iCrossing's Noah Elkin explains why relying entirely on paid search is a mistake, and why natural search optimization is key to your marketing mix.
When Google sounds the alarm about a potential slowdown in its revenue growth, that's a signal for the rest of the industry to stand up and take notice, especially considering that a serious disconnect seems to be taking place in the search space. In fact, I'll go out on a limb and say that advertisers are replicating the same mistake with their search engine marketing campaigns that they have made with traditional media: betting on the wrong horse. In the case of search engine marketing, I mean an overreliance on paid media and an underutilization of natural search optimization.
Speaking of horses, if it sounds like I'm flogging a dead one by harping on the superior ROI metrics for organic search results and search engine optimization as a whole, consider the following statistics. First, a significant portion of internet users still are not even aware of the difference between organic and paid search results. For you marketers, this means expensive keyword campaigns may be lost on much of your target audience.
iCrossing's own "How America Searches: Financial Products and Services" study, which is due out later this month and which uses research commissioned from Harris Interactive, will show that 48 percent of online adults are in fact familiar with the distinction between natural and paid listings. That's an improvement over the 38 percent figure reached by the Pew Internet & American Life Project in January 2005, but still nothing to write home about. Perhaps most relevant are the oft-cited statistics that organic search results absorb 70-80 percent of total clicks by internet users. The so-called 80/20 rule, substantiated to some extent in studies by JupiterResearch and Enquiro, among others, has become a standard feature of the search industry landscape, a veritable watchword for the savvy marketer.
Yet, according to "The State of Search Engine Marketing 2005," a survey of advertisers and agencies released by the Search Engine Marketing Professional Organization (SEMPO) in January 2006, natural search optimization accounted for just 11.2 percent of total advertiser spending on search engine marketing last year. By contrast, nearly 90 percent of spending went to paid placement and paid inclusion, with PPC by far the dominant tactic.
If you've begun to sense the disconnect, you may find the results from the survey ad:tech and MarketingSherpa fielded in December 2005 on best (and worst) practices in online marketing even more curious. Deemed "great-- outperforms other tactics" by 52 percent of respondents, paid search advertisements ranked at the top of the heap of best-performing online marketing tactics. Search engine optimization, by contrast, finished a distant fifth, at 33 percent, behind email (house list), rich media ads and behavioral targeting. The ad:tech/MarketingSherpa study attributed the buoyant feelings toward paid search to a stabilization in keyword prices in the second half of the year. Then again, it is worth pointing out that data from DoubleClick indicate a steady increase in the average cost per keyword and cost per click from June onward, with the expected peak at the end of the fourth quarter. That doesn't sound like more bang for your buck.
In light of the fact that natural listings account for the majority of clicks, the continued disparity in resource allocation to paid media smacks of marketers focusing too heavily on the easy win in visibility and not focusing enough on the long-term value they can derive from search. After all, part of the reason that search began to draw advertising dollars away from television was that it could deliver a far more targeted audience. But instead of taking advantage of the search opportunity, many marketers still seem intent on devoting the lion's share of their search marketing resources to reaching just a small percentage of the audience interested in their message.
If it sounds like I'm on some sort of anti-paid search crusade, don't be fooled. I'm only harping on performance issues to prove a point, not to suggest that marketers should focus all of their attention and budgets on natural search optimization. However, it does seem reasonable to expect that attention and dollars be spent proportionately, according to the returns that each search strategy provides. Even if we take a conservative approach and assume that natural listings account for 60 percent of total user clicks, search marketing budgets still are way out of whack. There's no excuse for not getting the most out of a far more targeted medium.
Before committing to a major outlay on paid search or optimization services, smart marketers need to think more about how consumers will find their messages. Only then, by thinking in reverse, can they fully exploit the search opportunity. Discover the way your customers think about your brand and you'll know how to reach them at their point of interest-- with the right content, the right messages and hopefully the right balance of paid and natural search results.