Online Marketing: Mastering the Basics

by Toby Ward — In short, the power of online advertising is present, significant and growing. For those that seek to further harness this power there are three particularly important marketing concepts to understand - Search Engine Optimization, Paid Search and e-mail Marketing.

The fast growth of the web means we are constantly achieving new milestones. For online advertising, a critical component in all Internet strategies, 2005 marked the turning point when advertisers switched from testing to investing in online advertising. Jupiter Research estimates the U.S. online advertising market will grow 28 percent over last year to $11.9 billion in 2005, to $13.6 billion in 2006, and $15.1 billion in 2007.

Naysayers could argue that because online advertising is still a small part of overall advertising spending—accounting for approximately five percent of the overall advertising budget in the U.S.—it can be ignored. They’d be well advised to consider these statistics:

• Almost 80 percent of North Americans have Internet access.

• More than 50 percent have made online purchases.

• A majority use the Internet as a decision-making tool.

• The Internet is cited as the most influential channel on luxury purchasing (cited by 44 percent of affluent purchasers).

• 39 percent of North Americans use online banking.

• 73.5 percent of e-commerce sites estimate sales growth of 15 to 35 percent this year.

• 60 percent of chain retailers estimate web sales growth of 25-200 percent.

• Time spent online by adult Canadians has increased 50% since 2002 and Internet use is ready to overtake watching television.

In short, the power of online advertising is present, significant and growing. For those that seek to further harness this power there are three particularly important marketing concepts to understand. This article, which is based on a series originally published in Prescient Digital Media’s

, will provide the facts you need to concerning:

• Search Engine Optimization

  : SEO is the optimization of your content pages and classification and labelling of content to increase your rank in search engine results. In laymen’s terms, it helps you to get the best ranking possible when someone uses Google to search for you.

• Paid Search

  : This new technique allows an advertiser to pay for small text ads, that sometimes look like they are regular search result listings or they are offset from the regular listings as small promotional boxes, and are served up alongside regular search result listings.

• E-mail Marketing

  : Despite the negative feelings expressed for spam, e-mail marketing is the single most effective marketing tool, except for traditional direct marketing.

These marketing concepts, SEO, paid search and e-mail marketing, require more clarity so you can understanding what they are and when they should be used, if at all.

Search Engine Optimization

Obviously, SEO is a marketing technique unique to the Internet. As a result, it brings with it a new set of concepts and techniques. Because you must assume that customers will find your site through a search, improving your website’s search ranking requires education and reconnaissance. It’s important to understand the algorithms and determinants that factor into Google and other engine’s ranking process, including the big three:

1. Click popularity (number, relevance, text)

   : how often your site is clicked on from links on other sites

2. Format, placement and content of the page title tag

   : the relevancy of the title that appears in the top of your browser (e.g. HealthyOntario.com – Consumer health information & health services for Ontario, Canada)

3. Link popularity

   : how many other websites of relevance link to your website

• Use of keywords in URL names (e.g. www.dresses.com)

• Keyword frequency, weight, prominence and proximity

• Meta tags

• ALT tags

• Comment tags

• Themes and overall site design

It is not necessarily easy to improve your ranking especially if your competition has a head start of several years or is also working hard to improve their SEO.

1. First, your website needs to be solid; rich in relevant and fresh content that is well designed, categorized, laid-out and tagged.

2. Second, ensure that people are visiting your website by way of links on other sites. Build up the links to your website by trading links. “I’ll link to yours if you link to mine.”

• Build content partnerships with other sites so that you can trade and share content (and links)

• Register your website with all of the big engines and portals including AOL and DMOG (Open Directory Project)

• Establish your credentials as “thought leaders” and place articles or ‘leadership’ columns on relevant webzines

There are dos and don’ts to SEO. Our recommended dos highlighted above can boost your traffic and (if applicable) your revenue. The don’ts could get you banned from Google and others. Avoid...

• Cloaking your website

  : don’t establish mirror websites of your primary website in an attempt to fool the engines (they will figure it out and won’t be happy)

• Joining link exchanges that aren’t relevant to your content for the sole purpose of increasing ranking

  : it’s not just enough to have links, the links have to be from relevant content

• Write text or create links that can be seen by search engines but not by users

  : all links should be viewable by the user

• Send automated queries to Google to monitor your site's ranking:

  automated programs make Google angry.

• Use programs that generate automatic pages of links or ‘doorway pages’:

  see the above about making Google angry.

Paid Search

Paid search receives a lot of press because it’s making a big bang. However, many advertisers and web managers are still confused about this hotly evolving science (or art depending on your perspective). This new technique allows an advertiser to pay for placement so that they are served up alongside regular search result listings —sometimes look like they are regular search result listings or they are offset from the regular listings as small promotional boxes but most users don’t even know they’re ads.

When an advertiser pays for small text ads to accompany the search results, they choose the keywords that they want their ads associated with. The advertiser pays only when someone clicks on the ad. This rate, called

, is determined by how often users search out that phrase or word, how often they click, and how big the competition is for advertising with that phrase.

