Google is on the Cover of Forbes
Ask Susan - Tip of the Month
June 2003

Since September 2002 I have been running a small advertisement on Google for this e-mail newsletter:



with a link to sitesofboston.com. I have attracted 93 visitors, gained 29 new subscribers and I paid just $5.69.

How did I do that? Well, the ad is only displayed when someone searches for "search engine information", and my ad was the only one on Google that used this key phrase. When I first posted it I paid 5 cents every time a searcher clicked on the ad to visit my website. This is a "Paid Search", or "pay per click" ad.

The number one position in Google now costs $1.35 per click. Are all the bargains gone? No, but more companies are catching on, and Paid Search advertising now has the attention of mainstream media

The May issue of Forbes Magazine features Google on the cover, and Yahoo! is on the cover of the June 2, 2003 issue of Businessweek. The current hype reflects the huge success of Paid Search. It works - it brings qualified traffic to websites for pennies. It works well - users report a 29% return on investment(1). Revenues are growing - total search ad revenue was $1.4 billion in 2002 and is expected to grow 40-50% annually.(2,3) Paid Search is a terrific opportunity for small businesses to affordably advertise, before large companies drive up prices.

Why is Paid Search working so well? Last year, 13% of visitors arrived at a website from search engines, double the rate for the previous year.(4) Paid Search ads are relevant to the searchers - they are actively looking for the advertised product or service - so the click-through rate is much higher compared with other on-line advertising. There are now twice as many product and service searches done on search engines as there are through the Yellow Pages.(5) Already, 100,000 small businesses have identified this rapid change in consumer behavior and have subscribed to GoogleAdWords in its first ten months.

A March 2003 study (1) shows the cost per lead generated for different direct marketing techniques:





Paid search is still a bargain because corporate advertisers have yet to catch up. Currently, they allocate only 2% of their advertising budget to ALL on-line advertising. They spend three times as much on Yellow Pages, even though there are only half as many searches in the Yellow Pages and it costs more then five times as much per lead. (5)

Why are larger companies not spending more on Web advertising? Some do not appreciate the opportunities or do not have the necessary skills. Many have not integrated on-line marketing with their overall marketing plan. And advertising agencies make less money in commissions placing ads on-line then they do with other media.

As more large companies discover Paid Search, ad rates will continue rise. So now is the time for small businesses to take advantage of affordable ads - and see a nice return on the investment!

By the way, the same ad for "search engine information" is only $.08 per click for the #1 listing on Yahoo! which is just as popular as Google.

To learn more about "Paid Search" or "pay per click" advertising, read our Oct 2002 issue: Pay per Click - Overture and our Dec 2002 issue: Web Ads that Work: Two Case Studies, or contact Susan Hankins at 978-266-0481.

Sources:
(1) US Bancorp Piper Jaffray (The Golden Search, March 2003) as reported by Barbara Coll www.webmama.com
(2) Forbes May 26, 2003
(3) Businessweek June 2, 2003
(4) WebSideStory.com
(5) www.searchengineposition.com/info/netprofit/adbudget1.asp




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