February 28, 2005, 12:00 AM

Search Engine Marketing

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Number of keywords managed: Search engine marketing appears to be more effective in generating web sales when a greater number of keywords are managed. 21% of e-retailers who report that search contributes 60% of more of their web sales say they manage 5,000 or more keywords. By comparison, only 3% of e-retailers who report that search generates 10% or less of web sales say they manage 5,000 or more keywords. This correlation between the number of keywords under management and search`s relative performance in generating online sales is consistent throughout all ranges of both variables.

Amount paid per click: The same cannot be said of the average amount per click that is spent on a keyword. There appears to be little or no correlation between the amount an e-retailer spends per word and the level of web sales generated by search. For example, 9% of e-retailers who generate 60% of their web sales from search engine marketing report they pay $1 or more per click per word; but the same 9% of e-retailers who generate half the level of online sales from search engine marketing also pay $1 or more for keywords. And one-quarter of e-retailers who generate 60% of more of their web sales from SEM pay less than 10 cents per keyword. As a result, the most popular level of spending on a keyword--10 to 25 cents per click--seems to be an optimum price level as well.

In-house vs. outside management: Those who manage their search programs in-house tend to outperform those who rely solely on outside providers for search marketing management. But those who split management between in-house staff and outside managers tend to outperform both the other groups when it comes to generating online sales.

What`s the best search engine: It should come as no surprise that Google is the search engine preferred by most e-retailers, since it enjoys such a commanding share of the overall search market. And, in fact, nearly 73% of those responding to the Internet Retailer survey report that Google is the best search engine when it comes to producing online sales. Yahoo/Overture comes in a distant second with a 21% preference rating, while MSN, AOL and LookSmart are preferred by 3% or fewer. Despite these reported preferences, however, the numbers that e-retailers report regarding the amount of web sales generated by search show no significant correlation to the search engine they prefer. Those who say Google is the best report similar search engine marketing results as those who favor Yahoo/Overture.

Conversion rates and web traffic: While search engine marketing is widely credited by those who use it with improving their online sales, that improvement appears to be mostly a function of traffic generation rather than improvement in conversion rates. Those who attribute a high percentage of their online sales to search engine marketing do not report significantly higher conversion rates on search traffic than those who attribute lower online sales rates to search engine marketing.


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