Any marketer that has been involved in search engine marketing 
and search engine optimization understands the never-ending quest 
to attract customers at a reasonable cost.  With acquisition 
costs that can rise to $60 to $100 per customer or more, there 
is a constant demand for better word lists, better bidding, and 
better ad copy to compel click-throughs on the meatiest words.

The reality is that there often simply is not enough highly 
affordable traffic to sustain business growth unless the marketer
optimizes the landing page offer as well as the search terms and 
makes them work as a team!

Search Engine Marketing works -- provided you are selling a 
product that has some demand, that is priced reasonably, and 
that you are able to satisfy the basics of security and 
fulfillment. We can buy product names, brand names, and other 
hot terms that are very specific to a product we specialize in, 
and qualified customers will find us.


The Vicious Cycle of SEM

The problem with search engine marketing is when you need to 
increase revenue and profitability.  I cannot count the number 
of times I have heard of marketers who have developed a list of 
2,000 to 20,000 words and phrases to garner traffic.  This number 
is inevitably reduced, sometimes to 100-150 high-performing 
terms, when the cost per customer acquired soars beyond 
profitability.

Growing a list definitely grows traffic, but it can often be 
“bad traffic.”  This traffic consists of words that are cheap, 
but have a .01 or even lower conversion rate during visits as 
well as words that have a 3% or more conversion rate, but end 
up costing $80-100 per acquired customer because of competition 
from other sellers.

For example, “ecommerce” is a high-traffic term, and results in 
a lot of clicks for online advertisers because the searchers are 
usually looking for at least information if not an actual product 
or service.  Unfortunately, this traffic is so unqualified that 
actually converting a visitor into a buyer of a commerce 
platform, consulting service, or marketing service is very 
unlikely.

Alternatively, the names of brand name electronics equipment 
like Olympus C-460 can be high-conversion search terms, but 
even when they result in a purchase the yield on the sale does 
not merit the cost paid for the click. In our experience, you 
have to buy both product terms and category terms like these to 
maximize the volume of traffic of your online segment.


Optimize your Landing Pages

To make such a traffic purchase affordable, you need to optimize 
your “Landing Page” or the page that the PPC search term ad links 
to, on your site.  Effective landing page optimization strategies
include:

1. Assortment Optimization - Develop the ability to continually 
   optimize assortment to make certain that you find the right 
   offer for “category” words.  A key/supporting product scheme 
   can work, provided you have the technology to rotate and test 
   what product to present as the leading offer and what other 
   products to provide in the assortment.

2. Accessory Optimization - Deploy an aggressive accessory 
   strategy to maximize AOV (average order value, or the total 
   dollar value of merchandise that the average customer buys).

3. Substitution Optimization – With high-cost, highly specific 
   terms, it can be advantageous to recommend higher-margin 
   substitutes on your landing page. A slight increase in 
   average margin can make better search positioning affordable. 

4. Promotion Optimization - Test and optimize promotions 
   including free shipping to encourage increased purchases 
   during a qualified visit without needlessly sacrificing 
   profit margin.

New software tools like Offermatica (available at 
http://www.Offermatica.com) are focused on providing merchants 
or direct marketers with these types of optimizations.


Customer Case

For example, one company sold games for children and adults 
online and generated traffic around search terms largely selected
by the brand names of the games they sold.  This strategy was 
effective, but the words were competitive and they wanted more 
revenue per purchase.  Using Offermatica, they providing an 
automated list of top-selling products on the pages where the 
target products were displayed, the company increased their 
AOV by 20% against a control group.

In another case, a company represents travel products that have 
radically different gross margins.  The company should continue 
to drive traffic from external and internal search to the 
low-margin properties, but could also begin to purposefully 
display higher-margin alternatives in the same region and price 
range to increase the profitability of their acquired customers.

Finally, a consumer products retailer that generated much of 
their traffic around a limited range of brand-name products 
tested a gift-with-purchase strategy to try to increase 
conversion rates on expensive brand-based terms. 


None of these marketing approaches are earth-shattering.  They 
reflect well-trodden paths lain down by traditional retailers, 
catalog retailers, and even the late-night infomercials.  They 
are also very effective.

Any retailer can drive traffic if they pay enough, and anyone 
can refine the traffic to pay relatively little for relatively 
low traffic.  The search engine future, however, belongs to 
those who can sell enough to pay enough for a large, growing 
base of online customers.