• by Laurie Sullivan , Staff Writer @lauriesullivan, June 8, 2011

Higher gas prices and a decline in consumer confidence in continuing economic recovery put a slight damper on retail sales in May, but revenue from paid-search performance for U.S. online retailers rose 21% for the month, according to PM Digital.

The Rewind Paid Search Performance Index, which measures monthly paid-search performance for U.S. online retail, points to a 27% rise in conversion rates, which have been creeping up steadily for several months. May also experienced a boost in paid-search revenue, despite the fact that clicks held onto a modest 1% uptick. An increase in cost per clicks (CPCs) translated into an increase in overall paid-search spend. Both CPCs and spend grew 14%.

While PM Digital's clients spent most search investments during the beginning of the month, consumers spent the most at the end. The average order value for the month rose 3%, compared with the year-ago period.

And while search marketers appear to generate a positive return on investments on their own, are they increasingly integrating search campaigns into social? Suzy Sandberg, PM Digital president, said the Facebook campaign typically leads a person to conduct a search. People who have been exposed to a brand's social media content are 35% more likely to click on a paid-search ad.

On the paid-search side, Sandberg has seen marketers use Google Sitelinks to drive searchers to their Facebook page to solicit new "Likes." Interesting use of Sitelinks, indeed.

Sandberg said that with SEO linking practices used by J.C. Penney that made them lose their strong rankings in natural search, PM Digital has seen an uptick in marketers developing relationships with well-known bloggers to create links from the blogs back to the retail sites. These link-building techniques help improve SEO, when they come from a reputable source.

Aside from paid-search spend, PM Digital also tracks attribution. In fact, the company tracks three levels of attribution: search, online, and multichannel, including offline and online. "We can see in click paths how many people convert on paid search that saw a Facebook ad first," she said. "It's important that the creative be integrated across these channels because we do regularly see Facebook ads in the clickstream for paid-search conversions."