A new survey of search engine marketers found that only one in four use advanced bidding strategies and measurement techniques.
Jupiter Research in August polled 538 U.S. marketers using paid search campaigns. The survey, which Jupiter plans to release today, found most do not use past campaign performance metrics to guide bidding or properly measure their return through either sales or clicks.
“Too many marketers are involved in this marketplace without a good understanding of how it should work,” said Nate Elliott, a Jupiter analyst.
Jupiter divided search marketers into “sophisticates” and “unsophisticates” based on how they bid and measured their campaigns' results. Elliott said Jupiter defines an “intelligent” bidding strategy as one tied to past campaign performance or the cost of goods sold. “Unintelligent” bidding maintains the same price for all keywords, lets the search engine handle bidding or is guided by no strategy at all. Just 6 percent of search marketers in the survey said they bid based on the cost of the goods sold.
“There's a fair amount of dumb bidding going on,” he said.
Marketers that Jupiter pegged as sophisticates were more likely to have 2 1/2 to three years' experience in search marketing. Sophisticates were more likely to manage larger, more expensive search budgets: 39 percent bid on more than 1,000 keywords, compared with 14 percent of unsophisticates; and 33 percent of sophisticates spend more than $1 million annually on search versus 17 percent of unsophisticates.
Bidding strategy and campaign measurement have risen in importance as prices for paid search have increased. Jupiter forecasts average click prices to climb 26 percent this year, from 29 cents last year to 36 cents. It expects click prices to rise another 11 percent in 2005. The New York research firm expects average cost per click will reach 47 cents by 2009.
“What we've seen is the ROI for search has gone from great to good,” Elliott said. “In that environment, it is even more important they become sophisticated.”
Google and Yahoo's Overture Services, among other search providers, offer marketers free conversion-tracking tools that let them gauge the success of their campaigns. Third-party search marketing firms also provide tracking and bidding services.
