The Impact & Value of Search Engine Rankings

Search is a cornerstone of the Internet economy and an essential part of the daily lives of many social and business users. According to a new study from McKinsey & Company, The Impact of Internet Technologies: Search, in 2010, the average US Internet user performed about 1,500 searches. That’s 4+ searches a day. Over the course of the year, some 1.6 trillion searches are conducted globally. Google reports that more than one trillion unique, worldwide URLs were indexed by 2010. Obviously many are using search to harness the vast amount of information on the Web, but what’s the value? Can it be quantified?

For marketers, search engines offer three forms of value: increased awareness, targeted messaging, and discoverability for long-tail, niche products. Most studies now report that 90+% of techies use search when deciding what to purchase. Because it is keyword driven, search engines allow us to better target prospective customers with specific messages — especially if we have page 1 natural search results or a well crafted PPC campaign. For long-tail, niche products that might otherwise be difficult to find, search engines are an indispensible resource.

Expanding on this, McKinsey identifies nine sources of search value:

• Better matching. Search helps customers, individuals, and organizations find information that is more relevant to their needs.

• Time saved. Search accelerates the process of finding information, which in turn can streamline processes such as decision making and purchasing.

• Raised awareness. Search helps all manner of people and organizations raise awareness about themselves and their offerings, in addition to the value of raised awareness from an advertiser’s perspective that has been the focus of most studies.

• Price transparency. This is similar to “better matching” in that it helps users find the information they need, but here, the focus is on getting the best price.

• Long-tail offerings. These are niche items that relatively few customers might want. With the help of search, consumers can seek out such offerings, which now have greater profit potential for suppliers.

• People matching. This again entails the matching of information but this time focusing on people, be it for social or work purposes.

• Problem solving. Search tools facilitate all manner of problem solving, be it how to build a chair, identify whether the plant your one-year-old has just swallowed is poisonous, or advance scientific research.

• New business models. New companies and business models are springing up to take advantage of search. Without search, many recently developed business models would not exist. Price comparison sites are a case in point.

• Entertainment. Given the quantity of digital music and video available, search creates value by helping to navigate content. For a generation of teenagers who pass on TV to watch videos on YouTube instead, search has also enabled a completely different mode of entertainment.

Advertising ROI of 7:1

Many more companies are relying on natural search and search advertising than offline advertising formats. According to McKinsey, in the US, paid search is used by about 10X as many advertisers as any other media channel. There’s good reason for this. The ROI is there. “The return on investment (ROI) for those that deploy search are high. Advertisers do well, earning an average ROI of 7:1. Other constituencies fare better still. Based strictly on the value of time saved, individuals in our study—that is, individual information seekers and content creators, consumers, and entrepreneurs—earn an ROI of 10:1 on average. Enterprises earn still more, with an ROI of 17:1 as a result of time saved.”

Advertiser value was calculated by estimating the ROI earned from paid search advertising (both online and mobile), SEO, online classified ads, e-commerce, and Research Online Purchase Offline sales.

Several interesting academic papers have quantified important pieces of the value question. For example, the value of advertising clicks is estimated at a ratio of $2 – $2.5 for every $1 invested. And advertisers receive an average of 5 – 5.3 clicks on their natural search results for every one click on their ads when both natural search and PPC links appear on the same page.

This is a good start at giving us quantitative support for our investments in search marketing. I think I’ll take a break now and contemplate a way to calculate SEO value, as that is such a critical component for today’s successful B2B marketer.

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