Whats Wrong With This Picture?

    January 5, 2005

Don’t quote me, but here’s some inside information on deep background.

The Search Engine Marketing Professional Organization (SEMPO) recently published a research paper, “The State of Search Engine Marketing 2004.” (To download a summary copy of the research, go to http://www.sempo.org/research/sem-trends-2004.php.) According to the research, $4.087 billion was spent last year on search marketing programs in the U.S. and Canada.

The picture it paints of the search engine marketing industry resembles one of those old penny farthing bicycles, which had a large front wheel and small rear wheel.

The big wheel in search engine marketing is paid placement. According to the SEMPO research, 81.8% of the amount spent on search marketing in 2004, $3.342 billion, was for paid placement campaigns – pay-per-click (PPC) and cost-per-click (CPC) advertising programs such as Google AdWords and Overture Precision Match.

The little wheel in search engine marketing is organic search engine optimization. According to the SEMPO research, only 12.0% of the amount spent on search marketing last year, $492 million, was spent on organic search engine optimization. (Another 4.4%, $182 million, was spent on paid inclusion, such as Overture Site Match.)

What’s wrong with this picture?

Earlier search engine marketing research conducted by iProspect, Enquiro, and others, has found that 60.5% to 70.0% of search engine users find organic results to be more relevant when conducting queries. Only 30% to 39.5% of search engine users find paid results to be more relevant.

So, why are companies spending 6.8 times more money on paid placement, when organic search engine optimization can generate 1.5 to 2.3 times more clicks for the same search terms? Is the cost-benefit ratio of paid placement really 9.8 to 15.6 times greater than organic search engine optimization?

In my humble opinion, there are three fundamental reasons why spending on search engine marketing in North America seems so imbalanced.

First, all of the major search engines make it significantly easier to launch paid placement campaigns and significantly harder to start organic search engine optimization programs.

For example, Google AdWords says you can “start gaining new customers in less than 15 minutes.” (And, when you’re done, you can “help transfer funds from deposed dictators” in less than 15 minutes, too.) Overture merely claims, “Using Overture is easy.” And, for just $199, Overture will put your new campaign on the “Fast Track” – providing “expert assistance” with search term selection, titles and descriptions, budget management, and tracking URLs. Google now has a similar program called “Jumpstart” that costs $299. (I’m shocked, shocked to find that search engines are competing with search engine marketing agencies!)

On the other hand, if you are starting an organic search engine optimization program, Google’s Webmaster Guidelines “outline some of the illicit practices that may lead to a site being removed entirely from the Google index.” (Although, they have yet to add the latest guideline: “Do no evil.”)

Yahoo also provides guidelines on search engine spam: “Some pages are created deliberately to trick the search engine into offering inappropriate, redundant or poor-quality search results; this is often called spam.’ Yahoo! does not want these pages in the index.” (Do you think the major search engines are creating more fear, uncertainty and doubt about search engine spam than they are for – say – click fraud?)

Danny Sullivan, the editor of SearchEngineWatch.com, thinks the major search engines could do a lot more to level the playing field for organic search engine optimization and paid placement without violating the church/state divide. While I agree with him, I don’t expect Google or Yahoo will do anything that isn’t in their “enlightened” self interest. If you were the New York Yankees, would you trade Randy Johnson to the Red Sox just to level the playing field? (Not that there’s anything wrong with that picture!)

Second, even search engine marketing agencies find it significantly easier to expand successful paid placement campaigns to thousands of keywords, but find it significantly harder to expand successful organic search engine optimization programs to even hundreds of keywords.

Using Google’s Broad Match and Overture’s Advanced match options, you don’t even need to create additional listings to broaden your paid placement campaigns to additional keywords. But, how do you write “pages that clearly and accurately describe your content” (Google guidelines) or create “original and unique content of genuine value” (Yahoo guidelines) that include more than a couple of “the words users would type to find your pages” (Google guidelines) without creating “pages in great quantity, automatically generated or of little value” (Yahoo guidelines)?

While most copywriters will say it’s not easy to write a good headline within the constraints of Google AdWords 25-character or Overture’s 40-character limit, I’ve found that it’s just as hard to write a good five to 10-word title tag within the constraints of Google’s 83-character or Yahoo’s 111-character limit.

And writing effective copy within the AdWords constraints (two lines of 35 characters each) or Overture constraints (one line of 190 characters) involves the same “wordsmithing” abilities as writing an effective meta description tag or lead paragraph.

After that, the AdWords and Overture copywriter is done. But, the copywriter for a new page of web content has just started. (I’ve written both kinds of copy, so this isn’t a knock on anyone’s profession.)

