PPC search obsession flies high!

dice.jpgThe UK commercial search accounts today for a staggering 90% of the search marketing spend or £1.26 billion whilst, natural search accounted for £147 million in the UK in 2006 (Travelution, November 2006).

Research from Nielsen/Net Ratings indicates that in 2006, 265m people used a search engine (81% of the internet population) creating 27bn search views. The average search user views 93 result pages a month and spends 27 minutes of their time on the process. Google’s dominance on the search market continues to grow, recieving almost three times the amount of traffic as nearest rival Yahoo! Search – however two-thirds of all search engine users use at least two search engines. The chart below (Hitwise, December 2006) compares the budget allocation between commercial search and organic search within the UK airline market.

organicandpaidsearch.png

Ryanair’s decision not to allocate any funding to PPC commercial search defies the industry norm. Even British Airways, the de-facto national carrier within the UK allocates 61% of its search budget to PPC commercial search (spending between £3M to £4M in PPC commercial search every year). The chart establishes an interesting relationship between brand and search channel allocation; however the more interesting relationship is the one between online revenue share and search channel allocation. The higher the contribution of online to the airlines’ overall bookings and revenue, the lower the PPC budget. One of our own airline clients allocates over 50% of its search budget to commercial search. The on-going discussion with our client is about the opportunity cost of that commercial search budget ” could that budget yield a higher return on investment somewhere else? Our statistics indicate distribution programs with leading vertical search comparison engines such as Kelkoo and Travel Supermarket, yield a click to book conversion 25% to 30% higher than non-brand based PPC campaigns. Today’s obsession with PPC search is without a doubt fueled by the channels ability to deliver effective direct response solutions. However, today’s obsession is mostly driven by the inability of many companies to 1) benchmark the results of PPC search against all other online marketing channels including organic search and 2) understand how the last click gets to much credit.

One of our former clients at Hilton Hotels, Ivan Imhoff supported this perspective at last years’ EyeforTravel conference in Berlin, highlighting the effectiveness of search is mostly concentrated across the “head” of the search curve given consumers’ tendency to focus on the first ten search results.

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About Alain Portmann

My job is simple. To inspire staff, clients and consumers.

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