness the power
of all that searching.
It’s not as easy as it was when search was new and few retailers understood
the importance of search. Back then, retailers could focus on their brand names
and a few keywords. But as more retailers entered the competition for keywords
and as search engines gained a better understanding of how to generate revenue,
the business took on a degree of complexity that today is beyond management
by mere humans.
Many thousands of words
For starters, some retailers now manage lists of keywords that number into
the tens of thousands. For another, the costs of buying keywords at pay-per-click
search engines change frequently and that creates a constant management challenge
to keep at the top of the search results list. And as consumer tastes change,
the relative importance of keywords goes up and down—sometimes faster than the
eye can follow. “It’s a nightmare to manage all that,” says Dave Carlson, CEO
of search engine marketing company Go Toast LLC, a division of eonBusiness Corp.,
an Internet development company.
And
managing keywords is only the start. There’s a whole back end involved in making
sure search results are doing what the retailer wants them to do—create sales.
That involves tracking who’s coming to the site from search pages, which page
they land on, what they’re viewing, and not only what they’re buying but whether
they’re buying the right mix of profitable products. After retailers have sorted
all that, they need to calculate the cost of acquiring customers and determine
if the price they paid for keywords was worth it. Then the process starts all
over again. “You really need a tool to maximize your efforts,” says Jake Baillie,
vice president of search engine marketing at Priva, the online marketing arm
of Chicago-based ad agency Gennera, Knab & Co.
The industry is full of stories of retailers who dug through piles of search
data for campaigns they thought were successful only to find their investments
weren’t paying off. “Search engine optimization is not something you can touch
and feel,” says Lisa Wehr, president of search engine optimization provider
Oneupweb. “You just have to wait and see what happens.” And then apply analysis
to the results. “If for starters you know your average sale, profit margin and
conversion rates, you can plug in the formulas and see how much money you make
on each search engine keyword,” Wehr says.
The market is only going to grow, making retailers’ challenge even greater,
analysts say. Search is the third largest Internet market after e-commerce and
advertising, says a new report from U.S. Bancorp Piper Jaffray Equity Research.
Search engine revenue reached $1.8 billion last year and will grow 35% a year
through 2007, when it will reach nearly $7 billion, according to Piper Jaffray’s
“The Golden Search” report. “We are still at the very early phases of the improved
search technology,” the report says. And that revenue measures only the money
spent directly on search activities themselves; it does not count the revenue
to companies that make a business of increasing retailers’ visibility online.
Search engine marketing companies’ own experience bears out Piper Jaffray’s
conclusions. “We’ve seen a dramatic shift in the marketplace,” says Tim Armstrong,
vice president of advertising sales at search engine Google. “Three or four
years ago, retailers who didn’t have search strategies were in the majority.
Today, they are far in the minority. The vast majority have search programs
running. They have gotten much more knowledgeable about how customers look for
information over the Internet.”
New way of marketing
It’s also not too strong to say that online search has changed the way retailers
market and advertise, observers say. “Search has changed the dynamics of marketing—online
and offline,” says Paul Schulz, senior vice president of marketing and general
manager of the online business of Overture. “Traditional marketing has been
based on demographics, psychographics and location. We’ve turned that idea on
its head. We don’t give demographic or psychographic information; we give retailers
people who are in the market for their products. They’re raising their hands
and they’re very specific about what they’re looking for. People are in the
mood to take action.”
Further, keywords have become crucial as the Internet disrupts other ways
of doing business. “The Internet does not create brand loyalty, in fact, it
does just the opposite,” says Ralph Koehrer, CEO of search engine marketing
company Inceptor Inc. “So you have to make sure you are creating relationships
somehow.”
The search market has evolved into two markets: On the one hand are products
offered by search engines such as Yahoo and Google that employ so-called algorithmic
search, based on a search engine’s analysis of the content of web pages and
presented in the order that the engine believes is most relevant. On the other
hand are companies such as Overture Services Inc. as well as new offerings from
Google which offer paid search, based on how much a marketer is willing to pay—usually
on a per-click basis—to have a site land high in the search results.
Whatever the approach, keywords are the heart of search engine marketing.
They are what consumers use to find web sites that have the products they want.
Just identifying the proper keywords presents a challenge to most companies.
There’s the famed case of the seller of a rubbing compound to buff up cars’
paint jobs. The marketer came to search engine marketing company iProspect.com
Inc., wondering why the keyword “rubbing compound” wasn’t getting results. A
little research showed that prospective customers were searching on the term
“swirl marks,” which was the problem they were trying to solve, and not on the
product that would solve the problem, says Fredrick Marckini, CEO of iProspect.