Wait, there’s more! When you’ve finished creating relevant content, then you have to start building links. But, according to Yahoo guidelines, you have to build “hyperlinks intended to help people find interesting, related content” without “excessively cross-linking sites to inflate a site’s apparent popularity.” And, according to Google guidelines, “every page should be reachable from at least one static text link,” but you shouldn’t use “free-for-all” links or “participate in link schemes designed to increase your site’s ranking or PageRank.” (Get the picture?)

That’s why organic search engine optimization is significantly harder! If you’ve already optimized most of the existing pages on your web site, the only ways you can build on your initial success is to write new pages, create more content, and build good links.

This is one of the reasons why I continue to encourage friends, clients, and partners to start optimizing the new content that is being created every week without ever thinking about organic search engine optimization. This includes press releases and newsletter articles today as well as corporate blogs and RSS feeds in the near future. If your corporate communications people are already creating hundreds of pages of new content each year, why not make an incremental investment in optimizing and repurposing it for the major search engines – and news search engines?

Nevertheless, I continue to look for new tips, tools, or techniques that would help us create more, new, original, unique, relevant, optimized pages of valuable content quickly. If we’re ever going to shift the ratio of spending on search marketing programs to reflect the ratio of searches by users, we’ll need to find significantly easier ways to expand organic search engine optimization programs to hundreds of keywords.

To pick up on my earlier analogy, the penny farthing bicycle was invented in 1871. It was popular until 1892, when a safer style of bicycle with two wheels of the same size was introduced. (And there’s nothing wrong with that picture.)

Third, companies find it significantly easier to pay per click for paid placement and paid inclusion and significantly harder to pay in advance for organic search engine optimization.

Who can blame them? Would you prefer to pay for results each month as they are delivered, or would you rather pay in advance for a service that can’t guarantee a top ranking on Google or Yahoo? If fact, organic search engine optimization can’t even guarantee a consistent ranking from month to month.

So, who do we blame? As Shakespeare’s Caesar observed, “The fault lies not in the stars, dear Brutus, but in ourselves.”

Too many search engine marketing agencies (including my own) started off asking clients to pay for organic search engine optimization based on our time and hourly consulting rate. Why not? Consultants and public relations professionals have been using that billing system for 100 years.

But Bill Gross, the founder of Idealab, revolutionized the way companies paid for advertising campaigns when he launched GoTo.com (later renamed Overture) and unveiled his PPC model (later renamed Pay-for-Performance) in 1998. Google followed suit in early 2002, when it changed its AdWords program from a CPM to a CPC model.

Today, hundreds of thousands of companies are hooked on the idea of paying for clicks (outputs) or conversions (outcomes). So, is it any wonder that they’ve become more and more reluctant to pay professionals for punching clocks (inputs)?

So, professionals who specialize in organic search engine optimization can pedal extra hard up the hill – trying to convince companies to continue paying for their inputs. Or, they can coast down the hill – asking companies to pay for outputs and outcomes.

Now, even my business partner in San Francisco is reluctant to switch gears on the way we charge for our organic search engine optimization services. He’s hoping that I’ll forget this crazy concept as fast as I’ve forgotten most of my previous New Year’s resolutions. But, I’m at least open to testing the idea.

How might we do this? Maybe we could borrow a page from paid inclusion programs, like Overture Site Match. We might charge “a non-refundable annual review fee” for setting up an account and “for quality review of your pages.” The first URL might cost more, the next 2-10 URLs a little less, and the 11th URL and beyond a lot less. Then we might charge “a cost-per-click fee” for each lead driven to a site. We might have two tiers for different categories of web sites.

As for reporting results, we might use WebTrends, Urchin Software, ClickTracks, or NetTracker to measure organic search engine traffic, sales conversions and return-on-investment. (If we’re ever going to shift the ratio of spending on search marketing programs to reflect the ratio of searches by users, we’ll need to test, test, test and test some more.)

Still not convinced that this is an idea worth testing?

Consider this: In 2004, I did some consulting for a Fortune 500 company that helped it use search engine marketing to generate several million dollars in revenue. But, I only charged them several thousand dollars for my time. (What’s wrong with this picture?)

But, please, don’t quote me on that. I’m providing all of this inside information off the record, on deep background. Right?

Greg Jarboe is the co-founder and CEO of SEO-PR, which provides search engine optimization and public relations services to Southwest Airlines, Verizon SuperPages.com, the Wharton School of the University of Pennsylvania, the Search Engine Marketing Professional Organization (SEMPO), and a growing list of other organizations. Jarboe is also the editor of SEO-PRs News Blog.