By Mylene Mangalindan
Staff Reporter of THE WALL STREET JOURNAL
Move over, banner ads and pop-ups. Make room for search.
That's the new marketing mantra these days, as more and more companies
doing business online find that the best way to reach prospective
customers is through their Web searches.
After all, most consumers looking to make a purchase online start
with a keyword search. So why splatter ads all over the Internet --
and risk having most of the people they reach treat them as nothing
more than an annoyance -- when you can focus on people who show an
interest in what you're selling and who are getting ready to buy.
"The difference between this and any other form of advertising
is the customer is looking for you," says Heather Walls, an Internet
content specialist at Lippincott Williams & Wilkins. The Philadelphia-based
publisher of medical information started using search-related marketing
late last year, and has since scaled back on banner ads and print
promotions and stopped doing direct-mail campaigns. "With this,
you know people searching on the Internet are looking for you and
what you have to offer," Ms. Walls says. "That makes them
twice as likely to buy from you" as consumers reached through
any other marketing medium, she has found.
Results like that are fueling rapid growth in the industry. Spending
on paid listings and paid inclusion -- two of the three forms of search-related
marketing -- more than doubled in the U.S. from $419 million in 2001
to $1.19 billion last year, and is expected to grow 48% this year
to $1.77 billion, according to brokerage firm U.S. Bancorp Piper Jaffray.
Globally, such spending is expected to grow fivefold to about $7 billion
a year by 2007 from $1.4 billion last year, says Safa Rashtchy, an
analyst at the Minneapolis-based firm. Outside the U.S., he expects
tenfold growth to $2 billion in 2007 from about $200 million this
For all its promise, though, search-based marketing can be confusing
for companies new to the game. And figuring out which of the three
approaches to use -- paid listings, paid inclusion and search-engine
optimization -- takes some work.
"In today's evolving search marketplace, you need to take all
three channels seriously," says Andrew Wetzler, president of
MoreVisibility.com Inc., a firm based in Boca Raton, Fla., that specializes
in search-based marketing.
Here, then, is a guide to getting started in the search marketing
The hottest category in search marketing is paid listings -- short
text advertisements, with links to the advertiser's site, that appear
on the pages that display the results of an Internet search. Google
Inc. (www.google.com <http://www.google.com/> ), for example,
displays "sponsored links" at the top of each results page
and down the side, to the right of the regular results, while Yahoo
Inc. ( www.yahoo.com<http://www.yahoo.com/> ) shows "sponsor
results" at the top and -- if there are enough listings -- at
the bottom of each page of search results. The number of advertisers
appearing on the pages varies with the search term -- Google and Yahoo
each showed a single paid listing recently for "hat liners,"
for example, but dozens for "CD players."
Marketers also refer to these ads as pay for placement, pay for performance,
pay per click or cost per click -- terms that reflect how the system
works for advertisers.
SEARCHING FOR ANSWERS
Advertisers bid for placement on a results page in terms of how much
they will pay the search engine every time someone clicks on their
ad. Minimum bids vary, but generally the range of bidding starts at
five cents a click, marketers say, and goes all the way up to about
$100 for some mortgage-related terms.
Generally, the highest bid wins the most prominent display on the
page, with the rest of the advertisers listed in descending order
of their bids. (Google also takes into account how many people click
on each ad, so a listing that draws more people to the advertiser's
site can move up the scale.) You may have to rebid occasionally to
maintain your rank, if a higher bid comes in.
Danny Sullivan, editor of SearchEngineWatch.com, a site for people
who want to learn more about search marketing, advises companies to
test out paid listings with a couple of moderate bids.
Colin Kendrick says paid listings work for him. A 33-year-old audio
engineer, he pondered last year how to drum up new members for the
Austin Music Foundation, a nonprofit organization based in Austin,
Texas, that helps musicians learn what it takes to build a sustainable
In September, he submitted bids through Overture Services Inc. --
which acts as an agent for paid listings on Yahoo and on Microsoft
Corp.'s MSN search engine, among others -- for listings associated
with the terms "Texas music," "Austin music" and
"nonprofit music." He won the top listing for each term,
ahead of at least three other advertisers in each case, for which
he pays 10 to 35 cents per click.
The foundation's Web site (www.austinmusicfoundation.org <http://www.austinmusicfoundation.org/>
) attracted more visitors almost immediately. The organization's membership
soared 75%, to 1,400 from 800, in just four months. In the fourth
quarter of 2002, 6% of all the people who clicked on the foundation's
ad signed up as members. That's at least twice the conversion rate
many marketers expect from direct mail. The cost? An average of $20
a month for eight months, says Mr. Kendrick, who is the foundation's
Paid listings are increasingly popular outside the U.S. as well. Neckermann
Versand AG, a German mail-order company, turned to search marketing
for its online store in 2000.
"Since search engines are widely used and the number of people
using this tool is still growing, we decided to include search in
our marketing strategy," says Markus J. Krechting, director of
new media at Neckermann Versand. "For us, it turned out to be
not only an effective way to draw users' attention to our Web site,
but also to sell our products."
Paid listings can get pricey, particularly for companies whose product
lines are so complex and fluid that they would have to buy listings
for a multitude of keywords and continually buy new ones to cover
For these companies especially, an alternative, paid inclusion, can
be an effective way to increase visibility on the Web -- with the
notable exception of Google's site, which doesn't offer paid inclusion.
In paid inclusion, a company pays a search engine for the right to
submit the entire content of its Web site, or selected pages, directly
to the search engine's database. Search engines regularly scour the
Internet for new and updated material to include in their databases,
which is where they look for matches when a search query is entered.
