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SEM Survey Highlights 6 Opportunities for Advertisers

Internet Retailer’s SEM Survey (August, 2011) gives us numerous clues as to how paid search programs can be expanded, optimized and enhanced to produce more sales (or leads), revenues and profits.

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Number of Keywords

The IR survey revealed that over 33% of respondents had less than 500 keywords, with 14.6% having less than 100. And almost 45% had less than 1,000 keywords.

Analysis: there aren’t many situations where you can’t develop bigger lists or don’t need such small keyword lists. Even a company with just one product or service should be able to build out more keywords. As we’ve written in our Long Tail of Search Green Paper (http://D2C.acquirgy.net), keywords in the long tail usually have higher conversion rates, lower click costs and are generally more profitable. If you’re in the 45% group with less than 1,000 keywords, this is potentially an area for immediate enhancement.

Attribution of Sales
On a real positive note, 41% of the respondents indicated that more than 50% of their sales are a result of SEM & SEO. On the other end, 27.3% said that their online sales did not account for more than 20% of their total sales.

Analysis: while we’ve all seen the emergence of social media, for our clients, search is still king. If you’re in the < 20% group, have you recently analyzed every aspect of your search program to determine why this number is not higher? Have you also analyzed the profitability of the other channels that contribute to your online sales to see which is greater? We find that these kinds of exercises can often pay off in meaningful direction.

Conversion Rate

This was a real eye-opener. The specific question was “What percent of shoppers who come to your site through your paid search program make a purchase?” There is a real “have/have not” thing going on here. 39% report their conversion rate is less than 2%, while 20% report a 5% or better rate, with the real good ones (4.3%) converting at 10% or more.

Analysis: there are numerous factors that contribute to conversion rate, some that an advertiser can control, and others that can’t be controlled. Advertisers can increase conversions by looking at what we call “the search continuum” which is every step of the process, from keywords used, keyword copy, call to action, offer, landing page design and order path. When was the last time you examined all of these links to determine if you have any weak links that are slowing down sales? Maybe now is the time to do an audit of your search continuum to see what you uncover.

Conversion Rate Over Time

The survey reported that 51.4% of advertisers said their SEM conversion rate increased over the past year, while 16.8% said it decreased. Like the last section, an audit will most likely help you uncover ways to increase conversion rate in the year ahead.

Online Marketing Budget Spent on Search

41.4% of the advertisers indicated that less than 20% of their budget is spent on search, including paid and organic. Of course, that means than 80% or more is being spent in other online venues. Digging a little deeper in to the numbers, 42.6% spend more than 50% of their online budget on search.

Analysis: if you’re in the former group, it would make sense to review all metrics for all online marketing tactics and determine if dollars are being correctly allocated. Often times companies take dollars away from search in favor of other tactics, which may be eroding sales and profits.

Conversion Rate by Search Engine

2/3 of the respondents indicated that Google yields the highest conversion rate, with 1/3 indicating Bing.
Analysis: with the analytics tools out there today, it is pretty easy to see the conversion rate by engine, for each keyword or ad group. We find that some keywords/ad groups convert better on Google, and others better on Bing. The trick – and this is where to spend your time – is to determine the right mix of Google and Bing for all of your keywords and ad groups. Unless you’ve maxed out your spend on both, shifting dollars between the two engines based on very granular conversion rates makes a lot of sense.

Conclusion

Our analysts and managers spend a lot of time looking at trends and reviewing daily reports to find pockets of opportunity. Whether your manage search in-house or use an agency, make sure that the analysis we’ve presented in this Executive Brief is a staple of your SEM program.

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