Search Marketing Finds Its Way

6 december 2002, 08:09

Traffic as an important online metric is threatening to make search marketing trendy. Companies like Google, Overture, Yahoo, Search123, LookSmart, Ask Jeeves, AltaVista, DealTime, and are busy plugging the virtues of search marketing at e-commerce conferences and advertising trade shows and in trade press articles and mainstream media.

Take Google, whose site supposedly attracts 150 million searches a day. The Mountain View, CA, company is conducting educational initiatives and roadshows this quarter targeting prospects, with a spillover into next year.

“They’re not so much to sell Google, but to sell them on search and let them know how important search is for them,” said Tim Armstrong, vice president of advertising sales at the 4-year-old company.

It is frustrating. Offline media account for 95 percent of the total advertising spend, leaving online with $5 billion to $6 billion, according to industry estimates. Paid search is the fastest-growing online ad medium, with a market size of $1.4 billion from 100,000 advertisers, according to Citigroup’s Salomon Smith Barney investment bank. By 2008, paid search on pay-per-click search engines is to reach $5 billion.

That spend is not commensurate with consumer activity in the medium. More than 90 million people search online monthly, making it one of the leading uses of the Internet along with e-mail and news, Yahoo said. Nearly 800 million searches take place daily, compared with 2.7 million pieces of direct mail sent daily, according to Overture.

“With search, the initiation is by the user,” said James K. Beriker, CEO of Search123, Westlake Village, CA. “With direct mail, the initiation is by the marketer. It’s really what makes search such a brilliant way of reaching buyers. In what other medium does the buyer seek out the advertiser?”

Still, where is the respect?

“The overwhelming challenge is for marketers to realize that this is a channel that probably should be bigger than 1 percent of their budget,” Armstrong said. “The challenge for the Googles and Overtures and those types of companies is how do we go out and educate literally hundreds of thousands of companies?”

If search marketing players are now roaring, they were whispering in the past few years. Fancier online tactics like e-mail marketing, banner ads of all contortions and affiliate relationships overshadowed mere keyword placements and dry searches.

“On the marketing side, people had the impression that the Internet was 80 percent or 90 percent branding and 10 percent or 20 percent direct response or direct marketing,” said Iggy Fanlo, president and chief operating officer of DealTime, New York, the leading shopping search engine. “I think it’s exactly the flip side. It took a couple of years for that to sort of work itself through the channel.”

Fanlo cited a study quoted in a November 2001 Overture report saying that search marketing accounted for only 3 percent of all media spend but 70 percent of all leads generated when compared with direct mail and Yellow Pages.

In the case of shopping search engines, less than 4 percent of all online sales go through shopping search engines. DealTime estimates that can grow to 10 percent to 20 percent in five to seven years.

DealTime crawls 1,000 merchants’ sites with permission—they send feeds and pay for that privilege—and another 500 that do not pay to be listed on the site for comparing prices and deals. So the problem for shopping search engine services like DealTime is not effectiveness, but awareness.

“The reason it didn’t take off right away is because there wasn’t a physical antecedent,” Fanlo said. “Now contrast that with travel. Expedia, Travelocity, Orbitz took off right away. Why? Because a thing such as a travel agent existed for the last 50 years. People don’t have shopping agents.”

Even retailers are getting into the act, albeit with better search functionality, according to EasyAsk, Littleton, MA, which provides search technology. Lands’ End, for instance, found a 10 percent increase in search conversion rates and a 28 percent decrease in “null” results when it implemented the EasyAsk platform, the company claims.

Similarly, Talbots saw a 34 percent rise in search conversion rates and an 18 percent increase in average order size using EasyAsk. Furniture retailer Bombay Company is using the same service to boost online sales.

New Functionalities

Not surprisingly, search engine companies are doing what they have to do to move the needle for clients. New functionalities are being introduced to offer speed and relevant results when keywords are typed in search boxes.

Earlier this year, Ask Jeeves, San Mateo, CA, introduced its Teoma search engine. The company claims its search engine is as good as Google’s in pulling up relevant search results and monetizing users. It also claims that it has only an 11 percent overlap in users with Google.

Last week, Ask Jeeves began a multichannel branding campaign to promote its site. Its marketing includes a “Search that Never Sleeps” outdoor ad campaign in New York, a partnership with the Los Angeles Lakers basketball team and the ongoing “Sharp-Dressed Jeeves” online effort. Also, the company’s Jeeves butler will appear for the fourth time in the Macy’s Thanksgiving Day Parade in New York, and yet another book in the “Ask Jeeves” series is set to debut in the first quarter.

Ask Jeeves is ranked the No. 2 pure search engine in traffic after Google and is fifth among all sites, including portals like Yahoo and MSN, offering As with many companies in search marketing, things get a little incestuous. Though still a competitor, Ask Jeeves includes Google’s paid listings on And it shares another commonality with both have Web sites.

“Overture [a paid listings search service] doesn’t have its own site,” said Jim Lanzone, vice president of product development at Ask Jeeves. “Overture doesn’t own their own traffic.”

This means search engines other than Google or Ask Jeeves have to pay for distribution, or consumer traffic for their searches.

LookSmart, San Francisco, is another player in search marketing. In April, it bought WiseNut to integrate that firm’s search algorithms to improve searches on LookSmart’s editorially reviewed directory of 2 million Web sites.

“We bought WiseNut with the specific goal of using it to provide search results for our portal partners, to create an alternative offering for the portals to folks like Google, who are competing with the portals,” LookSmart CEO Jason Kellerman said.

