The idea of paid internet search results as a marketing technique has come under fire from untrusting and dissatisfied consumers, while marketers have been reporting successful results and increasing investments in pay-per-click and paid-for listings.
According to the 2007 Search Attitudes Report from search conversion agency Tamar, based on a survey by Tickbox.net, consumers are already predicting the decline of paid search and the rise of natural search (in which no results are paid-for).
Consumer lack trust
Nine out of ten British consumers surveyed for Tamar said they prefer natural search results when shopping online, and seven out of ten said they will abandon a purchase if search results include negative comments about the brand in question. Consumers generally lack trust in paid search results, and are turning mainly to natural search results when making their purchase decisions online.
But the problem for marketers is more critical: Brands are actually placing themselves at increasing risk from negative comments appearing in natural search results. The report suggests that brands can help to protect themselves from this negative influence by implementing online reputation management strategies.
Out with the sponsored link
British consumers don't trust sponsored links, either. The survey found that almost half (43%) are now aware of the difference between natural and paid-for search results, and 92% prefer using natural search results when looking for a product or service.
However, the level of awareness is a function of age and generation. More than half (55%) of 16-24 year olds are aware of the difference, compared with 51% of the 25-34 year old age group. Not surprisingly the figure falls to 32% for consumers aged 55 and over.
Drivers of natural search
When asked why they preferred natural search results to sponsored links, women trust natural search results to be the most relevant while men were more cynical about the degree to which paid search results are manipulated by keyword bidding.
Cynicism over the independence of sponsored links increases with the consumer's age, and there is a significant contrast in awareness between the genders: 53% of men claim to know the difference between paid and natural search links, compared with only 39% of women.
Where paid search works
Sponsored links are most effective when targeting 16-24 year olds, but still less than one in eight (12%) prefer to click on them instead of a natural search results. By contrast, brands are better served by using natural search engine optimisation when targeting those aged 55+. This group is the most sceptical about clicking on sponsored links, with 94% saying they would always prefer using natural results. The 25-34 year old audience is equally cautious, with 92% preferring natural search results.
According to Tamar director Neil McCarthy, "Consumers are wising up to how sponsored links work and as the cost of paid search continues to grow, so does consumer scepticism. Online marketers need to take a joined-up approach to their online marketing and avoid over-reliance on paid-search. The most effective online campaigns strike a balance between paid and natural search."
So is paid search the marketer's friend?
According to a report by E-Consultancy and Neutralise, marketers are still keen to turn to paid search techniques to drive online sales and customer acquisition, with 60% of the companies surveyed saying they were planning to increase their paid search marketing budgets in the next 12 months.
The UK Search Engine Marketing Report 2007 surveyed more than 700 internet marketers during March, and found that while 60% of British companies are increasing their budget for paid search, 62% will also be making more investment in search engine optimisation (SEO) to help increase natural search engine visibility.
Spending it with Google
More than half (56%) of respondents said that their company spends more than 10,000 (approx. US$19,900) each year on paid search (e.g. sponsored listings). One-quarter (25%) reported spending more than 100,000 each year. The overwhelming consensus among respondents was that Google is the best search engine across all five criteria examined (return on investment, quality of traffic, volume of traffic, customer service, and pay-per-click management tools).
At the same time, most respondents (80%) who expressed a preference said they rated Google as the best search engine for return on investment, compared to 11% for MSN and 8% for Yahoo!. However, the survey results were not all good news for Google, as more than half (54%) also believe that Google has an unhealthy dominance of the UK's search engine marketplace, and 60% said that its dominance represented a risk of some sort.
Linus Gregoriadis, E-Consultancy's head of research, explained: "Google's dominance in the marketplace is seen as a two-edged sword. On the one hand, the fact that Google generates such a high proportion of the search volume means that many advertisers feel they can focus their efforts on this search engine with good returns. On the other hand, an over-reliance on Google is seen as a potential risk to businesses. Many advertisers would like to see more competition from the other search engines."
Click... and the cost goes up
Another problem for many companies is rising click costs. Almost half (44%) of UK company search marketers said this was significantly impacting their return on investment from search, compared half that number (22%) who said that this was not an issue.
Despite this, for paid search, half of respondents who know their return on investment said they are getting returns in excess of 300%, and just less than one-quarter (22%) reported an ROI of 500% or more. For standard SEO techniques, the returns can be even greater. Two thirds of respondents (68%) are getting an ROI in excess of 300%, while 40% are getting a return of 500% or more.
Lack of metrics
But despite this success, the survey also revealed a lack of measurement - particularly in terms of ROI - as 43% of company search marketers said they do not know their ROI from paid search, and 61% do not know their ROI from SEO. More worryingly, the number of marketers who are not effectively tracking their ROI from search engine marketing outweighs the number of people who are doing so, both for paid search and for SEO.
Lucy Cokes, managing director for search agency Neutralise, said: "It is very reassuring seeing the continued positive attitudes toward search engine marketing in the UK and the great returns companies are achieving, and also the increased investment both paid and organic search will get. But it is clear there is still progress to be made in terms of tracking and analysis, and quantifying the return on investment against other marketing methods."
Other key findings from the report included:
- Just under half of respondents (48%) said that their companies carry out paid search exclusively in-house. Some 57% of companies conduct their SEO exclusively in-house.
- The four paid search services most commonly used by companies using agencies are keyword research (50%); ROI tracking and analysis (47%); automated bid management (33%); and landing page optimisation (31%).
- The four SEO agency services that companies are most likely to be using are position monitoring (41%); keyword research; (40%); search strategy definition (36%); and site technical audit (34%).
- On average, respondents spend 32% of their total marketing budget on online marketing, and 32% of that online marketing budget on search.
- On average, 61% of search engine marketing budget is spent on paid search and 33% is spent on SEO.
- Overall, respondents felt that standard search engine optimisation techniques are more important than pay-per-click, in terms of impact on the brand.
- Most respondents felt that a lack of internal resource is the biggest problem preventing success for both paid search and SEO techniques.
The full E-Consultancy/Neutralise report has been made available for free download from E-Consultancy's web site - click here.