This session was led by Niki Scevak, who was on the panel earlier about the online advertising and search forecasts. He went into explaining that ROI is very important to a search marketer. Sixty nine percent of search marketers plan to spend more money on search engine marketing then in 2003. Niki explained that only one of four search marketers bids and measures intelligently. They are look more at profit contribution, but not sales. The differences between unsophisticated and sophisticated search marketers are quite large. Sophisticated search marketers annually on average can spend $100,000 on a search marketing for the year. They are able to do this because they have systems in place that will enable them to spend rationally and with results.
Niki describes how search advertising took off from initial banner advertising, in terms of cost per impressions and cost per click. Sophisticates he says are happier with SEM, and because so will increase spending by more each year. He relates that sophisticates have systems in place that enable them to do this. There levels of spending depend upon what they know.
There is a life cycle for search marketers. On the first level is the one that entered in as unsophisticated and have opened an account and bid on a few terms, for example 20. He may have looked at looked at his log files and seen how much search marketing contributes to his traffic. The next level is the person that builds confidence in search marketing, and they go the next step by investing in more web analytics to track the campaigns. They see the potential and are now able to somewhat track the process. However do they know what they should be advertising on? Should I be on both Google and Yahoo, or just one? Additionally they may wonder how broad match or some of the tools offered by the search engines can help them. Niki mentions that search distribution of search marketers depends on how quickly they can measure the effectiveness of these engines. Using more advanced web analytics will help them decide whether they want to use both Overture and Google, and go into second and third tier engine space. The next level of the search marketer is more sophisticated but realizes that there is a fork in the road. They are realizing that spending is increasing and CPC rates are going up in more competitive areas, it will be necessary to analyze other means for which to optimize the campaign. This includes landing pages, and how the website that is being used. As the search marketer becomes more intelligent in their spending and management, they will grow more in the current market then they will increase in more spending or more search engines. Its about optimizing the current situation before moving on to the next. Additional factors in the development of a search marketer include the adoption of new technologies.
Niki states the obvious in my opinion, but he goes on to say the bidding on more engines increases search clicks. There appears to be a certain testing time in which unsophisticated search marketers test one search engine before moving on to the next. He gaves some interesting stats in that sophisticates use Google 96% and Overture 91% of the time, as compared to Findwhat 44% percent of the time. Sophisticated search marketers use the second tier search engines way more than unsophisticated. So this means if you are considering using Findwhat or similar search engines, you are giving up more clicks to those that that are more sophisticated than you.
Niki concluded with some key points that marketers must achieve sophistication in bid strategy and measurement to survive. They will need to concentrate on improving web site efficiency to thrive.
Good session, the room is pretty packed for a session right after lunch. Some last points, they mentioned that there is estimated to be about 100,000 search marketers in the US. This number is based on a 538,000 people survey. They did fail to mention the variations of search marketing, such as one that works as an affiliate marketer. However someone in the audience brought it up and Gary Stein did talk a bit on some of the early results from an affiliate survey they are just finishing. He mentions that to create a successful affiliate program requires two things; one is to create a competitive commission structure, and two to offer a data feed of products. I really look forward to seeing some results from