Competition for premium placement on the Web’ssearch engines has spawned an advertising market forpaid search listings.
However, e-commerce sites that consider advertising via paid search results should understand that not all search engines are created equal, and that different engines may deliver varying returns on the marketing dollar, analysts say.
“Marketers must balance how much they are paying withhow much traffic will result and what type of customerthey will be reaching,” Forrester Research analystShar Van Boskirk told the E-Commerce Times.
This kind of diligent channel evaluation should benothing new for today’s cost-conscious Internetmarketers.
It is no wonder that search engines have becomeattractive vehicles for e-commerce advertisers. Theaudience is made up of users actively seeking product andservice information who often are ready to purchase.
Yahoo! (Nasdaq: YHOO) recognized this opportunity andrecently alliedwith Overture (Nasdaq: OVER), formerly GoTo.com, tolaunch Sponsor Matches, which give Web sites increasedvisibility in Yahoo’s search results.
“Millions of commercial searches are conducted usingour search and directory service everyday,” Yahoo!general manager of search and directory Scott Gatztold the E-Commerce Times. “Businesses have expressedinterest in reaching our audience of people seekingproducts and services.”
But advertisers should not necessarily equate the volumeof users with the quality of leads, Van Boskirk argued.
“Companies must figure out where their customers arecoming from,” she said, looking at such factors as the percentage of visitors with income over US$100,000.
It may make more sense for high-end e-commercecompanies to pay for premium placement on one search engine rather than on another, depending on the audience being targeted, Van Boskirk suggested.
Turning to Spiders
If e-commerce companies determine that their corecustomers are not heavy users of a particular searchengine, they may want to forgo premium placement thereand instead optimize their sites for search enginespider detection, said Van Boskirk.
A number of consultancies offer search engineoptimization services for 30 to 40 cents per lead,Van Boskirk noted.
“Companies must determine how much they are willing topay for a customer based on the supposed value of thatcustomer,” she added.
What You See
When weighing where and how to spend money with searchengines, e-commerce marketers should be aware of newpayment methods based on actual results.
For instance, Overture charges advertisers on apay-for-performance basis. That is, advertisers payonly when users click on their listings. Overture saidmore than 338 million “paid introductions” to its49,000 advertisers took place using its service in thethird quarter.
“Marketers are pinched and need to show performance,”Van Boskirk said. “Pay-for-performance and pay-for-impression models create a results-based market for advertising.”
Overture’s advertisers reportedly paid an average of16 cents per click in Q1 2001. The company said it has enjoyed success with its payment model, including a 190 percent year-over-year revenue increase for the third quarter.
Regardless of which search engines are chosen, marketers whopay for premium placement must assume partialresponsibility for ensuring that listings arepresented clearly as paid-for results, said Van Boskirk.
“It is the responsibility of the search engine andmarketer to indicate which listings are sponsored,”she noted. “Many consumers are not aware of thedifference.”
A Link from Our …
Indeed, consumer activist groups like CommercialAlert have argued that paid-for search engineplacement deceives consumers. Most search enginecompanies are mindful of this sensitive issue, andthey visually differentiate sponsored results fromkeyword-driven results.
“The listings in the Sponsor Matches program appear ina separate, clearly demarcated area on the searchresults page, so it will be apparent to users whichsites have enhanced placement,” Yahoo’s Gatz said.