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As Search ROI Declines, How Do You Use Search?

Now that search is fulfilling the inevitable promise of decreasing ROI effectiveness against increased demand and increased prices, what are we to do with search?

As many of you know, search is one of the most utilized, and typically most effective, forms of online advertising. It's no longer a secret, but as many people forecasted, search is starting to become less effective as a pure direct response tool now that some of the key categories are increasing in cost-per-click pricing while response rates either stabilize or drop. The result is that cost-per-actions are increasing for many categories and this is a worrisome thought for many advertisers. If this trend continues, how will advertisers look at search in the context of the overall marketing mix?

Search has been 99 percent dedicated to driving immediate ROI to date. Most desired actions occur within the initial click through, and therefore the ROI is easily tracked and easily managed. As response rates decrease and more people take more time to consider their purchases, search does become a branding element as well. For the casual surfer, search provides a window into the wealth of content available on a certain topic. For the more detailed surfer, search becomes the most valuable tool next to word of mouth. The presence of an advertiser in the paid search placements adds immediate credibility to a brand and can increase their propensity to purchase one brand over another at a later date.

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Search also becomes a tool for customer retention. For pharma advertisers, search adds a sense of ease to a user who is seeking information on topics pertaining to their health just by being among the top results for those searches. The more comfortable a user is with a brand, the more comfortable they are with the ongoing use of that same brand. It's similar to the old line that, "you don't get fired for hiring IBM." If the brand is recognized and works its way into your immediate community (via word of mouth or from an established source) then you continue to feel comfortable and will continue to make the same purchase.

Search has definitely reached the apex of its value from an ROI standpoint, but the strongest value that it adds is its ability to create a shorter connection between the user and the information. Advertisers will always continue to pay for a shortcut from target to purchase, so regardless of the immediate ROI for search, you should know that it is effective. You should also realize the effect that general advertising will have on search results. Running a broader reach ad campaign will inevitably drive an increase in search volume, which translates into the opportunity to expose you to more potential consumers. Even if the ROI is decreasing, your overall volume may increase and the opportunity cost of not running a search campaign should also deter you from any exclusionary effort.

Just because immediate search ROI is starting to decline, does not mean that you should allocate fewer dollars to search. It's just the evolution of the model. After all, a number of people predicted that banners would go away and yet they still continue to hover around. What makes you think this will be any different?

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