There's no doubt: 2004 will go down as the year of paid search. Last year, more than $3.34 billion was spent on paid search engine placement. In comparison, a mere $492 million was allocated to organic search engine optimization (SEO), according to a research report out of Executive Summary Consulting, sponsored by SEMPO.
Yet with ever-increasing keyword costs and evidence that search engine users more frequently use organic search results, many marketers are turning their attention-and budgets-to SEO. Search experts still recommend using both paid placement and organic search, but many marketers are wondering: Is 2005 the year of organic search?
Overall, advertisers will spend 39% more on all search engine marketing this year, according to the SEMPO report. They will spend 28% more on SEO, while agencies' spending increases will top 62%. Advertisers will spend 45% more on paid placement, and agencies will spend 77% more.
One reason organic search is picking up steam is the increase in keyword prices. Paid search terms that cost pennies only a few years ago now sell for several dollars, if not more. The majority of increases materialized over the past six to 12 months. Case in point: Keywords cost 24% more in the fourth quarter than they did at the end of the third, according to a Fathom Online report.
Higher bid prices cause marketers to explore less volatile strategies, said Michael Gorman, senior VP-search marketing for Digital Impact. "Companies are beginning to run up against the natural limits of their abilities to pay for paid search," he said. "They are exhausting the easy inventory buys. They can go deeper into the three-, four- and five-word phrases, but they are looking for where they can get incremental performance."
And that's only if their ad actually appears. Positions are outbid and budgets run out on a minute-to-minute basis. "Depending on the search engine, your ad will be visible at some times and invisible at others," said Frederick Marckini, CEO of search engine marketing company iProspect. "Google, for example, will throttle your ad on and off during the day so you never go over your daily budget."
Marketers are also realizing that they aren't reaching everyone unless they own both the paid and organic listings. Google searchers click on organic results 72% of the time, while 60% of all clicks on Yahoo! originate on the organic side. That means that paid search is only garnering 28% and 40% of the eyes, respectively, according to a report from iProspect.
David Hallerman, a senior analyst with researcher eMarketer, said: "Humans are humans, and people prefer organic to paid, and are more likely to click on organic," he said. "At the same time, companies are putting more than 80% of their marketing budget in paid search. It's imbalanced."
The final reason for the push into SEO may not be on every marketer's radar yet. Last month, Google announced a change to its paid program designed to reduce duplicate listings for a single Web site. If the same address appears as a destination in more than one paid search ad, only the one with the highest bid will appear. This means that marketers that count on affiliate listings to increase their paid ad presence will be out of luck. It also means, at least on Google, that the days of owning lots of property are over.
More for the Money
Organic search rankings, however, have few of these issues. And according to one expert, those in the b-to-b space have the most to gain from securing such spots.
Melissa Burgess, director of business development for search company IMPAQT, said it's not uncommon for clients to be completely absent from organic search results. "When we first talk to a b-to-b company, it's normal if their site hasn't been touched in years," she said. "Most might be operating on a 2000 build; they have Java, frames or pop-down menus, which makes it impossible for a [search engine] spider to crawl the site."
That's when SEO firms or internal marketers should optimize sites, removing frames, integrating keywords into the content and metadata, and creating new keywords based on customer research. Burgess said one recent project took her client's site from zero visibility to receiving 78% of all its conversions from organic search. "A b-to-b site is great for filtering qualified leads to salespeople," she said.
Once a site is optimized and shows up on a search engine, companies can expect to hold that spot for at least a month until it is recrawled, so it's often more efficient than paid search.
That said, experts agree that paid search advertising and SEO aren't mutually exclusive. The two methodologies generally complement each other, although a successful SEO program can reduce the amount of your paid spend, said Rachel Lyubovitzky, director of operations for Searchfeed.com, a marketing company that handles paid placement.
Lyubovitzky's company knows this firsthand. She hired an SEO company to boost Searchfeed.com's own organic rankings. "When those things are done hand in hand, search marketing can be very successful," she said. "If your site comes up on the first two pages on major organic search and there's a link to a paid search, it gives the user more confidence. That visitor may feel more comfortable and have a higher level of trust."