Playing the Search-Engine Game

By Mylene Mangalindan

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 year.

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 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 game:

Paid Listings

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. ( <> ), 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. (<> ) 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.


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, 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 career.

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 ( <> ) 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 executive director.

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 Inclusion

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 their inventory.

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 (<> ), 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 ( <> ). 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 ( <> )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 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.

Search-Engine Optimization

Mr. Sullivan, the 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 Inc., based in Arlington, Mass., help companies optimize their Web sites. The firm (<> ) 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 <> ) 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, an Ashland, Mass., search-engine optimization firm ( <> ).

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 Francisco bureau.

Write to Mylene Mangalindan at [email protected]


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