Author Archives: ghotchkiss

Search’s Multiplier Effect: The Hidden Value of SEM

First published May 12, 2005 in Mediapost’s Search Insider

Television is toying around with a new pricing model. From now on, you’ll only be charged for the television ads that prompt you to actually take action. If you choose not to visit a place of business or eventually buy something, the advertiser won’t be charged for that ad. If successful in television, the same pricing model will likely be used in all forms of advertising, including newspaper ads, magazine, and radio.

Yeah… right!

One of the paradoxes of search is that the pricing model described above, which is relatively unique to search, has proven to be a blessing and a curse. The idea of paying just for your performing ads and the accountability that it brings has fueled search’s meteoric rise as a marketing channel. Its appeal has been particularly popular with direct marketers, where every single advertising expense is measured against the return it can bring. For these marketers, a pure performance-based pricing model was a gift from on high.

But in adopting this pricing model, search has also done itself a disservice. By not putting any value on the ads not clicked on, search has implied that these ads are worthless. But as more research comes out showing that search’s role in a customer’s buying decision is much more complex and long-term than we thought, it’s beginning to appear that the unclicked search ad could be the bargain of the century. Because search, my friends, does build awareness and those ads do have value.

The Role of Search in the Buying Cycle I’ve talked about where search is typically used by a prospective customer often enough. Research conducted by comScore has shown that potential customers can launch anywhere from two to six related searches in the 12 weeks preceding a purchase. That means two to six interactions with a number of search results pages. Combine that with our own eye-tracking research that shows that the top region of the search results page (referred to in our study as Google’s Golden Triangle) has 100 percent visibility. This includes top sponsored ads and the top three or four organic ads. So, every eyeball for that search will see an ad in this prime real estate. But the advertiser only pays if the ad is clicked. We know that proportionately, only about 15 to 20 percent of the clicks will happen in these top sponsored locations on Google.

So let’s put some real numbers to this and try to get some sense of the value provided. Let’s assume you’re bidding for a term that will get 50,000 searches in a month. You bid enough to capture the top sponsored spot. Your per-click bid price is $1.50. And, we’ll estimate that you capture about 7 percent of all the clicks on the page. One last assumption: Every search does not result in a click-through. So let’s say that 15 percent of the searchers will not find anything on the page worth clicking, and they’ll either relaunch the search or click-through to the second page.

So, in a month, given the above assumptions, you would get 2,975 visitors at a cost of $4,462.50. But you’ve also had your ad seen by 47,025 other people, for free! True, these visitors didn’t click-through to your site… this time. But remember, chances are they’ll be coming back to a search engine and launching a related search at least one more time in the buying process. If your ad comes up again, the reinforced brand recognition might prompt a click-through during this second session.

We Have to Measure the Full Value of Search Search marketers are fond of saying that search is the most measurableof marketing channels, and that’s true, up to a point. I believe one ofthe reasons we don’t give search full value is that we’re not always measuring the right things. How do you measure the value of a split-second glance at a brand name in a search listing? How do you assign a value to the cumulative impact of seeing the same site appear in four or five different searches? I know these things have value, but I’m not sure how to measure it.

We’re very good at measuring the easy conversions. We can track back from a purchase or the submission of a quote request form to see which listing on which engine generated this lead. But we’re not good at measuring subtleties and nuances. It’s difficult to assign values todifferent patterns of site-side user behavior. It requires a conversion-tracking mechanism that extends into every aspect of the business to track offline purchases that are generated by online research activities. And theonline analytics industry is just beginning to grapple with the challenge of getting a more balanced picture of true-visitor value.

The role of search in a customer research session is much more complex than we ever imagined. As we do more research, we’ll get more clarity in regards to how search helps influence buying decisions and the nature of a customer’s cognitive interaction with the search results. As we find these answers,we’ll get better at assigning value to our search advertising, whether the ad is clicked on or not. But until then, recognize that it has a value and enjoy the free ride!

 

I’d Love to Search but Words Get in the Way

First published April 28, 2005 in Mediapost’s Search Insider

The perfect search engine would be a small microchip implanted in our brain. It would act as an instantaneous connection between the vast complexity of our brain and the vast complexity of the Web. To find something, we would just have to think about it and the chip would match that concept with the most relevant destination online.

Unfortunately, such a development hasn’t rolled out of the Google Labs yet. So for now, we have to shoehorn our thoughts into a small quarter-inch by three-inch box on the search engine’s home page. We have to distill our thoughts into a few choice words and hope this provides the search engine with enough to go by. And there lies the ultimate vulnerability point of search. Often, our ideas are too big to capture in one or two words.

Small Words, Big Searches; Big Words, Small Searches We all have different intentions when we go to search. As I’ve mentioned in previous columns, many of us turn to a general search engine when we’re mapping out unfamiliar territory online. When we define the boundaries of our concept, we often leave them vague and inclusive, because we don’t want to rule anything out. So, perhaps I’m at the beginning stages of considering a trip to New Orleans. I haven’t done any research yet, so I’m looking for options and alternatives. My mind is open. This particular canvas hasn’t been painted on yet. So my search is likely to be broad, i.e. “New Orleans.” By keeping it broad, I know I should include everything on New Orleans.

