The Value of Search Goes Well Beyond E-Commerce

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In the late 1990s, goto.com introduced pay-per-click search advertising. This innovation changed the industry drastically and helped legitimize it as it recovers from the excessive days of the dot-com boom.


Few realize that cost-per-click advertising goes beyond a means to reach customers. CPC advertising represents a paradigm shift from seller responsibility to buyer responsibility. The auction nature of search listings has brought many search terms' cost to "market price" in just a few years. Some terms have even reached the system's maximum price of $100 per click.


The value of CPC advertising too often is based on feedback from systems that measure return solely on conversion to e-commerce sales. To realize the true value of search, advertisers need to factor in sales finalized at the call center and in stores. The measure of call center and in-store sales reveals CPC's extensive influence on sales outside e-commerce. Marketers who don't factor in the total cost/total sales approach could miss out on opportunities to reach new markets and help the markets grow.


Recent tests by MakeBuzz show that clients with a call center or store could pay up to five times the current market CPC. In addition to looking at CPC values by multichannel tracking, MakeBuzz let its clients bid on generic search terms. One client enjoyed an excellent return value for the search term "cruise" when only one sale occurred via e-commerce. In this case and many like it, online search became a research tool for consumers who made purchases offline.


Despite the small percentage of e-commerce sales results, it would be unfair to assume online search had little influence on the overall market.


In addition to new tracking solutions, the effects of local search on localized purchasing will be realized in years to come. As a result, even generic search terms will increase their CPC values. A search for a generic term such as "plumber" will garner a higher CPC because of the proximity of the potential customer to the sale. Imagine how much a business would pay per click knowing that the searcher is just around the block. For many service and product businesses, this searcher as a potential client is valuable.


What does this mean for your industry? Better tracking will let you extend your markets while your competitors sit idly by. In time, CPC likely will increase as more multichannel marketers dominate the search space. This is both a benefit and threat to the CPC search engines. While income and profits rise, merchants not adopting complex multichannel tracking strategies could lose interest in maintaining accounts, thus reducing their total number of accounts. The multichannel marketer must adopt new business logic to compete in a growing industry.


Search is a useful marketing tool whose value will only increase as the market increases and tracking technology gets more sophisticated. E-commerce represents 2 percent of the retail market, a statistic that misleads advertisers into thinking it reflects the value of online search. However, search greatly influences where consumers spend money offline. Advertisers need to stop thinking of search strictly in terms of e-commerce and realize its influence in the overall retail sales market.
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