Search marketing continues to work for US online retailers, and they plan to keep spending on it, according to an Internet Retailer-sponsored study conducted in February 2008 by Vovici.

More than one-half of the online merchants surveyed said they spent at least 40% of their budgets on search engine marketing (SEM)—including 25% who said that more than three-quarters of their budgets were going to SEM.



Pay-per-click search marketing worked especially well for responding online retailers during the past year.

Nearly one-half of responding merchants said they had increased their pay-per-click conversion rates.

SEM analysts and digital advertising agencies with retailer accounts interviewed by Internet Retailer said that a successful pay-per-click campaign should generate conversion rates of 1.5% to 3%. Yet 64.1% of respondents said their conversion rate on a typical paid search campaign was higher than 5%.

Jeffrey Pruitt, executive vice president at iCrossing and a board member of the Search Engine Marketing Professionals Organization said that conversion rates were rising because more retailers were relying less on expensive generic keywords.

Instead, Mr. Pruitt said that merchants were bidding more intently on SKU- and product-specific words and phrases.

More than four out of 10 respondents said they were using PPC more often as a search tactic in February than they had previously.



eMarketer predicts that US spending on search marketing tactics other than paid search ads will increase through 2011, but that more than one-half will continue to go to such ads.