We also use search as a navigation short cut to get to the most appropriate page on the Internet. We want to go directly from point A to B (again, the topic of a previous column) without a lot of detours to get in the way. Often, these types of searches happen well into the research phase. For example, let’s say I had done a lot of research into New Orleans and in a previous session I remember seeing a page on upcoming events on the New Orleans’s Chamber of Commerce Web site. I don’t have the URL and I didn’t book mark it. So I go to the search engine and type in “New Orleans Chamber of Commerce Events.” It’s a very specific search that should take me right where I want to go. I don’t want to see everything on New Orleans. I just want to see this one page.

Mapping Our Thoughts to Words The challenge comes in the search engine trying to interpret my intentions based on my key phrases. Let’s go back to the first example. Although I’ve kept the search broad (“New Orleans”) I obviously have a concept of the type of sites I’m looking for. They could be restaurant directories, accommodation guides, lists of things to do, official visitor sites, or other rich research sources. This is my concept, unstated to the search engine but residing in my mind.

So, when the search results come up, I’m looking at them through a “semantic map” that continues many words that flesh out my concept and might catch my attention. I’m trying to match the ideas in my mind with the results I see on the page. While I searched for “New Orleans” I’m actually looking for anything that might give me valuable and trusted information on how to make my trip to New Orleans more enjoyable.

The Eyes Have It We’ve just recently completed two studies that show the impact of semantic mapping in the search process. One was an eye tracking study and one was an analysis of the importance of different factors in precipitating a click through. Based on these two studies, here’s what seems to happen. The eye looks for a visual cue, generally the phrase we just searched for, in the title. Starting on the top of page on the left hand side, we start scanning down the page in an “F” pattern. While we’re focused on the visual cue, our peripheral vision is open to the appearance of words that might match our semantic map. Even though we didn’t search for any of these words explicitly, their appearance in the title and description has a strong implicit impact on which link we start reading. When there seems to be a match based on a quick scan including both where our eyes are fixated and the extra detail picked up by our peripheral vision, we switch to more traditional reading behavior, reading first the title and then the description from left to right. This lateral activity creates the horizontal arms of the “F”.

As an example, we saw that people searching for digital cameras were presented with two listings from the same site, with almost identical titles. The listings were first and second in the organic results. Both listings promised “unbiased consumer reviews” in the title, after the query string “digital cameras.” We saw fixation points on both of these visual cues. The difference came in what was shown in the description. In the second listing, there were recognized brands mentioned, including Kodak and Nikon. The vast majority of searchers quickly scanned past the first listing and started active reading of the second. It was a better match for their semantic map.

So, what does this mean? Well, it means that it’s not enough to be No. 1. It’s not even enough to make sure you have the query string in your title. To maximize the potential for click through, you have to understand what might be in your target customer’s semantic map and match this through careful crafting of both title and description text. Bidding and organic optimization can put you in the right place, but you’d better have the right message too.

Getting from Point A to B with Search

First published April 14, 2005 in Mediapost’s Search Insider

In preparing for a presentation I’m going to do in a month or so to a group of catalogue publishers, I decided to do some research to see how search worked to bring traffic to some well known online catalogs. What searches translated into traffic for Lands End, L.L. Bean, or Victoria’s Secret?

The more I dug, with the help of Hitwise, the more surprised I got. In each of these cases, variations of the site’s name accounted for one half of all search traffic. With Lands End, these variations totaled a little over 48 percent of all its search referrals. Just over 3 percent of all search referrals were for “www.landsend.com”, the exact URL users could have just typed in their address bar.

With L.L. Bean, the total was about 42 percent and Victoria’s Secret was about 63.5 percent. So, about one out of every two searches that ended up delivering traffic to these sites appears to be someone who was unsure of the actual URL and thought it would be quicker just to search for it.

And that got the mental wheels in motion.

Search as a Navigation Shortcut We’ve always known that this behavior takes place. It’s one of the reasons why “google.com” and “google” perennially shows up as an often searched for term on Google. I think I heard a fellow columnist refer to it as the “people are stupid” factor. But I don’t think that’s it at all. I think it’s the “people are in a hurry” and “people are lazy” factor, and I put myself squarely in both camps.

Yes, we could go up to the address bar and type in the URL. But toolbars put search just a little closer to our cursor. And, if we type the address slightly wrong, the search engine will helpfully ask us “Did you mean…?” It’s just quicker and easier to let a search engine eliminate the frustration of getting the right URL typed into that little box.

The timesavings get even more significant when we’re interested in a short cut to a specific section beyond the home page. For example, a significant percentage of Lands End traffic searched for “Lands End Overstocks.” Yes, you could type in http://www.LandsEnd.com and then navigate through the site to find the overstock section, but you could also just launch a split-second search (Google’s average response time is less than a quarter second) and click right to it. Increasingly, we’re using search engines to take us exactly where we want to go.

Implications for Marketing If we’re using search for a short cut, there are a few obvious implications for the search marketer. First of all, the better known the site and its corresponding brand, the more likely this will occur. Again turning to Hitwise, we find the top 10 referring terms for the appliance and electronics industry contained only one non brand name search (cell phones). The rest of the search terms were for the vendors you’d expect to dominate this industry.

