To date, B2B marketers have been relatively restrained in their take up of search engine marketing. There are though, signs that this is changing as they begin to recognise the potential benefits. As more and more new technologies make search engine marketing (SEM) ever more effective, this is no longer a technique that the serious B2B marketer can ignore.
Andy Atkin-Kruger, president of the Search Marketing Association, says, “Search engine marketing is ideal for B2B marketers, it allows small niche companies to have a wide geographical reach. It provides companies with prospects who are actively looking to buy, and it offers clear measures of return on investment.”
Most agencies report a significant increase in interest and spend levels from B2B marketers, and this appears to be supported by recent research. According to a September report from Forrester Research, the past 12 months have seen a 57 per cent growth in the SEM market, and SEM has so far accounted for 66 per cent of online spend in 2005, compared to 53 per cent in 2004. Similarly, according to data from MarketingSherpa and Merrill Lynch, total spending on SEM in the US has risen 177 per cent over the last 12 months.
Pay-per-click performs
Jonty Kelt, product director of SEM agency Dart Search, comments: “Google, Yahoo and a host of shopping comparison sites carry more B2B products and services today than they did in the past. Travel, automotive, computers and electronics are the B2B sub-sectors that are taking the lead on this.”
To a large extent this growth has been driven by pay-per-click (PPC). With PPC – rather than building up a website that performs well in so-called natural search listings (which appear on the left hand side of the Google results page) – companies can get listed in response to keywords they choose. Whenever this results in someone clicking through to their site, they pay an amount that has been agreed for each word via an auction.
If a marketer knows how much it costs to get a prospect to his website, how many convert to a sale and then the average sale value, he has that precious commodity: a clear return on investment model. As Gavin Somers, marketing director of Search & Directory at online directory InfoSpace Europe, says: “Pay-per-click transformed the online environment for a lot of organisations and gave the advertising and marketing world a huge wake up call to the awesome potential of search.”
Remaining barriers
Yet, B2B still lags behind B2C in its use of this medium. According to MarketingSherpa, B2C marketers allocate 56 per cent of the annual budget to online, while B2B marketers allocate only 40 per cent. There are still several significant barriers to the take up of SEM by B2B marketers. The first is that lead times are long, as Edward ‘Teddie’ Cowell, technical director at Neutralize, an SEM agency explains: “For many B2B marketers it can be difficult to link sales to enquiries simply because the time between the two is so great. This can sometimes make it difficult for them to see the business case for search.”
Click fraud remains a problem for SEM, as Ralph du Plessis, head of search at search agency DGM, explains: “Click fraud has been a huge thorn in the side of the search market and is arguably the main barrier preventing B2B companies from adopting search. Where humans are employed to spend their days clicking on links, search engines can now identify multiple clicks from the same IP address and so block that address. When click fraud is done through online robots it’s more difficult to combat. Google and other networks do however provide refunds where click fraud can be proven to have occurred.”
Another problem for SEM is that too many B2B websites are simply not set up for online commerce. Too few B2B marketers have placed their websites firmly in their sales process with the result that there is little point driving traffic to it. As Tim Gibbon, marketing and communications director at WebtraffIQ, a web analytics agency, puts it: “We advise clients to drive traffic only to sites that are prepared, ready and able to manage visitor interest and requirements. Bringing prospects to sites that don’t meet these requirements will just result in them going elsewhere and not returning.”
Other experts point out that there are more fundamental problems for B2B marketers in SEM. Matt Trimmer, MD of Internet marketing agency Ivantage, says: “It can be difficult to find suitable keywords. Many technical, industrial and commercial keywords just don’t show up on traditional keyword research tools. Also, many B2B keywords will also have a consumer connotation and so B2B marketers need to make sure they don’t pay for that consumer traffic.”
However, the greatest remaining barrier to take up of SEM appears to be ignorance of its benefits. “Many companies are naïve about the value of SEM and dismiss it too readily,” argues Spencer Gallagher, the MD and founder of Bluhalo, a new media agency. “Quite often businesses are wary of embracing online marketing, as they are unaware of its benefits. Some companies see SEM as a technical service and so, although they want to understand all about it, they don’t fully grasp how the process works and get confused.”
Future developments
As more and more companies begin to recognise the potential of SEM, so competition between search engines for their business intensifies. Google currently leads the way with 69 per cent of all UK searches. Sarith Chandrasekaran, account director at design agency Milton Bayer, comments: “Google is popular because it uses geo-targeting technologies that allow companies to then specify the countries and customers at which they would like to target their ads. In particular the different services they provide like Froogle for product search, Local Google for local services and Mobile Search are excellent.”
Yahoo and Miva hold most of the rest, with the recently-launched MSN taking a significant proportion of the consumer market. However, Grant Whiteside, technical director of SEM agency Ambergreen, predicts that Google’s dominance may be fairly short-lived. “Google is very impressive right now, but even the Roman Empire fell in the end,” he says. “If you’d have told AltaVista five years ago that by 2005 it would have only two per cent of the UK market they would have laughed at you. Google’s position is by no means permanent.”
A significant challenge will come from pay-per-call. Launched by Miva on 30 September 2005, five years to the day since the same company launched pay-per-click, this is being described by many experts as the next big thing in SEM. Seb Bishop, Miva’s chief marketing officer, says: “We realised that although there are 2.7 million companies advertising in the UK, only 85,000 of them have websites. So, we’ve devised a service that will allow people to research a purchase online, and then telephone a provider. That provider does not even need to have a website.” At two pounds as the minimum bid for a keyword, cost-per-call is expensive, but the evidence from the US – where the service launched at the end of 2004 – is that conversion rates are impressive. Bishop says that some companies are achieving 25 per cent.
Looking beyond pay-per-call, some predict that the next big thing will be GeoIP, which uses computer positioning to create localised results based on the computer’s geographical position. However, noting the recent acquisition of Skype by eBay, most observers are waiting for VoIP. This will allow buyers to browse the Internet for the product or service they want to buy, then with the click of a button get connected by telephone to the company they want to buy from.
Ongoing growth
While the Forrester research projected slowing growth for the SEM market to 24 per cent in 2006 and then 12 per cent in 2007, it looks more likely that these new developments will see it continue to grow at its current phenomenal rate. As Paul Mead, managing director of Quartz Interactive, puts it: “As we see more success stories in the B2B search marketing space we will see more businesses beginning to test the water. This in turn will build momentum and search will be seen as a ‘must-have’ rather than a luxury in a businesses marketing strategy.”
