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Marketers report high ROI with paid listings

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Until recently, the pay-for-placement search engine model largely catered to the business-to-consumer marketers. However, as b-to-b companies realize the effectiveness of this form of promotion, more of them are including it in their marketing mix.

While there are more than a dozen such services available, the most recent entrant is Google, known for its deep search capabilities unmatched by most other engines. Through a partnership with Earthlink announced on Feb. 20, Google is going up against sector leader Overture (formerly GoTo). Google will offer AdWords Select, a service in which positioning is determined by both popularity and amount paid per click.

"Paid listings offer the best targeting a company could want," said Forrester Research senior analyst Jim Nail. "The advertiser is reaching the buyer at the exact moment he or she is engaged in a decision."

Nail is quick to point out that paid listings should be just one part of a larger marketing strategy, and that traditional listing methods involving meta tags should still be used for maximum results.

‘Cheaper and faster’

Lee Mills, director of online promotions for SiteLab, a San Diego-based interactive marketing agency, said, "Standard, organic optimization provides a high ROI over time in most categories, but paid listings can be one of the most cost-efficient methods."

Mills cites a recent campaign on Overture for VivoCom, a provider of fax server software. The effort increased site traffic 50% in the first week, with an immediate 35% increase in free downloads and a 25% increase in conversion. He said this was the only marketing done for the site and that cost per click varied from 5 cents to $1.78, depending on current bids.

"This was much cheaper and faster than other methods," Mills said, noting the generally larger purchase amounts from b-to-b customers, which contribute to higher return on investment.

Jodi Hans, a Los Angeles-based Internet marketing consultant, said paid listings are great for testing keywords at a relatively low and controllable cost, which helps to optimize standard listing methods. He said knowing the top five keywords and phrases is crucial. Marketers can determine this by subscribing to services such as www.keywordtracker.com.

Hans has seen the best results from Overture, with a 6% to 10% conversion for his consulting services. Results from FindWhat, another leading player, have been about 70% of Overture’s at the same cost, he said. "I’ve seen greater return on leads costing 50 cents than those costing $2," he said, stressing the importance of testing. Hans also said a site must be listed for a week for a valid trial.

As b-to-b companies start using pay-for-placement search engines, they need to avoid certain pitfalls. "If the competition knows you’re doing paid placement, they may click your site to increase your costs," said Mills, adding that Overture monitors and credits for the practice. "Costs can rise quickly also, and engines won’t tell you if someone drops out, leading you to overpay," a situation for which he recommends monitoring software such as that offered by Did-it (www.did-it.com).

It’s important to stay in the top-five ranking, Hans said. "Below that you get very few results. Of course, be sure to closely monitor conversion rates."

Test despite doubts

Even with services such as those offered by Business.com, which targets paid listings to a b-to-b audience, some have doubts about the b-to-b prospects for this space.

"Paid placement will likely remain mostly b-to-c, since business buyers often have other sources of information, such as trade publications and directories and known suppliers," Forrester’s Nail said.

Despite such doubts, it’s still a good idea to test, Hans said. As the paid listing market expands, b-to-b companies should continue experimenting as competition for top spots, and the cost for those spots, grows.

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