Search Engine Results That Pay Off

Competition for premium placement on the Web's search engines has spawned an advertising market for paid 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 with how much traffic will result and what type of customer they will be reaching," Forrester Research analyst Shar Van Boskirk told the E-Commerce Times.

This kind of diligent channel evaluation should be nothing new for today's cost-conscious Internet marketers.

Captive Audience

It is no wonder that search engines have become attractive vehicles for e-commerce advertisers. The audience is made up of users actively seeking product and service information who often are ready to purchase.

Yahoo! (Nasdaq: YHOO) recognized this opportunity and recently allied with Overture (Nasdaq: OVER), formerly GoTo.com, to launch Sponsor Matches, which give Web sites increased visibility in Yahoo's search results.

"Millions of commercial searches are conducted using our search and directory service everyday," Yahoo! general manager of search and directory Scott Gatz told the E-Commerce Times. "Businesses have expressed interest in reaching our audience of people seeking products and services."

Numbers Game

But advertisers should not necessarily equate the volume of users with the quality of leads, Van Boskirk argued.

"Companies must figure out where their customers are coming 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-commerce companies 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 core customers are not heavy users of a particular search engine, they may want to forgo premium placement there and instead optimize their sites for search engine spider detection, said Van Boskirk.

A number of consultancies offer search engine optimization services for 30 to 40 cents per lead, Van Boskirk noted.

"Companies must determine how much they are willing to pay for a customer based on the supposed value of that customer," she added.

What You See

When weighing where and how to spend money with search engines, e-commerce marketers should be aware of new payment methods based on actual results.

For instance, Overture charges advertisers on a pay-for-performance basis. That is, advertisers pay only when users click on their listings. Overture said more than 338 million "paid introductions" to its 49,000 advertisers took place using its service in the third 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 of 16 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.

Pay Fair

Regardless of which search engines are chosen, marketers who pay for premium placement must assume partial responsibility for ensuring that listings are presented clearly as paid-for results, said Van Boskirk.

"It is the responsibility of the search engine and marketer to indicate which listings are sponsored," she noted. "Many consumers are not aware of the difference."

A Link from Our ...

Indeed, consumer activist groups like Commercial Alert have argued that paid-for search engine placement deceives consumers. Most search engine companies are mindful of this sensitive issue, and they visually differentiate sponsored results from keyword-driven results.

"The listings in the Sponsor Matches program appear in a separate, clearly demarcated area on the search results page, so it will be apparent to users which sites have enhanced placement," Yahoo's Gatz said.