Search is evolving, with many approaches now available -- resulting in SEM revenues rising faster than those from any other marketing strategy.

eMarketer’s October Ad Spending Trends report takes a look at changes in online and offline media spending, showing interactions between the two channels. The report identified four basic trends contributing to the continued growth of internet ad spending:

• Ad budgets are increasing
• Marketers are shifting ad dollars to the internet from other media
• More companies now include the internet in their marketing plans
• Prices are increasing for branding ads (e.g., display and rich media) and direct response ads (e.g., paid search)

Despite the phenomenal growth in internet ad spending, this medium still receives a trivial share of the average marketing budget. This share will expand, and as it does, search marketing will continue to attract attention.

eMarketer projects a 33.7 percent growth rate for U.S. internet marketing, supported by the strong first half results from Yahoo! and Google, which together make up about 48 percent of the total U.S. internet advertising market. While growth rates projected by various research firms vary widely, most firms projected a 20 percent growth rate. eMarketer attributes this difference to a different definition of internet advertising by the research houses (e.g., some include paid search; others do not).

More than direct response

Search marketing has been called “the greatest DM medium to ever hit the advertising scene.” However, that assertion short changes its value because search marketing is much more.

comScore reported the latency effect of search marketing in generating the offline sales that don’t show in your website log files. Studies by NPD Group and IAB-Nielsen/NetRatings have documented the superior branding effects of search listings compared to other online advertising strategies. These studies suggest that search marketing is a many-sided tool that can achieve different marketing objectives.

As search marketing has proven itself to be both effective and accountable, national marketers and ad agencies are making it an integral part of traditional marketing campaigns. Search marketing is a multipurpose strategy. It can be used to generate leads, as well as online and offline sales. It can induce users to take desired actions such as newsletter sign-ups, white paper downloads and seminar registrations. While all this is going on, your prominent listing in the search engine results pages (SERPs) contributes to branding.

Search marketing grab bag

Search engine marketing continues to expand, offering many different flavors. Current approaches include search engine optimization (SEO), pay-per-click advertising (PPC), paid inclusion (PI), search contextual ads (SCA) and the new pay-per-call search advertising service (PPCall).

Search Engine Optimization: The original search strategy was SEO, which requires alteration of website structure and content to make your site “search engine friendly.” A properly optimized website is more easily indexed for organic ranking in search engine databases by the search crawlers. Well-optimized sites will get you higher rankings. It goes without saying that sites should be optimized for customers as well as search engines to ensure success.

Pay-Per-Click: Another widely adopted search strategy is the popular PPC model. It allows you to buy search listing text ads that are ranked based on keyword bid price in the sponsored listings section of the SERPs. You pay the bid amount when users click on your listing, bringing them to your landing page. It is necessary to closely monitor performance, making bid adjustments with bid management tools to get the best ROI. One should also guard against click fraud, which can run as high as 15 to 40 percent.

Paid Inclusion: This strategy requires payment for guaranteed, fast inclusion and frequent respidering in a search database. However, it does not promise high rankings. The Yahoo! paid inclusion program, Yahoo! Site Match, charges by the click. ExactSeek.com’s Featured Listings cost $36 per URL for the first five URLs for a year, or $12 per URL for the first five URLs for three months, without pay-per-click fees. PI is useful for new sites, dynamic sites and sites with frequently changing product pages.

Search Contextual Ads: A fourth strategy is the use of contextual ads on relevant publisher sites, which are distributed through Google AdSense, Yahoo! Publisher Network and MSN adCenter (Beta). SCAs are displayed on publisher content pages across the web rather than in the SERPs. The text ad contains a link to your landing page and is displayed in a banner or skyscraper ad module. Google automatically selects the number of ads to list in an ad block, depending on which ads produce the most revenue. The ads rotate, so sometimes you’ll see a single ad in the banner space; other times there might be four text ads or even a graphic.

Google, Yahoo! and MSN have distribution networks consisting of approved publisher sites that agree to display ads and share revenue. Recently, contextual ad networks have been extended to include smaller, qualified publishers. Advertisers can select sites for ad display. Many publishers are happy campers. Referring to Google AdSense, one site owner said, “It's amazing how well it works. From the publisher's viewpoint it is fantastic.”

Pay-Per-Call: Another search marketing strategy introduced this year by Ingenio is the pay-per-call (PPCall) ad service. This advertising model is designed for small and local businesses as well as firms marketing “high-touch” products and services that benefit from personal contact to close the sale. Advertisers bid for phone call leads at the rate of $2.00 and up. Ads are displayed through a distribution network; for Ingenio, this includes AOL, go2, Miva and Local.com.

Other players include Verizon SuperPages, which launched a similar Pay For Calls service in September. InfoSpace partnered recently with Jambo to offer a new pay-per-call lead-generation service. Additionally, it is likely that eBay will offer pay-per-call with Skype. All the hype is due to an emphasis on local search and small business advertising, a potential growth area for search marketing.

What search strategy is right for you?

The best thing to do is strike for balance using the strategies best for your website and industry. In general, users prefer organic to sponsored listings by five to one, and organic links usually convert better. However, if you have a new site and need quick results, it’s best to add a little PI and PPC to the mix, adjusting the campaign as your SEO rankings materialize.

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