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Search Engine Marketing Explained

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Posted February 11, 2005 By James Maguire     Feedback

A primer for buying keyword terms on search engines, which is considered by many e-tailers to be an indispensable part of customer building.

Buying keyword search terms on popular search engines like Google and Yahoo has become an important part — perhaps the most critical part — of the marketing strategy of today's e-tailers. This common practice, in which merchants pay search engines to present a link to their site to users who search for a given term, is a hugely successful sales driver.

Yet for many e-tailers, learning the most effective methods for purchasing search terms is an expensive trial and error proposition. What are the best techniques? Which engines should I favor? What pitfalls should I avoid? These are all frequently asked questions, along with the big one: how do I get the most bang for my buck?

To shed light on the all-important task of navigating search engine buys, E-Commerce Guide spoke with Brad Fallon, who runs InstantSEOexpert author of a primer on search engine optimization, and Brad Fallon, who writes a well-trafficked blog about search engine marketing (SEM). Additionally, Fallon owns and operates MyWeddingFavors, which enables him to hone his SEM techniques using a real (and thriving) online store.

Step One: Choose Your Words
Planning your search term buy requires a bit of research. What terms are the most advantageous for you to spend your ad dollars on?

To find the best keywords for your business, look in your log files to see what search terms shoppers are already using to find you. But you should also go beyond this list in choosing your terms. "The great thing about paid search is that you can draw people to your site who haven't found your site in the natural [unpaid] search results," Fallon notes.

To find additional words to buy, look in Word Tracker and Overture Keyword Selector.

The Overture tool is a favorite among merchants. If there's a word or phrase you think shoppers might use to search for your product, enter it on the Overture Keyword Selector front page. The results will tell you how that word has been used in popular searches. If you enter "toys," it will come back with a long list: "dinosaur toys," "educational toys," "electronic toys" and so forth.

However, Fallon notes, don't search for the broad, high profile words that relate to your site. If you sell clothing, forget about buying "clothing" — such a popular term will be wildly expensive. The Overture tool indicates that there were 302,691 searches for "clothing" in December 2004. In contrast, Overture reveals that there were only 9,904 searches for "western clothing" and just 7,874 searches for "infant clothing." These more specific terms will be far less expensive per click than "clothing" — and are also far more effective at attracting the customers you want.

"The best way to get the best deals is to bid as exact matches on the most specific, esoteric keywords, because those will be the cheapest," Fallon says.

Step Two: The Need-to-Know Formula
Once you have your keywords chosen, you need to bid for them on Google, Yahoo or other search engines. How much should you offer to pay? There's a formula to help with this decision.

"If you consider that a standard e-commerce store converts one percent of visitors into sales, and if you bid 10 cents a click, then the one percent conversion rate means you're paying $10 per sale," Fallon explains. In other words, if a merchant is making more than $10 on each purchase, they can safely bid 10 cents a click. If they're making more, they can bid correspondingly higher.

"One of the things that's been proven over and over is that people are more likely to click on ads that contain the keywords that they just typed in."

—Brad Fallon
Search engine marketing expert

The formula, of course, stays constant: five cents a click means a merchant pays $5 per sale (assuming a one percent conversion rate), 35 cents a click means a merchant pays $35 per sale.

Armed with this knowledge, now is the time to go to the search engines and purchase a passel of keywords.

"Most people do not bid on enough keywords," Fallon says. "A lot of people just bid on the basic terms, and they don't drill down far enough to words that might get only one search a day. If you have lots of keywords that only have a few searches, and add them all together, it can be a significant amount." The advantage is that these rarely used terms are dirt cheap by comparison to common terms.

And don't be timid, Fallon says: "You want to bid on thousands of terms."

"The trick is to put in lots of keywords, and lots of categories, so you can track them all individually and be able to have different ads for each keyword," Fallon says. This doesn't entail spending the family fortune. The search engines allow merchants to place a cap on their keyword buy, say, a $100 cap or a $1500 cap. Once your account reaches a limit you set, your ad is no longer displayed in the search results.

"On Google, for example, you can set a daily limit, and it will spread your ads out throughout the day and you only spend that amount," Fallon notes.

Matching Options
It's essential that merchants are aware of the different matching options that search engines offer. Google, for example, offers broad match, phrase match, and exact match.

