Search Engine Marketing
A picture’s worth a thousand words, but these words are worth millions
If online retailers need any further proof that web search is moving to the front of the line in terms of its importance to marketing, a recent report from U.S. Bancorp Piper Jaffray should help settle the question. The research firm projects that the online search market will enjoy a compound annual growth rate of more than 30% over the next four years and represent a $7 billion industry by 2007, making it the third-largest online market after e-commerce itself and online advertising.
Those numbers should come as no surprise to anyone who’s observed a recent flurry of expansion in the industry as established providers and new players alike angle for a bigger piece of the pie. Overture Services Inc., the first big mover in the paid search arena, still dominates with an estimated $688 million in search revenue last year, but Google, which made its early reputation on algorithmic search, is in hot pursuit with its addition over the past two years of paid AdWords and paid sponsorships, which now appear, clearly identified, along with natural search results on a Google page.
Meanwhile, Overture has expanded beyond the boundaries of paid search to broaden its portfolio into other offerings. Earlier this year, Overture acquired search engine AltaVista and the Internet search business of Fast Search & Transfer, which encompasses Fast’s algorithmic web search and PartnerSite paid inclusion services, as well as multi-language linguistics capacities at the Oslo, Norway-based firm that Overture will use to help it expand internationally. The acquisitions, says Overture, give the company a full suite of paid placement, paid inclusion and algorithmic search products and services for syndication to portals, Internet service providers and other search destination sites.
Shortly after those acquisitions went down, Overture itself was acquired by Yahoo Inc., in a deal valued at $1.6 billion. “It’s a testament to the long-term staying power of search engine marketing,” says Frederick Marckini, CEO of search engine marketing firm iProspect.com Inc. “Investments this big don’t happen unless companies know the market is going to be there a long time.”
1 in 500 million
The combination also is expected to produce revenues of more than $1 billion this year for Overture. With that size of opportunity, paid search is also expected to be a major driver of revenue in the near future at portals Yahoo and MSN as they, too, seek ways to leverage search into cash.
One such avenue, payment for expedited review, is already generating extra income for most search engines by speeding up the often poky natural entry of new web site content into search engine indexes. In natural, or algorithm-based search, it’s only when the search engine spiders find, crawl and index a page that its content even has a chance of showing up in search results. Some online marketers have found the process takes months—or longer—and plenty are happy to pay for faster review that can shorten getting into indexes to a matter of days.
But getting into the indexes is only half the battle. Search engines list what some industry sources estimate as upwards of 500 million documents. Without some help, chances can be slim that search results will list high up the content a merchant wants consumers to see. “It’s like buying a ticket to a raffle with 500 million chances,” says Marckini.
It’s those odds that created the search optimization industry. Outside of paid search, search engines use algorithms to find and rank relevant content among indexed web pages. The optimization process seeks to stay current with the engines’ priorities, manipulating what may be hundreds of variable elements to make it easier for engines to recognize relevant products and listings and post them higher in search results. Everything from the template and layout of a page to the architecture that the site is hosted on and the way it serves pages to the actual content of a page is fair game for optimization to what search engines seek.
For example, search engines typically rank a page in part on keyword prominence or how early in the text of a page a keyword appears. They also look for the concentration of a given keyword on the page. Thus, “If your site is selling microwave ovens, but those words don’t appear until far down on a page, you’re not going to do well,” says Marckini.
Growing web crowds
One argument for natural search optimization is that it’s a less expensive means of getting content and products in front of consumers than the alternative, paid search. But in an increasingly crowded web universe, paid search builds on optimization by taking the increased likelihood that an engine will rank a merchant’s relevant listing high in search results and turning it into a guarantee—for a fee. Overture’s paid search offering, in which advertisers bid a cost-per-click fee for top positions under various keywords in search results Overture’s engine feeds to numerous search destinations, defined the model.
As the bidding on keywords can be fast and furious for particularly competitive terms, and some merchants and other advertisers maintain paid positions on thousands of keywords, managing the process, selecting the keywords that will drive the best results, and staying in top positions where bids and rankings may change frequently have become increasingly complex and time-consuming. Spying opportunity, service providers to online retailers that weren’t even in the search business a few years ago have now added management of paid search programs for retailers to their roster.
Affiliate marketing services company ValueClick Inc.’s BeFree, for example, added tracking of results from keyword campaigns to its lineup this year. Search engine optimization companies such as MoreVisibilty.com Inc. have bolstered their program offerings to retailers and others by securing direct feeds into Overture’s engine. Industry analysts such as Jupiter Research Inc. have recognized online search’s booming marketplace by elevating it to a dedicated practice area.
Why all the buzz? The answer is music to the ears of online retailers fighting to grow business: search engine marketing works. 76% of marketing executives who used search engine marketing surveyed by Jupiter rated it more effective than online banner advertising, and 64% said they plan to increase their spending on it. That’s because increasingly, online consumers are finding the web’s search engines the quickest way to get to specific products and services, beating the effectiveness of even site search. Online marketers are feeding that with new ways to connect searchers with the searched-for even faster, such as with strategies that deliver shoppers directly to a relevant product page, for example, instead of a site’s home page. And online merchandisers are taking advantage of the fact that shoppers are delivered to product pages in a more ready-to-buy state by displaying relevant cross-sell and upsell opportunities on that page.
Greatest opportunity
“For consumers, web-wide search is more accurate than local site search 52% of the time,” says Jupiter analyst Matthew Berk. “Search is the greatest single opportunity to learn from and influence customer behavior.”
A survey by analytics provider NetIQ Corp. and iProspect found that 77% of online marketers are evaluating paid search strategies. Interestingly, the survey also found that 31% of those using search engine marketing don’t measure results, one reason analytics providers are growing. “Right now,” says Jeff Seacrist, group product manager for WebTrends analytics solutions at Net IQ, “search engine marketing may be the hottest tool.”
And that sets up perhaps the latest trend to emerge from search companies: going beyond search to find new ways to connect retailers and other online advertisers to new customers. Overture delivered some 2 billion clicks to advertisers from consumers last year, and to find even more, its paid placement now goes where it’s never gone before: directly to content pages. Advertisers using Overture’s new Content Match product bid on keywords that link them directly to relevant content on publisher sites that are Overture partners.
How does it work? Consumers logging onto MSN to find content about jazz singer Norah Jones, for example, might see ad links to related products such as Norah Jones CDs or videos. Clicking on that link delivers the consumer to the advertiser’s site where the shopper could buy the product; clicking on the back button gets them back to the content on MSN. Advertisers bid on the contextually placed keywords as they do on keyword positions in search results. The difference is that the link to a relevant shopping opportunity is delivered on a content page, to a consumer who’s chosen to view particular content but not actively looking to buy something.
Non-intrusive
“The links are done in a non-intrusive way so as not to hinder consumers’ experience with that content, but at the same time, they’re relevant to the story they’re reading,” says Bill Demas, senior vice president and general manager of Overture’s Partners Business and Solutions Group. “So there’s a greater likelihood they might click on that link.” Overture is already distributing the contextual advertising product to MSN and other content-oriented businesses such as the MyFamily network, which operates sites such as Genealogy.com. It’s also in talks with other content-focused sites that have participated in tests of Content Match over the past four months, including the auto and real estate sections of Yahoo, says Demas.
In addition to new opportunities for existing partners such as MSN, Content Match opens up advertising opportunities for content publishers previously unable to participate in the Overture network because they didn’t have search boxes, adds Demas. “Much of our existing network will be interested in this,” he says.
