The acquisition will add more than 300 products to L’Oreal’s lineup.
Bing is poised for growth, but retailers worry about changes coming from Google.
Talk about a rough year. Most respondents to a new Internet Retailer survey, 63%, said that their Google search rankings changed because of revisions such as Panda and "fresh" that the web's leading search engine made in the past 18 months to the way it ranks web sites. Of those respondents, the majority—65%—reported their search rankings decreased, with the remainder enjoying a bounce.
The survey, covering various aspects of search marketing, also shines a light on another Google Inc. effort that promises to play a significant role in e-retailing just as holiday shopping ramps up: the Google Shopping program, which by this fall will replace the free clicks on Google Product Search with paid clicks designed to attract online comparison shoppers. More than a third of respondents—39.7%—have already decided to take part, although 29.4% remain unsure. 23.0% of respondents are opting out, while 7.9% of them don't know what Google Shopping is.
This year's Internet Retailer survey on search marketing, conducted in June, attracted 128 responses, of which the majority—64.4%—came from web-only merchants. Besides the findings regarding search rankings and Google Shopping, the survey results highlight the command that search holds over online marketing budgets. They also show the ongoing interest in devoting more of that spend to Microsoft Corp.'s Bing search engine, which accounts for just less than 30% of searches, a percentage that's held steady over the past year. Google accounts for about 65% of searches, according to web measurement firm Experian Hitwise. Most questions for this year's survey were the same as last year's, allowing for some rough comparisons, although it is impossible to tell if the same respondents took part because both surveys were anonymous.
The survey results show that search remains a marketing workhorse for online retailers: more than 70% of respondents attributed at least of one-fifth of online sales to their paid search and search engine optimization efforts, with well more than a third—38.6%—giving search credit for generating more than half of their web revenue.
Setting a budget
Among the main findings is how much the respondents—the list also includes chain and catalog retailers, and consumer brand manufacturers—budget for paid search and search engine optimization. Just less than half of them, 44.9%, said they've devoted more of their online marketing budgets to search over the last year compared with the year prior. That compares with 53.1% who said the same thing in last year's survey. This year, 18.1% of respondents reported a smaller share of online marketing dollars going to search, while 37.0% said there was no change.
The Internet Retailer survey shows a close split when it comes to retailers' plans for paid search advertising this year. 50.8% of respondents said they will not increase the amount they spend on cost-per-click in 2012; 49.2% will increase that spending.
That's a more conservative split than Zenya, a search engine marketing services provider, is seeing. "Our retail clients are increasing spend across all engines," says Robin Simkins, general manager of Zenya, a unit of Info.com Ltd.
Asked how much they spend per click on a paid search ad, the largest group, 17.6%, or slightly fewer than one in five, reported paying in the range of 26 cents to 40 cents. 15.2% reported paying an average of 51 cents to 75 cents per click, while 12.8% said they pay 5 or fewer cents. (For more detail, see the accompanying charts.) Last year, only 6.4% of respondents reported paying an average of 5 or fewer cents per click for paid search ads, which means more retailers this year are paying on average only a few pennies for a click.
Simkins says retailers are getting smarter about how they bid on paid search ads. "[Our clients] are reducing their average cost per click by getting away from broad match and building out their keyword portfolio to be more comprehensive and offer searchers more relevant ads," she says. Broad match refers to word combinations that are generally relevant to specific keywords. For instance, a retailer targeting "tennis shoes" might use broad match to land shoppers looking for "tennis sneakers" or "tennis shoe," according to Google.
Paid search does a decent amount of heavy lifting in bringing online shoppers to retail sites, the survey results suggest. 20.6% of respondents gave paid search credit for generating between 26% and 50% of site traffic—compared with 21.5% who said the same last year. And 40.5% of respondents said paid search is bringing in more traffic this year than last year. But it's not a big factor for all: 26.2% of respondents credit paid search with generating less than 5% of their overall site traffic.
Bing is on the rise
Retailers seem to expect that more traffic will come from Bing, the 3-year-old search engine operated by Microsoft that also provides search results for Yahoo Inc. sites. 42.5% of respondents plan to increase their search ad spending on Bing this year, compared with 5.5% who will decrease spending and 28.3% who will keep it at the same level. (The remaining 23.6% of respondents don't advertise on Bing.)
Those results reflect what some search marketing providers are reporting for their clients. "Kenshoo is seeing improvements in all key quality metrics for Bing and Yahoo," says Aaron Goldman, chief marketing officer of online marketing software firm Kenshoo Ltd. For instance, Kenshoo clients that use adCenter, Bing's paid search service, report that clicks on Bing search ads increased 30% year over year in the second quarter of 2012, and 5% when compared with the first quarter of 2012.
Spending is following that success: Kenshoo reports a 20% increase in paid search spending going to Bing/Yahoo in the second quarter compared with the same period last year. "Microsoft has done a great job improving the consumer search experience on Bing and improving the functionality of adCenter," Goldman says. Bing took two steps earlier this year to gain ground on Google: beginning to pepper search results with Facebook information and beefing up the search analytics tools available to marketers.