So, well known brands better have their prime real estate secured in the search results. If you’re not No. 1 for the major variations of your brand in the organic listings, you’re potentially losing a lot of traffic to the competition. Even worse, if an attack site has somehow gained top spot for your brand name, you’re exceptionally vulnerable. I’ll give you all a minute to go check this right now on your favorite search engine.

What if you’re No. 4 or 5 for your brand? Our eye tracking research shows that visibility and click-throughs drop dramatically as you move from No. 1 to No. 2, 3 or even worse, 7 or 9. Not holding the No. 1 organic spot in this instance is like letting your competitor put their sign over yours in front of your store.

Secondly, it’s important to make sure search engines are indexing your entire site. If your customers are using search as a short cut to land deep in your site and your site isn’t fully indexed, you’re stranding them high and dry.

A Continuing Trend Let’s face it, trying to remember the right URL, with the right extension, and spell it correctly is a lot of effort when we can launch a search and see the results in a second or two. The easier search will be to use and the more tightly integrated it is, the more we’ll use it as our primary source of navigating the Web. It’s like our own online transporter, picking us up and delivering us to exactly the online destination we wanted, without the messy navigation in between. No longer is online search just a way to find what we didn’t know existed. Now it’s the fastest way to get to even our most familiar online destinations, making a comprehensive search strategy even more important for every online business.

 

Can Search Help Customers be Heard?

First published on March 31, 2005 in Mediapost’s Search Insider

I’m on vacation right now with my family. In fact, as most of you are reading this, I’ll be flying back from Orlando. While here, I saw a television ad that got me to thinking. The ad was for a real estate company, and the premise was this: Wouldn’t it be nice if every company we did business with had a customer satisfaction rating posted prominently? Right up front, you could see if the business you were dealing with rated a 97 percent or a 43 percent.

While the ad’s message was that this particular real estate company did post their approval rating for every potential customer to see, the thoughts this stirred up in me were a little deeper and more fundamental.

We all know that the Internet is transferring power from the marketer to the consumer. In fact, the use of the label consumer is probably no longer valid. Ray Podder, a brand strategist, hates the use of the term. It conjures up images of a vast mindless herd of Pavlovian dogs eagerly consuming whatever marketers shovel our way through advertising. Ray recommends using the term “empowered customers” instead. So, in this column, I’ll follow Ray’s lead and use his wording.

The Internet and the proliferation of self-publishing options give us the power to build or dissemble brands instantly. Suddenly, the intended market is sharing the straight scoop on products, without corporate filters or advertising spin getting in the way. We share our real life experiences from our perspective, not from a Madison Avenue idealized one.

But to get back to the commercial I saw, so far no one with enough market traction has taken up the task of aggregating this information into an easy-to-digest rating system. There is no “seal of approval” that comes from customers. But for the first time, the potential is there.

There have been a few players who have attempted to do this. Trip Advisor is one that shares real-world ratings of hotels and other travel related services. And Epinions.com has also offered readers the opportunity to post reviews on a number of products. But neither service has tapped into the online market to any great extent. According to Alexa, Epinions.com is ranked around 1,000 for site popularity. It hasn’t gained the critical mass needed to turn it into a hot online property. And considering that it’s been around for some time, it may never get there.

This, by a long and circuitous route, leads me to the topic of this column. How about search engines? Can they provide customers with a podium to be heard from? They’re already the most popular sites online, so critical mass and traffic certainly won’t be a problem.

Search engines rank sites by their own criteria of what makes a good site or a substandard one. They’re already in the business of aggregating information and using it to rank alternatives for the user. They are generally considered objective and non-partisan. And they’ve already drawn a line between their advertising and the editorial section of their page that is recognized by most users. And as they continue to become more vertical (Ask Jeeves’ recent acquisition will certainly heat up this race) it seems they’ll be looking for a competitive advantage to offer their users. This seems to be a compelling one.

We are on the nexus of the switch to the customer-controlled marketing model. At this point, most empowered customers are totally unaware they wield this much power. Only the adventurous few who have staked their territory online have learned how the Internet gives each of us a powerful voice that can reach millions. In a few spectacular and oft quoted examples, online buzz has synergized to the point where new product introductions took off. Online takes word-of-mouth to a whole new dimension. Like many thing in our fragile society, the relationship between marketers and customers is on the verge of a fundamental and earth-shaking shift. Advertisers, don’t tell us how we’re supposed to feel about your products. We’ll tell you, and you’d better listen!

As a relevant aside, we’re starting to hear more and more from companies who are fighting customer launched attack sites who have achieved higher rankings on search engines than the official site for the brand. In this case, the balance of power has swung from the advertiser to the customer. This is unfamiliar territory for the corporate world.

But to this point, there’s no online destination with enough market penetration and critical mass that is dedicated to acting as the focal point for customer opinion. In fact, most customers turn to search engines when looking for published information on a product and sift through blog and forum postings. If they’re already turning to search, why not close the loop and help aggregate the information they’re looking for? Why not find a way to measure online buzz, both good and bad, and present it to us in an easily understood way?