But the universe of Web pages is so vast -- about three billion pages
by some estimates -- that it can take some search engines weeks or
even months to discover a particular item on a business's Web site
and include it in the database. By eliminating the wait for a search
engine to find its material, a business using paid inclusion ensures
that everything on its site, or those pages it selects, will be entered
into the search engine's database more quickly, and thus be available
to match searches -- and more matches can mean more sales.
Sony Disc Manufacturing, a unit of Japan's Sony Corp. that makes compact
discs and offers related services, wanted an inexpensive, easy and
low-maintenance way to reach prospective customers, says Mary Beth
Walls, Sony Disc's marketing coordinator. After consulting with MoreVisibility.com
( www.morevisibility.com<http://www.morevisibility.com/> ),
Sony Disc decided in August to submit its Web pages for paid inclusion
to Inktomi Inc. (which acts as an agent for search engines including
MSN's and which was purchased by Yahoo in December), Ask Jeeves Inc.,
LookSmart Ltd. and Fast Search & Transfer ASA, a European company
that owns the search engine alltheweb.com ( www.alltheweb.com <http://www.alltheweb.com/>
). Sony Disc had a lot of detailed information it wanted to convey
to prospective customers, and it didn't want to buy a raft of keywords
through a paid-listings program.
Since starting with paid inclusion, Sony Disc has received an average
of 10 requests for price quotes and other information each month,
compared with two monthly requests before the program, Ms. Walls says.
Lippincott Williams & Wilkins chose paid inclusion for similar
reasons, says the medical publisher's Heather Walls, who is no relation
to Sony Disc's Mary Beth Walls. The publisher's wide range of products
couldn't easily be categorized under a few keywords, and it wanted
a way for search engines to draw on as much information from its Web
site as possible.
Traffic to Lippincott's Web site ( www.lww.com <http://www.lww.com/>
)has risen at least 15% since it started using paid inclusion, Ms.
Walls says. "There are literally millions of people out there
using the Internet," she notes. With paid inclusion, "you
have constant exposure."
The company also prefers this type of marketing to print promotions
because it can better gauge the return on its investment, she says.
Merchants pay an annual fee of about $20 to $40 per Web page for paid
inclusion, depending on the number of pages submitted, says Mr. Wetzler
of MoreVisibility.com. Companies with dozens of pages or more on their
sites might choose the pay-per-click option, which ranges from about
15 cents to 40 cents every time a shopper clicks on the merchant's
Web site through the search engine.
Mr. Sullivan, the SearchEngineWatch.com editor, defines search-engineoptimization
as "the act of altering your site so that it may rank well for
particular terms" used in Web searches. The ideal is to get your
site to the top of the results of a Web search, or at least on the
first page of results.
One relatively easy change to make is to use simple terms or words
that everyone would understand to describe your products -- and therefore
be more likely to use in a search -- instead of industry jargon. Experts
suggest doing research on keyword use to find out what terms Internet
users are searching for, and then altering the content of your site
to make sure it appears as a match for more of those words.
Changes below the surface, in a Web site's software, also can help
the site achieve a higher listing in search results.
Firms like iProspect.com Inc., based in Arlington, Mass., help companies
optimize their Web sites. The firm ( www.iprospect.com<http://www.iprospect.com/>
) was hired last August by Aubuchon Hardware, a family-owned chain
of 135 hardware stores based in Westminster, Mass. The hardware company
had been paying for more than 4,000 keywords in paid listings. That
was working well, says William E. Aubuchon IV, the company's Web manager.
But the company wanted to be able to add products to its online store
and alert prospective customers of their availability through search
results without having to buy more keywords through paid listings.
Under iProspect's direction, Aubuchon began to highlight new products,
such as cordless drills, on its Web pages when they were added, to
ensure that search engines picked them up.
Two months after it hired iProspect, Aubuchon Hardware's online sales
volume had more than doubled.
One important advantage of this approach is that it allows companies
to show up, and prominently, in Google's results. Since Google doesn't
have a paid-inclusion program, the only options open to companies
that want to ensure display in Google's search results are search-engine
optimization or paid listings. A word of warning, though: Google will
eliminate from its database companies that it believes are using unscrupulous
methods to improve their rankings in search results. So familiarize
yourself with Google's standards (spelled out at www.google.com/webmasters/guidelines.html
<http://www.google.com/webmasters/guidelines.html> ) and be
sure your strategy complies with them.
Search-engine optimization also has had to overcome some bad publicity
from disgruntled customers who wondered what they got out of it. "It
was thought of as more of a black art," acknowledges Jill Whalen,
owner of HighRankings.com, an Ashland, Mass., search-engine optimization
firm (www.highrankings.com <http://www.highrankings.com/> ).
Search-engine optimizers and marketers advise merchants considering
this option to take the same precautions they would with any service
provider: Ask for references and interview them. Spend time interviewing
the firm you want to hire, to understand what it offers and to communicate
what your exp ectations are.
Costs vary depending on what type of firm is hired and the complexity
of the customer's Web site. Some SEO firms charge an up-front fee
and then a monthly fee to maintain the site and its status in the
search-engine listings. For instance, Ms. Whalen says she charges
a minimum of $7,500 to revamp a site. She'll charge $100 a month to
monitor a client's Web site afterward. Some SEO companies charge a
flat fee to rework a site and monitor it for one year.
Ms. Whalen advises clients to pay for a Web site report, sometimes
called a site analysis, if they're considering hiring an SEO firm.
She charges $2,000 for a site report. It tells Web site owners what
they can do to make the site more likely to be found by search engines
such as Google. That gives customers the option of doing the work
themselves or hiring some help.
Ms. Mangalindan is a staff reporter in The Wall Street Journal's San