Groupon says its focus is on the bottom line, rather than top-line growth.
Retailers are investing in better natural search results and becoming more efficient in paid search.
Fiscal inertia characterized much of U.S. retailing in late 2008 and early 2009 as the country reeled from one bad economic report after another. But through it all online retailers generally have fared better than other retail channels and many have done so by sticking to search marketing as a key tool for online advertising. And there are signs that strategy is working.
Internet Retailer’s April search engine marketing survey of 211 web-only retailers, chain retailers, catalogers and consumer brand manufacturers found that since last fall 41.9% of retailers say paid search advertising outperformed other forms of marketing. And 35.6% say it is performing at least as well as it had been prior to September, while 22.5% say it is performing worse.
“This recession has forced many retailers to be more efficient with search and its integration with other online activities. This provides a partial explanation of why 42% say they’re getting better results with paid search,” says Daniel Yonts, president of PayingAttention.net, an Internet marketing consulting firm that specializes in search engine marketing and optimization. “For those that stayed the same, this could rightfully be called a victory in a down economy, which required making major strides to keep up.”
Flexible and scalable
Another reason paid search is serving retailers well in the sour economy is because it’s flexible and scalable, says George Michie, principal, search marketing, at Rimm-Kaufman Group LLC, an e-commerce consulting firm.
“The fact that day to day you can scale your paid search efforts more, less, whatever, means you can respond to sudden changes in the marketplace very rapidly,” Michie says. “Paid search is very quick and responsive, and that’s in its favor in a volatile market.”
Paid search is just one tool online merchants use, and more retailers are investing in search engine optimization as the economy worsens. Moving forward through the recession, 55.3% plan to increase spending on search engine optimization to achieve better natural search results, says the Internet Retailer survey. 35.9% will keep this spending about the same and 8.8% plan to decrease spending. Only 24.2% plan to increase spend on paid search; 45.9% plan to keep it about the same while 30% plan to decrease spending.
Web retailers are turning to natural search because it produces results: In the past year, 46.3% of retailers say their natural search conversion rate went up, according to the survey. 43.8% said natural search conversion stayed the same while 9.9% said it went down.
Search engine marketers will spend an estimated $3.85 billion on optimization programs by 2013, research firm eMarketer Inc. says in a recent report. That’s an increase of 111.5% from an estimated $1.82 billion in 2009. “Marketers who do search engine optimization within their companies likely choose that option to keep costs down,” eMarketer senior analyst David Hallerman says.
Optimization isn’t the only productive part of natural search these days, says Gary Smith, vice president, worldwide sales and marketing, at YourAmigo Ltd., a search marketing company specializing in natural search. “Retailers are starting to recognize that doing only SEO is a minimal approach. SEO is an important part, but is traditionally viewed as optimizing keywords. That’s only about 10%-15% of what they should be doing,” Smith says.
For YourAmigo, natural search is about how to increase sales from all products and pages on a retailer’s e-commerce site. “Web retailers need to look at scalable solutions to enhance their organic search capabilities,” Smith says.
Because for most retailers their most popular products are concentrated on a relatively small percentage of the pages on a site, they may not pay attention to products and pages that attract fewer consumers. That’s a mistake, says Smith. “When they optimize the long and very long tail products,” he says, “there is an opportunity to make more money.”