In the second phase, plans call for better leveraging the WiseNut index, which has 900 million documents. Google still leads the search-engine segment in terms of relevant search results, but services like LookSmart are catching up, Kellerman said.

The way Google works, “the more documents that point to a document on the Internet, the more relevant that particular document is to a particular search,” he said. “What WiseNut does is it actually takes that to the next level and looks to the context of the documents that point to the particular document.”

Not far behind is AltaVista, the pioneer among search engines. The Palo Alto, CA, company recently introduced new features, including a daily refresh of 50 percent of search results shown. A next generation of the firm’s news-specific search service called News 2.0 was launched. And the AltaVista Prisma search tool is now available in French, Italian, German and Spanish versions.

Better ROI Is the Goal

The goal for search engines is to offer better return on investment to clients that pay large sums for keywords associated with their businesses.

Google, for example, recently launched Google News. The company crawls 4,500 news sources to post the latest headlines. Publishers are eyeing that with keen interest. There are no plans to charge news publishers for that service until a critical mass of users is reached.

Sound familiar? It’s the same strategy Google pursued for its search service. For the first few months, it did not commercialize its searches. Then, once it became a vital destination for consumers to turn online when searching for products, services or people, it started charging for traffic.

Ads now run on top of the Google search results page and to the right side. Listings on are all editorial, with no paid inclusion or ads within the results. But marketers can buy positions on the search result pages that are targeted by keywords. Sponsored listings, which appear on the top of the page, can be bought on a cost-per-thousand basis. AdWords, which appear on the right side, can be bought on a cost-per-click basis.

By contrast, search engines like Overture, Search123, FindWhat and charge for placements within the listings.

“The real strength that Google has as a leader in the space is that they control in excess of 150 million daily searches and they’re not paying a partner for that distribution,” Search123’s Beriker said.

Google has 130 clients in 30 countries, embedding its search engine with the Yahoo, AOL, Netscape, The New York Times and Washington Post sites. Faster, more relevant, better: That is what Google is working to make its search index. The company crawls 3 billion Web pages daily.

“Google’s mission is to organize the world’s information and make it universally acceptable and useful,” said Marissa Mayer, product manager for

Not surprisingly, Yahoo and America Online are alarmed that Google is competing for the same traffic. Though they have renewed contracts with Google, all options are being explored. Yahoo is a case in point. It may be an all-encompassing portal and media company, but it has not forgotten its roots.

“Search lies at the very heart of what Yahoo is about and is a very important component of Yahoo’s overall business strategy,” said Jeff Weiner, senior vice president of search and marketplace at Yahoo, Sunnyvale, CA. “We’re allocating the resources and investments to search to ensure that we continue to be the leader in this space.”

One major reason search is critical to Yahoo’s overall business strategy is that it is the entry point to many parts of the site. This includes Yahoo areas like movies, Yellow Pages, maps, music and shopping. It also is one of the company’s larger revenue earners thanks to a lucrative three-year deal with Overture.

And Yahoo’s definition of search is more than searching within a search box. It includes users searching for travel information, health news and stock quotes, receiving the same number of queries as within the Yahoo Search box.

Though Yahoo does not disclose internal search numbers, Nielsen//NetRatings reports that Yahoo is the leading search destination for users. According to data gathered for September, an estimated 36 million users visited Yahoo Search. The company claims retention and click-through numbers are up since recent search changes like the Overture deal were implemented.

“You’ll see several enhancements to Yahoo Search in the coming year,” Weiner said, “including improvements to the user interface, product search, deeper integration of search throughout the network, international improvements and additional technological enhancements to continue improving relevancy of the product.”

In terms of trends, all days of the week are not equal, at least on Yahoo searches. Yahoo sees a spike for searches on cartoons on Saturdays, homework on Sundays, lottery searches on Wednesdays and back-to-work/errand-type searches like DMV or resumes on Mondays. Meanwhile, DealTime sees a shopping search spike on Mondays because of faster office Internet connections.

But for all the hoopla, search engine companies know that search marketing’s fate might resemble the once-popular banner that now reportedly delivers only a 0.3 percent click-through rate.

“All paid search providers will have to become increasingly sensitive to the needs of the advertiser—they’re at the center of the universe of paid search,” Beriker said.

Beriker anticipates that industry leaders will band together and establish some form of best practices, and uniform terms and standards along the line of the Bill of Rights that Search123 has propounded.

“Basically, what we’re trying to do is make search easier to buy,” Google’s Armstrong said, “and I think what people can expect over the next five years is there will be a drastic improvement over time to buy search.”

The Federal Communications Commission is growing more active in ensuring that paid listings are labeled so. This is especially true as Web properties with any search traffic try to monetize that.

Salomon Smith Barney thinks the FCC’s attention is worrisome. The FCC is likely to focus on less-obvious forms of paid listings, including paid inclusion. The manner in which paid listings appear among non-paid results also is a scrutiny candidate.

The quality of traffic is becoming an issue as well. Unless searches lead to clicks that convert to sales, the effort is not “e-commerce productive,” as Search123 terms it.

“If search traffic does not convert to sales, there is no ROI and no value can be attributed to the click,” Beriker said. “Paid search providers, in order to remain competitive and serve their advertiser base, must remain focused on the ROI potential of their traffic. Advertisers will increasingly hold paid search providers accountable by the click.”


Marco Derksen
Partner bij Upstream

Oprichter/partner Upstream, Marketingfacts, Arnhem Direct, SportNext, TravelNext, RvT VPRO, Bestuur Luxor Live, social business, onderwijs, fotografie en vader!


Marketingfacts. Elke dag vers. Mis niks!