Research Supports Aggressive SEM and SEO

Two recent research reports suggest search marketers should probably assign different success metrics to generic search words within campaigns. Research is validating that lagged and offline conversions represent a huge proportion of search traffic value. The data often support a different, measured ROI decision for generic keywords.

Lagged conversion, the fact some buyers behave differently in earlier stages of the buying cycle, is well-known. Marketers often extend cookie length or slightly bump up CPO/CPA targets to reflect this delayed purchase behavior. Another reason marketers use a small fudge factor is to reflect the PC on which research was performed may not be the same one on which the purchase was finalized. Some people search at work, then buy at home on a different computer. Some even email themselves a product link. Multi-channel marketers also have data indicating offline purchases are often preceded by online search behavior.

Two recent studies support continued growth in SEO and SEM’s importance as critical components of an integrated marketing plan. Both studies were conduced with comScore as the data source. The first, a joint Overture/comScore study, “The Role of Search in the Buying Cycle,” looks at both onl- and offline purchase behavior within the consumer electronics category. This study was primarily interested in the big picture buying cycle. The more recent DoubleClick-sponsored study, “Search Before the Purchase” looked at pre-purchase behavior in four completely different categories: apparel, computer hardware, sports/fitness, and travel.

Both studies recognized there was lagged conversion that needed to be more fully understood, but Overture’s study focused on online and offline purchase behavior, while DoubleClick’s study focuses on online behavior, but looks at extended lagged conversion and the behavior preceding that conversion. Another differentiator is the more recent DoubleClick study worked its way backward from a purchase. So by tracing back behavior prior to a purchase, one can determine the likely influencers of that purchase. Overture’s study worked from a “single start query” forward.

Key findings from DoubleClick’s study that correlate well with Overture’s are:

  1. Majority of searches are on generic keywords.

  2. Generic keywords often occur at the beginning of the buy cycle.
  3. While brands and trademark terms tend to occur later in the buy cycle, they don’t always occur, and may also be used early in the buy cycle.

Additional findings supporting a broad, well-diversified campaign are brought to light in DoubleClick’s study. The number of searches leading to the online purchase was 2.5 to 6 relevant searches during the 12-week period prior to purchase. Specific category results were as follows:

Category/Industry Relevant searches
Sports/fitness 2.5
Apparel 4.7
Computer Hardware 4.9
Travel 6.0

Findings which initially appear to differ but actually make complete sense include:

  1. Approximately 90 percent of search conversions occur offline (Overture).

  2. Half of all buyers search before their online purchase (DoubleClick). This varied by category, with a range of 46.3 percent searching before purchase for sports/fitness, and 73 percent for travel.

Because DoubleClick’s methodology worked backward from an online purchase, it could clearly identify a search occurred in half the cases. That’s a key finding, because only half of online-only buyers make decisions without search in the mix. What online retailer could argue with data like that when it comes to the power of search?

Overture’s study looked at specific searches, then followed up with searchers to determine if they purchased at all, online or off-. Apparently, the vast majority of searchers would never have made it into the DoubleClick study. Overture’s study indicates only 10 percent of people who made a purchase related to a search made that purchase online; most bought offline.

Together, these data would seem to indicate there’s still significant upside in keyword prices as marketers execute their own studies to validate the research for themselves. Plus, this data seems to indicate the prices a multi-channel retailer should be willing to pay must be higher than for an Internet pure play. This gives Best Buy, Walmart, Target and Circuit City an advantage over Buy.com, eBay and Amazon. The multi-channel retailer’s dollar goes further, as offline conversions multiply the effectiveness of their PPC search advertising.

As a PPC search marketer, how should you react to these eye-opening studies? You may want to conduct a study of your own to validate the lagged and offline conversions, then cluster your keywords based on what kind of multiplier should be added to your ROI targets. If you believe generic keywords influence conversion down the line or offline, for example, you could ratchet up the measurable ROI you accept for those keywords. Or, if you have an offline business and you have a holistic approach to growing the bottom line, you may want to shift more budget to SEM and SEO.

The variance between industry categories indicate you may want to use your own data to set specific ROI adjustment factors, but one thing is clear: some of your competition will likely escalate their bids as evidence of lagged and offline conversion mounts for their businesses.

Meet Kevin at Search Engine Strategies in New York City, February 28-March 3.

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