Online Retailers Heart Search Engine Marketing

April 24, 2007

This article is included in these additional categories: Paid Search | Retail & E-Commerce | Search Engine Optimization

Most retailers say a bigger digital marketing program will deliver more sales and so they’re increasing the amount of money and other resources they’re devoting to pay-per-click advertising and natural search, according to Internet Retailer’s latest survey on search engine marketing.

SEM drives more than 50% of sales for 30.2% of e-retailers, according to the survey, and 82.8% of all survey respondents say they have no plans to reduce their overall spending on PPC advertising in 2007.

In addition:

  • Some 76.9% of those surveyed rate Google as producing the best sales results, followed by 13% for Yahoo, 4% for MSN and 2% for AOL.
  • Most retailers surveyed are pretty small spenders: 30.6% say they spend less than $1,000 a month on PPC campaigns; 28.1% spend between $1,001 and $10,000; 27.3% spend from $10,001 and $75,000; and 12.8% more than $75,000.
  • As for cost per click, 78.7% say their average cost is between 5 cents and $1. Only 2.5% say less than a nickel, and only 5.1% say more than $1.
  • Some 25.1% of merchants say they maintain a keyword inventory of fewer than 50 words; 29.8% cite 51-500 words; 30.3%, 501-10,000 words; and 14.9% say more than 10,000.

Of the 142 online-only merchants, 50 chain retailers, 33 catalogers and 20 consumer brand manufacturers taking part in the survey, 57.4% say search engine marketing performed better or somewhat better than their other marketing programs.

Moreover, 17.2% say SEM performs as well as other forms; 12.7% say it performs worse; none said it performs much worse. Some 12.3% said they don’t know how search compares with other forms of marketing.

Merchants tend to prefer executing their own search strategy: only 26.4% have used an outside agency. Only 10.8% expect to outsource PPC or optimization within six months, and 7% in more than six months. Two-thirds??”66.5%??”have no intention of outsourcing.

The survey found that merchants are looking for a balance between PPC and optimization. Some 39.2% say they use more pay-per-click than search engine optimization to drive traffic; 34.7% use more natural than paid; and 26.1% use both equally.

But nearly half – 46.1% – say natural search delivers better sales conversions, compared with 37.3% who say PPC converts better; 16.6% say paid and natural search perform equally well.

In any case, merchants are planning to spend more on PPC advertising – while reducing their keyword inventory to improve ROI. Some 35.8% expect to spend significantly more, and 22.7% more, on paid search this year, compared with 32.8% planning to spend the same; 8.7% say they will reduce PPC ad spending.

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