Online advertising spending has grown 34 percent in the past year and is expected to reach $15.6 billion by 2006. Of this, 42 percent is expected to be spent on pay-per-click advertising. As a result, competition for keywords is increasing and cost-per-click rates are up.
To offset rising costs, companies must learn tactics to increase the effectiveness of campaigns in order to sustain and boost conversion rates and generate a significant return on investment.
To create an effective pay-per-click campaign, advertisers must identify what type of visitor they want and allocate budgets accordingly to major and targeted channels.
Major search engines are primary channels of pay per click because they bring in the largest number of click-throughs and help establish brand awareness to a broad audience. Research shows that many users of major engines are still in the “window-shopping” phase, researching vendor and product options for later purchase. While branding achieves long-term goals, conversion rates from major search engines often can be lower than from other channels.
To increase conversion rates, advertisers should focus on targeting specific audiences that are likely to become both immediate and long-term customers. Conversion rates tracked across multiple search engines show that searchers who are ready to spend most often connect to sites from vertical search engines.
DollarDays: A Case History
DollarDays International, a wholesaler of general merchandise, knows it is critical for business-to-business companies such as itself to generate a steady stream of new customers. Based on thorough tracking and analysis of marketing initiatives, pay per click is the key advertising channel for DollarDays’ customer acquisition. It allocates the most marketing dollars to search engines that produce the highest conversion rates of click-throughs to purchasing customers.
Besides brand-building pay-per-click campaigns with major search portals such as Google, DollarDays allocates a significant budget for industry-specific search engines such as goWholesale that target and increase its customer base of independent retailers.
In addition to an audience of ready-to-purchase buyers, DollarDays has found that vertical search engines offer other unique benefits such as:
· Lower cost-per-click rates. A targeted audience means fewer advertisers compete for top positioning and that niche keywords will be popular search terms.
· Industry-related content. Building content that demonstrates an understanding of industry topics and trends enables vertical engines to provide more effective search results. Considering that 54 percent of business owners report to using the same search engine for nearly every search, this is an important piece in gaining user loyalty.
Getting top positions on major search engines is competitive and often requires expensive search engine optimization campaigns that don’t guarantee results. BTB companies know that only buyers looking for the products or services being sold click on their vertical search engine ads. Every click is a chance to gain a new customer.
For more articles from The Direct Marketer’s Essential Guide to Search Engine Marketing, visit http://www.dmnews.com/cgi-bin/artcategory.cgi?category_id=22
A PDF of the guide is available at: http://www.dmnews.com/pdffiles/semguide.pdf
