A study released by comScore Networks this past December reveals some interesting insight into how search engine usage impacts the buying decisions of consumers. While search engine marketing has long been touted for its ability to deliver targeted traffic and generate high conversion rates, the reality is that most searchers research products online, but purchase them from brick and mortar stores.
For example, the study revealed that a quarter of all users searching for electronics or computers ended up making purchases, but 92% of those purchases occurred offline. Of the remaining 8% that did purchase online, the majority did not make their purchase during the original user session. Ultimately, just 1.2% of consumers from the study made a purchase from a Web site during their original searching session. There was some variation in online verses offline purchases among product types with consumer electronics (i.e. DVD players, TVs, digital cameras) resulting in more offline purchases than desktop and laptop computers.
The good news is that search conversions are actually higher than the figure above might lead you to believe. While only 1.2% of users will make a purchase during their initial searching session, 7% of searches ultimately result in a purchase from an online store. Nearly 40% of searches result in sales as much as 5-12 weeks after the initial searching period takes place. What does this mean for online businesses? That it's not enough to simply rank well in the engines and draw traffic to your site. With the majority of searches making their purchasing decision sometime after they've conducted their search, your site needs to be strong enough to stand out in their mind. You need to create a compelling reason for them to come back to your site and make the purchase from you. (As opposed to making it from one of the other sites they visited while searching.) The study dramatically reinforces the idea of content as king.
It also shows that the value of search marketing cannot simply be measured by the conversion rate of any particular keyword phrase or user session. James Lamberti, VP of comScore Networks explains it this way: “These findings reinforce the importance of considering the latent impact of search engine usage when evaluating search engine marketing investments. Search cannot be thought of as solely a direct response marketing tool, especially in highly considered product categories where search activity can precede a purchase by as much as 60 to 90 days.”
So how does this data impact the way that you do business? Well, the study is encouraging for brick and mortar stores. Major retailers can use their online presence to draw traffic from search engines and then entice users to come to their stores to make their purchases. The problem with this scenario is the difficulty in tracking the success of campaigns. Users might start their search for a new television online and realize that rather than pay hefty shipping charges, they can simply drive to the store's physical location and pick it up there. Companies like Barnes & Noble that have strong e-commerce sites may not be able to properly measure the impact of their search marketing campaigns because they have no way of knowing which user sessions ended up driving a customer to their store.
Companies like Sears and Best Buy have addressed this issue by allowing users to make their purchases online and then pick them up in the stores to avoid shipping charges, but few small businesses are offering this type of service. Ironically, moving ahead with your online business may mean that small business owners have to put more effort into their brick and mortar abilities. Sure it's great to sell gift baskets online, but have you considered targeting your geographical region and allowing customers to pick those baskets up the same day they order them? Have you considered partnering with a gift basket company in another major city so that you can share orders (and profits?) for local pickups? What about promoting your restaurant by allowing individuals to make their pick-up order online? Wouldn't it be convent for your customers to be able to browse your complete restaurant menu, including daily specials on your Web site, make their order with an online form, pay with their credit card, and then simply swing by on their way home to pick up their dinner?
In light of the study's findings on when purchasing occurs, the data also challenges the way the companies select keywords to bid on. Search marketers have found that more specific terms like exact product names tend to produce higher conversion rates than generic product terms do. The industry has long operated under the idea that a search engine user will start with a generic term, but will make their search more specific once they understand what they are looking for. Unfortunately, the comScore study pokes some holes in this theory. Although the study showed that 85% of searches conducted additional searches at later dates for their products, the vast majority of them used the same search phrase that they had used in their initial query. Since 83% of searches begin their search with a generic phrase, companies that are targeting ONLY the specific phrases are missing out on more than 80% of searchers.
That certainly doesn't mean that marketers should turn popular SEM theory on its head and start targeting only generic phrases, but it does indicate that there are some flaws behind the idea of ONLY targeting highly specific terms. Granted, generic phrases are generally far more difficult (and expensive) to compete for, but companies that have the online presence and marketing dollars to do so should certainly be putting effort toward those high level phrases.
Ultimately it boils down how well your site sells. Knowing that most people that visit your site are not likely to make a purchase that day, how confident are you that you've given them a compelling reason to return to your store?
Discuss this article in the Small Business Ideas Forum.
January 26, 2005
Jennifer Laycock is the Editor of Search Engine Guide, the Social Media Faculty Chair for MarketMotive and offers small business social media strategy & consulting. Jennifer enjoys the challenge of finding unique and creative ways to connect with consumers without spending a fortune in marketing dollars. Though she now prefers to work with small businesses, Jenniferâ€™s clients have included companies like Verizon, American Greetings and Highlights for Children.
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