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Search Engine Marketing - Category Killer?

Stephane Perino
Agence Virtuelle

September 1, 2003

Can traditional online advertising survive in the face of search marketing?

Why are companies continuing to spend significant amounts of money on traditional online advertising methods, when Jupiter Research recently found that 76% of marketers believe that search engine marketing (SEM) is more effective? This statistic reflects the incredible growth of search marketing in the past 18 months, driven by the likes of Google, Espotting and Overture which have turned the world of online advertising on its head.

Traditional online advertising has been fighting back in an effort to dispel the negativity associated with the "banner ad", with new and arguably more intrusive formats. However, with even the best rich-media adverts obtaining response rates of only 2.1 per cent, the question facing many marketing directors is whether they can continue to justify current levels of spending in a form of online advertising which delivers such a low and unquantifiable return on investment.

So why has search marketing become such a powerful tool? Quite simply, search engines are the doorways to the online world for most consumers, with IDC estimating that 84% of surfers gain access to Internet content through a search engine. The power of search engines to deliver high volumes of responsive traffic to sites is well understood. Companies have for a long time paid search engine optimisation specialists to adapt their web pages in order to make them more identifiable by search engine software and be more prominent in search results listings. This process has evolved with paid-for-placement results, where prominence at the top of a search engine is guaranteed in return for a fee when particular keywords are entered.

The most compelling argument for marketers to adopting the search marketing approach is the measurable return on investment (ROI) . The most popular and fastest growing search marketing model is cost-per-click (CPC). With the CPC approach, advertisers only pay when a user actually clicks through to their site. The rankings of the search results will be ordered according to a live auction with those companies prepared to pay the most CPC appearing at the top. While not quite as straightforward as a banner advert, marketers appreciate the flexibility of the model allowing them to change their ranking and spending very quickly, in response to seasonal peaks in demand or in conjunction with promotions or new product launches.

The CPC model delivers a clear and measurable return on investment. For instance a recent campaign for a leading online European holiday firm resulted in £54 of sales for each £1 invested in CPC search advertising. This level of return is not unusual and is causing many firms to revaluate how their online marketing budget is being carved up.

But what about the role that traditional online advertising plays in brand building? For a large company with significant offline brand investment, the Internet is either another medium for brand advertising or a channel to generate sales (or both). In terms of consumer experience, it is arguably important that a particular product or service appears at the top of a search results listing and users click through to your site rather than a competitor's. Some SEM copmanies believe that investment in CPC advertising is a better use of budget than a noisily animated "brand building" advert flying around a user's screen when he or she is visiting a newspaper site and has no intention of buying anything.

That said, the brand building potential of search marketing shouldn't be ignored and can be particularly important for new entrants into a market or small companies with small marketing budgets. Through the use of search, these types of companies can appear alongside the big brands in search listings and as a result build brand awareness. New players can of course target their spending so that they secure the top spot in a search ranking -- for instance, during the months following launch -- to gain recognition. In fact, recent research from Double Click revealed that 41% of Internet users gained initial brand awareness from search alone - without exposure to logos and graphics.

For businesses of all sizes, search should be a vital component of a company's online marketing strategy - it is targeted, unobtrusive, measurable and low in cost. In the face of all these benefits, traditional online advertising has a real fight on it hands to keep its current share of marketing spend.

Stephane Perino is founder and CEO of the European search engine marketing consultancy Agence Virtuelle (www.agencevirtuelle.com) based in Geneva, Paris and London.


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