Many big brands in the retail, travel, and financial services sectors are wasting a large part of their online marketing budget by failing to achieve the right balance between paid and natural search techniques, according to the '2007 Searching Sectors' report by search conversion agency Tamar.
The report looked into the paid and natural search strategies of the top twenty brands in each of the financial services, retail and travel sectors to determine how well each industry is using the search channel. The authors assessed each brand's presence on the first page of search rankings for a combination of 40+ popular generic and specific search terms for each sector.
All about conversions
"As the cost of paid search continues to rise, very few brands in each sector seem to have realised that a balanced paid and natural search strategy can drive down the overall cost of search marketing campaigns while also increasing conversion rates," explained Neil Jackson, search director for Tamar.
"As marketers continue to be pushed to demonstrate a greater return on investment they also need to understand that search marketing is not just about 'eyeballs' but actually converting those into leads and sales," Jackson said.
Don't pay generically
Leading financial services institutions have apparently failed to strike the right balance between paid and natural search and are paying dearly by bidding unnecessarily on generic search terms. These brands were found to be 50% more likely to be targeting generic search terms (such as 'insurance', 'mortgage', 'credit card' and 'bank account') via paid search, and paying up to 8.65 per click for 'mortgage' and 8.24 per click for 'insurance' rather than using natural search engine optimisation.
Jackson warned that generic search terms such as 'mortgage' are far less likely to generate high quality leads and sales than specific terms such as 'low interest, tracker, repayment mortgage', and yet financial services brands continue to pay for generic terms instead of tackling them more affordably with natural search techniques.
Follow the retail leader
Overall the financial services brands were found to be most the active in terms of search engine marketing, being 26% more likely to be using paid or natural search than retail brands, and 24% more likely than travel brands.
But the report tells two contrasting stories about retailers, with the savvier online retailers such as Amazon getting their approach right, while the rest of the sector still relies too heavily on paid search. As a sector, retail brands are three times less likely than financial services brands to be using paid search to bid on generic search terms such as 'clothes', 'books' and 'music', but this is also representative of the fact retailers are less active in search marketing than are financial services brands.
After the savviest online retailers (who are using a comprehensive search conversion approach) only 10% of the 20 retail brands examined appeared to be regularly on the first page of search results for the most popular retail search terms. Jackson commented: "The retail sector shows a dramatic split between super brands such as Amazon and Tesco whose presence is consistently high by using natural and paid search intelligently, to the rest of the sector whose profile on search is sporadic at best. The rest of the retail sector needs to catch up and follow the example of its leading brands."
Travel sector strategy
In contrast to the retail and financial services sectors, the report showed that travel brands are twice as good as financial services brands at using paid search to target potential customers with specific, high-conversion search terms such as 'economy flight to New York', 'winter sports Switzerland' and 'clubbing holiday Ibiza'.
However the lure of the high traffic generic terms such as 'cheap flights' continues to prove irresistible for travel brands who continue to spend up to 2 per click on such terms that are far less likely to convert into sales. In the travel sector, search listings are dominated by scheduled airlines and online travel agents. The study found that two out of three of the top brand listings on the first page of paid and natural search results belonged to either scheduled airlines or online travel providers.
Jackson concluded: "Travel brands, more than financial services and retailers, seem to understand when to use paid search to deliver the best conversion into sales. However, many of the leading travel brands continue to throw good money away by bidding on expensive generic keywords rather than harnessing the power of natural search."