This makes even more sense when you consider that search will aggressively try to place itself at the intersection of all online customer behavior. The areas they’re currently looking to control include shopping search and local search. Both have huge potential wins from a revenue potential. If customers could also find an easily digested capsule of popular opinion to help in the making of their decision, I believe it would present a compelling package.

And that places Ask Jeeves in a unique situation. As a recent acquisition of IAC, they join the corporate family of Citysearch, Expedia, and Match.com. Suddenly, Ask Jeeves is in the ideal position to pursue a vertical strategy. And a vertical search destination would be a great place to start a customer rating system. In fact, Citysearch already has both reader and editorial ratings for restaurants and other tourist destinations. After gaining a foothold here, it could be expanded to all the Ask Jeeves search properties.

There’s no doubt that customers will speak, and speak loudly online. But will search engines provide them the forum to be heard?

A Battle Plan for MSN Search: Innovation and Integration, not Inundation

First published March 17, 2005 in Mediapost’s Search Insider

We know Microsoft wants to win the search battle. Bill Gates has gone on record repeatedly and publicly saying his biggest business regret is not having recognized the importance of Internet search soon enough (this would be the same Bill Gates who said the Internet would never amount to much). And during the Super Bowl, an ad for MSN Search invited millions to try the new, more precise, more powerful search engine.

Rumor has it that Microsoft has a gargantuan battle chest set aside for further advertising. The intention is clear. We will keep being hammered by MSN Search ads until we give in and give up on Google.

But at the Search Engine Strategies Conference in New York, Jupiter Media Analyst Gary Stein reminded us of something. Google got to where they are with a total ad budget of… $0. They just built a better search engine.

I think the future success of MSN lies not in showcase television ads, but in giving us a reason to switch.

Google Is Not Invincible It sometimes appears that Google has a stranglehold on search. Take a room full of people pretty much anywhere on the planet and it’s a safe bet that most of them will be Google users. But recent research has shown that there may be a few stress fractures showing in our love affair with Google. I don’t think it’s because Google has done anything overtly to cause us to look elsewhere. It’s just that they don’t have the clear performance advantage they once did.

Again, Gary Stein had an excellent point. There’s no significant user pain involved in switching search engines. You don’t have to reinstall software, reformat files, or change computers. One day you’re using Google, and the next, MSN. It’s that easy. In fact, you can switch search engines in the middle of a task. Millions of people do it every day. Google’s brand equity can disappear in the time it takes to click a mouse.

Putting Search One Click Away In any type of measurement of search engine market share, there emerges an interesting contradiction that speaks of another vulnerable area for Google. If you do a survey and ask people what their preferred search engine is, my bet is that at least 75 percent or more will say Google. In the last survey we did with 1,600 participants, the number was almost 83 percent. Yet, when you look at Nielsen or comScore’s market share numbers, Google ends up with somewhere between 35 and 45 percent of the market. So, if three out of four people prefer Google, why don’t they own a proportionate share of searches?

The reason is that we’re basically lazy. If we’re on MSN and a search box is handy, we won’t bother going to Google. This is one reason why the battle of the search toolbar heated up so quickly. It also points out the precariousness of Google’s position. Yes, we love Google, but ask us to spend another three to four seconds to type in the URL and we’ll head off with the first search opportunity that catches our eye. Online, brand love is a very fickle thing.

It’s Time to Raise the Bar, Again What we really want is a better way to search. Something that gets us just the destination and information we want, quickly, seamlessly, and, while you’re at it, it wouldn’t hurt to wow us with some new innovation as well. I think we’re on the threshold of another breakthrough. It’s time for a giant leap forward in search. There are a number of startups that are knocking on the door, but we’re waiting for a search site with enough market traction to really up the ante with search.

The blizzard of incremental improvements we’ve seen coming out of the major players is nice, but the market advantage they give only lasts for a week or two and then the competition evens the playing field again. Somebody has to stake the high ground and keep it for more than a few days.

The Secret? Search at the OS Level I believe the functionality to make this quantum leap forward in search has to rest at the operating system level. Search needs to be more fully integrated into our daily online activities. It needs to achieve the transparency that can only happen when search works in the background, totally integrated with programs and the basic functionality of our computer.

This is where MSN Search can deliver the knockout punch to Google. And I believe Google knows this. I’m guessing a fair number of the hundreds of Google PhD’s are wrapping their collective intellect around this blockbuster challenge. Google has to gain a foothold on the desktop to effectively fight off Microsoft’s attack. And this means surrendering privacy. Privacy is something we are protecting more and more diligently. We won’t give it up easily.

But Microsoft has already integrated themselves at the root level on our desktop. They don’t just own the high ground, they own the whole landscape. And when they can deliver a search experience that’s truly better than the competition, they’ll have already won. It won’t take another Super Bowl ad.

Microsoft, you had us at hello.

Online is Not the Place for the Road Less Travelled

First published Feb 17, 2005 in Mediapost’s Search Insider

We are all creatures of habit. We travel in well-worn grooves, interacting with the familiar and generally eschewing the unfamiliar. Of course, not all people are alike, but generally speaking, we as a species don’t like breaking new ground. Occasionally we will nudge ourselves out of our rut to try something new, but pretty big win had better be in store for us.