The options work as follows:

Broad match — your word will come up in a variety of broad phrases, regardless if searchers enter it. If you buy "wedding favors" but someone searches for "inexpensive wedding favors" or "favors for a wedding" your ad will still be displayed.

Phrase match — your phrase will come up in a variety of phrases, as long as your phrase is used in the search; "wedding favors" will come up if someone searches for "inexpensive wedding favors" but not if they search for "inexpensive favors for a wedding."

Exact match — your term "wedding favors" only comes up if someone searches specifically for "wedding favors."

Fallon recommends choosing all these options for all of your search terms, if possible. "If another person has your phrase for a broad match, and you have it for an exact match, your exact match will be favored — so your ads will display higher for less money," he says.

A common mistake made by many search term buyers when buying phrases is forgetting to exclude certain words.

"On Overture, when you chose your match options ["broad," "phrase," or "exact"] you might want to exclude the word 'free' or 'used' from your phrase," Fallon says.

Overture keyword tool
Experts suggest taking advantage of search engine keyword tools, like this one from Overture, to optimize search engine results and sales.

If you don't do this, you might be charged to attract shoppers who are looking for things you don't sell it. It's also a good idea to exclude terms with a double meaning that might cause errant clicks.

Key Points to Bear In Mind:

  • Smaller engines Lesser known search engines can offer big value, Fallon notes. Merchants most typically use Google and Yahoo, yet there are a raft of second tier engines. Of the small engines, Fallon recommends Canoodle, Looksmart, and Findwhat.

    The second tier search engines "don't get as much traffic, but if you add them together it can be a decent amount, and it can be a lot less expensive because most merchants don't compete in those markets," he says.

    "On Google, the minimum is five cents per click and on Overture it's 10 cents per click, and on some of the second-tier search engines it can be as little as a penny," Fallon notes.

  • Where's it show up? Fallon warns merchants to specify where their paid search terms are displayed, whether nationally or internationally. "On Google, do you want your ads to display in just the United States, or the U.S. and Canada? A common mistake is to have them display all over the world — you get extra traffic that wastes money on people not in your target market."

  • Dynamic Insertion A valuable tool that many merchants overlook is called Dynamic Keyword Insertion. Using this tool, a merchant selects a phrase that the search engine inserts into the headline of an ad that's presented in response to a search for that term. So the very phrase that the user just typed in is presented to them with a link to that merchant's site.

    "One of the things that's been proven over and over is that people are more likely to click on ads that contain the keywords that they just typed in," Fallon notes. "If the user typed in 'tennis racket' and they see a whole bunch of tennis racket ads, but one has the [search term] in the title, they're much more likely to click on that ad."

  • Link to the most advantageous page In many cases, it's a "huge mistake" for people to link their search engine ads to their front page, Fallon notes. Instead, merchants should link to the specific page that enables a shopper to buy that product. Don't make them hunt and click if they're ready to purchase.

  • Researching vs. Buying Often, when shoppers type in one or two keywords, they're still researching, Fallon says. But when they type in a longer, more specific phrase, they're ready to buy. This makes phrases of three or more words that point to your site highly effective.

    "If someone types in 'wedding favors' they might be researching, but if they type in 'pink wedding cake candle favor,' they're more likely to be buying," he notes. "If you have a limited budget, spend your money on the people who are more likely to be buying."

The Real Secret
It's not enough to chose the right words and bid effectively. Merchants who want to optimize their paid search budget must track the success of their efforts. "You can track the individual keyword using the tools that come with Overture or Google," Fallon notes. "You can specifically tell how much you spent on the keyword, how many clicks you got, and how many conversions you got."

The search engines, for example, give merchants a small piece of Javascript code that merchants post on their site's checkout page. "When someone successfully converts, Overture or Google will know it, and they track that for you," says Fallon.

Going forward, this information can be used to determine bid level: the return on investment for each keyword allows a merchant to know how high she can profitably bid on that term in the future.

However, "You'd be surprised how many people set up and run campaigns and don't even do the conversion tracking," Fallon says. Part of the problem is the very success of search engine marketing. Once merchants start using paid search, "they get direct traffic full of people looking for what they're selling and the find they're making sales, that they leave it at that."

Ideally, "You want to at least look at [your keyword account] once a day," Fallon says. This is particularly true in the beginning of a campaign. Certainly, he concedes, if a campaign is established and the spending caps are established, it might not require this close attention.

However, "the more you pay attention, the better return on investment you can get."

Adapted from

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