SEM means search engine merchandising (not "marketing")
Several weeks ago, I was visiting a client who runs a large auto supply store. At the end of our meeting, he invited me to inspect his facilities and we walked into a large area that housed what appeared to be a fully equipped auto supply store, with hundreds of products on its fully stocked shelves.
This "store," however, wasn't a real operating store, but a training facility in which the client's staff learned the art and science of merchandising. After we had moved into the center of the gleaming "store," the client stopped me in front of a particular display and asked me what I saw.
"I see shelves with cans of motor oil on them."
"Look harder," said my client.
"OK," I said. "I can see that you've put the expensive motor oil at eye level, the medium-grade oil on the middle shelves, and the cheapest oil at the bottom."
"Look even harder," said the client. I stared and stared, but gave up after about a minute.
"Look at the handles on the cans," he said. And sure enough, the handles of all the expensive motor oil cans had been turned around so that they faced anyone walking down the aisle.
"Customers can easily pick the expensive oil from the shelves with just one hand," he said. "The other brands require either two hands or make the customer stoop down. That, my friend, is how we move $30 million of this premium oil through our stores each month."
The only thing I could say was "Wow," because this gentleman thoroughly understood how big a difference scientific merchandising meant to his company's bottom line.
As I was driving back from this meeting, it occurred to me that the term "search engine marketing" is a complete misnomer. The term "marketing," even when broadly defined, describes the efforts used by businesses or individuals to attract new business, new customers and new sales through demand stimulation. The term "merchandising," on the other hand, pertains to those methods used by merchants to stimulate high-value purchases once a customer is already in the store, and it describes more accurately what search engine "marketing" people actually do.
Think about it for a moment. Searchers, once they've gone to a search engine and typed in a set of keywords describing a product or service offered by your company, are already "in your store." Perhaps they arrived because of a media campaign you've run online or offline, or perhaps they've just shown up on impulse. But regardless of the reason they're there, your job is all about influencing their further movement into a situation that maximizes the exposure of your high-value merchandise in a way that encourages conversion.
So this process really isn't "marketing" in the conventional sense: It's merchandising. Search engine results page (SERP) positions are essentially like shelf space in which the highest-value products belong at the highest positions where they are most visible/reachable by in-market prospects. The problem, of course, is that unlike a store you actually own, you have no control over whether your product or those of your competitors winds up on the "top shelf" of a SERP.
Position is an important variable, but it's not the only one. The cost of displacing a competitor from such a "top shelf" may be prohibitively expensive, and you may be forced to fall back to a lower-trafficked "right rail" position that gets far lower levels of traffic. To ensure high conversion levels, you must use every tool in your arsenal. Ad copy is crucial in terms of making sure your message stands out against competitors - each of whom may be running undistinguished, uninspired, look-alike ad copy. Landing pages that do not immediately deliver on the ad copy's call to action throw unnecessary barriers in front of your prospects. Even today, when these best practices are well known, far too many merchants continue to direct prospects to generic pages with long lists of products that require more decisions than necessary, and more opportunities to hit the "back button." If you do this, you're literally throwing business away.
The principles of successful merchandising were not handed down to humanity etched on a stone tablet. They only became evident after methodical, scientific analysis of consumer behavior and testing of all significant variables in the buy funnel. Merchandising is fundamentally a creative endeavor and many of its insights appeared unexpectedly. You cannot expect to succeed at search unless your in-house team or SEM agency has both the creativity to try new approaches and the means to continually test and refine your campaigns in the same way that merchandisers do.
Sometimes people ask me why there's so much "churn" in the SEM agency business. In my view, it's that too many SEM agencies don't realize that they're merchandising agencies, not marketing agencies. No wonder they can't do a good job: They don't even realize what business they're in!
Search Engine Merchandising is tough because everybody wants to be on the top shelf. But you can win if, as my client friend would put it, "you figure out how your customers can pick up the high-value merchandise with just one hand" and leave the painful stooping and awkward two-handed lifting to your competition.