Optimal Search Engine Marketing Strategy

October 2005 | Sen, Ravi

When using a search engine to look for information, most buyers trust and follow links displayed in the editorial section of the search-results page. This should encourage online sellers to invest in search engine optimization (SEO), since SEO results in a higher-ranked listings in the editorial section of the search-results’ pages. However, most of the search engine marketing (SEM) dollars are directed at paid-placements and a relatively smaller amount is spent on SEO. One explanation offered for this seemingly irrational behavior is that SEO is more expensive to implement than paid-placement and the resulting benefits may not justify this comparatively high cost. Another explanation for relatively lower popularity of SEO is that SEO activity does not lead to a high ranking in search-results pages on a consistent basis. These reasons suggest that if SEO was relatively less expensive and resulted in more consistent ranking on search-results page, then more sellers should invest in SEO. This paper takes an analytical approach to show that even if the total cost of implementing SEO was the same as that of implementing paid-placement, and SEO always resulted in a high ranking on search-results page, paid-placement will still dominate as the SEM strategy of choice for most online sellers. What is interesting is that there exists no optimal SEM strategy which includes SEO. These are significant results, especially for advertising professionals who have to justify investments in paid-placements, despite overwhelming evidence that most buyers ignore paid placements and follow links displayed in the editorial section of the search-results page.

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Optimal Search Engine Marketing Strategy