January 4, 2006, 12:00 AM

SPONSORED SUPPLEMENT: Search Engine Marketing

Search engine marketing has become the number one way of marketing online. In the few years that it has been in existence it has rapidly moved from one way to market web sites to the primary way. All other methods take a backseat to search engine marketing. In fact, in an Internet Retailer survey last year, only 13% of web sites reported that they don’t use search engine marketing.

Most online retailers and search marketing agencies think those who don’t use search engine marketing are missing out on something big. The Internet Retailer survey showed that for 62% of retailers, search marketing accounts for 11% or more of sales. And 52% said it works better or much better than other marketing activities. “Paid search and natural search are the most efficient and cost effective marketing spend that marketers have ever engaged in,” says Fredrick Marckini, CEO of search engine marketing company iProspect.com. “It’s the only one where people are raising their hands and saying ‘I’m interested in what you are selling.’”

Reverse direct marketing

In fact, search marketing company iCrossing Inc. calls search marketing “reverse direct marketing.” “Customers are actively seeking businesses,” says Noah Elkin, director of industry relations for iCrossing. “Unlike in print, radio or TV advertising where you are pushing the message to consumers, consumers are expressing their interest in the products that you sell.”

Its popularity has made search engine marketing extremely competitive-so much so that some marketers and agencies are focusing on ways to maximize their appearance in results and bump other retailers to deeper pages in search results. “The challenge today is to get more listings on a page and push competitors off that page,” says David Williams, chief strategist, 360i Search. “It’s similar to grocery stores where brands try to maximize their shelf space and minimize the number of competitors.”

Retailers are realizing the importance of search marketing to the extent that agencies that provide search services are having to expand. “I recruit continuously,” says Lisa Wehr, CEO of search engine marketing provider OneUpWeb. Marckini echoed such sentiments. “We have a steady stream of paid search advocates that we interview and we are looking for more,” he says.

And its popularity is opening up possibilities for newcomers. ChannelAdvisor Corp., for instance, a leading provider of e-commerce systems that helps retailers sell on eBay, Amazon, Yahoo and other aggregating markets, bought search engine marketing company SearchMarketing.com in July. “Our customers were requesting it,” says Scot Wingo, CEO of Channel Advisor. “They liked our data feeds into eBay and other places and asked about taking a retailer-based way of approaching search.” While ChannelAdvisor is a relative newcomer to the market, Wingo notes that 50 of the retailers in the Internet Retailer Top 400 are ChannelAdvisor clients.

Drilling down

Like other industries as they mature, search is becoming more specific as well. While Google and Yahoo still rule, some companies have developed vertical search products, where shoppers who are looking for a certain type of product or service can search among just providers of that product. For instance, LookSmart Ltd. launched 161 vertical search sites in October, bringing its total to 181, including such sites as Home Living, Food, Sports, Style, and Tech & Games. “We provide the essential and not the exhaustive,” says David Hills, chief executive officer. “Over time, when people get hooked on something, they tend to go to places on the Internet that are vertical.”

But for anyone who thinks that the industry might be settling on best practices or that it has chosen leaders, participants say: “Hang on-you ain’t seen nothing yet.” “This market is way in its infancy,” says Stuart Larkins, vice president, search, of Performics, part of DoubleClick Inc. “It’s 5 years old and it’s only just beginning. The market will continue to change.”

Search engine marketing comes in many flavors these days. It’s no longer just figuring out how to get to the top of the listings in Google or Yahoo. While Google and Yahoo are still important-in fact, the most important players in the search game-marketers must now contend with many more search sites, including new, improved MSN and AskJeeves; more sophisticated comparison shopping sites such as Shopping.com and Shopzilla.com; and vertical search sites, such as LooksSmart and Google’s Froogle. “Complexity comes in this market as companies move budgets not just to interactive marketing, but specifically to search and by tying it all together and measuring the results,” Elkin says.

Multiple levels of play

Add paid results, where a retailer pays the search engine each time a consumer clicks on a link, with those willing to pay more getting higher in the results; paid inclusion, where a retailer pays a search engine to crawl a site, with no guarantee as to where the site will land in searches; and good old-fashioned web site optimization, in which a retailer designs a site so as to land high in so-called natural language search. That’s all created a market that’s more bewildering than the California freeway system with so much going on at one time that retailers can feel like they’re watching Cirque du Soleil in multiple mirrors. “It’s three-dimensional chess,” Marckini says.

Just as skilled chess players spend years honing their game, today’s search engine marketing vendors have spent years learning the intricacies of the industry. Wehr notes that, even though she hires only qualified staff with experience in marketing or retailing, OneUpWeb still invests six months in training before an account manager can touch a client’s program. “Even while growing a company and developing services, my focus has always been on maintaining depth in our level of expertise,” she says, a sentiment that others echo. “The expertise that people bring to the table is critical to success in search marketing.”

But just as almost anything to do with the Internet, search marketing requires technology. “Technology is playing a bigger role today in search engine marketing-both paid and natural,” Wingo says.

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