eMarketer estimates that while the rate of search ad spending growth was down in 2008, search still grew 21% over 2007. “In fact, the rate of growth will fall over the next three years—but search ad spending growth will continue to be positive, in double digits every year—until 2012 when it will rise to nearly 14%.”

Search, it seems, is “recession-resistant.”

Smart Marketers will continue to spend increasing budgets on Search – and rightfully so, if they want to continue to make their ROAS (Return on Advertising Spend) accountable.

But are marketers managing and measuring ROAS properly?

Maybe not.

We are consistently seeing situations where two key areas are being overlooked:

1. There is no ongoing measurement of Search campaign performance or visitor behavior

2. Traffic is sent to a generic landing page (or the home page) and not to custom landing pages for segmented traffic

As a result, two bad things happen to smart marketers who are spending money on Search:

1. There is no visibility to the fact that a high percentage of Conversion come from a very small percentage of the Search budget (yes, the old 80-20 rule lives right here)

2. The Conversion Rate on the traffic is lower than it would be had they decided to create custom landing pages for segmented traffic (and this applies to even to ad groups that generate low traffic numbers)

Search marketing is a smart way to drive traffic to the site – but just investing in Search and not monitoring/dissecting the campaign to understand performance of ad groups, and just driving all the traffic to the same generic page is a big missed opportunity.

Pew Research, a nonprofit “fact tank” that provides information on the issues, attitudes and trends shaping America and the world, reports today that the percentage of internet users who use search engines on a typical day has been steadily rising from about one-third of all users in 2002, to a new high of just under one-half (49%).

With this increase, the number of those using a search engine on a typical day is pulling ever closer to the 60% of internet users who use email, arguably the internet is the all-time killer app…

In other words, your customers are using Search every day more than they did before and are becoming more sophisticated about their response once they land on your website – and on your competitors’ sites.

It’s high noon to make sure your landing pages are the best in town!

In the opinion of SMX, they are:
1. Increase traffic with SEM-aware design and copy
2. Save money by optimizing your SEO/PPC investment
3. Maximize natural search rankings with killer content strategy
4. Boost conversions by driving high-quality traffic to your site
5. Grow sales after selecting more effective keywords
6. Win business by outwitting the competition

Wait. Nothing about Conversion Optimization?

This is an indication that Danny Sullivan and the search industry still don’t understand how conversion decisions work (and we’ll ignore the fact that #5 is a subset of #2, #2 is a subset of #4, and #6 provides no value at all).

Please understand that getting a person to your site is typically less than 10% of the effort of getting them to purchase. If driving traffic is all you had to do, you would have a 100% conversion rate.

Think about this for a second.

Imagine I want what you’re selling

Imagine you sell iPhone accessories online. I happen to be searching for an iPhone screen protector so I see your Google ad that promises “iPhone screen protectors, best prices anywhere” from your highly optimized, relevant PPC campaign with SEM-aware design and copy. I click on your ad and arrive at your landing page.

Do you REALLY have what I want?

Okay, so I’ve made an infinitesimally small commitment to you – I’ve clicked on your ad. Congratulations.

But now you have to convince me to buy from you over all of the other iPhone accessory vendors that are open in my other browser tabs. You want me to do a bunch of uncomfortable things, like:

• Familiarize myself with your site’s unique=innovative=terrible navigation system
• Search through your list of products (because your landing page probably didn’t send me directly to the right one) to find what I need
• Read a bunch of copy about your company and product
• Scroll up and down to find the info I want (I hate scrolling and my wrist is starting to hurt)
• Figure how much you want me to pay
• Figure out whether you ship to my location and how much shipping costs (which I may have to go to the shopping cart to find out!)
• Enter a whole lot of personal information about me into a form (how do I know what you’re going to do with this?)
• Figure out why I keep getting an error message and kicked back to the top of the form (Oh.. I need a six character password that must contain a number but when the page reloads I lost some of the other info I’d already entered.. ack.. and why is the error message in a spot on the page that I can’t see without scrolling..)
• Give you my credit card number

Conversion Optimization does that

That’s a big job. And that’s where conversion optimization comes in. It’s the science and art of moving people through your conversion funnel to get more leads and sales from that expensive traffic you’re driving to your site.

I was at SMX West a few weeks ago and was surprised at how few of the SEM vendors knew about conversion optimization. We’re still in the early adopter phase and it will be exciting to see the lumbering behemoth that is the search industry understand that a purchase decision can’t be solved with an algorithm.

Our clients are now leap-frogging their competition by becoming more efficient with their marketing dollars. Conversion optimization is the right tactic to use now especially when few others are.

Note: For more information on how you can increase your conversion rate, contact one of our conversion optimization experts.

As it turns out, from the results of a study conducted for the Search Engine Marketing Professional Organization (SEMPO) called “2007 State of the Market” we learn that there are multiple reasons for SEM spending growth. The reasons include advertiser demand, rising keyword and pay-per-click campaign costs, small-to-midsized business SEM use and increased behavioral and demographic targeting.

Very importantly in light of concerns about the overall economy, “some of this spending is the result of shifting marketing dollars from other offline and online marketing endeavors” says Jeffrey Pruitt, president of SEMPO.

So, even as some businesses decide to cut back spending to hedge against further economic problems, search engine marketing (SEM) is in great shape. For now.

The study also found that three-quarters of respondents said they were “nearing a spending ceiling” in SEM.

How can your businesses respond to rising keyword and pay-per-click campaign costs?

Simple: get more Actions on your website. Improve the conversion rate, and watch the marketing ROI rise.

(To access our handy Conversion Optimization Model for Lead Generation and eCommerce, just click here: http://www.widerfunnel.com/proof/downloads)