Paid search also allows you to track exactly how you’re doing: how many times people are seeing your ad, how many are clicking through, and what is the exact cost to you the advertiser.

However, paid search is part art and part science. You may want to have your ad associated with keywords and phrases, but you will have competition. And getting the top spot is not yet determined solely by price but by algorithm. However, MSN, Yahoo! and Ask Jeeves are all moving to a highest bidder model.

Bidding on keywords can be very expensive if you have rivals jockeying for position. Alternatively, you can bid on more obscure keyword phrases that no other advertiser is using where you can assure yourself the number one ad placement, but you won’t get as much traffic as the more popular search phrases.

To determine what keywords to associate with your ad, there are a couple of tools:

• Hitwise's search term analysis

  : type a phrase and it will list the sites that receive the most traffic and their percentage share of the total traffic generated by the phrase.

• WordTracker

  : competitive analysis tool to seek out the best keywords based on over 300 million keyword phrases.

• Pay Per Click Galaxy: generates thousands of keyword phrases to consider and experiment.

• Google link analysis

  : type in your URL and find out what websites link to your website.

While traditional online display advertising (banner, spatials, etc.) accounts for 45 percent of all online advertising, paid search advertising accounts for 34 percent of the marketing and is growing at a massive clip, according to Jupiter Research. In fact it won’t be long until paid search advertising passes all other forms of online advertising. The study forecasts paid search to exceed banner ads by 2010. At the same time, cost-per-click is anticipated to grow from $.39 in 2004 to $.58 by 2010.

Despite the increase in cost, paid search clearly is good bang for the buck. Forty-two percent of the study respondents that classify themselves as sophisticated marketers plan to increase their paid search budget next year.

E-mail Marketing

We all hate spam, but consider that orders per e-mail delivered were 0.35 percent in the fourth quarter of 2004, an all-time high and much higher than the previous records - 0.30 percent. (These stats were reported by DoubleClick, which based its study on 2.5 billion e-mails sent.)

That means there’s a sale, on average, for every 300 e-mail solicitations sent. While it depends on how you do it, the cost of sending 300 e-mails is next to nothing. And this is why e-mail marketing continues to be wildly successful despite the stigma against spam.

The real winners are not those marketers that are spamming (though some are wildly successful), but those that undertake permission marketing.

Coined by online marketing guru Seth Godin, permission marketing is a sales approach used by a marketer to obtain advanced, explicit permission from a sales prospect before sending them marketing information. In other words, a person gives you permission to sell to them – usually in the form of opt-in e-mail.

Permission marketing is a big business. Generally speaking, PM is more effective and the response and conversion (sales) rates are higher because people want to be marketed to (yes, of course, plenty slip through the cracks and still treat this marketing as spam but it’s still more effective than blind spam).

“What kind of returns can I expect?” you ask. Well, it depends on many factors of course — key is the quality of marketing list:

• Are your e-mail targets voluntary opt-in subscribers?

• Are they past customers?

• Do they know what to expect from you?

• The more your subscribers know you, know what to expect, and have purchased from you, the better your success.

Like any business, you do have to spend money to make money. However, you don’t have to break the bank, and following some common sense approaches will deliver strong results:

• Use e-mail to communicate with your customers, but get their permission.

• Double opt-in is strongly recommended.

• Opt-out option on all correspondence Privacy Policy is a must (PIPPA requirement).

• Third-party lists are strongly discouraged; ditto for sharing.

• Provide links to back issues and related information.

• Write succinct, punchy subject lines.

• Don’t be shy – be persistent.

In a ClickZ column this summer

featured in a great e-mail marketing case study

. The company, Dakin Farm, is a small, family-owned specialty foods company in Vermont.

In 2004, Dakin Farm had an e-mail marketing budget of a little under $14,000. It sent regular marketing offers three times per month (on average) via e-mail to its subscriber base of some 13,500. The return was huge. Total sales equaled $185,000. That’s an ROI of 1300%. The click-through rate was fairly standard: only 4.34% of recipients clicked on specific offers. But of those that clicked, 98% bought.

Jennings quotes the following reasons for success, right from the owner’s lips (Sam Cutting IV):

• Everyone with a direct response website should build an e-mail list and send offers, even if the list is small.

• Measure response to e-mail offers.

• Determine your breakeven point.

• Increase the frequency of sending e-mail to a level that feels right and is above breakeven.

• Ensure every e-mail contains a strong offer.

• Use short deadlines as a call to action.

In Closing

As you can see, successfully utilizing online advertising isn’t rocket science. Understanding the basics of search engine optimization, paid search and e-mail marketing; and staying abreast of the numerous success stories online, and you’re likely to see a positive return on your investment, in both time and money.

A final pointer is to remember that honesty is the best policy. Whether you’re optimizing your search performance by ensuring you have an up-to-date, content-rich website or maximizing your e-mail campaign by having something truly relevant to say to customers you know want to hear from you, you’ll stand out from the spammers and cloakers.