E-commerce grew 20% for Costco in fiscal 2015—20 times faster than store sales.
It's a new game every day in search marketing. Those who can keep up can reap big profits.
Consumers start their product research on Internet search engines. In fact, Google and Bing are the first stop for 58% of consumers embarking on a shopping excursion, according to search marketing firm GroupM Search.
There is good reason why consumers have become so reliant on search engines. Through search, they can find everything from product descriptions, prices and customer reviews to promotional videos and discount coupons.
Retailers recognize that consumers are constantly visiting the main search engines, Google and Bing, and search marketing remains by far the biggest single item in the marketing budgets of online retailers. But getting the kind of return on investment they want from search marketing requires keeping up with the constant changes in how Google and Bing present search results, and in how consumers use the Internet. The rapid adoption in recent years of social networks and sophisticated smartphones are just two of the factors that have transformed search, and that retailers must adapt to in order to generate market-leading results.
Google's introduction last year of its own social network, Google +, is just one example of how rapidly, and significantly, the search results page is changing. If a consumer is so inclined, she can click a button near the top of the Google search results page to call up results from her friends in the Google + social network. Retailers have to know how to make sure that works to their advantage.
While the growing influence and sophistication of search creates many new opportunities for retailers, making the most of these opportunities requires retail marketers to be up to the minute on search engine innovations and changes in how consumers use them. Only then can marketers make the best decisions about where and how to apply their search dollars.
Google may be the king of the search engines, with as much as 85% of search queries, but retailers are missing a big opportunity if they don't also pay attention to the other major search engine, Bing.
"Bing may only get about 15% of the search traffic, but if you have a sizeable paid search campaign, that represents a substantial amount of incremental traffic and conversions," says Suzy Sandberg, president of direct response online marketing firm PM Digital.
Bing offers demographic targeting (which Google does not) and retailers can improve the performance of specific keywords by targeting visitors within certain demographics such as gender, age, education, and household income.
"Demographic targeting can improve keyword performance, but retailers will pay more for the enhancement," Sandberg says. "Retailers should consider it, but since it will reduce volume, it should be applied to marginal ad groups that might not otherwise make the cut in order to improve their performance. This can increase overall scale for the campaign."
Determining how to allocate search marketing budgets and resources between Bing and Google comes down to conversions. Even though Bing nets a smaller percentage of search queries, if retailers use it properly they can get a good return on investment from their search marketing dollars.
"Bing's reports can actually help retailers do a better job of reducing wasteful spending on keywords. Once retailers determine the conversions they can generate on Bing and Google, they can build out their search strategy for each search engine and allocate resources accordingly. Running a strong campaign on each search engine is recommended," says Timothy Seward, founder and CEO of paid search management firm ROI Revolution.
Mobile is different
It's critical that retailers carefully analyze the performance of their search marketing campaigns. And it's crucial to look separately at the results of search traffic from desktop computers versus that coming from smartphones and tablet computers.
"Too often retailers look at the overall performance of keywords, but keyword performance really needs to be broken down by device type, because consumers will search differently by device," says Justin D'Angelo, team leader, paid search marketing, for online marketing agency ROI Revolution. "Top campaigns should be broken out by device if performance differs between PC and mobile."
For instance, recent trends indicate that smartphone sales are stronger during nighttime hours. Retailers can create specific campaigns with relevant keywords and bid more aggressively during evening hours. Also, retailers can look at which products are researched on smartphones and tablet computers and bid aggressively on related keywords. Another tip is to look at which operating systems (OS5 vs. Android, for example) products are researched on.
"Targeting keywords by device type and performance on the device is a best practice for search marketing," Sandberg says. "Retailers that don't segment their campaigns by device are missing an opportunity to improve the effectiveness of their campaigns."
Retailers should also keep in mind that smartphone users may only be looking for information—such as price at another store or a store location—rather than looking to make a purchase. That's different from how consumers behave on tablet computers like the iPad. "Most searches on the smartphone are not conducted with the intent to purchase, whereas consumers buy tablets with the intent to conduct e-commerce on them," Sandberg adds.
Stick the landing
Showing consumers paid search ads relevant to their search queries is just one piece of the puzzle when it comes to improving conversion. Landing pages, whether created for a paid search or organic search campaign, need to be closely tied to the intent of the consumer's search query.
For search marketing, landing pages need to show a consumer products as specific as possible to his query.
Best practices for landing pages in a search marketing campaign include making sure the content displayed matches the message of the search ad, keeping the design of the page clean and simple so consumers can zero in on the information they need to make the purchasing decision, including product images or videos. Retailers must make it easy for the consumer to purchase the product, and they must continually test new elements to keep pages fresh.