Foneshop, a leading UK online retailer of mobile phones and accessories, was established in 2003. Initially it struggled, scraping in only about 10 orders a day - but in 2005 it embarked on a search marketing strategy through Google AdWords. Within a year, its orders had soared by 56%, the average value of each order had risen by 54% and its conversion costs had fallen by 29%.
'We're doing at least 150 orders a day now, and we have three people manning the phones,' says marketing director David Hyett, who estimates that 50% of all its customers find Foneshop though Google.
Adrian Flux Insurance Services, one of the UK's biggest specialist motor insurance providers, has used search marketing on the Microsoft adCenter platform since 2003. 'We also advertise heavily in the specialist press, but search is by far the most cost-effective way of marketing for us,' says online services manager David Wilson. 'It is at least twice as effective as buying pre-qualified leads from third parties.'
Meanwhile Garlik, the online identity expert set up in 2005 by Egg founders Mike Harris and Tom Ilube, used search marketing to build awareness and consideration for the nascent brand.
'We were competing with established players like Experian. Search marketing reduced our cost per acquisition,' says marketing manager Jayne Sankoh-Beacom.
Despite the considerable benefits that search marketing delivers, nearly two-thirds of British small- and medium-sized enterprises (SMEs) that have websites do not promote them online, according to a report by Microsoft adCenter.
'It's like having a shop tucked away in a back street, with no signpost,' says adCenter marketing manager Cedric Chambaz. He estimates that businesses waste about £3bn on websites that are either inaccessible or invisible to customers looking for products and services online.
'In today's competitive online environment, a website is not enough,' says Chambaz. 'There are about 38.5m internet users in the UK, and search is now the most common online activity after email. You have to be where your customers are.'
There are two main aspects to search marketing. The first is search engine optimisation (SEO), which involves building features into a website that will make it appear closer to the top of 'natural' search listings. The other is search engine management (SEM), which uses advertisements featuring key words to drive traffic.
SEM resembles the Yellow Pages model, where everyone is listed but some small businesses pay for a more prominent advertisement. However, while a company pays up front for an ad in the Yellow Pages, SEM's pay-per-click model means that payment is made only when a user clicks on their ad. The amount a company pays depends on how much it bids for keywords that internet users seeking a similar product or service are likely to enter. Typically, the higher a keyword bid, the higher the listing for an ad. While the average cost per click is 10p-20p, in some competitive industries, such as financial services, it can be as much as £3.
The payment structure makes search marketing a cost-effective medium. It is also more targeted than most advertising, as a company can specify the type of audience, geographical location and time of day it wants to reach people. It ensures more qualified leads, as customers' propensity to ring or buy is higher than if they had come across an ad in a newspaper.
Search is also measurable and controllable. Companies can set a maximum monthly, weekly or even daily budget, measure the success of the campaign in terms of number of clicks or conversion rate, and adapt it accordingly. Not only does this allow a brand to optimise the return on its marketing investment, but also improves market knowledge, as Mark Mitchell, head of search at OMD Group, points out.
'While word of mouth is the best form of marketing for a small business, search marketing supports it by providing customer data that allows it to target its marketing efforts better,' says Mitchell. 'Understanding customers and where the traffic is coming from is an integral part of growing a business in the digital age. Search is not just about generating leads.'
Search allows highly niche businesses to be viable. Gareth Evans, global communications and public affairs manager at Google UK, cites the example of dustbag.co.uk, which sells bags for thousands of vacuum cleaner models world-wide. 'It would never stay in business if it were on the high street,' he says.
Equally, a local business can orchestrate steady traffic to its site though geo-targeting. A local pizza company, for example, could aim its ads at 16- to 35-year-old men in Liverpool at 10pm on Mondays.
Chambaz attributes SMEs' reluctance to embrace search marketing to three misconceptions: that it is too expensive, time-consuming and complicated. 'They seem to have a real inferiority complex, when, in fact, their size, flexibility, responsiveness and adaptability makes them eminently suited to online marketing - indeed, much more so than bigger, more established businesses,' he says. 'Our research shows that 76% of SMEs with a search marketing strategy have seen higher sales as a result.'
For a small business, or even a sole trader, on the brink of recession, it's a compelling proposition.
Top tips: Search marketing on a budget
- Set up a website. It can be done cheaply and quickly, using off-the-shelf products such as Microsoft Office Life, which offers server space, a domain name and a selection of basic templates.
- Establish a simple linking strategy. For example, a Corgi-registered plumber might provide a link to the Corgi website. Such links will help raise the brand's visibility in natural searches.
- Do your background research. Advice abounds, from the detailed online tutorials offered by the main search engines Google, Yahoo! and Microsoft to an array of blogs.
- Be prepared to spend time setting up and monitoring the search strategy. 'Search marketing requires more effort than the traditional fire-and-forget approach of a Yellow Pages ad,' says Rhys Williams, managing partner at digital agency agenda21. 'This is not a hands-off medium. It is very dynamic and you have to watch what is working for you.'
- Set up an account. It takes as little as 15 minutes to do so, and it can easily be managed from your desk. Results will come in from keywords costing only 10p-20p per click.
- Pick the right keywords. Avoid generic ones such as 'travel', which will be bid on by major national advertisers; instead, use 'long-tail' keywords, such as 'adventure travel agent Newcastle'. These have less competition, reduce key-word spend, bring relevant searchers to the website, and increase investment return.
- Start small. Experiment with a maximum daily cost, say £10-£20, to see which words work best. After observing this, raise investment accordingly.
- Know the target market. 'There is often a disconnect between the way businesses market their products and how their customers think of them,' says Chambaz. 'For example, if you are selling anything to do with vacuum cleaners in the UK, you will need to remember that many people still use the words "Hoover" and "vacuum" interchangeably.'
- Do it yourself. An agency could be of use to help set up or manage a search marketing strategy, but sophisticated online guidance and tools from the main search engines such as Google, Microsoft and Yahoo! mean that businesses prepared to put time and effort into understanding the medium will quickly yield strong results.
- Quality is paramount. The algorithms search engines use to ensure they are offering relevancy and good service to people searching the web are growing in sophistication. Quality indicators include the relevance of the ad to the website, the number of inbound links to a page and the quality of the ad itself - including spelling and grammatical mistakes. 'Quality can put you in a number-one position even though you are bidding less than the number two and three listings,' says Chambaz.