SEO – A Maturing Market?
Posted by Thomas Schonenberger on 16 Nov 2009 | Tagged as: Facts and Figures
So, online ad spend finally overtook TV ad spend this year, but is the shift in spend gaining momentum or slowing down? Ecommerce growth estimates are forecast to slow (Forrester as quoted on business week) but that growth is still stealing market share from traditional ad spend.
At the beginning of this year, growth and spend for 2009 was predicted to fall somewhat as we all battened down for the long hard winter of recession.
I had a much gloomier picture in mind than what the actual figures to date reveal as quoted by e-marketer. Looking at this growth curve would hardly have me believe that we were in recession this year!
This online spend is of course funnelled from various sources and as Search Marketing Experts we like to know where our visitors are coming from. Figures from Hitwise show the top distinct traffic sources for e-commerce to be Organic Search (31%), with over 3 times the volume of the next segment which is Paid Search (9%). Interestingly, Social Networks are a close third at 7.1% with e-mail marketing at 4.5%. No surprise then that there is so much social media hype.
The real clincher comes as we reveal the percentage split in the distribution of search clicks between SEO and PPC, with natural search accounting for close on 90% of clicks and only 10% landing on PPC.
The real question then is, why do decision makers choose to spend 9 times as much on PPC than on SEO? Is it seen as the easy solution? Is it because they believe it does what it says on the tin? Or do decision makers still believe that SEO is unpredictable and is our industry still tarred by cowboys promising first page results for $100? (No offence to Bas and the Cowboys)
I believe this sets the scene for some interesting times ahead for SEO’s. Everyone wants a piece of the action and we clearly have not seen the end of the $100 special, but we have certainly seen the decision makers getting wiser to these sales pitches.
Search is a maturing market – we have spent the last 5 years educating the market as to what Search can achieve, and our job is far from over. I find myself speaking less about what we can do with search and more about what we can do for your bottom line, and a large part of this discussion is conversion. Whether the visitor arrives at your door via SEO or PPC, the focus is still to convert into a sale. Business owners very quickly do some sums and work out where they are getting the best ROI and we always see them shifting more budget from PPC to SEO. Our most recent example is Douglas and Gordon where we showed a 250% increase in non branded search relating to a 75% drop in cost per conversion while actually cutting the spend by 33%!
I expect this pie chart to shift with the SEO wedge becoming far more prominent through 2010. A lot of empirical data shows that folks trust natural listings more than sponsored listings. The conversion rate of natural traffic is higher than that of PPC traffic and, last but not least, SEO is an investment going forward whereas PPC is like a fireworks display – at the end of the night it has all gone up in smoke!
Many thanks to Rand and SEOMoz for putting pretty pictures together out of the mass of stats data out there.
