Buying a "Top Ranking" in Search Engine Results.

This newsletter was originally posted in the earliest days of the "search engine wars". Search Term and / or "context advertising" offered the ability to target ads in a new and exciting way. As you can see from this 1997 newsletter, we were all trying to keep up with the changing "rules of the game". VectorInter.Net staff is constantly testing and learning the latest ad strategies to help our clients make an informed, cost-effective decision.

    Many web site owners are hearing about a controversial strategy called "paid placement" on search engine results pages. As the economy slows, web e-tailers are working harder than ever to get potential customers to visit their web site. Making payments to guarantee traffic sounds good in theory. Who wouldn't want a secure spot in the lead position in search results? A few consumer groups are crying foul, and some web entrepreneurs are wondering whether the results are really worth the cost. Since banner ads have fallen out of favor, search engines are the new Internet marketer's dream. (We aren't convinced banner ads won't work, if done correctly. Read "Effective Banner ads" in the VectorInter.Net newsletter archive.

    First, Let me define the terminology. "Paid placement" means a web site owner pays a fee to one or more search engine operators to guarantee that links to a specific web page, or pages will appear in the first few listings of relevant search results. This advertising strategy sidesteps the traditional way web sites earn listings. For years, web site owners had to submit their URLs ( individual web page addresses ) and define the categories in which those pages should be listed in a search engine data base. Some search engines charged a fee for the submission process, but most were free. The search engines then placed the listing into their directory based on unbiased standards. Any search would return results showing the most accurate match or list the site in order of popularity.  As the need for revenue grew at the search engine companies, a new concept of "Paid placement" began to emerge as a source of funding. Many of the major search engines now return a combination of "ranked" and "paid placement" listings.

    Web site owners bid for placement in search results based on their chosen keywords. Keywords are the terms, or "specific words" typed into the search engines "query" line. The bid is the amount an advertiser ( web site ) will pay each time a customer clicks on their listings in the results page of the search engine. The highest bid wins. The industry term is "click-through". A web visitor will find your listing and "click-through" to your web pages. You will pay for each visitor to your web pages, whether they make a purchase or not.   Your cost will be between 1 cent and usd$10.oo per lead, or "click-through" with an average of about 5- 25 cents per lead. Costs usually include a minimum monthly fee too, and will correspond to the popularity of the search terms and where entrepreneurs want their results positioned. For example, if an entrepreneur chooses a very popular term that will likely create a lot of clicks-such as "Flower deli very"-it may cost several dollars per click-through to be listed in the first position. Being listed first under a less specific term, such as "romantic gifts" might cost just 1 to 5 cents per click-through. You could economize and save money, if you're content with being in the 25th position under "flower delivery". 

    The first way to buy search engine traffic is to pay for placement with a company that provides search results to other sites, such as Overture (formerly GoTo.com) or FindWhat.com. This may be the most economical way to go, but is very inefficient. Search engine experts say companies that provide listings to other search engines are the best bet for small web site owners. Individual search engines are likely to charge higher minimum fees and involve commissions to advertising sales reps. With a listings provider, your web site may also show up in many different places on the Internet. 

    The other paid-placement option is to work directly with a specific search engine. Google uses sponsored links, but they resemble paid advertising. Yahoo! returns all of its search results with 3 to 5 paid spots. Excite has its own internal paid placement program in addition to the supplement listings from FindWhat.com, mentioned above. AltaVista does the same thing, but with the results list from Overture. These combinations are constantly evolving as the search engine companies fight for ad dollars to support themselves. Working with specific search engines can provide better quality traffic. These are web surfers looking for your product or service, not those "clicking-in" out of curiousity or by accident. This specialization will cost more, and of course you must have an agreement with "all" of the search engines individually.  

    In our advice to clients, we see several problems with Paid Placement as a traffic building model and its effectiveness for the small web site operator is less than assured. You will only hear "success stories" from the search engines, but not everyone is happy with paid-placement arrangements. A continuing problem is the lack of an independent ratings service. No single company has been able to convince a majority of the Internet industry that they are able to accurately measure the number of viewers to any given web page. MediaMetrics and others claim to provide this service. VectorInter.Net media consultants have dissected some of these reports for clients. We find them to be lacking in detail and full of assumptions and promises, not supported in verifiable facts. Ultimately you are being asked to buy "click-through" traffic, without knowing the quality of the sales prospect. This is similar to locating your Ferrari dealership next to a flea market or a shopping mall filled with upscale retailers? Both locations would provide traffic walking thru the showroom. If you had to pay for each visitor to your showroom floor, which clientele would be more conductive to real sales growth? 

    There are some political problems too, and they may become legal issues. Commercial Alert is a Portland, Oregon-based national nonprofit anti-commercialism group. They have filed a deceptive advertising complaint with the FTC against eight search engines. The heart of the issue is the search engines "results page" does not clearly indicate which matches have "merit" and which were indeed advertising. Gary Ruskin, executive director of Commercial Alert says "[they] look like information from an objective database selected by an objective algorithm. [These listings are] really just paid ads disguised as results." The seven search-engines named in the complaint are AltaVista, AOL Time Warner, Direct Hit Technologies, iWon, LookSmart, Microsoft and Terra Lycos. Ruskin says that by concealing the fact that such listings are really just ads, search engines appear to be violating the federal prohibition against deceptive acts or practices. This omission falls within a line of deceptive advertising cases, in which the FTC sought sanctions against companies in other media caught hiding the fact that announcements were really paid advertising, such as TV "info-mercials". Some of these search engines now refer to their paid links as "Featured Links" or "Sponsored links". It may be a semantic difference, but does at least disclose the advertising connection. Just as with "banner ads", we question the cost effeciency of this customer traffic. Read about Banner Ads in the VectorInter.Net newsletter archive. Even Ruskin admits that not all search engine companies have adopted deceptive advertising practices, while still providing this service to advertisers. The example, he offers is Google, which clearly notes that its paid placements are "Sponsored Links". Google also refuses to place paid ads within its search results. 

    In summary, paid placement, even if not labeled as an ad, is a valid way to promote your online business. When you directly purchase customer traffic, the sales cycle ramps up faster. That is why search engine companies revenues are growing even in a down economy. The question remains, "At what real cost per sales transaction are we buying traffic"? Both the effectiveness of this technique and the dependability of the true "cost per completed transaction" numbers are difficult to determine and trust. Pay-for-placement search engines usually employ an auction model where the highest position on the "results" page goes to the highest bidder. Direct advertising requires research to determine which message worked best. At about 5 to 20 cents per click, the pay for placement model will quickly demonstrate whether it is worth the expense.
   
    We have on occasion attempted to make an educated guesses and projections. There are no easy answers. Many web site owners and small businesses have had good success. Others have found no incremental increase in their sales volume over a well thought out, baseline "FREE" search engine placement. Which is the correct choice for you? Every situation is unique. Our best opinion is that unless you have a substantial database to compare against in a statistical model, from catalog sales or mail order response rates, you are just guessing. We would be too. 

    We will continue to monitor this advertising option. Search engines are constantly evolving, changeable things. The programmers continually refine their models, filter "unworthy" web sites and work to keep rankings credible and relevant. The time and attention search engine marketing demands is best handled by an outsource provider. We can recommend several companies to choose from. In the competitive arena of the Internet, the cost and the possible payoff of search engine paid placement may add up to the best bang you can find for your marketing buck. Contact us at any VectorInter.Net office. We can analyze your needs and budget.