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What matters more for online retailers: display advertising or search? It's likely not an either or answer, but it's a question that has been the subject of an ongoing debate in our comments section this week.

I wrote this post after reading an AdAge article that implied search only accounted for 10% of traffic sent to online retail sites. Abby Klaasen wrote:

"Nielsen found the majority of retailers' web traffic (61%, on average) comes from people going directly to a retail site -- consumers typing, say, Amazon.com into a browser address bar."

The idea that only 10% of traffic would be driven by search was new to me, and we asked our readers to weigh in with their own experiences. Many were surprised and confused by Nielsen's numbers (and there is a ton of information in those comments for anyone interested in the subject).

I spoke with Kenneth Cassar, Nielsen's VP of industry insights, to get some clarification. And as always, it turns out that context is key with these numbers.

For starters, those of you who argued that search drives far more than 10% of traffic to online retailers were not wrong. Nielsen took traffic results from the top 200 retail sites, meaning that searchers were already more familiar with those companies than the majority of online retailers out there.

According to AdAge, the 9.5% of traffic driven by search probably "included a good chunk of people conducting navigational searches -- typing Zappos into the search bar rather than searching for types of products (shoes) or product attributes (comfort footwear)." 

That means that people already knew where they were going when they got to the search engine. How could that be? Well, among the top 200 retailers, traffic numbers were heavily weighted toward the top three retailers: eBay, Walmart and Amazon.

To say that results for those three companies would not be typical of other retailers is an understatement. But Cassar tells me that these numbers are not meant to be generalized to all retailers, but for these specific retailers to compare their efforts against what their competitors are doing.

"It's a very different story if you're a small retailer."

And Cassar says that the referrals attributed to search in this study are not an exact science either:

"If we went with a looser definition, something like 'where were they immediately before they came to the site?' the number would have been twice as high."

Furthermore, search is once again beholden to the fact that it's easier to track than other formats. Display advertising got conflated with other factors because it's harder to monitor. Says Cassat:

"We don't call it a display number — we call it a 'third party/ other bucket.'"

But these details do not invalidate Cassar's larger point — that display is often overlook in favor of search:

"I believe that retailers in particular and commerce players more broadly are overlooking the importance of brand and have become a little too myopically focused on search."

Cassar thinks that getting a debate started will help fix some of the disparaties between search and display for retailers. And some of his comments are definitely debate sparkers. Like this one:

"There's value to brand building and with most retailers that I talk to, they ascribe no value whatever to brand building."

Meghan Keane

Published 5 November, 2009 by Meghan Keane

Based in New York, Meghan Keane is US Editor of Econsultancy. You can follow her on Twitter: @keanesian.

721 more posts from this author

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Daniel Yonts

Again, the problem is that many Internet Marketers simply don't believes the "Marketing" part applies to the Internet. Yes, search is great at putting marketers in touch with those who are ready to buy -- who are at the Action stage of the AIDAS model. Its great for discovering new markets (consumer intentions) and optimizing for conversions around intent. Unfortunately, it doesn't deserve the skewed resource focus that has developed over the last few years. Just a fact. Of course, I know this as a fact because I've tested this with millions of ad dollars and hundreds of campaigns for my clients and employers. Subtract branded terms from search ROI and you'll get a truer picture of the ROI of search. Nobody searches for something they don't know exists. Branded search terms covert at the highest rate, have highest avg. order size and conv. rate -- along with direct entries. Both require exposure to occur.  

almost 7 years ago

Matthew Curry

Matthew Curry, Head of Ecommerce at Lovehoney

But, and I know I'm niche - I subtract everyone who's searched for my brand from my traffic, and look at only non brand terms, it still has higher ROI than display advertising. I can't get my head around how a display advert generally promoting my brand can have higher ROI than a PPC ad directly offering my company as a solution to the searched problem. It just doesn't make sense.

Agree that monitoring conversion rate for brand term visits isn't a good metric, which is why I started filtering in the first place.

