Back

StrategyJan 22, 2013

Part 2: Building a Comprehensive Online Marketing & Digital Strategy – Search Engine Marketing

Kyle Wahlquist

Part 2: SEM vs. SEO  – Why SEM is Key Depending on whom you ask, Search Engine Marketing (SEM) can have various meanings.  In the past, Search Engine Marketing was primarily used to describe any marketing efforts done through the search engine, whether those be pay-per-click campaigns or efforts to improve organic (i.e. non-paid) search results  However, the term Search Engine Optimization (SEO) is now used to describe marketing efforts designed to produce organic search results. Thus, SEM has evolved now to refer solely to the pay-per-click marketing efforts, which is the definition used in our article.

There are five major components to building out a comprehensive SEM segment for your digital strategy.  Each component funnels into the next until, ultimately, the customer converts. Let’s examine each of these components in turn.

SEM Funnel

1.  Ad content – the copy within the search engine ad that speaks to the user.  Having good copy that a user can relate to their intent can lead to more clicks.  You also want to make sure it is describing in detail your explicit marketable intention, otherwise you can be paying for clicks that will only mislead the user and not convert into sales. You will want to make sure that your content is saying the same thing that your uses are looking for and that it mimics the content you use on your site itself—put another way, you should put as much effort into your ad copy as you do into your site copy.  To the extent that you have captured the user voice as part of your SEO efforts, you can and should leverage the leanings from those efforts as you write your ad content

2.  Terms – the words users search for that you find valuable enough to place a bid on (Google Keywords is a great place to begin your search for the right terms).  When a user searches for a term that you have bid on, your marketing account goes into an automated auction with any competitors who might have also found value and bid on that term.  The winners will have their ads displayed in order according to the way in which they were ranked in the term auction process.

3.  Bid – The monetary amount you put towards a particular term during the term auction can affect where in the ad results your content ranks among your competitors for the same term.  You have control of many levers in this particular part of the conversion funnel, e.g. your daily auction budget, your default bid amount, whether you want to focus on higher converting words, or focus on impressions, etc.  There are also uncontrollable variables, e.g. how many others are competing for the same search term.  How desirable a term is – based on the number of others competing for it – determines bid pricing.

4.  Landing Page – When buying ad space, one thing that leads to higher ultimate conversion is having similar language and message on the page a customer lands on once they have clicked on the ad.  If a customer clicks on an ad referring to a sale or promotion you have, and does not see anything that reinforces this messaging on the landing page, they are more likely to leave your site.  If you are bringing in users looking for something specific, and do not give them easy access to that specific thing through a custom landing page, you have room to grow your conversion rate.

5.  SEM Conversion – This is the sales rate you have specifically for users that find your site through SEM clicks.  This should typically lead to a higher conversion percentage than your organic traffic.

After hearing that SEM leads to higher conversion percentage than organic search results, you might be tempted to go to your online marketing team and double down on their efforts, or refocus resources from SEO to SEM, but let’s take a step back and look at the bigger picture.  It is true; SEM converts more than SEO numbers.  A report from 2009 Internet Retailer shows that an average of 2.03% of users who click through SEM ads convert into sales, while in comparison only 1.26% of visits based on organic clicks convert to sales (click here for the study).

“Fantastic, let’s spend more!” you say.

Not so fast! While SEM does convert at a higher rate we need to look at the reasons why.  SEO can attract users who are looking for terms used across your site, and does not discriminate between attracting users through converting terms, non converting terms, and terms that or more or less off of your radar.  This means that SEO is more of a general traffic approach and will therefore attract more traffic overall, even if it doesn’t convert.

A properly run SEM campaign, on the other hand, should start with a grouping of terms that seem like they would be a good fit to run ads on.  Start by bidding on these terms. After you have sufficient data on the initial term set, review the clickable data by running analytics against it. Narrow down your initial broader term set to those with the highest conversion ratings. Then, increase the amount you bid on these high-converting terms  and decrease (or cut) the amount you spend on the lower-scoring terms. Repeat this process on as regular an interval as you deem necessary.

So, SEM does have higher click-through ratings than does an-SEO only approach, but those high click-through ratings come only as a result of significant effort expended filtering, analyzing, and refining search terms.  Without this effort and analysis, SEM will have no better—and maybe even worse— conversion rates than SEO. The main difference in the SEO/SEM conversion rate numbers are basically saying that SEM has a 50% increase in conversion due to it being a more precise tactic, while SEO has a lower conversion because it is more of a shotgun approach.  But let’s see what the shotgun can comparatively bring home.

The results of an August 2012 GroupM UK and Neilson research report around search engines found that only 6% of searches in their 2012 study converted to a click through an ad, while 96% of those that search converted via a click through an organic link (click here for study).  This means that while your refined SEM campaign can convert at 50% more than your overall SEO implemented site, it will only draw a very minor fraction of the overall traffic potential.  SEO has a much higher chance of converting an impression to a click than SEM does.

SEM is effective, but at its core it is simply buying sales.  At some point, your rate of return is going to hit its apex, and will start to diminish as you continually put more finances behind it.  While an optimized SEM campaign is an important part of any good digital strategy, it should never be seen as THE solution to getting and maintaining an audience, especially if you are a smaller company with less experience to this arena.

SEM should be seen as a valuable component to your digital strategy arsenal, which can provide an immediate track able lift in your numbers.  There are many venues on the web to spend your online marketing budget on such as Google, Yahoo and Bing, but of course Google has historically been the venue of choice for most online marketing teams.

Our client Vology has seen great success with its SEM campaigns through Google generically and Google Shopping more specifically.  “Google Shopping uses reseller ratings, so it ads buyer trust and confidence,” says Debi Steigerwald, Vology eCommerce Project Manager.  Adding built-in buyer confidence to your ad spend is valuable and should lead to higher conversion once they are on site.

One final note of caution before embarking on an SEM campaign: when finding what allocations of spend per channel are right for your site’s marketing budget, keep in mind that doing SEM wrong can also be a costly mistake.  Before you start putting serious portions of your marketing budget towards SEM, you will want to have a deep look into your site’s analytics and your conversion funnel.  You will want to see what steps in your site are converting to the next step appropriately, and also see if there are any major misses where users are having an outlying drop off rate.  If you have a step in your conversion process that can be improved upon and generate higher natural conversion, go ahead and improve your site’s native design—make it the best-converting site it can be—and THEN crank up your SEO dollars.

Read all five parts of Kyle’s blog series: Part 1Part 2Part 3Part 4, and Part 5. For additional information about our services, visit Credera.com.