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Google: A Gift for Small Retailers.
by Rob Speigel for BusinessKnowHow.com
Rob Spiegel is a well-known author on Internet business. His books include Net Strategy (Dearborn) and The Shoestring Entrepreneur’s Guide to Internet Start-ups (St. Martin's Press).
Again, the Internet has presented small companies with an unexpected marketing opportunity. The surprise opportunity involves the most basic tool on the Web, the search engine. When you do a search for a New Orleans trips on Google, look at the list of advertisements on the right side of your screen. One ad comes from a small hotel company offering rooms in the French Quarter; another ad promotes a book covering things to do in New Orleans.
These are small companies, but they’re not advertising through a small medium. Google facilitates 250 million searches per day. Yet Google offers its advertising at pennies per prospect. For the companies selling hotel rooms or tour books in New Orleans, the cost of advertising on the world’s largest search engine is paid on a cost-per-click basis.
Some small companies fear too much success. Even if they only pay 29 cents per click (Goggle’s average), what if they receive 100,000 clicks on the first day? Google sets up the AdWords program so advertisers won’t choke on success. Google lets advertisers put a ceiling on how much they spend per day.
A wildflower seed company in Vermont, American Meadows, has been so successful finding customers on Google, the company now devotes most of its advertising budget to search engine advertising. At one time, founder Ray Allen spent tens of thousands of dollars on advertising. He purchased pricey display ads in national home and garden magazines. That was before his son prodded him into launching a Website to sell the family’s seeds. From there, Allen began to experiment with Internet advertising. Most experiments were unsuccessful. Then it tried Google and hit pay dirt. “We now do zero in magazines,” says Allen. “We’re using all our money on pay-per-click advertising now." (Pay-per-click was invented by GoTo.com, which became Overture.com, which is now Yahoo Search Marketing. Google introduced their pay-per-click interface soon after GoTo.)
The process of obtaining customers over the Internet has been very beneficial to American Meadows. It’s been so successful that Allen has quit printing catalogs altogether. At one point he was sending more than a million catalogs around the country. Now, customers buy American Meadows wildflower seeds at the Vermont retail store and worldwide over the Internet. Allen’s Web-based promotions have been so efficient, the catalog simply became unnecessary.
The cost to attach ads to Google search terms is set by the popularity of the keywords. The more popular the term, the higher the per-click rate. If you want the ad to come up in the first two or three ads on the list, the cost runs higher. To offset these competitively driven rates, Allen digs deep for obscure terms that he can nab at the minimum click rate of 5 cents. American Meadows sells 70 varieties of wildflowers. Allen discovered that he could reach potential customers buy using terms such as “rudbeckia hirta,” the botanical term for Black-Eyed Susan. “It’s great,” says Allen. “Gardeners are putting in the Latin names for all 70 of our wildflowers.” The obscure terms help to keep his average pay-per-click low.
Searching for obscure-but-profitable keywords is a painstaking process, but Allen believes it is well worth the time invested. “It’s grunt work to figure out what terms to use. One easy way is to open up the Web logs and look at my Web trends,” explains Allen. “There are always obvious terms there, but there are 350 terms, sometimes up to 700, so there are a number of things people use to get to your site.”
Allen insists that search engine pay-per-click advertising is easily his best advertising buy, dollar-for-dollar. “You can spend $20,000 on a full-page ad in one of the large home and garden magazines,” explains Allen. “Think of what you can do with $20,000 using pay-per-click.” Allen believes the future of Web-based advertising will be even brighter than the present. “The Web is a great retailing medium,” says Allen. “And I don’t think we’ve even scratched the surface.