Search results lag expectations

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Is all the money being spent on search marketing paying off? According to a new survey of search campaigns, there is ample room for improvement.

A report published last month by MarketingSherpa found that about half of marketers and their agencies said their campaign results were only "somewhat good." Of marketers using paid ads, 47% said their results were "somewhat good," while only one-third said their results were "very good." For paid inclusion, more than half (51%) said results were somewhat good, while only 18% indicated "very good" results. And 23% said results were "not good."

"Very few people are doing a good job of it," said Anne Holland, publisher at MarketingSherpa, Warren, R.I. She attributes the less than stellar return to a number of factors, including the increase in the cost for pay-per-click, page clutter due to increasing results and the number of new search marketers "flooding the field." "There are not enough experienced staffers out there," she said, citing the relative youth of the industry.

Despite the tepid results, marketers are spending significantly in the search channel.

Paid search is currently a $3.3 billion business, with another $250 million being spent on paid inclusion and $238.5 million on optimization, according to numbers compiled by Piper Jaffray in June 2004, combined with MarketingSherpa figures from last October.

Of b-to-b service marketers doing search, 28% of their online budgets are dedicated to search and 9% of their overall budgets are dedicated to search marketing. B-to-b product marketers dedicated 34% of their online budgets to search and 12% of their overall budgets (see chart, above).

While the bulk of spending is slated for paid search, search engine optimization is also effective in driving traffic and converting leads. One expert said the SEO approach is getting short shrift. "The focus is too far toward paid listings and less toward search engine optimization," said Niki Scevak, an analyst at JupiterResearch. He said six out of seven leads come from organic indexes versus paid search.

MarketingSherpa likewise found a strong case for optimization. Marketers that optimized their sites, reported an average 73% increase in click-through from organic results six months after optimizing.

However, b-to-b and b-to-c conversion rates differed, with paid placement appearing to convert better for b-to-b than b-to-c. B-to-b marketers pursuing lead generation converted 7.6% from paid search compared with conversions of 6.7% from organic search. On the consumer side, 6.5% converted from organic search while only 4.8% converted from paid search.

"Few b-to-b sites are well-designed on every page of the site to generate a lead," Holland theorized. "Their paid ads probably link to a lead-generation form page, while organic might `deeplink' anywhere in the site. If your basic site template doesn't have compelling lead generation forms on every page, then you're going to lose some conversions."

Optimization in general seems a tough nut to crack for marketers, and experts agree one factor is the learning curve for this complex process.

"Everyone knows how to place a paid ad," Holland said. "It's a heckuva lot harder to optimize your site." She added that search engines, whose main revenue source is paid advertising, obviously have a vested interest in promoting paid search.

JupiterResearch's Scevak agreed that optimization posed more of a challenge to marketers.

"As part of a wider theme over the next few years, you'll see a search `Darwinism' of advertisers being unable to bid on keywords unless there is a focus on optimization and conversion," he said. "Those who don't do that will be priced out of the market."

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