Can you post an example of who you've done this for? I can't find any case studies on your site?

Matt

almost 7 years ago

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Daniel Yonts

OK, let's say you have a completely new product or product that has low search volume (too low to reach your revenue goals), what do you do as an Online Marketer? Search inventory is low and the cost to reach that limited intention based market is high. Do you run print ads or do radio spots to build awareness, interest, desire? If these channels didn't work, people wouldn't have advertised through them successfully in the past, would they? No. The same applies to display ads. You might not be able to measure with percision how many people viewed or listened to or watched an ad -- but when any of these are the dominant channel, its obvious that they work (or else these companies advertising via traditional media wouldn't stay in business). PPC display ads can be measured with greater precision and targeted to those in the early stages of buying process or who might be persuaded to buy at a later time.

What makes a display ad successful is the same thing that makes a traditional media ad successful. It isn't as if a consumer views an ad and runs directly to the merchant's store or calls a direct maketer that determines the ad campaign's success. Its whether the ad makes a connection with the consumer and presents an offer that they care about -- that has meaning to them. When consumers are ready to buy, the idea is that they remember and trust your brand enough to make a purchase from you. Online, your brand is unique because its directional -- providing an easy way to find you and order from you.

What differentiates PPC display advertising from traditional media is that you can control costs, increase conversions and build brands by disqualifying non-buyers from clicking on your ad. You only pay when people click and you only invite those to click who are ready to buy. You disqualify further by letting folks know what your offer is or isn't, how much it costs, etc -- because you don't want to pay for someone to click on the ad who won't buy for these reasons. In other words, your messaging will determine later conversions-- just like traditional media advertising -- as well as your costs/profitability. If you have poor messaging, you'll quickly deplete your ad budget, get far fewer exposures and conversions. The ROI will look really bad. This, however, won't be because display ads don't put you in front of those most likely to want and need your offer -- or because they tune out display ads. Its due to not crafting the right message.

Suppose I'm in front of consumers reading an article on the benefits of cranberries and I'm an adventerous marketer who sells cranberry sauce off-season. Would I want a 336X280 or 728X90 or 160X600 ad touting the health benefits of my offer -- and inviting them to buy my particular brand. Yes. When they are ready to buy, instead of searching for cranberry sauce -- my hope is they will search for my brand or go to my site directly. I have seen this hope realized for hundreds of offers and it never gets old. Display ads can get you in front of those pondering a solution within a context that strengthens and reinforces your brand authority.  

Over the past 2 years, I've had a great time helping my clients grow during this global recession. They've established strong niche brands that were built primarily through PPC display. Competitors dropping out of this channel helped drive the pricing down. Learning more about those in the early buying stages helped us to optimize ads, landing pages and funnel navigation. Thankfully, with Google's View Through metrics, we are now able to optimize campaigns even better -- focusing on messaging that generates the most conversion responses rather than 1st click conversions -- and a reliance on measuring brand activity (brand search and direct entries). Since they only do online channels, I have a certainty that eludes multichannel retailers.  

almost 7 years ago

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true religion jeans

It isn't as if a consumer views an ad and runs directly to the merchant's store or calls a direct maketer that determines the ad campaign's success. Its whether the ad makes a connection with the consumer and presents an offer that they care about -- that has meaning to them. When consumers are ready to buy, the idea is that they remember and trust your brand enough to make a purchase from you.

almost 7 years ago

Adam Tudor

Adam Tudor, Senior Digital Marketing Manager at The Black Hole

I totally agree in what you're saying about the value of display, my issue with this research has not been the fact that display is a useless or is undervalued, but that generally retail sites see much more than 10% of their traffic coming through search.  

The issue is, the figures quoted indicated that across "second-quarter traffic for 200 online retailers" search referrals accounted for less than 10% of traffic referred to these sites.  We now know in reality, this is only really across 3 main retailers, and that the search figures attributed are not really 'exact' as such either. 

