To Pay or Not to Pay

While the never-ending debate about the necessity of search engine marketing still rages, there is a growing trend of search engines to develop their own GoTo-like paid-for-placement listings. So we thought this week, we’d address the current state of paid vs. non-paid placements, the pros and cons, what it could it cost the advertiser, and, most importantly, is it really worth it?

Overview

There are essentially two ways to achieve prominent placement on major search engines: 1) pay for it, or 2) use various search engine optimization techniques to “go to the head of your class.” In other words, paid placement vs. non-paid placement.

Types of Paid Placements

Bid Placements:
Pay-per-click search engines like GoTo use the bid placement system as a main source of revenue. The advertiser specifies the amount of money they’re willing to spend on each keyword. How high their company is listed on the search results depends 100% upon how far away from the top bid they are. When a user clicks on the advertiser’s link, their GoTo account is debited for the amount of the bid.

Since bidding can be done online, instantaneously and ad infinitum, there really is no limit to how high the top rankings may cost — it’s a buyer’s market. In order to retain top positions, frequent monitoring is required.

There are several benefits to this approach. The main benefit is that advertisers controls their placement, and thus, their visibility. Second, the whole process is immeasurably faster trying to get a site indexed on a traditional search engine like Yahoo!.

On the downside, bid placement can be incredibly costly and time consuming. For example, American Express is currently paying $4.67 on GoTo for the keyword “e-commerce;” Verio is right behind them at $4.66. Bid placement monitoring can be done manually or by software, but in either case, this is a hidden expense. Lastly, many people don’t consider that some searchers avoid paid-for placement sites altogether because results are not based upon relevancy, but upon bidding, and are therefore might have less bearing on the mission of the search in the first place.

For more on GoTo and the bidding process see our earlier tip “Tackling the GoTo Goliath“.

Paid-For Sponsor Listings
Paid-for sponsor listings are different than bid placements in that they are more like purchased advertisements. Examples are Yahoo!’s “Sponsored Sites” and Google’s “Adwords” and “Premium Sponsored Listings.” These are text-based advertisements that look like search engine listings and which are given guaranteed prominence with respect to search engine query results. Positioning is usually at the top or right-hand side of the page.

Though Yahoo! and Google differ in some ways, the overall pros and cons to them are similar. PROS: Both offer high visibility, targeted listings, and quick turn around time once the order is placed. Pricing is also more stable than with bid placements. CONS: Yahoo! only allows paid-for listings of sites already indexed in their directory, and it still serves targeted keyword banner ads on the same page. Google, doesn’t have banners to distract from their paid-for sponsor listings, but it does severely limit the content of the ad, and only offers rates by the CPM. Moreover, if more than 3 advertisers want to purchase each type of ad space, Google will only display the top 3 based upon the amount they paid and their click-thru rate.

For the latest on what some individual sites are doing in this arena see our tip “Paid For Search Engines“.

Non-Paid Placement

If you choose not to pay for placements on search engines, your alternative is to OPTIMIZE your site so the engines index it and rank it highly anyway. Search Engine Optimization (SEO) is more like an art form instead of rocket science. Have an experienced person do it *by hand* instead of relying upon an automated service or software program. Like paid-placement, non-paid placement is still competitive, so submitting your site regularly can help to maintain a top position.

The benefits of this approach? For starters you’ll be saving yourself time and most likely some dollars. Unlike paid placement (especially bid monitoring), you don’t need to spend the day with your eyes glued to the screen like a day trader while you attempt to maintain your top position on GoTo. Search engines rankings can be accomplished efficiently on a monthly basis, not a daily one. Secondly, costs for SEO are usually fixed, while paid placement is unpredictable and could wind up costing more, especially if you’re bidding on a hot keyword. Lastly, if your site is optimized it can receive top ranking across multiple engines, not just one.

The cons? Con #1 is that despite your best SEO efforts, there is no guarantee you will be listed highly on a search return page. The only way you can guarantee a top listing is with top dollar. Second, SEO can be much slower in generating results than paid- for placements — Yahoo! can take up to 12 weeks (!) to add your site to their directory, if at all. And finally, remembering that SEO is an art form, it’s an ever-changing one, one that requires constant study and attention in order to stay on top of the game and achieve the best results.

For more on SEO, see our tips “Secrets of Search Engine Optimization 2001-Part I” and “Secrets of Search Engine Optimization - Part II“.

I guess you could look at it that at least advertisers have options. Decisions as to which method to pursue should be determined by the particular goals, budget, and time constraints required. Obviously, American Express has a little more financial wherewithall than you or I.

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