February 2005

Beyond Search Engine Marketing —
Increasing Post-Click Conversion Rates With Intelligent Search

By Jason Hekl, InQuira

Every marketer who stays current with marketing tactics knows that SEM (search engine marketing) has very quickly become a critical part of the marketing mix. According to a MarketingSherpa survey of over 3,000 marketers, SEM accounts for 15 percent of total budgeted marketing expenditures, a percentage that has increased from virtually nothing a few years ago. Market dynamics ensure that SEM will continue to expand in coming years. Nearly 60 percent of consumers believe advertising has little relevance to them (Yankelovich, 2004), and a new report from the Stanford Institute for the Quantitative Study of Society reported that Internet users spend 50 percent more time online than they do watching television. SEM enables marketers to reach advertising-resistant online shoppers by targeting marketing messages to only those customers who have expressed interest in a keyword phrase of mutual significance. Marketers have embraced SEM because it represents one of the best mechanisms for reaching a targeted audience in a manner that is easily measurable, efficient and low in cost.

Problem: SEM Is Not A Silver Bullet
Appealing though it may be, SEM is not a panacea for demand generation problems. Accepted best practices to increase click-through rates and post-click conversion rates recommend that marketers create one-to-one-to-one relationships between keywords, ads and landing pages. In other words, if the marketer bids on the keyword “Roth IRA,” the marketer should feature “Roth IRA” in both the ad and the landing page. In practice, few marketers have the time or resources to create individual ads and landing pages for every keyword a company tracks. Customer abandonment rates increase when the expected keyword is not included in the ad or landing page copy. Even when marketers follow best practice guidelines, two percent to three percent click-through rates and six percent to eight percent post-click conversion rates are considered exceptional. A campaign is performing well if you get one or two conversions (newsletter subscriptions, download registrations, completed sales, etc.) from every 1,000 ad impressions. Compared with traditional mass media advertising, SEM is arguably more effective and much lower in cost. However, considering the interactive potential of the Internet medium, and that most visitors initiated a search on a term relevant to the marketer’s product or service, you could argue that the click-through and conversion numbers are disappointing. The reason: There is leakage in the SEM process. Potential customers, for unknown reasons, are not converting.

Those leaks are getting more costly all the time. Spending on paid searches will top $3.9 billion in 2004, according to eMarketer, and is expected to grow to $6.7 billion by 2009. Though still relatively inexpensive compared with other marketing tactics, the days when the average cost per click (CPC) was only pennies are long gone. MarketingSherpa estimates that the average CPC for complex b-to-b products and services ranges from $1.67 to $1.92. As more companies compete for top listings, average CPC for all categories will trend higher. The key to long-term SEM success, then, is to focus on the one variable over which the marketer has the most control — the post-click conversion rate.

Consumers Control Online Transactions
According to a report from Marketing-Sherpa.com, fears of adware and spyware prompt 38 percent of U.S. consumers to wipe cookies from their computers at least once per week, limiting the measurement of cookies-based post-click conversion tracking. A May 2004 study by BURST Media found that only 23 percent of survey respondents were amenable to providing non-personally identifiable information on a Web site to deliver more relevant ads. Consumers prefer to remain anonymous when online. The message is clear: Companies cannot dictate an online sales process; consumers are in control. Effective marketing recognizes this central truth, and it endeavors to influence customer behavior to accelerate a customer’s movement through a personal buying process (hopefully to purchase your product or service). Tactics that essentially push a product or service, or outline features and benefits, or hope customers will respond, are proving increasingly ineffective. A more successful technique is to engage the customer in a dialog to understand his or her needs and then to deliver the product or service that most effectively satisfies those needs.

Use Landing Pages To Influence A Customer’s Personal Buying Process
In an SEM environment, the marketer has a tremendous opportunity to influence buyer behavior through interactions on the landing page, even when the customer is completely unknown (save for the referring search phrase). Most specialized landing pages come in one of two flavors — either they are targeted to an immediate purchase transaction, or they feature multiple offers. Marketers have no way of knowing where their potential customers are in their personal buying process when they click through a paid search ad. The only clue is the selected keyword. Many landing pages, then, are biased toward the final stage in a customer’s buying process — the transaction.

Of every 100 click-throughs on paid search ads, perhaps six to eight will convert. Maybe 15 to 20 landed there in error and are not a good fit for your product or service. What about the other 70 to 80 people who searched on a relevant keyword phrase and clicked through to your landing page? Certainly some of those consumers are valuable to you. Why did those customers not raise their hands and express interest? What can you do to salvage those potential customers who clicked through your ad but did not convert?

A Retail Sales Analogy: “How Can I Help You?”
Marketers can find the answers by looking at traditional retail marketing tactics. A consumer sees an advertisement in a local newspaper (akin to a paid search ad) for a product and drives to the local mall. The consumer steps inside the store and looks at the display (analogous to a specialized landing page), then turns to leave. A salesperson intercepts the customer before he or she heads for the door and asks the customer a simple question: “May I help you?”

The problem with search marketing is that there is no one there to help the online consumer who looks at the offer and “heads for the door.” Or is there?

What works well in the offline world, but which marketers struggle with in the online world, is engaging the customer in a dialog to determine which products or services best suit his or her needs. In the retail example, the sales associate might determine that the sale item may not have been appropriate for the consumer, but based on an understanding of the customer’s situation and need, the associate is able to provide information, guidance and advice regarding an alternative product or service. The key to this dynamic is the customer interaction. The advertisement was enough to get the customer to the store, but the display (offer) on its own failed to generate the desired transaction. The dialog with the salesperson determined if that prospect would convert from potential customer to actual customer. Marketers can replicate this proven customer interaction behavior on their Web sites through an accepted consumer medium — search.