In any online marketing campaign, the 'marketing' must come first and the mediums used to achieve objectives come as a result of this.

almost 7 years ago

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Adrian Johnson

Interesting article ! I've been in business for about 20 years (pre internet) and used to generate all my sales from adds in magazines. More and more, I am finding my customers come directly from the search engines. I'm considering cutting my display budget even more this year.

almost 7 years ago

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Daniel Yonts

Adam,

I agree that smaller retailers are more likely to get a higher percentage of their traffic from search -- although search only represents a small percentage of online activity (less than 10%). I'm also quite certain that of the search traffic that these retailers attract -- a large percentage is branded terms (i.e., the result of exposures that aren't directly related to search). Of total revenue generated from search, I'd also postulate that the overwhelming majority comes from branded terms (overs 70%). This is where the value of search is inflated (in terms of resources allocated) and where the current SEO/SEM market is unstatainable -- especially in a down economy.

What's troubling is that the choices made based on inflated assumptions and reporting are costing retailers, their suppliers and the folks they employ. It's also creating problems for the profession of Internet Marketing. Long term, we must be much more than technocrats manipulating search alogorithms in the hopes of attracting buyers. The Internet -- including search -- gives us some powerful tools as MARKETERS to be much more. What makes us marketers, however, isn't the tools or tactics -- but our ability to persuade the right people to take action at the right time.

almost 7 years ago

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Daniel Yonts

Interesting article ! I've been in business for about 20 years (pre internet) and used to generate all my sales from adds in magazines. More and more, I am finding my customers come directly from the search engines. I'm considering cutting my display budget even more this year.

----------------------------------------

Here's what your likely to find. If you separate branded terms for non-branded terms -- you'll find that search revenue is comprised mostly of branded terms. Consumers search for your brand as a result of exposure (online and offline) not because you've optimized your branded terms for search. Nobody searches for things they don't know exist.

Keep that measurement (brand searches) and cut off your display ads. A few weeks later, go into you analytics and see how much your branded search activity decreased -- along with your number of direct entries. Branded search and direct entries are where retailers generate the overwhelming majority of sales. Keep track of this over the next few months -- assuming your sales don't decrease so much that your reflexively re-institute your previous approach.

If your doing display ads well (just like print ads), you generate both response and an awareness of your brand. You also build trust and authority within your market -- making the conversion process easier. With the inclusion of View Through measurement in Google AdWords -- you can also see which ads made which people go to your site to buy -- without clicking on the ad! Over time you can use information gained to optimize ads and landing pages -- further increasing conversions and lowering costs.

If anyone's job is tied to your choices, I beg you to measure the affect of your decision on brand searches and direct entries. Its easy to do. Also, think about what made your print ads successful. What would have happened if you had terrible messaging, weak calls to action and the wrong audience? Would I be justified in saying that print ads had no value? Would I be justified in moving away from those who going to buy as soon as they see the ad in a magazine?

almost 7 years ago

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Adrian Johnson

Thanks for responding. All the items that I sell I also manufacture so not sure that brand is relevent. Will take your coments onboard though.

Cheers

Adrian

almost 7 years ago

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Daniel Yonts

Adrian,

Your branded terms would be your site name, site url, product names, and business name. The amount that these increase or decrease determines a big part of your sales -- since they convert at the highest rate and have highest avg. order size.

Good luck!

almost 7 years ago

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JHardy

The Amazon / Walmart / Ebay slant pretty much explains their data in these findings, but to say "Nielsen found the majority of retailers' web traffic (61%, on average) comes from people going directly to a retail site" is entirely misleading to the majority of web marketers out there - if they'd said something like "the majority of very well known brand's traffic is direct" then it would have been much more understandable

almost 7 years ago

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Steve Phipps

Some great info here. For someone like myself who is venturing into online marketing, I appreciate all the discussion. Like with most marketing, whether online or offline, it all comes back to what you're trying to accomplish. Search accomplishes some things well while display ads accomplish some things well. There's no a silver bullet. Rather, its a combination of efforts that seem to net the best results.

almost 7 years ago

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