December 29, 2006, 12:00 AM

Riding the web search love/hate affair

Few things stir up emotions among online marketers more than paid-search.

Few things stir up emotions among online marketers more than paid-search. Marketers know it works, but often get stumped trying to figure their return on investment.

27% of online retailers don’t know the cost of conversion in pay-per-click search campaigns compared with the dollar value of each sale, for instance, and 49% say that 20% or fewer visitors come to their sites via PPC campaigns, according to a study from researchers/consultants The E-Tailing Group Inc. and marketing services firm NetElixir Inc.

Nonetheless, 66% of the study’s respondents have been investing in PPC marketing for more than two years. On a scale of 1-10, with 10 the most sophisticated, 54% of marketers rate their organizations at 7 or higher in PPC marketing sophistication.

Still, many continue to find managing PPC programs challenging. “With 44% of those surveyed currently allocating more than one-fifth of their advertising budgets to PPC campaigns and 40% of them managing over 5,000 keywords, it is clear that merchants see value in this marketing method,” says Lauren Freedman, president of The e-Tailing Group. “However, resource constraints plus limited time availability and skilled personnel to dedicate to PPC were also frustrations clearly expressed by these merchants.”

The study also found that staffing for PPC management was a mix of 59% internal, 18% outsourced and 23% a combination of the two. The time spent on managing the programs ranged from less than five hours per week, reported by 32%; to 21 or more hours per week, reported by 33%.

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