Last month, we talked at length about how online search triggers offline sales and the mechanics of latent search buying. We brought you up to date on the state of ecommerce and talked about preparing for the holiday season. Then we promised to let you know how paid search compares to organic listings when it comes to conversions.

SEO Vs. Paid Search Conversion Rates

MarketingSherpa (2005) reports that “SEO is a huge driver of ‘latent’ conversions.” Looking at conversions by campaign goal for paid search and SEO, the study found the following:

  • Average of all campaigns: SEO had higher conversion rates (4.2%) than paid search (3.6%)
  • Delayed ecommerce/service purchase campaigns: SEO had higher conversion rates (6.3%) than paid search (4.2%)
  • Ecommerce product/service purchase campaigns, SEO had higher conversion rates (4.1%) than paid search (3.8%)

However, paid search is getting better at conversions. The latest research from WebSideStory looking at traffic and conversion data from 20 B2C ecommerce sites for the period January through August 2006 found conversions fairly equal but slightly favoring paid search. Paid search conversion rates averaged 3.4%, while organic rates ran 3.13% on over 57 million search engine visits to ecommerce sites.

There is no doubt that a good balance of organic and paid search listings can maximize your search marketing ROI by taking advantage of the different benefits offered by PPC and SEO.

Boost Conversions With Search Marketing

Search engines have over twice the ecommerce conversion rate of other traffic acquisition sources.

During the last three months of 2005, the search engine conversion rate at B2C ecommerce websites was 2.30%. This was more than twice the conversion rate of banner ads, affiliate marketing links, shopping search engines and other referring links (0.96%), as reported by the WebSideStory Index.

You need just the right mix of SEO and paid search advertising in your search marketing plan. Anecdotal evidence shows that sites using both strategies increase conversion rates because traffic goes up dramatically with links in multiple positions. Users choose to click more frequently on an organic listing when they also see a sponsored listing. But when marketers experiment by removing their paid links, conversions drop precipitously. Put the paid link back, and conversions rise. Go figure!

Boost Conversions With Site Search

Effective site search is becoming one of the most critical conversion drivers in online commerce. A study by WebSideStory shows that site search provided a huge boost to ecommerce sites during the 2005 holiday shopping season. Site search helped convert visitors into buyers at nearly three times the rate of average site users.

During the last three months of the year, the conversion rate for visitors using the search box on a Website was 7.54% – 2.7 times higher than the conversion rate for average site users (2.79%). Site search conversion rates ranged from just under 6% in October to over 8% in December.

Enhance Keyword Bid Management

Keyword bid management enables more effective allocation of your marketing dollars when buying keywords or categories of keywords. The integration of keyword bid management and Web analytics allows you to track keywords to determine which phrases work best in terms of conversions. You can also determine the monetary value of those keywords, including cost per click, cost per acquisition, cost per initial sale and cost per lead. Analytics helps you manage the bidding process for optimum results.

It is also worthwhile to track all the misspellings and alternative names found from site search behavior in your Web analytics program. The analysis of visitor traffic from those external search results can reveal which keywords work best for turning prospects into customers. You can then buy only those keyword phrases that result in your targeted ROI or CPA.

The Future of eCommerce

Ecommerce has survived 12 years on the Web, evolving considerably over time. One of its biggest challenges is the growing importance of search. With the huge number of purchases following Web searches, search engines like Google want retailers to add tons of additional details online to enhance the search process. This might include continuous structured feeds of data such as SKU listings, daily inventory and hours of operation, which would be fed into public search engines.

Theoretically, this will allow more specific and relevant search results, long with increased ecommerce revenue for cooperating retailers. For instance, a consumer seeking a particular model of vacuum cleaner will see search results for local vendors who carry that model and actually have it in stock. For this to work, inventories must be kept up to date, no small task. This would also improve the efficiency of in-store pickups. The in-store pickup option is currently not available on all ecommerce sites; however, it could help increase online sales.

The pressure will be on technology systems to accurately predict what is and isn't in stock, which may require inventory data to be fed to search engines, along with POS (point-of-sale) and RFID (radio frequency identification) item-location information. The POS data could be critical during high-volume purchasing periods like the year-end holidays.

Such a system may take years to implement. Data sharing is one obstacle, which probably can be overcome with time as more and more retailers buy in. The major problem for retailers is accessing the data and transferring it to the search engines. In most cases, this involves changes in established processes. While most retailers see search as a great distribution channel, the top decision makers have difficulty making the necessary changes and prioritizing these tasks. Nevertheless, ecommerce continues to evolve.

Discuss this article in the Small Business Ideas forum.

January 11, 2007

Paul J. Bruemmer has provided search engine marketing expertise and consulting services to prominent American businesses since 1995. As Director of Search Marketing at Red Door Interactive, he is responsible for strategizing and implementing search engine marketing activities within Red Door's Internet Presence Management (IPM) services.

Search Engine Guide > Paul Bruemmer > Retail Bonanza Starts With Search – Part 2