Other iProspect customers refused to use the terms “GPS” and “laptop” because
that was not how their corporations identified the products they sold. “They’re
not going to be found if they don’t understand how their audience is searching,
and if they don’t have the words that people are searching for on their web
sites,” Marckini says.
Be specific
In addition, retailers should be specific in their keyword selection, experts
say. “‘Designer scarf’ or ‘silk scarf’ is better than just ‘scarves,’” Carlson
says, “as is ‘cheap sports car insurance’ better than ‘automobile insurance.’”
For one thing, he observes, a narrower term may be less expensive than a broad
term for which there might be a lot of competition. For another, he adds, “It
narrows down your audience to what you sell.”
Further, keyword selection is a dynamic activity. Once a retailer has identified
keywords that it thinks will work, it should find out what other keywords they
can lead to. “Retailers usually find a tremendous amount of information in keywords
that they didn’t know existed,” says Google’s Armstrong. “A marketer could start
with 500 keywords, then after a month of testing multiple messages with various
keywords grow to 1,000 keywords.” Analyzing search results “gives you the flexibility
to change as you go,” Armstrong says. Google provides retailers access to its
database of searched terms so they can refine their keyword strategies.
Selecting keywords is only the start, though. After selection, keywords require
constant management. For one thing, a retail marketing program must keep a vigilant
eye on how it’s landing in the search rankings. With paid inclusions, that means
constantly outbidding the competition. “Merchants need to stay abreast of pricing
changes,” says Overture’s Schulz. “Some retailers put their most expensive words
into categories and check them frequently.” With algorithmic search, or natural
language search as it is also called, that means always analyzing page content
to stay current. “You can never say, ‘I’m done,’” Baillie says. “Retailers should
always be adding information pages to their sites, like product reviews and
opinions, because search engines like new stuff.”
After that, retailers have to make sure that the keywords and their spots
in the search results remain relevant to their business goals. “A retailer who
has lots of inventory of a particular product will pay more to land high in
the search results,” Koehrer says. “But once the inventory goes down, he better
make sure his bid for placement goes down as well.” Same for particular products
that a retailer may want to highlight—either to promote a high-margin product
when it is seeking a little extra profitability or a seasonal item.
Similarly, the day of the week may affect the amount a retailer is willing
to bid for keywords. “A lot of retailers launch sales on Sundays or Wednesdays,
so they might want to increase their bids for certain keywords on those days
only or for a few days after,” Wehr says.
Working together
In addition to bidding for keywords, however, retailers should be aware of
the need to optimize their pages so that algorithmic search engines can find
them. “Our biggest source of new revenue is people who come to us and say ‘I’ve
been spending $10,000 a month on keywords and not getting results,’” Marckini
says.
In fact, Marckini stresses that pay-per-click and optimizing pages to be found
by search engines work together. “Some people believe that pay-per-click advertising
by itself is search engine marketing, but nothing is further from the truth,”
he says. “With pay per click, the instant your marketing budget expires, so
does your visibility. But once you optimize your site, it can work for years.
You have to integrate the two.”
In optimizing their web sites, retailers need to be alert to how consumers
view their pages on the web. Pages that are delivered to the viewer from a database
are less likely to be found by natural language search engines than pages that
reside on the web, experts say. “Those pages look like a database and not like
a web page,” says Google’s Armstrong.
Even marketers who use certain keywords over and over on their sites in a
bid to rank high in search results may find that doesn’t work if they don’t
do it at the right place on the web. “If a keyword doesn’t appear in a viewable
part of the site, you won’t be found,” Marckini says.
Furthermore, retailers can buy services that will spider the site before they
go out to be found by search engines. Go Toast, for instance, will spider a
site and put all information into a master list, which it then will publish
to the search engines, including page title, product description and URL. “We
create the listings and keep the information current,” Carlson says.
Relevancy counts
Marketers say that shoppers perceive little difference between natural-language
search results and paid search results. “End users tell us they are interested
in the relevancy of the results and not in how the results got before them,”
Schulz says.
In fact, consumers are smart about how the web works and are fully aware that
some results are paid and others are not, Carlson says. “Consumers have become
very savvy,” he says. “They know that if they’re shopping for something, it
might be worth looking at the paid listings because someone is paying to get
their attention.”
After a retailer has selected the keywords and made sure they are the right
ones, the real work begins. One of the major challenges is making sure that
how the site ranks in search results is paying back in sales. “A big change
that we’ve noticed in the past 12 months has been that retailers are tracking
their conversions,” Schulz says. “There are a variety of ways to understand
how they’re doing, but they need to employ some tools beyond knowing the click-through
rates.”
