May 2, 2005, 12:00 AM

SPONSORED SUPPLEMENT: Search Engine Marketing

Getting the most out of today`s No. 1 marketing strategy

There`s no doubt that search engine marketing is the most successful form of marketing for online retailers. Nearly half of retailers ranked search engine marketing as somewhat or much better than other forms of marketing for their web sites in a recent survey by Internet Retailer. That proportion is surprisingly high given that 75% of users of search engine marketing have been at it for four years or less.

But as search engine marketing has become an important part of the marketing mix, retail marketing managers have needed to change their approach to managing search marketing, experts say. They can no longer approach search marketing on an ad hoc, stand-alone basis. "It`s time to start planning for search campaigns the way you do for any other marketing medium," says Sara Holoubek, chief strategy officer of search engine marketing company icrossing Inc. "You need to create a budget line item for search marketing, then look at your marketing calendar and make sure that any time you run a commercial, a print campaign or any other online campaign your search marketing fits in with it."

Two flavors

Search marketing comes in two basic flavors. So-called natural language or organic search consists of optimizing pages to make sure the search engines--Yahoo, Google and a gaggle of smaller engines--can find the site as they crawl the web. Paid search is the practice of bidding on the cost of clicks per keyword, with the higher the bid, the higher the site showing up in search results. A variation on paid search is paid inclusion. With paid inclusion, a retailer pays a search engine to crawl a site and guarantee that the content will be indexed by the engine for possible inclusion in search results, although placement within the results is not guaranteed.

Three years ago, the market appeared ready to shift to paid search. Retailers liked the fact that paying for clicks guaranteed that their sites would show up high in results faster than they would appear if a retailer optimized a site then waited for the engines to crawl it. But consumers demonstrated the inability of even the smartest marketers to predict consumer behavior--they showed a decided preference for the supposed objectivity of natural language search. So in the past year, there has been renewed interest by retailers in natural language search.

Getting the message

But experts don`t expect the pendulum to swing all the way back to natural language search. Across all search engines, natural and paid results get about equal clicks, depending on who`s doing the research. Some say it`s 50/50 and others put it at 60/40 favoring natural. Results definitely vary by engine, however, with consumers at Google, for instance, showing a 3-to-1 preference for natural results while AOL users are split 50/50. "Retailers need to address both sides of search results," says Fredrick Marckini, president of search engine marketing company Inc. "For a long time, they were myopically focused on paid search, which was a mistake. Now they are becoming myopically focused on organic search, which is also a mistake."

Retailers are starting to get that message. The Internet Retailer survey reported that 57% of online retailers prefer both paid and natural language search, with 23% preferring paid and 20% natural language. "Marketers have to use both," says Lisa Wehr, president of search engine marketing company Oneupweb. "It`s worth it to be No. 1 in natural language results and No. 1 in paid."

The migration

In fact, customers of search marketing company Zunch Communications Inc. experience dramatically improved click-throughs when they show up in both paid and natural results, says Tony Wright, chief interactive marketing officer. "Click rates triple when they`re in both," he says. "One reinforces the brand in the other."

If marketers need to be in both, then the challenge becomes determining when to use each. For starters, Wright says consumers will click on different results depending on their frame of mind. "Information gatherers click on natural, but shoppers who are ready to buy click on paid," he says.

In fact, a survey from Yahoo! Search Marketing, a division of Yahoo! Inc. and formerly Overture Services Inc., reports that customers use generic and specific terms at different stages in their shopping expeditions. 21% of purchasers in a survey conducted for Yahoo! by comScore Networks Inc. reported that they started their search with generic terms, such as "digital camera" or "women`s apparel," and ended it with a specific brand name. "It`s very important to understand the interplay of keywords," says Diane Rinaldo, director of the retail category for Yahoo! Search Marketing. "There`s a lot of activity with different kinds of keywords. Generic keywords may not have immediate ROI or a high conversion rate, but they are a very important part of the buying cycle."

Retailers also need to keep in mind not just the consumers` intentions but the retailer`s own needs in terms of seasonality or moving inventory. Since showing up in natural language search results takes an average of 2.5 months, retailers will want to focus on paid for moving merchandise or promoting sales depending on the time of year, experts say. "Retailers trying to move closeouts, with sale merchandise or trying to sell during a certain buying season like Mothers Day will want to use paid in those instances," Holoubek says.

Events that precipitate the use of paid search are not always predictable, however, making the ability to jump into paid search quickly very important. For instance, when the Red Sox won the World Series last year--certainly an unpredictable event given that it had not happened for 86`s account manager for client, retailer of baseball caps, went online and doubled`s bids on Boston Red Sox caps and other merchandise, resulting in a jump in the sale of such products. "Paid search is phenomenally successful when responding to events," Marckini says. "When events happen that cause a spike in traffic, it`s not just interest that increases, it`s conversion rates as well. If you`re not prepared and don`t understand the seasonal ebbs and flows that create increased demand, you won`t be prepared to increase your bids and capture that opportunity."

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