Ruth P. Stevens Articles and Columns: IM Press (Interactive Marketing Press)

August 2006

What's New in Search Engine Marketing

Search Engine Marketing (SEM) has been the "hottest of the hot" in the last few years, attracting the attention and the dollars of marketers-$13.5 billion, according to Piper Jaffray, the analyst firm. The research firm eMarketer says that search engine ad spending has tripled in size in the last 3 years, and is expected to grow 26.2% in 2006 versus 2005.

Well, why not? SEM is an excellent way to find qualified prospects. If someone is already searching for information about your category, it makes abundant sense to deliver them your offer. But as fast as it has grown, SEM is also beginning to mature. Competition is heating up, and marketers are looking for new ways to get maximum value from their investments.

So what's new in SEM? Three techniques are gaining traction.

Multi-word Search Engine Bidding

One way to refine your search engine marketing program is to use multi-term bidding. Instead of simply bidding on the most generic keyword, which can cost $25 or more per click, marketers are going for more specificity.

MarketMakers, a teleservices firm, for example, conducted a pay-per-click campaign on Yahoo! Search Marketing recently using a variety of search terms. MarketMakers's objective was to find new clients, companies who need help in their outbound telemarketing. The second-place bid for the term "outbound telemarketing" was $8.00, and represented 5,408 searches in the month of July, but the second-place bid for "telemarketing lead generation" was priced at just $3.30. This 3-word term comprised only 348 searches in the month, but the audience was more qualified-as well as cheaper to reach.

The campaign results? From April 1 to August 14, the keyword-driven ads generated over 650 clicks, from 65,000 impressions. Some of the keyword terms pulled click-through rates greater than 6%. From an ROI standpoint, MarketMakers has already closed one new piece of business representing 10 times the value of the entire pay-per-click campaign.

Vertical Search Engine Marketing

In the U.S., the big providers of SEM opportunity are Google's AdWords and Yahoo! Search Marketing, which together comprise about 70% of the market, according to Nielsen NetRatings. But there are plenty of other search engines out there, most of them devoted to market niches. For example, there are LookSmart, which delivers search in a variety of vertical categories, like music, sports, and food; SideStep (travel); and Marchex (shopping) in consumer markets. In B-to-B, there are directories like GlobalSpec (engineering); BitPipe (IT); goWholesale (retailing); ThomasNet (industrial); and Business.com (general business).

Keyword bidding with vertical search engines often results in a better ROI, because verticals deliver a more qualified prospect, who will better convert to a qualified lead. Keep in mind, however, that there no "free lunches" here. Your volume is going to be smaller and price per click is likely to be higher. For example, for the term "database software" a #1 ad position on Business.com is priced at $2.10 today, while it costs $1.25 on Google.

Automated keyword bidding
Companies who invest a lot in search engine marketing find, very quickly, that they cannot manage the process by hand. Consider how difficult it would be to keep track of the prices on hundreds, even thousands, of keywords. It's even harder if you are bidding on keywords that experience high volatility, with prices that change rapidly throughout the day. Examples would be in hot categories like travel, insurance or stocks.

This complexity has driven the development of new kinds of software, known as "bid management tools" intended to help search engine marketers.

The bid tools allow marketers to keep track of how much they have invested in each search engine, what words are most productive, and what to pay for each word. They also support various competitive strategies, such as:

Bid gap management: Identify gaps between your bid and those of your competitors, so you can save money but still receive clicks.
Day-part maximization: Determine the best time of day and day of the week, and adjust your spending accordingly.
Bid jamming: Set a maximum bid a single penny under the competitor's bid, to ensure that they pay the full amount (this only works in niche markets with a few players).

Some of the leading software providers are Atlas Search and BidTrack. Additional value comes from hiring full-service firms like Did-it.com, which have proprietary bid management software and also provide a team of experts to handle the bidding for you.

What is the secret to success in this fast-moving, competitive environment of SEM? Says Kevin Lee, founder of Did-it.com, "Act like a shark. Keep on swimming!"

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