Canadian small and medium sized businesses aren’t investing adequately in search engine advertising and could be missing out on an effective way to drive sales, according to online marketing experts.
Search advertising — or paying a price for specific key words to show up in the sponsored section of search engine results — is the dominant form of online marketing in the U.S. and Europe.
However, in Canada, fewer businesses are buying those key words and when they do, they are spending only a small portion of their marketing budget on search advertising.
But one Canadian online merchant is bucking that trend.
Vancouver-based Coastal Contacts Inc. sells contact lenses directly to customers worldwide at www.clearlycontacts.ca. With just 175 employees at offices in Vancouver, Sweden, Singapore and The Netherlands, the company has delivered more than 100 million contact lenses to customers in 150 different countries.
Search advertising is the company’s top marketing investment, says Curtis Peterson, the director of acquisition and retention at Coastal Contacts Inc.
“It’s our biggest line item,” he says. “It’s probably the most efficient way to get a potential customer to your storefront. They’re only a click away.”
The optical e-store is the world’s fastest-growing vision care supplier with an annual growth rate of 79 per cent. It is the second largest company in the industry with 2007 forecasted revenues of more than $100 million.
Companies looking to get started with search advertising can do so quickly, Peterson says. There’s lots of data online and it’s easy to see if your experiments are working or not.
“The feedback loop is measured in minutes and hours rather than weeks and months,” he says. “It might seem like a big risk and a lot to get into, but measure it in the exact same way you’re measuring your other advertising and you’ll see that it performs well.”
Global search advertising spend, this year, will reach $12.9 billion, according to eMarketer, an online marketing research and analysis firm. That’s nearly double the next highest spend, display ads at $6.6 billion, and more than one-third of total online spending of $32.5 billion.
But the Canadian market isn’t quite so enthusiastic about that marketing channel, says Martin Bryne, general manager at iProspect, a search engine marketing professional services firm headquartered in Watertown, Mass. Bryne is based in Toronto.
“In the Canadian market, we don’t see the same level of awareness and adoption yet,” he says. “Canadian online markets are still several years behind American and European companies in terms of search marketing.”
Less than a quarter of Canadian markets are investing in search marketing, according to research done by iProspect. Those that do, spend, at most, one-quarter of their budget there.
Compare that with companies south of the border, where about three-quarters of companies buy search advertising and put about 35 to 45 per cent of their marketing budget into that channel.
A typical Canadian client with iProspect would spend about five to 10 per cent of their budget on search advertising, Bryne says.
“We’re still seeing most online advertising spending going into banner advertising and sponsorship,” he says.
It’s also cheap to get started. There’s no minimum cost-of-entry as when purchasing a billboard. Instead, the results are directly proportionate to your budget.
“You can start off with a marketing program at a low cost,” Bryne says. “There are people who literally spend $100 a month for their dreamcatcher business. So a medium to a large-sized company can get started for a few thousand dollars.”
With free tools such as Google Analytics, companies can track their results and see how effective search engine marketing will be on a bigger scale. A company could determine how many cents must be spent for each visitor to the site, and how many of those visitors will convert to transactions.
How many of your Web visitors turn into actual customers may depend on which search engine you’re spending your money on, says Peterson from Coastal Contacts. He finds a Microsoft Live Search user is more likely to follow up with a transaction than a Google search user.
The conversion rate for Google users is about five to nine per cent, he says, while that for Microsoft Live Search users is about 10 to 15 per cent.
That could be explained by the company’s purchase of display ads on Microsoft’s Web properties such as MSN, Hotmail, and the Live Search page.
“They’ve already seen six or seven ads from us and they’ve really been primed to make that purchase,” says Peterson. “We definitely see better results in MSN than in Google.”
But Google is still, by far, the dominant search engine in Canada, accounting for about eight out of every 10 searches. Coastal Contacts strategy is to maximize their budget on smaller search engines, then spend the rest on Google to get the really high volume, Peterson says.
Consumers are very savvy in today’s economy and will likely do some research online before making a purchase, he adds. So don’t go and blow a lot of money on traditional advertising, if you’re not going to follow it up with some search spending.
“If someone searches for lawnmowers because they saw your big, full page ad for lawnmowers, and then you’re not there, you’ve just sent a hot lead to someone that’s playing the search game,” he says.
So it’s either spend money on search advertising, or don’t advertise at all, he says.