Newest services
Until vendors began offering such analytics tools to help retailers test their
effectiveness, the only way to know what was happening was to play around with
the keywords and observe traffic to a site. “One client was spending $60,000
a month on keywords at Overture and I asked how effective the spending was for
him,” Baillie recounts. “He said, ‘I don’t know. I’m afraid to pull my terms
because I don’t want our sales to go flat.’”
Measuring the effectiveness of search placements is the newest area where
many vendors are competing. In fact, one measure of the importance of such analytics
is that just about all vendors are offering analytics products that tie conversions
and sales to keywords that customers searched on as well as to sources of referrals.
Most also report number of conversions and sales, cost of bringing the customer
to the site, repeat buyers and more:
— Go Toast offers its placement and analysis products on an ASP basis.
— Google has created a number of vertical markets including a retail
team and has created Froogle.com as a shopping portal.
— Inceptor says its Excedia product analyzes the effectiveness of marketing
in all media.
— iProspect recently licensed Future Now Inc.’s methodology for analyzing
web content and redesigning pages.
— Oneupweb offers its ROI Trax.
— Overture is working with high-end analytics providers to show the value
of paid search placements.
— Priva is rolling out a product it calls PRIZM.
“Rather than rankings and focusing on getting the top spot, the industry is
now focusing on what people are searching on and asking: Is being number one
in the search results really getting us something?” Baillie says.
Most software that tracks the effectiveness of search results when a customer
clicks through to a web site can report which search engine delivered the consumer
to the site and which keyword the consumer searched on. Most also then track
what the customer views and whether the customer buys something.
Understanding the return
For further analysis, it’s up to the retailer to provide the search analytics
program information on profit margins, average sales and conversion rates so
the program can measure the efficacy of each keyword that the retailer employs.
“Retailers plug in the formula—as much or as little data as they want to provide—and
it helps them understand the actual financial return on each campaign,” says
Wehr about Oneupweb’s ROI Trax product. “It’s a comprehensive reporting system
that helps retailers understand how the campaign is doing and how it can continue
to improve and drive more traffic to the site.”
It’s also a way, she says, to make sure they have chosen the right keywords.
“Doing the analytics gives us a whole new list of real-world phrases based on
what people search on,” Wehr says.
Analytics can further help retailers understand if customers are coming to
the right page in order to make buying and checking out as easy as possible
with as few clicks as possible. “It’s really important to get the customer to
the right page,” Inceptor’s Koehrer says. “We all know there are people who
are really savvy and can find their way around a web site and others who cannot.”
The right landing page
Koehrer recommends that retailers test delivering search users to different
landing pages at a site to determine how they convert to buyers. “You need to
take their eyeballs right to what they want,” he says.
What that page displays is up to each retailer. “Sometimes it’s more economical
to have people go to a category page than to a product page,” Armstrong says.
By referring customers to category pages, retailers have to manage fewer pages
in relation to search results. Others argue that offering customers a few extra
products when they get to the landing page is sound merchandising because it
offers the opportunity for cross-selling and upsellng.
Analytics also are telling retailers whether the ranking in search results
is really beneficial. Depending on the product and the term, a number one spot
is not always necessary—but usually being in the top five is, Baillie says.
“If you’re a research topic, you can probably be pages into the rankings and
still be looked at. But that’s not as true with retail,” he says. “It’s very
important to be in the top five.”
As a result of the focus on analytics, search engine marketing companies have
found themselves becoming more deeply involved in advising retailers on the
content of their sites. “Before a site can be indexed and before the pages are
optimized, you have to look at the site and ask whether it can be indexed,”
Baillie says. “Unless a spider can crawl specific pages, you won’t get indexed.”
Search engine marketing companies are finding that their recommendations for
how to place high in rankings have implications beyond the marketing department.
“When we do a search engine marketing campaign and a site gains in rankings,
we sometimes find that we are directing changes in a web site’s architecture,”
Marckini says. But, he adds, iProspect does not design sites. “We are unconcerned
with design; we are concerned with text,” he says.
A balancing act
Thus retailers have a balancing act: Their site design must lend itself to
optimal search engine marketing, and their marketing program must take best
advantage of their site design. “Retailers need to pay attention to both,” Wehr
says. “They’re spending their time developing their web site, and they’re not
spending their time developing their marketing program. They have to build optimization
into their web sites as they build the sites.”
Some vendors offer specialized products that bring previously buried product
information to the top so search engines can find it. Inceptor’s Excedia 4.0
product, for instance, retrieves content from a product catalog, articles or
in other areas not visible to spiders that may be stored in Microsoft Word or
an Adobe PDF and not necessarily visible to spiders. Inceptor says Excedia reads
this content and converts it into optimized HTML that can be presented to search
engines for indexing.
