• by Jack Loechner , Staff Writer @mp_research, May 17, 2010

According to Internet Retailer's recent search engine marketing survey of 102 web-only retailers, chain retailers, catalogers and consumer brand manufacturers, 28.0% of merchants report more than 25% of their site traffic stems from paid search advertisements, while 51.5% say more than a quarter of their traffic comes from natural search. Search engine marketing is one of Internet retailing's fundamentals, says the report. Web merchants keep pouring money into advertising on search results pages and on search engine optimization projects to move up in natural search results.

In the past year:

·      44.9% of merchants report that the conversion rate on pay-per-click search advertising went up

·      16.3% say it went down

·      38.8% say their conversion rate held steady

·      47% report more than 25% of their web sales stem from search engine marketing

·      44.6% increased their paid search budgets

·      49% say they will increase it in the year ahead

Shar VanBoskirk, Vice President and principal analyst at Forrester Research, says "Everything we see from the retail side indicates... considerable interest and investment in search related to... driving more online sales."

37.7% of respondents spent more than 50% of their online marketing budget, 11.9% spent 61% to 75%, and 20.8% spent more than 75%, according to the Internet Retailer survey of IRNewsLink e-newsletter readers conducted with e-mail marketing and survey firm Vovici Corp.

27.0% report more than 50% of their online sales are attributable to search engine marketing:

Google dominates the search engine landscape. Yahoo has been the perennial second-place finisher. Bing, has been making inroads since its launch in June 2009, and gaining increasing attention from retail marketers. 19.4% of respondents to the Internet Retailer survey say more than 90% of their search engine traffic comes from Google:

·      43.9% say 71% to 90%,

·      25.5% report 50% to 70%

·      11.2% report less than 50%

Udayan Bose, founder and CEO of NetElixir, says "For 40% of our online retail clients, Bing even surpasses Google in terms of conversion rates... (showing) very clear shift from Yahoo to Bing... because the conversion rate derived for Bing is significantly superior to Yahoo...  and in many cases...  to Google."

2010 may also see more retailers getting graphic with their search programs, says the report. Images in search results have begun popping up, especially on Google, whose Google Base, formerly Froogle, has been testing the use of product images when consumers search for product-related terms.

In the survey, 36.4% of retailers say they are working with search engines to incorporate images into paid and natural search results. 40.4% say they are not, but plan to; 23.2% say no and have no plans to do so.

Images seem to be having an effect on consumers searching for products.

23.5% of retailers using images report a 1-5% increase in click-through rates,

·      17.6% say a 6-10% jump

·      11.8% report an 11-15% boost

·      2.9% report a 16-20% increase

·      5.9% say a more than 20% jump

·      38.2% report no improvement

Forrester's VanBoskirk "There are a lot more sophisticated things a retailer can be doing than just throwing an image in the search results... better tailor the content of your ad to the users' intent... better keyword strategies and better deciphering of users' intent."

For additional information, please visit Internet Retailer here, or to see all of the tables accompanying the survey article, visit here.