Private equity firm Apollo Global Management will take Rackspace private in the all-cash deal.
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Most retailers engage in a combination of pay-for-performance and page optimization when devising their search strategies. Under the pay-for-performance model, retailers get instant results, control over which search sites they appear on, and an ROI that’s easy to measure. The downside to pay-for-performance is that a retailer pays every time a customer clicks through. With page optimization, retailers get exposure where they can’t pay for results and it’s less expensive so it’s within the reach of small retailers. The negative story, though, is that retailers sometimes have a hard time keeping up with the changing criteria of the search engines, ROI is difficult to measure and it often takes time to show up in search results.
But just as retailers are adopting combined strategies, so are the search engines. Yahoo, for instance, is a customer of Overture, so someone performing a search at Yahoo on products for which Overture receives a click-through fee will see the Overture results bracketing the Yahoo results at the top and the bottom of the page. In fact, 95% of the 5 billion search queries that Overture receives in a month come from sites other than Overture.com. “We position ourselves as a distributor of search results,” Karmstedt says.
The entire area of managing keywords is so new that there is no accepted industry practice as to who has that responsibility. Among the titles to which Overture sends activity reports are direct marketing managers, electronic commerce managers and interactive marketing managers. “It’s rare,” Karnstedt says, “for anyone to have the word ‘advertising’ in their title.”
Overture reports such information as traffic counts, clicks by terms and bids for terms. It’s up to the retailer to make the data fit the retailer’s metrics for measuring success. Among the factors that a retailer would measure would be the margin on the products it sold through clicks vs. other methods, revenue per customer, revenue per new customer and cost of acquiring customers. Whoever receives the reports and manages the process, though, must be familiar with what has worked in other media as well as in search. “The more they can tie together what they’ve been successful with in other media, the more successful they’ll be with this,” Karnstedt says.
With all its focus on marketers who are selecting keywords and paying for click-throughs and on the major sites such as Yahoo.com that distribute the results, Overture also recognizes that the consumer is its customer as well. “One way that we got to be a marquee distributor of search results is the quality of our results,” Karnstedt says. “And consumers recognize that.”