In the early days of the Internet, everything was new. Every visit online was forging new horizons. We made new discoveries daily. We had no choice. If we chose to go online, we were forced to venture into the unfamiliar. While this is still true to a certain extent, those days are rapidly disappearing.

We are civilizing and settling the online world. We’re staking out the familiar territory. We’re finding and bookmarking our favorite destinations. And suddenly, there is a value assessed to well-traveled online properties. Brand loyalty builds.

Search as our navigator This is nothing revelatory or earthshaking, but it does have some direct implications for search marketing. There is a sweet spot for search, and it has to do with the size, scope, and nature of our identified and familiar online world. Whenever we have to venture into the terra incognito that lies beyond those boundaries, we turn to a search engine.

And, because we are creatures of habit, we turn to our favorite search engine. We trust that engine to quickly identify new sites that we feel comfortable exploring. Search acts as a navigator and guide. And generally, we only go to search when a familiar destination doesn’t immediately spring to mind.

So, in a consumer interaction, there are distinct phases where we are likely to turn to a general search engine like Yahoo! or Google. If we are booking a trip, most of us will go directly to Expedia or Travelocity. That’s familiar ground to us and we know that it will deliver what we’re looking for: a quick way to compare a number of different airfares, hotels, or other options.

We don’t go to Google each time and search for the lowest airfare to our destination or a hotel. We don’t need a navigator, because we already know the way. There are sites we know of that are better able to find the information we’re looking for, because they were built for that specific type of search.

Stepping into the unknown But let’s say we want to do consumer research in an area where we don’t have a reference and comparison site such as Expedia. For example, let’s say we’re looking for a new mountain bike. We may be familiar with a brand or two, but we’re looking to broaden our options for consideration. So, we turn to a general search engine to help quickly identify new landmarks to help navigate this unfamiliar territory.

As soon as we can, we try to find vertical reference sites in the market we’re researching, because we know they’re built to provide richer content and more searching functionality for that particular product than a general, one-size-fits-all search engine. We use the navigator to find the reference landmark.

Why so many consumers use generic keyphrases Often there is back and forth between the two. In the case of the mountain bike, perhaps the vertical reference site allows us to find new models, which we then turn to our favorite search engine to find more information on. This may or may not happen and it’s one reason why the comScore study released in December found that many consumer searches on general search engines never progressed beyond generic key phrases.

Another example we saw of this behavior became apparent in a focus group we conducted early in 2004. In it, we gave 24 participants a budget to spend and asked them to start researching their purchases online. About half the group wanted to purchase a consumer electronic (CE) item and either the first or second place they went was the site of a very well known CE retailer. They did the majority of their research there and only occasionally turned to a search engine to broaden the options or look for new online destinations.

Exploring our target consumer’s online market landscape As search marketers, we need to spend more time understanding the territory that our target consumers travel through. If we’re trying to intercept them, we need to know their online destinations, both familiar and unfamiliar.

We must know when they’re likely to turn to a search engine and when they might go directly to a site they’re already familiar with. The fastest way to find the intercept point is to examine the traffic patterns and then decide where you can stake a presence in a prime intersection. But all too often, we try to stake our claim to online territory, never knowing if our customer might even come that way.

Rashtchy’s Golden Search turns Platinum

First published on Feb 3, 2005 in Mediapost’s Search Insider

On November 9, 2004, Piper Jaffray analyst Safa Rashtchy dropped a bombshell on a small handful of people at the New York Ad:Tech show. He doubled his search revenue projections for the next five years. And, he bumped these projections less than two years after they originally came out.

Back then, Rashtchy’s $7 billion by 2007 revenue projection was quoted everywhere. You couldn’t turn around without seeing a reference to these amazing growth predictions. And now, he nonchalantly walked up to the podium and said search revenue in 2007 will be more like $13.5 billion! I was sitting in the audience and my jaw dropped.

But a strange thing happened this time. Nobody seemed to care. In preparing for this column, I scoured the Internet for any mention of Rashtchy’s exciting announcement. I found nothing. While it’s not surprising that the announcement missed the mainstream press, I can’t believe our own industry didn’t pick up on it. I finally had to resort to contacting Rashtchy’s team and getting a copy of his presentation.

In the process, I asked Rashtchy why the announcement didn’t seem to gain attention. His response indicates that the lack of attention means search is now accepted with more credibility: “I think search is now accepted as a big business. You have a $60 billion company on the market doing only search, so people are saying that with these valuations, we expect that you will up your estimates significantly.”

Sorry Rashtchy, Better Late than Never…. I think the readers of this column would be well served to get the high points of Rashtchy’s announcement, so let me share them with you.

First of all, the growth numbers. In March 2003, Rashtchy estimated that worldwide search revenues would hit $7 billion by 2007. Just a few months later he was quoted as saying that these numbers are likely too conservative. With last November’s presentation, he had the opportunity to bump those numbers up.

Rashtchy now feels we’ll not only hit that target, but surpass the 2007 – $7 billion mark this year. Next year, he predicts search revenues to top $10 billion, and then hit $13.5 billion in 2007, $16.2 billion in 2008, $19.8 billion in 2009 and top $23 billion in 2010.

