Paid Search Up; Will Facebook Campaigns Offset Returns?


Some marketers may have a Zen moment to make a move when thinking about combining search and social in a campaign, but if not closely monitored, the real outcome may produce different results.  

As for paid-search campaigns, March continues to see growth in both spending and revenue. Clicks rose 12% year-over-year for the second consecutive month, and average conversion rates outpaced the growth in all other metrics. Revenue rose 39%, as marketers spent 30% more on campaigns. That's according to PM Digital's Rewind Paid Search Performance Index: March 2011, which measures monthly U.S. paid-search performance for its online retail clients. The company plans to release findings Friday.

In March, paid-search cost per clicks (CPCs) came in at 14% and conversion rates at 43%, and average order value rose modestly to 4%, compared with the year-ago month. Findings from the PM Digital report suggest the end of the month produced all of the top sales days, a good sign as online retailers head into April.

PM Digital President Suzy Sandberg says it's difficult to scale the ads in Facebook. "We are gun-ho about using every media and marketing opportunity Facebook makes available because they are around for the long haul," she said. "Facebook is like the new telephone in social, and I don't think anyone can leapfrog them."

These days, retailers want more. But do they run the risk of offsetting revenue negatively by not knowing the art of running ads or ecommerce strategies on Facebook?

As marketers know, some retailers have begun to augment paid-search campaigns with Facebook ads and Fan ecommerce stores, as they look elsewhere to generate revenue. Aside from PM Digital, technology platform companies Covario, Efficient Frontier, Kenshoo, Marin Software, and SearchIgnite, among others, provide support to run contextual ads in Facebook. Many retailers are attracted to these platforms because the processes to purchase and optimize the ads seem similar to paid search. Analogous to GameStop, some retailers want to turn Facebook into an ecommerce powerhouse, but one Forrester Research analyst believes it won't work.

Sucharita Mulpuru writes in a report that Facebook may have reached its potential when it comes to driving substantial amounts of business-to-consumer revenue, largely because the click-through rates are basically nonexistent. Or it could be that ecommerce on Facebook simply needs to mature. The study looks at dozens of retailers and their use -- or lack of use -- of Facebook. It shows that most retailers continue to experiment.

As of yet, online retailers report little direct or indirect benefit from Facebook, and social networks overall trail far behind other customer acquisition tactics such as paid search and email. For example, Facebook has a 1% average click-through rate, compared with 11% for email marketing.

Having to remain within Facebook's "four walls" can't possibly be considered the optimal marketing strategy, although apps exist from companies like Adgregate Markets that allow consumers to make ecommerce transactions. Wedbush Analyst Lou Kerner believes Facebook presents the ideal place to experiment with ecommerce, but Forrester Analyst Mulpuru tells us that Facebook stores can't replicate the full brand experience of a company's official Web site.

When Forrester asked retailers to name the top three most effective sources used in 2009 to acquire customers, 90% of marketers pointed to search engine marketing, followed by affiliate programs at 50% and organic traffic at 42%.

Facebook is not a search engine, which becomes one of the biggest issues for shoppers. Mulpuru explains that most shoppers spearfish, enter keywords in a box and hit search in hopes of finding what they need. The difference is that Facebook's directory or communication tool is not likely to become the last stop in the purchase funnel before the sale or the tool for marketers to determine intent. Facebook will remain an interest-based targeting tool.

In the long run, Mulpuru writes, small businesses looking to open up shop online might find it in this "2011 version of Yahoo Merchant Solutions or eBay ProStores," but it's too early to tell.

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