Study: Search Listings Better at Branding, Sales Than Banners

Search listings perform better than banner ads in branding efforts, according to a new study Tuesday by the NPD Group, a market intelligence firm.

According the survey, conducted in late December and early January among 2,663 participants, search listings worked better than standard banners or button formats with regard to brand recall, favorable opinion rating and purchase origination.

In unaided recall, the top three search listings outperformed banners and tiles by three to one. In addition, more than twice as many participants reported a favorable overall opinion of companies in the top three search positions than those featured in banners and tiles.

Participants also reported that more of their online purchases originated from search listings than from banners. According to the findings, fifty-five percent of participants’ online purchases originated on sites found through search listings, compared to nine percent from sites originating from banner ads.

The findings are music to the ears of pay-for-performance search provider GoTo.com, which sponsored the study. And they also ring true for search players like Google, LookSmart, and Ask Jeeves, which have recently added or beefed-up efforts to attract advertisers to their search listing opportunities. Additionally, Santa Clara, Calif.-based Yahoo last week launched its own pay-for-placement program for companies in its “Shopping and Services” or “Business to Business” directory listings.

“Pay-for-performance search is the next frontier in online advertising,” said Ted Meisel, president and chief executive officer at Pasadena, Calif.-based GoTo. “This is great news for our advertisers seeking to establish or strengthen their online brand identity, and for our affiliates it validates the user awareness of search listings.”

Of course, GoTo’s proposition — which involves marketing the technology behind pay-for-placement search and e-commerce comparison shopping engines — receives a needed boost from the findings. The company last year rejiggered its model to focus on its higher-margin technology practice than its eponymous portal. Since then, it’s been working hard to win legitimacy for its services, positioning them to marketers as a way to boost awareness (and now, for branding) and to advertisers as a way to increase ad revenues.

Perhaps not coincidentally, GoTo releases its fourth-quarter and full-year 2000 earnings Tuesday after the market closes. Analysts are predicting the firm to post a quarterly loss of $0.38 per share, and a yearly loss of $1.04 per share, according to First Call/Thompson Financial consensus.

With continued losses expected for this and coming quarters, and with the stock valued at about a tenth of its 52-week high of $102, GoTo could use a victory. And increased attention for its services from marketers and big publishers — especially as its competition for the online marketing dollar struggles in the same difficult market — could be just the victory it needs.

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