The Pay or Not-to-Pay Conundrum

"Knowing is not enough; we must apply. Willing is not enough; we must do."
~ Johann Wolfgang von Goethe

I’d like to end the debate on which form of search is best, paid or unpaid, with some common sense: Nothing in life is free and all search is paid. One pays a search engine optimization firm, specialist staffer, or analytics provider. One might also pay for URLs to be fed to a search site, or pay to bid for listing positions in direct proximity to one’s competitor’s listings. All search is paid, and all search traffic can be boiled down to a click cost.

After attending (and participating in) the recent Ad:Tech New York panels on search, it is abundantly clear to me the paid and natural search worlds are still not communicating in harmony. I overheard at least one senior online marketing executive saying, “Search is promising the world right now and that will be its undoing.” Last week’s IAB/Pricewaterhouse Coopers 2003 to-date advertising revenue report confirmed the explosive growth of search citing a 22% increase in format spending since last year. Search advertisers are becoming pill-popping junkies hooked on the immediate gratification fix.

Consider this an intervention. At times like this, I defer to great thinkers like Plato, Goethe, and Yoda who all hoped that logic and reason would one day prevail amid much madness. Of course, this logic and reason are one in the same with the pragmatic thought process that keeps me from retreating to a small European town to subsist on Absinthe while praying to the green fairy. Let’s take rational look at SEM formats in an attempt to end this divided universe and move on to something a bit more productive.

Dynamics of Sanity

My panel at Ad:Tech focused on the basics of what we now call paid search. In order to understand the delineation, I offered the following classifications of search marketing. Though marketers primarily view search as either paid or unpaid, search can be placed into three distinct categories with bid-for-placement listings and organic optimization on each end of the spectrum and paid inclusion blurring the lines in the middle.

Search Engine Optimization (SEO)

  • Google
  • Also called, natural, editorial, or organic search
  • Effected by site architecture, interpreted relevance
  • “Pray for Positioning”

Pros: static fee structure, perceived as an unbiased information source by users
Cons: no guarantee of positioning, long delay to impact, messaging is static

Each time I refer to SEO as “Pray for Positioning” I get a laugh. Search Engine Optimization got a bad name with many advertisers due to its lack of measurement and long time frame to see any impact of optimizing efforts. Additionally, many specialized firms purported to have technology that could fool search engines which often led to “penalty box” third page listing positions for advertisers. Of course, measurement has improved over the years and with click costs skyrocketing in a crowded pay-for-placement arena, site optimization is looking better all the time. Still, only one thing is certain with SEO, there are no certainties in SEO.

Paid Inclusion

  • LookSmart, Inktomi
  • Effected by interpreted relevance, refresh factor
  • “Pay to be there”

Pros: no keyword bidding, appears near “editorial listings”
Cons: no guarantee of positioning, URL-based fee structure adds up quickly for big sites

The paid inclusion model has baffled many advertisers. It is not pay for placement, and is not of the same ilk as SEO. Think of paid inclusion as listings in the middle. Whether paying for inclusion in directories on a URL basis or cost-per-click structure, this model offers the “best balance of a listing appearing natural” according to eMarketer’s July 2003 online advertising tactics report.

No good deed (or search marketing opportunity) goes unpunished and the natural appearance may be its downfall. Big providers have begun to move in the direction of changing these listings to “sponsored” after attacks from consumer organizations suggested these listings should be clearly labeled as advertisements like pay-for-placement listings.

– Pay For Placement

  • Google Ad WordsTM, Overture, FindWhat, Kanoodle, Looksmart
  • URL listing bid environment
  • “Yellow Pages of the Web”

Pros: real time results, guaranteed positioning
Cons: keyword cost volatility, possible negative connotation

Ah, the ad model that saved Internet advertising. PFP listings are popping up everywhere and this is arguably the first model to really help search engines stay profitable. The most popular form of PFP includes listings that are “syndicated” from one search site to many others. This marketplace has become very crowded of late, which is forcing marketers to focus on beyond-the-click metrics to quantify pay-for-placement spending. The new mantra for PFP is get smart or go broke.

Where Do People Click?

Search Engine Optimization firms tout the benefits of organic optimization because, well, that’s what they do. Agencies have adopted and included paid programs into media plans because the self-service platforms allow them to easily do so. The question of which is more valuable to an advertiser, the sponsored link or the editorial search result, is the single biggest point of controversy in the industry

It is a generally accepted notion that the higher your listing ranks for a keyword search, the better off you are. According to eMarketer compiled data, Overture conducted a survey in July 2002 in which an estimated 54% of users had clicked on a paid search listing and the remaining portion had not. The same survey asked users if they thought the quality of clicked-on paid listings were better than other types of search listings. Nearly 96% of respondents thought the quality of these listings was the same or better.

On the other hand, an April 2003 PlanetFeedback study concluded that 29% of users were annoyed by paid listings. Ok, pop-up ads continue to annoy the hair off my head, but there are plenty of those around. Incidentally, the same study showed that 83% of consumers found pop-ups annoying. Only 83%? I suppose the remaining 17% who think pop-ups are just swell are the same people spending their life savings on magazine subscriptions in the hopes that this will somehow increase the likelihood of Ed McMahon one day showing up on their doorstep.

Even though consumers might think paid ads are annoying, research and revenue proves that they will click on links that are relevant. How annoying is it to enter a search term, receive 270,000 possible results, and choose none of them? Only 21% of searchers consider their search activity truly a success according to a March 2002, Mondosoft research study. The verdict? We have a long way to go in achieving search efficiency before we can bicker about which click is better.

Pulling It All Together

Last time I checked, Websites were still built for people. If your research indicates that 99.7% of your audience wants a Website built entirely on a rich-media platform, then build it. If you have to prohibit bots from entering your site to keep confidential data secret, do it. These two examples do not produce the best environment for search engines, but then again, a search engine won’t swing by and make a purchase.

If the bid or click costs of your keywords far exceed any hope of generating a positive return, then for heaven’s sake organically optimize the heck out of your site in lieu of spending advertising dollars foolishly.

At the end of the day, understanding your audience and the delicate intricacies of each type of search marketing will determine which search marketing colors you will apply to your palette. Most often, a combination of pay-for-placement and organic search optimization will fit the bill. Can you survive without one or the other? At the risk of sounding like the only sane man in an insane world, sure you can.

Soap Box Opportunity Knocks

In the utopian search marketing society, the needs of your constituents are met simultaneously with the needs of a search engine. This is a world where happy agencies work together within their respective disciplines in unison for the ultimate benefit of the advertisers they represent. Part of the problem with search lies within the many firms an advertiser may need to execute such programs. Where does this search responsibility ultimately rest? Everyone seems to have an opinion on this, but I’d like to hear your thoughts, so drop me a line.

About the author: iMedia search columnist Kevin Ryan’s current and former client roster reads like a “who’s who” in big brands; Rolex Watch, USA, State Farm Insurance, Farmers Insurance, Minolta Corporation, Samsung Electronics America, Toyota Motor Sales, USA, Panasonic Services, and the Hilton Hotels brands, to name a few. He is currently Director Market Development of IPG’s Wahlstrom Interactive where he provides guidance in directional online marketing to Wahlstrom’s prestigious list of clients and sister agency brands.