Factors of Growth Rashtchy feels there are a number of revenue drivers fueling the growth: • The increasing use of search by big business

  • A second wave of small business just discovering search
  • The international growth of search
  • Discovery of the branding value of search
  • The growth of contextual search, with local search perhaps poised to take over

 

In addition, he sees four immediate and fundamental drivers of search growth. He collectively refers to them as T.C.P.C.

Traffic – More people doing more searches, especially commercial searches Coverage – Expansion of keyword baskets, monetizing more search terms Price – Increasing prices per click Conversion – As we get better at converting clicks to buyers, advertisers are willing to bid more

Local Search Rashtchy feels that local search could become a significant driver of new search revenue. I know there are mixed opinions about this (I for one agree with Rashtchy on this one and have said so in previous columns), but I think the salient point here is that local search, if successful, dramatically increases the market size for Google and Overture.

It takes search from a global consumer activity and brings it back home. It ties the Internet much closer to our day-to-day shopping activities. It will take a few years for local search to make much of a difference in overall search revenues, but once felt, the impact will be significant.

Search Efficiency – It Still Can’t be Beat In comparing methods for customer acquisition, search still comes out far ahead. Piper Jaffray estimates the average customer acquisition cost for search to be between $7 and $10, compared to $15 and $25 for Yellow Pages, $40 to 80 for e-mail and $60 to 80 for direct mail. Search is growing because it works.

Bottom Line Rashtchy summed up with five conclusions that state the future potential of search in no uncertain terms: – Search is likely to become the most successful marketing method for all businesses

  • Local search is a huge force that could change the dynamics of search for online-only merchants, putting them at a big disadvantage
  • Concepts like broad match could make search an effective soft sell, suggestive advertising mechanism
  • Merchants should focus on customer conversion and extending the customer life cycles
  • Search providers should focus more on merchant conversion rates and offer lower charges for broad match and contextual search. They should also focus heavily on local and international expansion.

 

The 70/30 Rule of Search

First published on Jan 20, 2005 in Mediapost’s Search Insider

In nature, there are the Fibonacci numbers. This sequence (0,1,1,2,3,5,8,13…) and the Golden ratio (Phi or 1.618034) derived from it, occur with amazing frequency and can be found in flowers, the shells of mollusks, leaf arrangements, and even the proportions of the human body. I’m beginning to believe that search marketing has its own naturally reoccurring ratio, and I’ve dubbed it the 70/30 Rule.

I can’t help thinking that many of us are missing the boat when it comes to search marketing. Perhaps not the whole boat, but 70 percent of it. Every day, new research is coming out which points to there being a vast, untapped potential in search. We’ve picked the low hanging fruit, but there’s a whole tree full of rich marketing results that we have to reach a little further for. And when analysts like Safa Rashtchy and the gang at JupiterMedia point to doubling, tripling, and quadrupling revenues from search over the next five years, it’s based on assumptions that marketers will figure out ways to better tap into the full potential of search.

As I write, I know there’s a posse of irate search marketers who are whispering, “How dare he refute our expertise in this area! Low hanging fruit, indeed. The nerve!” As back up to my observation, here are just three examples that come to mind of where the 70/30 rule seems to apply.

Seventy percent organic 30 percent sponsored A little while back I was presenting a session at Search Engine Strategies about balancing organic and paid search strategies. I had a typical search results page from Google up on the screen. I asked the audience which section of the page they normally look at first. Almost every hand in the audience went up when I got to the top organic results. This was no great surprise. From our research into search user behavior, I was pretty sure this would be the case.

Then I asked who in the audience dedicated at least 30 percent of their search marketing budget to organic optimization. Very few hands went up, probably less than 3 percent of the audience.

Does anybody else see the disconnect here? This is not a new message. Study after study has shown that about 70 percent of all search engine clicks happen on the organic results. Yet sponsored search continues to take the spotlight and the lion’s share of the budget, while for many, organic optimization seems stuck as a little understood and even less trusted tactic only fully utilized by online casinos and porn merchants.

Companies using search have to understand their consumers are going to look and click on organic listings more often than sponsored, and you can’t just ignore the fact. Yes it’s harder, yes it’s not guaranteed, and yes it may require some changes to your site, but 7 out of 10 people can’t be wrong!

Seventy percent researchers 30 percent purchasers When is a consumer likely to use a search engine? When they’re ready to buy? No! It’s when they’re researching the buy. And most likely, they’re very high in the consideration phase, just checking out the competitive landscape. This varies with the type of purchase, but usually the search sweet spot is for a product where there is little familiarity, where there is a significant amount of consumer research and consideration, and where there is a lead time of a month or two before the purchase. This is not true all the time, but it is true about… well, look at that… 70 percent of the time!

Driving consumers to a hard purchase conversion and leaving them without another option is not going to be a successful online tactic for the majority of your consumers. We have to understand the mindset of the consumer when they’re likely to use a search engine. If you always aim for the easy conversion, or the low hanging fruit, you’re probably missing 70 percent or more of your market. Take some time to gain a better understanding of the consumer and what they’re looking for. Adjust your search marketing strategies accordingly. Extend your reach beyond the low hanging fruit.

