NMA SPECIAL Search: Sector trends

New Media Age

28/05/2009

As budgets tighten and the measurable value of marketing channels becomes key, more brands are turning to search, not just for response but also awareness and acquisition.

The search sector has been one of the few beneficiaries of the economic downturn, with brands increasingly turning to search marketing as they look for measurable returns in tough times.

This was exemplified in Econsultancy and Guava’s third annual UK Search Engine Marketing Benchmark Report last month, which surveyed 800 client companies, agencies and search consultants on trends within the sector. Some 45% of brands surveyed said they’re upping their paid search spend this year, with 55% investing more in natural search optimisation.

But as more money is invested in search, more emphasis is placed on its role in the sales process. What has traditionally been seen as a direct-response medium is becoming the key online acquisition channel and increasingly a branding channel — Orange’s I Am… and the Army’s Start Thinking Soldier campaigns are two highprofile examples of search being used for branding. This means search’s impact on the established sales process — from a consumer’s initial query, through research to a final transaction — is becoming ever-more scrutinised.

Darryl Bowman, sales and marketing director at Experian Interactive, says, “The traditional view is that search is one of the final links in the chain to purchase, so it was restricted to highly optimised DR-driven strategies. The more recent view is that search can play a role at all stages of the funnel, both raising awareness for the brand and driving conversions at all stages the sales funnel.”

Nick Seckold, head of search at Mindshare, says the agency is working with clients to gain greater understanding of how search performs at different stages of the purchase funnel, from sales and brand awareness points of view. He adds, however, that a change in consumer behaviour due to the recession is becoming apparent, with an impact on the sales process.

“We’re seeing an increase in query volume across various industries, which we think is largely due to the economic pressure facing consumers right now,” says Seckold. “In some verticals that historically have had shorter sales cycles, such as retail, we’re seeing it extending to as much as 60 days from first click to final transaction. While the search engines may see this extra query volume as an opportunity, it creates a challenge for advertisers because their budgets need to stretch further to remain visible for longer periods. This trend increases pressure on search budgets to generate a positive ROI.”

David Gilbert, client director at direct response agency TBG London, says that as more money enters the search chain more problems are highlighted. An ongoing issue is where the sale is attributed: the current last-click-wins model is well out of date and can have a detrimental effect on the market. “Aggregators are a great driver of conversions, but people tend to convert via Google, just because they think they get a better deal if they go direct,” he says. “For example, they look at the best deal on Moneysupermarket but then go to Google, type in the client’s name, click on a Google ad and convert. Allocating more budget towards Google and reducing the spend on Moneysupermarket is a decision clients and agencies make based on the last-click standard, when really they should do the opposite.”

There needs to be more agency interaction to fully demonstrate search’s changing role in the purchase funnel, stresses Alex Hoye, CEO of search marketing agency Latitude. “Conversion attribution technology has forced greater collaboration between agencies across channels,” he says. “As brands have realised they can see what influence search has on the purchase funnel, they’re getting their agencies from each channel specialism to work together to see what the optimum balance of budget is across each channel to gain maximum conversions.”

This identifies what search’s influence is on their sales process, and how it should be utilised, Hoye says. “For example, we’ve recently been working with retail clients and their offline agencies to track in-store sales that have been influenced by online channels, including search.”

Branding values

It’s not just agency collaboration that’s helping to educate brands. Media owners are providing more evidence and assistance on search’s influence on different touchpoints in a consumer’s buying cycle. This includes how it can be used as a branding tool — the very start of the purchase funnel — and even before then.

Last year Google and Microsoft launched major initiatives to show the true value of consumer interactions online through all channels that affect the purchase funnel. Microsoft’s Engagement Mapping, developed by its ad server Atlas, was arguably the higherprofile of the two, although Google was the first to release statistics of search’s branding value.

In July Google released pan-European research which showed that coming top of natural search listings raised purchase consideration of a brand by 4%. Exposure to a listing in the top paid position, with no organic listing on the page, increased purchase consideration by 20%.

Justin Moodie, head of digital at HMV, says such insights make search campaigns easier to manage and provide greater understanding of their influence across channels. “It allows us to see more information more easily and use that to control our campaigns with more precision,” he says. “We’ve also seen a shift in Google’s focus recently towards the customer. That means a closer, more co-operative relationship, which we appreciate. Agencies now need to step up their analytics to take advantage of this influx of information and drive more profit from the spend.”

TBG’s GiIbert says agencies are using the new tools for media owners to fine-tune campaigns, especially as each penny is more valuable than ever at this time. “In the current climate it’s important to know if certain suppliers and channels give you better customer engagement and conversions,” he says. “With Atlas’s Engagement Mapping technology we look at the true drivers of conversion and the impact of each touchpoint. We can then split the conversion proportionally among suppliers and channels, taking into account various elements such as the frequency of the ad, creative type, ad-size and recency.”

But there’s still more they could do, according to Latitude’s Hoye. “The likes of Google and Microsoft could work closely with major search agencies, or produce detailed vertical research on user behaviour using the cookie data they capture,” he says. “That way we could better understand search’s influence on the purchase funnel, taking into account differences between verticals.”

Ciaran McConaughy, head of analytics for Microsoft Advertising, says the company is working with agencies and brands to provide this information and its User Path Analysis tool is painting a much clearer picture of which channels reach which converters and in what sequence. “For instance, with mobile telecoms the search and affiliate channels account for the majority of conversions, but display does a great job of reaching and influencing people at key stages in the purchase funnel,” he says.

“For the search channel in particular we see many instances across all verticals where the brand conversions start with a generic keyword click or a series of SEO clicks leading to a PPC conversion,” McConaughy adds. “This is a key priority for us in trying to help agencies get a view of their consumers online and give them the tools to evaluate how publishers contribute to the mix.”

Mindshare’s Seckold, however, says that although search engines have a role to play, agencies, third-party tracking and ad serving partners are better placed to help clients truly understand how the different stages of the funnel behave. “Agencies have a holistic view of both the traffic and how it converts, whereas traditionally media owners have been kept at arms length when it comes to sensitive sales data,” he says. “The reason for this is that media owners spend their time trying to maximise traffic and page yield while agencies and clients focus on driving conversions at the lowest cost possible.

“The cynical view is that the search engines will always encourage advertisers to bid on high traffic volume and low-conversion keywords given the commercial benefits,” he adds. “However, I’m encouraged by the increasing level of transparency emerging from the search engines.”

The number of brands turning to search during the economic slowdown has demonstrated the need for greater understanding of how it affects the entire online journey. While the search engines are providing more transparency and insights, its clear that agencies’ responsibilities and roles are greater than ever.

Read the article at New Media Age (subscription required).