Customers are already prepared, as Internet search has become such a critical part of our online lives: to “Google” someone or something is now accepted lexicon. Jupiter Research estimates that 50 percent of search users have learned to type in three or more keywords per search to ensure a relevant results set, yet 75 percent of marketers concentrate their SEM programs on one to two keywords (MarketingSherpa.com). Consumers are ready to engage in a dialog via understood and accepted search behaviors, but marketers have been slow to capitalize.

Making The Search Experience Interactive
The keys to generating greater value from a SEM program are to make the search marketing experience interactive and to personalize the landing page experience with information that specifically answers the needs of each unique visitor. There are some guidelines that marketers can follow to achieve superior results:

• Leverage accepted search behavior to engage the customer in a dialog.
• Design landing pages that encourage an on-going dialog through intelligent search.
• Use intelligent search technology with powerful natural language processing capabilities to process customers’ searches for their semantic meaning or intent.
• Increase landing page conversion rates by presenting relevant information dynamically generated from an understanding of the searchers’ intent.
• Personalize the marketing message, and tune offers to the customers’ current stage in the buying process.
• Prominently feature the search functionality, and demonstrate through the information returned to the customer that the customers’ needs are understood.

Making the landing page experience interactive for the customer requires an automated mechanism for communicating with the customer and comprehending his or her specific needs and personal buying process. Intelligent search provides marketers with that mechanism, but it is important to understand how intelligent search differs from traditional keyword search. Because intelligent search technology understands a customer’s search request for its intent, and because intelligent search technology indexes enterprise content (including HTML pages, marketing offers, or any information source) for its semantic meaning, the marketer who uses intelligent search technology can use search results to match the customer’s intent with the information that meets that customer’s specific needs.

For example, a customer who searches on hybrid cars could have any of several intents: interest in reading about new hybrid technology; interest in buying a car that is environmentally friendly; or perhaps to save money on gas. If you type that search request into Google, the top SEM placement belongs to a Toyota ad that promotes “Prices on Toyotas.” Click through and the visitor lands on the Toyota home page, which features how the Toyota Tacoma won the 2005 Motor Trend Truck of the Year. There is no information on the landing page about hybrid cars. The customer clicks on the “Vehicles” navigation button, sees there is no entry for hybrid and abandons the site. Toyota just lost an opportunity to interact with a potential customer.

Contrast that experience with a search experience on Honda’s Web site. Type hybrid cars into the search box and the Web site returns a response page that does not look like your typical list of search results. First, the intelligent search engine understood hybrid cars to mean the Accord Hybrid, Civic Hybrid and Honda Insight. Rather than return a list of hyperlinks to pages with the term “hybrid cars” in the copy, Honda’s intelligent search engine returns a personalized response page with details on each hybrid model. The search engine understood the search request for its intent, and it returned the information most valuable to the customer. Pro-minently featured on the page is an enlarged search box, encouraging the customer to ask a more detailed question. Type in best hybrid mpg and the intelligent search engine returns a dynamically generated table listing the city and highway mileage of the Civic Hybrid and Insight. By understanding the intent of the question, the intelligent search engine is able to return a much more personalized and relevant results page to the customer, effectively personalizing the Web experience for that customer. Understanding the intent also allows for a personalized page that incorporates anticipated needs, and the links to fulfill those needs. Interest in hybrid cars and a best hybrid mpg may suggest concerns with fuel costs, so the personalized results page includes a link to a fuel savings calculator. Here Honda has created an automated interaction with the customer, one based on an understanding of the customer’s unique needs, and the information that customer requires to move forward in his or her particular buying process.

Combining Internet Keyword Search With Web Site Intelligent Search For Effective SEM
Internet keyword search and Web site intelligent search exist independently of one another. The former delivers customers to your company Web site, and the latter helps to accelerate each customer’s individual buying process. Marrying the two is a logical development for marketers committed to increasing the post-click conversion rates for their SEM programs.

There are numerous possibilities for the savvy marketer to leverage intelligent search to drive higher returns from search marketing programs. You can incorporate intelligent search components into static landing pages, for example, by featuring an elongated search box with an “Ask” button to encourage another question. You can dynamically populate portions of the landing page with intent-specific content by passing the words from the original search request directly into the intelligent search engine to generate a personalized response — effectively turning the keyword search into an intelligent search. A third possibility, and this may be most appropriate for companies that have heavily invested in SEM and track hundreds or thousands of keywords, is to configure your landing pages to be completely dynamic — essentially passing the customer’s keyword search directly into the intelligent search engine to generate completely personalized responses.

As more marketers embrace SEM, average CPC for all categories will trend higher, forcing marketers to be more sophisticated in how they generate value from their programs. Focus on the one SEM variable over which marketers have the most control, which is the design and function of the specialized landing page. Recognize that marketers do not control online sales processes. The customer’s buying process dictates when the customer will be ready to transact. Approach the search marketing experience from the customer’s perspective. Make the search experience interactive, and engage with the customer. Determine needs and understand the buying process. Personalize marketing messaging and offers to the unique needs and the buying stage of each customer. Achieve the dialog that will drive higher conversion rates by integrating intelligent search technologies into the SEM process.

Jason Hekl is Director of Marketing at InQuira, a provider of intelligent search solutions for improving the quality of customer interactions through company Web sites and contact centers. He may be contacted at [email protected].

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