Search Engine Metrics… Organic Search vs. Paid Placement
by:
Lawrence Deon
Let me preface this report
by citing advertisers in 2004 have spent 4 Billion dollars on search
engine marketing according to (SEMPO) the Search Engine Marketing
Professional Organization.
Website marketers cited
Search engine positioning was the top method to drive traffic to their
sites (66%), followed by email marketing (54%). Source: Direct Marketing
Association. Accordingly, the most cost effective way to market your web
site online is to obtain several top 10-search engine rankings in the
major search engines for your keywords.
According to a recent
Jupiter Research Survey, searching on the search engines is one of the
main uses of the Internet among 79% of users. Source: September 2002
Jupiter Research Survey. So that being the case, whatever your promoting
you’ll want to make sure it can be found on the first page of the search
engines results page.
The reason is numerically
simple. An Iprospect Survey in 2002 reported that 78% of web users abandon
their search if the first 3 pages don't provide an answer to their
question, and 28% don’t scroll past the 2nd page of results. Source: Media
Post article reporting results of Spring 2002 IProspect survey.
Combine those facts with
the Internets explosive growth rate of 1.8 Million people worldwide going
online every week for the very first time, Source: Official Guide To
Internet Promotion and you can soon appreciate what a top 10 ranking can
mean to you.
Google receives
approximately 39.4% of all search engine traffic. Yahoo receives
approximately 30.4%. They’re simply the largest search engines being
utilized online today.
Bringing up the rear is MSN
at 29.6%, and AOL 15.5% then Ask Jeeves with 8.5%. Source: Nielsen//NetRatings
January 2004
How much traffic is that?
Well, Google and its partner sites were reporting a whopping 250 million
searches a day in February 2003.
Overture and its partners
were reporting over 167 million searches per day. Inktomi reported 80
million followed by LookSmart with 45 million per day.
FindWhat reported 33
million while Ask Jeeves reported 20 million, Alta Vista reported 18
million and finally Fast reported 12 Million searches per day. Source:
Searchenginewatch.com 2004.
With all said, you can
easily see how your search engine rankings are directly proportional to
the traffic your web site receives, and your site traffic is directly
related to your potential to profit online.
Oh, and in case your
wondering how much money is spent online; a recent Forrester Research
Report indicated that online spending reached $95,700,000,000 million in
2003!
That's a cool 95.7 billion
dollars. Projected online spending is estimated to grow to $229 billion in
2008! A whopping 139% increase in online spending! Source: Forrester
Research
Now with these facts in
mind I’m confident you can clearly see what a top 10-search engine ranking
can mean for your bottom line. Although it does leave a question
unanswered in my mind, what has a higher ROI… organic search engine
optimization or paid search?
According to SEMPO’s key
analysis, the U.S. & Canadian SEM Industry Size Estimate by tactic in
2004, organic SEO accounted for 12% of the market share or $492,057,200
while Paid Placement accounted for $3,341,878,176 or 81.8%.
Interestingly, 9 out of 10
respondents are actively engaged in organic SEM marketing programs
accounting for 89% of the respondent advertisers. This trend can be
contributed to the average cost of popular keywords continuing to
escalate.
If the escalation continues
to rise it could make paid search engine advertising exponentially cost
prohibitive for all but the largest advertisers… the 900lb gorillas!
Simply put, ROI is
outpacing inflation: SEMPO’s key analysis indicates advertisers could
afford to pay on average 33% more for their keywords and remain
profitable, while they say prices have gone up 26% on average in the last
12 months. That’s leaves a 7% advertising margin to maintain current
profits for 2005!
SEMPO’s data also noted
that advertisers will get smarter about managing their paid placement
programs before they cut back on spending.
This is also consistent
with a report released by Nielsen/NetRatings indicating that the growing
demand for search engine advertising is outstripping the supply of
currently available advertising space.
These findings seem to
indicate the inventory of keywords is approaching a critical demand
problem however; most advertisers felt they still have some degree of
price flexibility in their paid placement programs before they will reach
the threshold of diminishing returns.
Is there any wonder why
organic search engine positioning has gained popularity for online
marketers in 2004? Could it be higher (ROI) return on investments?
SEMPO also cites that 43%
of advertiser respondents have shifted their budgets away from other
marketing programs for Organic SEO.
So what does it all mean?
Let the numbers speak for themselves.
Organic SEO is undeniably
gaining favor over the lower ROI paid advertising. This is evidenced by
virtue of the fact that paid advertising is becoming less profitable.
Although paid advertising
will continue to hold a large portion of the market share, as paid
advertising returns diminish and keyword costs soar my early 2005 forecast
is for the materialization of a progressive organic SEO market trend to
facilitate the need for advertising space.
by-http://www.rankingyourwaytothebank.com |