Seventy percent by luck, 30 percent by design Recently, JupiterMedia released findings of an extensive survey with search marketers. In it, they found that only about 25 percent (close enough to 30 for me) of the respondents actively used landing pages and other on-site tactics to increase conversion rates.

The majority of a search marketer’s time is spent in trying to influence position on the search engine results page. This is true whether you’re working on the sponsored side or the organic one. As marketers try to squeeze more return from their marketing investment, there are three points at which they can influence the ROI equation.

They can reduce the investment by intensive bid management or tapping into the organic potential of search. They can increase impressions and click-throughs by extending the keyword basket or improving their position on the page. And finally, they can increase the conversion rate on the site by making sure the search visitor finds what they were looking for and that an appropriate conversion path is present.

It’s the last of these three that offers the marketer the greatest degree of control, yet it’s the one most often overlooked. Usually, we have complete control over what happens on our own site. But often, we have never really asked our visitors what they’re looking for. We haven’t tapped into the existing (and extensive) body of knowledge on usability design when it comes to Web sites. This is one area that could have huge payoff not just in search, but also in all areas of online marketing.

Fibonacci redux For each of the three examples of the 70/30 Rule I’ve given, I know others exist. And I’m not sure that it’s wrong that marketers have previously gone for the obvious wins in search. But I worry about the lack of motivation to go after the wins that require more work.

We can’t move forward as an industry until we start doing the research required to better understand the 70 percent of the market we’re missing. The big winners in business have never been the companies that go for the easy wins. They’re the ones that figure out how to pick the fruit that’s just out of their competition’s reach.

Black vs White: SEM Soul Searching

First published on Jan 6, 2005 in Mediapost’s Search Insider

At the recent Search Engine Strategies conference in Chicago, there was a new addition to the session list: Black Versus White, And Lots of Gray! Danny Sullivan wanted to stage a showdown between known black hat SEO’s and those that have chosen to tread the purer path. Holding down the dark side was Todd Friesen and Greg Boser. The champions of the straight and narrow were Alan Perkins and Jill Whelan. Falling into the great gray in between was Mikkel deMib Svendson.

The Lighter Side of the Dark Side

The session had a somewhat tongue in cheek tone, but nevertheless, some serious issues that lie at the heart of organic search optimization were explored. Alan Perkins began to tackle the thorny issue of whether black hat SEO was even legal.

His reasoning was that manipulation of factors to increase rank for obviously commercial pages of questionable relevancy was in fact misleading presentation of advertising messages. There’s also the issue of whether hiding or presenting content specifically for search engines falls offside of the recently enacted accessibility legislation.

Todd and Greg countered with a plea for all search engine optimizers to come clean and admit we all manipulate search results (Greg believes SEM should stand for search engine manipulation); it’s just that some of us are more effective at it than others. They use tactics of varying degrees of aggressiveness, and only use the extreme black hat tactics in industries where it’s an absolute necessity to compete, such as online pharmaceuticals and gambling.

Greg made the excellent point that the most serious breach of ethics he’s run across in SEO are those companies that use black hat tactics but don’t disclose the fact to their clients. He insists on full and total approval of tactics by the client.

Was Sun Tzu a Black Hat?

Mikkel likened search marketing to warfare, citing Jay Conrad Levinson’s guerrilla approach, and said that you have to do whatever you have to do to win. Greg agreed, calling it a “full frontal assault” on the search engines. Alan Perkins found the warfare analogy unfortunate and distasteful, saying he didn’t believe that search marketing should be compared to war, because there are no winners in war.

As could be predicted going into such a heated topic, no one changed their minds, but I think we discovered a few more shades of gray between the two extremes. I suspect that was Danny’s intention in putting the session on the agenda. Somewhere between the blinding white of Alan’s world and the dark practicality of Todd and Greg’s, the real world of SEO exists. And as long as people continue to look for organic results, that world will continue to be colored in various shades of gray.

In fact, there is a somewhat symbiotic relationship between the two extremes in our industry. Many reputable companies that steer well clear of questionable practices look with fascination on the tactics employed by the true black hats. One cannot help but admire the sheer brilliance of the methodical attack on the algorithms of the search engines. And in those tactics, they hope to pick up the kernel of a strategy that can be pulled back and employed in a less aggressive manner for their clients. Even the search engines routinely plant informants at the shows at which the black hats tend to congregate to pick up intelligence on the latest tactics.

In the “Wish I Said” Category…

So, at the end of the day, there were no easy answers. But there were a couple of points made in my follow up conversations that I wish had come up in the session. One of the best points was made by my friend Greg Jarboe of SEO-PR.

The fact is that black hats will aggressively look for any hole, and they will attack that hole with everything at their disposal. This means that legitimate ways to gain search visibility are soon exploited by the black hats, forcing search engines in many cases to close down legitimate and useful opportunities for both users and advertisers.

We know that search marketing is a real estate game, and there’s nothing wrong with aggressively looking for new opportunities to gain territory on the page by exploring new strategies including shopping feeds and news engines. That’s just smart search marketing. But the line is crossed when the black hats aggressively subvert the rules and use those new channels to artificially build links or boost their visibility at the expense of the user experience.

