The Price of Search Engine Marketing

The Price of Search Engine Marketing: Hyper-Competition and Additional Strategies

Since Jakob Nielsen released his controversial article, Search Engines as Leeches on the Web, earlier this month, many analysts and internet marketers have responded with numerous opposing reactions. From complete agreement to absolute doubt, Nielsen’s article has succeeded in compelling industry professionals to evaluate their search engine promotional strategies with much more vigilance.

Neilsen presents a valid concern that “search engines are sucking out too much of the Web's value, acting as leeches on companies that create the very source materials the search engines index.” He asserts that – due to heavy internet competition among an overabundant amount of advertisers - search engines are doing very little work and setting themselves up to be the ultimate beneficiary of the profits. As competition in the online market becomes more aggressive and saturated, search engines are benefiting from the rapid rise of keyword prices. Companies are so intently focused on battling each other that they are increasing their spending in order to retain their pay-per-click rankings. And as spending increases, so do keyword prices; all the while with search engines effortlessly keeping a distance and reaping the benefits of this hyper-competition.

In a recent survey conducted by the Search Engine Marketing Professional Organization (SEMPO), an analysis of the state of search engine marketing estimated that prices of common keywords rose by “20% or more” in 2005 alone. And as the swarm of advertisers continues to grow and competition multiplies, it is expected that the prices for top positions will continue to grow at an average of 5 – 10% per year. Projections indicate that prices for some top positions will escalate at 20 – 30%.

However, advertisers can prevent search engines from exploiting them by utilizing effective methods of assessing accurate and true values of the traffic they receive. From better conversion tracking to greater understanding of sales cycles, advertisers have the capability to generate well-targeted and effective strategies.

There are two inherent traps that companies fall into when they begin their search engine marketing campaign. First, they become engrossed in pay-per-click and ignore organic search. This strategy quickly becomes an endless cycle of continuous bid and conversion rate increases as competitors vie for the top rankings. What companies need to concentrate on is not to achieve that “throne” at the top of the pyramid, but to focus more on conversion rates and what they can actually afford to bid, and then budget accordingly. If businesses spent their energies on ensuring that they bid with more caution, the realm of bidding would eventually level out.

Second, the challenges of maintaining a pay-per-click campaigns drive companies to rely on free search engine traffic and use in order to cut their budget and thereby focus on other forms of marketing. With this strategy, companies are creating significant risk for themselves due to the lack of diversity. Such an over-reliance on this method does not account for the fact that natural search results can fluctuate. Great rankings one day could be extinguished the next. Hence, without some other form of web marketing in place, the online presence of your business can promptly expire.

It is, then, important for companies to stop focusing on the sole objective of simply driving traffic to their sites. What companies need in order to outlast the competition are tactics directed at customer retention and loyalty, rather than simply attracting new visitors. The point is to ensure that consumers will go to your site without the help of a search engine; that they will think of your company first to fulfill their needs. Search traffic does not become buyers, but repeat customers and brand advocates do. A positive customer experience has greater potential to lead to repeat purchases and the development of new customers through referrals.

Other marketing efforts that foster customer retention are: Updated Email Newsletters, Request Marketing (where your task is to identify consumers’ needs, and to notify them when a requested service or product is available), Affiliate Programs (alliances where other sites promote your services to their users, and vice versa), Discussion Groups and Other Community Features related to your industry, and Advertising your URL on physical products.

Search engine marketing is a significant aspect of increasing your company’s online presence, and it should not be abandoned as a marketing method. However, there are snares that require aversion to ensure a maximally effective online campaign. The realm of online marketing requires a diversification of strategies whose goals are not to simply attract a new visitor with a flashy ad, but to keep these consumers and to successfully build a loyal customer base.

Sources:

http://www.useit.com/alertbox/search_engines.html

http://www.clickz.com/news/article.php/3576281