The Market Behind Search Marketing

The attention that is being paid to search marketing today is absolutely incredible. Advertisers in the U.S. and Canadian market will spend $4 billion dollars this year on search marketing programs.

So what market is directly related to the search marketing phenomenon?

Web analytics is the answer. Not familiar with this, we will explain further in a minute. First some industry numbers on search marketing.

$3 billion is expected to go to "search media" companies such as Google, Overture, FindWhat and Kanoodle. $600 million will be spent on SEM-related in-house expenses within advertising corporations. Search marketing agencies and tool vendors get a much smaller share of the spending, with $400 million to agencies and $30 million in SEM technology licensing fees.

So what does web analytics have to do with all this?

The essence of search marketing is that you have to know which words are converting and which are not — measurement that is central to all Web analytics applications. Retail and advertising-based business models are really starting to see the value of analytics, and those companies mostly focused on lead generation and customer support are a few years behind.

Anytime you can directly attribute revenue to an online event via analytics, it makes it that much easier to stomach the necessary investment. When it’s more difficult to quantify the value the information provides, it’s more difficult to make the investment says Eric T. Peterson a senior analyst at JupiterResearch.

Currently “the cookie” is at the heart of web analytics. “The cookie” is a unique string of letters and numbers that the web server stores in a file on your hard drive. This method is used by web designers to track visitors to a website so the visitors do not have to enter the same information every time they go to a new page or revisit a site. For example, web designers use cookies to keep track of purchases a visitor wants to make while shopping through a web catalog. Cookies may work through a single visit to a website, such as when tracking a shopping trip, or may be set to work through multiple sessions when a visitor returns to the site.

The cookie enables web analytics to look at “what has happened in the past and how does it impact what has just happened”. Without the use of cookies, marketers can only see “what just happened”, and this is nowhere near as useful as possessing previous information.

The leaders in this industry are Omniture and Coremetrics considering a combination of overall business value and market suitability. Other companies worth mentioning are WebSideStory which has grown aggressively since its IPO, VisualSciences and WebTrends.

Peterson says, “It’s one thing for someone to respond to a campaign and make one purchase. It’s another to have that person spend 30 minutes on your site exploring other products or services and return frequently over the next week. Analytics enables that kind of measurement.

The value in web analytics is that you are able to directly attribute the value of your marketing dollars to conversion, revenue, retention and how acquired and converted visitors behave on the site. Anytime you can directly relate your spending to the impact it is having on the consumer, you can directly influence the quality of your operations.