Commercial search engines and online marketing

When I worked for a small-town weekly newspaper, I did a little bit of everything. I wrote local news and obits on a heavy black manual typewriter; I typeset the paper on an ancient hot type machine; I swept the copy room floor; and I sold ads. Sometimes I would make a sales call and some cheapskate would want an ad rate based on the number of customers that resulted from the ad. Of course, such a thing was unheard of. We had 10,000 subscribers; advertisers paid for 10,000 impressions. Today, the World Wide Web has turned that model upside down.

Internet-based marketing, like the Internet itself, is still a new field, and the folks in the advertising and publishing game are still trying to figure out a winning scheme. Because the medium is so unlike anything else, the standard rules of print and broadcast marketing don't apply.

The traditional banner ad remains the most often-used tool for promoting an e-commerce venture online, although usage is dropping.

According to the Internet Advertising Bureau, use of banners dropped to 40 percent from 46 percent between Q3 and Q4 2000. And what's more, the ad model has changed from one of CPM (cost per thousand impressions) to CPC (cost per click). Advertisers have driven this new pricing model, perhaps because of the abysmally low clickthrough-rate (about a quarter of a percent) delivered by banners.

The IAB showed that while traditional banners accounted for 40% of online ads, sponsorships accounted for 31%, classifieds 10%, referrals 5%, interstitials 5%, email 4%, rich media 2%, and keyword searches 2%.

Let's look at that last category. While marketers rarely use it, keyword searches may actually be the key to e-commerce's salvation.

PricewaterhouseCoopers shows that 77 percent of online shoppers use a search engine to find what they want to buy.

By keyword search marketing, I'm not talking about placing a banner ad on top of a search engine portal. A banner ad on a search engine portal is just as ineffective as a banner ad anywhere else. The key here is in driving the results of individual consumer searches. A hit list on a search engine is decidedly unglamorous. It's nothing more than a list of links with a string of text attached to each one. There are no Flash presentations, no dancing logos, and no Java applets. Just text, and not even formatted text at that. Yet, if your offering happens to appear in the first page of results on a consumer's search, you'll get more clickthroughs than any banner ad could possibly deliver.

Commercial search engines like Search123 (www.search123.com) let you, as a merchant, bid against other merchants for the highest position on a keyword search results page. Search123 isn't a search portal site itself, but a company that places categorized search pages on other high-traffic sites. When a consumer clicks on a category or does a keyword search on one of those sites, your offering will appear if you have linked it to that specific keyword. Here's how it works: you as an e-commerce operator bid on keywords, and your bid relative to the bids of other merchants will determine where on the hit list your results will be displayed. For instance, if you sell Marilyn Monroe coffee mugs, you bid, say, a nickel a click on the keyword phrases "Marilyn Monroe" and "coffee mug." If nobody else bids more than a nickel, when a consumer searches on one of those phrases, your offering shows up on top of the list. Of course, there are utilities for automatic bidding, and you can set limits on how much you want to bid and how much you want to spend on your campaign.

It turns out that those cheapskates I called on years ago weren't cheapskates after all, but the harbingers of a whole new advertising model that continues to change the face of e-commerce.

Join the newsletter!

Error: Please check your email address.

More about Internet Advertising BureauPricewaterhouseCoopers

Show Comments

Market Place