And that brings me to my final point. I believe there is a place for guerrilla marketing, but I think Mikkel, Greg, and Todd missed an important point in using the all-out war analogy. Levinson’s intention was that the casualty would be the competition. When you attack the search engines, the casualties are numbered amongst the users of that engine. And those users are your target consumer. I somehow doubt that Mr. Levinson ever wanted you to launch a war on your customer.

Of Serendipity and Search Engines

First published in Mediapost’s Search Insider on Dec 13, 2004

I love the word serendipity. It’s like an entire poem in one word. Just saying it out loud makes you feel… well… serendipitous.

So, this week, with the holidays approaching, I was in a serendipitous mood and started noodling (another favorite word) with my Google toolbar. “Hmm” I said to myself, “I wonder how Google ranks on Google for the words “search engine.” Google’s whole promise is to bring the best to the top, right? So which search engine is Google giving its all-powerful vote of confidence?

Well, no one, as it turns out. SearchEngineWatch.com, Jupiter’s portal for search marketing and optimization, grabs the coveted top spot. So, surely, Google must be second. Nope, that would be Lycos. Now, as far as I can remember, Lycos is dying a long and lingering death, but according to Google, they’re No. 1. Well, actually No. 2, behind the site that isn’t a search engine.

In fact, Google ranks itself fifth, behind Dogpile and AltaVista. Can it be? Does Google have a secret inferiority complex? Is the cockiness of every Google employee I’ve ever met just a front for a shuddering mass of vulnerability? I dig further.

What if I refine my search? Let’s try “smartest search engine”. Oops, no search engine I recognize makes it to the top 10.

Okay, how about “best search engine”? Again, there aren’t too many familiar names in the top 10, although Dogpile does manage to sneak in at No. 8.

I’m getting desperate now, and serendipity is hanging by a thread, in mortal danger of giving way to unhealthy obsession. I type in “Larry and Sergei’s search engine,” figuring it’s time to get really specific. The strategy is lost on Google, which again serves up a list of unfamiliar sites, with the exception of Go.com in the No. 10 spot. Well, at least the first two letters are right.

One last stab in the dark: “Search engine with recent IPO that’s aiming for world domination.” Nada.

Maybe I’m using the wrong engine. I switch to Yahoo! And sure enough, there’s no identity crisis here. Yahoo! proudly ranks itself No. 1 for “search engine” and in a concession to the competition, throws the No. 2 spot to Google. Apparently, Yahoo! thinks more of Google than Google thinks of itself.

Let’s take Microsoft’s new algorithm for a spin. Again, MSN thinks a lot of SearchEngineWatch and gives them the top spot. And guess who gets No. 2? Google. Looking down the page, I see Search.com, AltaVista, Dogpile, Lycos, Northern Light (are they still around?), Webcrawler, and… no MSN. Didn’t even break the top 10. Well, maybe they haven’t gotten around to spidering themselves yet.

It’s time to Ask Jeeves. First, I had to scroll down past a zillion sponsored ads that pushed the real results off the page. And when I finally got to the results, they did a pretty good job of nailing the top engines. Like Yahoo!, Jeeves doesn’t mind blowing his own horn. Ask Jeeves is No. 1, Teoma (owned by Jeeves) is second, AltaVista third, Lycos fourth, AlltheWeb fifth, and Google comes in a distant sixth. Webcrawler, Dogpile, Yahoo!, and Excite round out the top 10.

All relevant, and all search engines, although the one-two finish of Ask.com properties smacks of a little judicious human intervention. Seems that Jeeves might know his stuff, even if he is a little egocentric. Google thinks Lycos is a search engine powerhouse, so how does Lycos feel about itself?

Well, Lycos apparently has no idea what a search engine actually is, because the only two search engines to break the top 10 are Overture and AOL. HotJobs is No. 1 and an eBay page for Thomas the Tank Engine is firmly embedded in the No. 3 spot. At least the HotJobs link might come in handy for the engineers currently working on the Lycos search algorithms.

There seems to be a building ground swell for AltaVista. Could this be a dark horse? I went to Yahoo!-owned AltaVista and found out that once again, the portal SearchEngineWatch takes the top spot. Is it coincidence that a portal for search engine optimization consistently takes the top spot, beating the engines at their own game? It’s deliciously ironic, if you ask me.

The irony continues with the fact that Google takes the No. 2 spot on the competitor’s engine, with hometown favorite AltaVista in No. 4, Yahoo in No. 5 and Dogpile in No. 6.

Survey Says…

And so, in a serendipitous, non-scientific poll, using GordRank, a sophisticated algorithm of my own invention, here are the top search engines, as ranked by the search engines themselves

1. Google (ranked higher by almost all the competitors than Google ranked themselves)
2. AltaVista
3. Yahoo!
4. Dogpile (yes, Dogpile)
5. Lycos
6. Teoma
7. All the Web
8. Webcrawler
9. Hotbot
10. Metacrawler

There are a couple of points that have to be said. Perhaps Larry and Sergei could hire a search optimization firm to help them rank better on Google. I know they have the money and it seems to be a challenge for them.

And despite Bill Gate’s bravado and bank account, no one seems to know that Microsoft has a search engine. Not even MSN!

Til next year, Happy Holidays!