How Search Engines Impact Online Sales!

by Joseph M. Holcomb

I really had to sit down and mull the facts released in a joint study by comScore Networks and DoubleClick. The ‘Understanding Online Buyer Search Actvity’ report studied 1.5 million internet users purchase decisions as related to 30 different web sites. It followed users over 12 weeks time acquiring data on how searchers made their buying decisions online.

While many advanced marketers may find this information to be old news they should be embracing the release of this data by DoubleClick and comScore. It’s significant research that can help to enhance the visibility of search marketing in general (both organic optimization and paid placement) and helps to dispel common myths involved in online search marketing. This research got very little press in the search marketing community today and I’m kind of upset by that.

This is research that helps pave the way for new online advertisers to completely understand the metrics behind why search engine marketing is absolutely vital to the success of their web site(s).

These companies should be applauded by search marketers for proving some of the assumptions we have guessed at for the last few years.

Three things stand out in this research that are significant findings:

More than 50% of online buying decisions begin on a search engine.
Using “generic search terms” is extremely important for search marketing.
Contrary to popular belief, one click will never equal one sale.

Of course there are more stats like 75% of all searches for travel related information result in an eventual sale. In other words if you have a travel related site and you are not focusing your online advertising dollars on web search then you are just plain crazy. Still, I want to elaborate on the three notes above.

50% or more of ALL online buying decisions begin with a web search.

Search marketers have known this for a long time. The reason that this is a significant fact is because no one has ever produced a solid number to emphasize the impact that search engine usage has on the buying process. It is a powerful statement to be able to say to potential search advertisers, “50% of all your sales are going to emanate from web search”. If you are not listed on the engines 24/7 you are killing your own sales revenue and handing business directly to your competitor.

What the study reveals is that searchers look for information on their purchases over a period of weeks before they make their buying decision. They repeatedly return to search results looking for valid information on their purchase. If your web site is not listed constantly in a prominent position on the 1st page of search results you might as well pack it in and go home. You’re getting beaten badly by every competitor ahead of you in the search results not to mention losing a major branding opportunity on every search.

In other words, if you’re doing pay per click, maintain your bid in one of the top 3 to 5 positions on the first page of search results ALL THE TIME, if possible. Turn on your auto-charge account at the pay per click provider and set a daily budget cap. Better yet figure out what times of day generate the most sales on your web site and implement a day parting program for your ads. (Day parting is when you time your search ads only to appear during certain hours of the day). 

If it’s organic optimization techniques then shoot to be on the first page of search results. Searches for “web hosting” will count for far more brand impact and sales than “cheap web hosting in Louisville Kentucky". Frankly if you’re ranking well for long search queries like that one then you need to fire the guy/gal working on your organic search optimization program. Although it’s great to say, YAY! We’re ranked #1 on the phrase “cow chips and moose patties” it sure as hell isn’t going to do much for your search volume and it will not contribute to your sales growth. Yes, it is important but it is also extremely useless to focus effort on optimizing for long phrases like that.

Using “generic search terms” is extremely important in search marketing.

Generic search terms heavily dominate the buyers “search vocabulary". There has been a big movement (especially prominent among pay per click search advertisers) that believes bidding on “generic” search terms is a waste of money and if you do bid on those terms you should maintain the lowest possible bid price. If you are one of those advertisers/search marketers that believes in this idea...guess what? You’re absolutely dead WRONG.

This study finds that searchers prefer to use generic search terms up until very late in the buying decision. Although there is some lift for brand specific searches directly before purchase, the impact of those brand specific searches (i.e. “the brand name search” as I like to call it) is minimal compared to generic terms. In my opinion, I would consider all brand name searches occurring during subsequent searches (by the same user) to be a direct result of the branding impact of search marketing in general.

Adapt to using generic terms and use them to your competitive advantage. Still you must account for your cost on generic terms. The search volume is much higher on generic terms which means a greatly increased number of clicks to your site and more money spent on your pay per click ads. How do you manage ad spend for search then?

One click can NEVER equal one sale.

Common misconception among new search marketers is that, “I got 30 trillion clicks and not one sale". I see this all the time in the search engine marketing forums. Especially when people complain about pay per click traffic.

Look here’s a slice of reality. Searchers will come to your web site many times over a period of weeks before they decide to buy from you. It’s a part of general Internet user behavior. Many people are still leery about online shopping. It is becoming more acceptable and mainstream as each day passes but you need to realize that the clicks you got today might result in sales weeks, or even months from now. If you are not tracking that users multiple visits to your web site somehow then how are you ever going to account for the conversions and calculate the right ROI?

Every search marketer needs to justify his or her ROI. They need to track sales to search engine traffic over a period of months, not days or hours. One click does not, will not, and will never be, equal to one sale. If it worked that way I would retire tomorrow and leave the country for a tropical destination never to be seen or heard from again!

Track everything over a long period of time. Implement cookie tracking that can tag the IP and original visit date of your web site’s visitors, as well as, the information on how that user was referred. Re-evaluate your search marketing on a monthly basis and assuming you are optimizing your titles, descriptions, and landing pages properly you should see your ROI steadily increase over time.

Lastly, to get the full benefit of understanding your core metrics for search marketing, adjust your ROI calculations based on the average number of visits to your web site by the same user. How many visits (by the same user) on average does it take for your web site to convert a sale? You can build this profile and see the trend over time. Soon you’ll understand how some companies can spend thousands of dollars every day on search marketing/advertising.

They have figured out how to calculate their ROI properly:

Average # of Visits By One User Before A Sale = Total Clicks Needed For A Sale
# Of Clicks x Cost Per Click = Ad Spend Needed For A Sale
Cost of Product + Ad Spend = Total Cost Per Sale (Figure in whatever else is appropriate here based on your costs)
Profit Per Sale - Cost Per Sale = ROI +/-

With the formula above you should be able to adequately figure out how much you can spend (even on a keyword by keyword basis) on pay per click advertising and still get a positive return on your advertising investment. As long as you are making $0.01 more than you spend on advertising then I consider that a success. Hey, we all want to do far better than that but it sure beats losing money on advertising.

Now go download the study above and read it.


About the Author: Joe Holcomb is a seven year veteran online marketing and web site development. He currently serves as Senior Vice President of Marketing for meta search engine, BlowSearch. His personal web site and weblog can be found at AGoToGuy.com.

 

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