Sea Change in Search Engine Marketing

Search engine marketing (SEM) strategies have advanced over the years as search engine practices and pricing models have changed. However, nothing can match the sea change that's been churning over the past year.

While pay-per-click (PPC) advertising in search engines debuted with Overture (GoTo) in late 1997, the PPC model became firmly entrenched as a major SEM player over the past year. PPC advertising now accounts for a good share of search engine revenues. Overture alone reported revenues of $288 million in 2001, up from $103 million in 2000, and is expected to report $650 million in 2002.

While the uninitiated ask if PPC has replaced traditional search engine optimization (SEO), editorial listings via SEO remain to this day a longer-lasting and cost-effective approach to SEM in the long term.

The hoopla over PPC advertising pervades, and new PPC offerings have launched left and right through several search engines and directories. Besides Google's AdWords Select, LookSmart and Lycos have introduced PPC programs to compete with Overture et al. It didn't take long for just about every search engine and directory to get themselves a PPC program or PPC partner to supplement revenues.

In my view, SEM includes both advertising (PPC) and public relations editorial (SEO). It's important to understand the difference between the two and to be careful allocating your marketing dollars in today's challenging economic climate.

Tracking ROI becomes imperative. When comparisons are made, all indications point to SEO editorial listings outperforming PPC advertising over time.

Advertising on the Decline

Advertising revenues have been declining steadily online and offline, even in such popular mediums as TV. CMR reported ad spending in B2B print magazines went down 21 percent over the last six-months. On the other hand, the Interactive Advertising Bureau (IAB) reported that search engine keyword buys have increased revenues over 350 percent from 2000 ($82 million) to 2001 ($288 million). This is an extraordinary feat, since total online ad revenues declined 12 percent in 2001.

The IAB further reports U.S. Internet advertising revenues of $1.55 billion in Q2 2002, declines of 6.5 percent from Q4 2001 and 18 percent from Q1 2001.

Why Are Search Engines So Effective?

Online searching is a very addictive user behavior. Nielsen//NetRatings reported the most addictive Web categories among home and work users to be: Finance & Investment, News & Information, Family & Lifestyles, Search Engines/Portals & Communities, and Travel.

Advertisers are flocking to search engine marketing for one simple reason. A search engine query is a frequent activity for Internet users, making search engines a part of the user experience in self-directed activities. Therefore, the search listings become a non-invasive, "pull marketing" strategy that works in the background.

Banner ads, pop-ups, and email marketing promotions use a "push marketing" strategy that interrupts the user's self-directed behavior. Needless to say, this can be frustrating. Conversely, search engine text links can help users achieve their goals. SEM is unobtrusive, and its power of suggestion is considered benign.

SEO Then and Now

In the past, SEO focused on page-one listings in major search engines to dramatically increase traffic. More recently, attention has shifted to conversions and ROI, a trend also evident in every online marketing discipline.

Formerly, the Web had ten to twelve major search engines. Now, there are less than half as many since players like Excite, InfoSeek, Snap, and Go disappeared, merged, or were bought out. The competition for top listings is keen with fewer search engines and an ever increasing number of Web sites seeking visibility.

In early days, all editorial listings were free if submitted properly. Along came paid placement (PPC sponsored listings) and paid inclusion (guaranteed inclusion with frequent refresh). This reduces the number of free editorial listings.

As the Web matures, more content is being indexed, including many different file types (PDF, images, audio, video, etc.) and even Flash .swf files (now indexed by FAST for AllTheWeb and partners). Additionally, the "deep Web" is becoming more visible in search engine databases. As database size increases, it's harder and harder to be listed on page one.

So the landscape has changed, and the current focus within search engines is on relevant content, freshness, categorization, and expanded search options. Where does this leave us in terms of search engine marketing strategies?

SEM Campaign Circa 2003

Editorial SEO:

• Directory listings are important because search engine crawlers consider those sites relevant and will index from directory databases.

• Paid Inclusion has become the cornerstone of a good SEO campaign (start with Inktomi).

• Optimizing your Web site for search engine friendliness remains important (factual, relevant copy, appropriate use and location of keyword phrases within web pages and code, good site navigation, good linking strategies).

• Properly submitting your Web site to the right engines, tracking progress and re-submitting only when necessary is still basic.

Advertising PPC:

• Test for best copy and track for ROI (some people do this daily).

• Use PPC to jump-start a campaign, later eliminating bids as free listings kick in.

• Consider trusted feeds rather than bidding for keyword position. Benefits include fixed pricing, consistent traffic, and low-involvement for the advertiser.

October 17, 2002