Specialization
The complexity of search engine marketing dictates specialization when it
comes to building a site, Baillie argues. “The web designer title is too big
a category today,” he says. “You have graphic designers, who are different from
HTML experts who are different from programmers. But at the same time, you have
to make sure they all work together. We’ve seen too many cases where the designer
puts something together and the search engine optimization expert comes in and
says: ‘Guess what. This isn’t going to work.’”
A newer twist on search engine marketing is contextual advertising. It’s still
pay per click and requires retailers to know which keywords are the best for
their sites, but it gives the link a little more oomph and extends the reach
of the search engine. Contextual advertising is most familiar through Google’s
AdWords program, which displays special, sponsored links on the right side of
search page results, usually in colored boxes with a notation that they are
special sponsored listings. The AdWords program is a way for Google to make
money directly from marketers for presenting their products.
When a consumer at Google searches on a term, Google displays its natural-language
search results. But it also displays its AdWords ads. Now it is extending that
presentation to other sites where Google is building relationships so a person
viewing baseball scores at a newspaper site, for instance, will also get AdWords
boxes displaying links to a team’s MLB.com Shop site, where the customer can
buy a cap from his favorite team. Small retailers who want to use the AdWords
can use a self-service section at Google to get started.
Large opportunity
Google recently agreed to extend contextual marketing to Amazon.com, where
customers looking at certain products will get a pitch for related products.
Customers viewing Bruce Springsteen’s latest CD, for instance, might get a link
to a site selling tickets to a Springsteen concert or to an art site that features
rock posters. Google bases the presentation on the content that the consumer
is viewing at the moment, thus the contextual part. From its search engine expertise,
Google is expert at analyzing pages, the company says, so it is merely extending
that expertise to analyzing sites that consumers are viewing and delivering
relevant marketing content.
Overture is working on a similar program which it expects to introduce to
market this year. “There is a large opportunity in providing results in a non-search
environment,” Schulz says. Because of the different context in which ads will
appear, Schulz says Overture expects different, as-yet-undetermined results.
Yet the prospect of earning click-through revenue is appealing to owners of
content sites, he says. “Content providers have been knocking our door down,”
he says. “Content providers have not been terrific at the monetization side
of their business.”
Search engine marketing—with its focus on optimization and the need to constantly
monitor keyword performance and rankings in search results—can be expensive
and daunting. And even though many analysts argue that there is a quick return
in search engine marketing investments, they nonetheless require upfront investments
before retailers will see results. Thus some companies are offering their services
on an outsourced basis.
Go Toast, for instance, has built its Market Maker product on an ASP basis.
“The vendors we deal with are constantly changing and adjusting their feeds
of data from marketers,” Carlson says. “They’re making changes every two weeks
to their software. We deal with these changes all the time.” Go Toast’s services
start at $50 a month and retailers can start with a 14-day free trial. “Lots
of people tell us they make two, 10 or even 12 times the cost of our service,”
Carlson says. Go Toast also offers a Profit Builder product which tracks conversions
and ROI.
In spite of all the changes that have occurred recently in search engine marketing,
more are on the way, most experts predict. For one thing, industry experts report
that MSN and Yahoo are attempting to create paid search models of their own.
Right now, they buy paid results from Overture. For another, the ways that retailers
and search engines will cut data will continue to increase. “There will be much
more retail information available to search on,” Armstrong says. “Both retailers
and the search engines will find innovative ways to get information into users’
search results.”
Consoldiation is coming
Others say that consolidation of search engines is inevitable. Piper Jaffray
reports that 15 major search engines operate today. But participants points
to recent developments such as Overture’s purchase of AltaVista and FAST search
engines recently and predict that more such acquisitions are likely. Overture
says it will use AltaVista and FAST as testing grounds for new products.
Further, the search engine market is a dynamic one, so retailers need to keep
up on what’s happening, Wehr cautions. “There are ebbs and flows in who’s popular
and who’s not,” she says. “The major search properties are battling it out.”
At the same time, though, marketers are clamoring for more search real estate,
which is one of the reasons that Google extended its AdWords program to other,
non-search sites. In that area, some predict that comparison shopping sites
will become a new battleground for search optimization as retailers seek ways
to present their products more forcefully at sites where consumers are clearly
ready to buy.
In a relatively short time, search has become the leading form of online marketing.
And it seems likely to stay that way. “In the second half of last year, there
was a lot of talk that search would disappear, that people knew the brand they
wanted and arrived at web sites that way,” says Inceptor’s Koehrer. “But it
just hasn’t happened that way. More people are arriving by search and the reason
is simple—it works.”
