June 2006 - Marketers…Start Your Search Engines

Experts share the ins and outs of search engine marketing and search engine optimization.

By David Lustig

In the ever changing, and always challenging, quest to make sure we utilize our time and resources to the fullest, it’s important to understand the difference between search engine marketing (SEM) and search engine optimization (SEO). They may sound similar, but they are not.

SEM has a tendency to cover a broader category than SEO, which has a narrower focus. SEM typically covers pay-for-click advertising, such as buying text ads on the major search engines, while SEO is a way to improve web-site ranking in search engine listings.

Confused? Don’t be.

“If you go to Google, you will see ‘sponsored links’ across the top of the results page and down the right side,” explains Eric Obeck, president of SendTec Inc. of St. Petersburg, Fla. “Advertisers pay a cost per click for any click-through that results from these ads. The order of listing is a function of what advertisers will pay for a click and/or the frequency of which their result is clicked, depending upon the search engine.

“The other listings on the page,” Obeck says, “are organic results and are not paid for by advertisers. Those results are driven by the search engine’s algorithms, which make decisions on ranking results.”

“SEO is the art and science of optimizing a web site to appear high in the rankings of the organic or natural search,” adds, Marty M. Fahncke, president of FawnKey & Associates of Farmington, Utah. “You do not directly pay for the traffic that comes to your site as a result of SEO, but it does take a lot of time and hard work to achieve high rankings, so you will pay for the expertise to get you there, either in-house or through an outside service provider.”

However, even with the understanding that web marketing can be extremely profitable, due to misconceptions on what it can or cannot do, there can be a number of pitfalls that will boomerang on even the best of products that should be a slam dunk for Internet sales.

“The two biggest misconceptions about SEM are how search engines rank ad placements and how advertisers select and bid on keywords,” says Ellen Siminoff, CEO of Efficient Frontier in Mountain View, Calif. “The search engine marketplace has become very opaque in its structure and ranking of search ads. Where ad placement once was a factor or how much a marketer was willing to bid, today many more variables come into play.

“Most of the major engines use, or are planning to use, a dynamic ranking system that is based on what is known as a quality scoring model. The theory is that this provides greater relevance when searching. With quality scoring, the bid is only one part of the factor. Other components such as keyword relevance, ad copy, geography, demographics and searcher IP address become critical as well.”

Does SEM/SEO bring value to your company’s bottom line?

“Search engine marketing is the single largest growing sector of online media advertising,” says Jim Carpenter, search engine marketer at Livemercial in Valparaiso, Ind. “According to the latest Nielsen/Net Ratings, there were just over 55 billion total searches conducted across all search engines in 2005, and 2006 is being touted as a record year already in search marketing, with estimates of SEM spending to reach $11 billion by the year 2010.

“Search engine technology is becoming more the way of life for today’s consumer, and every business, no matter the size, will have to implement some form of a search engine marketing plan to capture today’s consumer.”

Assuming that is the case, how does a marketer and e-tailer venturing into SEM or SEO master the process? Put in another way, how does a company make certain it has prime positioning on the major search engines?

“For SEO, the first step is to master the basics,” explains Jon Glick, senior director of product research for Become.com of Mountain View, Calif.

“Make sure your site can be crawled by the search engines so you can get your pages listed. Have good metadata-titles and descriptions-and use the words on your pages that typical users are likely to use when searching for your service, instead of using industry jargon.”

Glick goes on to explain that one site used to describe its service as “intrastate relocation”; however, the company soon found that it got a lot more traffic by changing to what people were actually looking for “in-town movers.”

But there are so many search engines out there. What are the ones that seem to be foremost on everyone’s thoughts right now?

“Google, Yahoo!, MSN and AOL are all major search portals,” says Tony Sziklai, director of information technology for Moulton Logistics Management in Van Nuys, Calif. “There are a lot of other search engines out there, but the traffic to those four is very significant-especially Google.”

What makes these top four so great, says Sziklai, is market share, with Google recognized as the leading search engine. “It’s part of the language,” he contends.

“But you have to be careful how you choose your keywords,” Sziklai continues. “Sometimes that can kill the campaign if people pick the wrong keywords. The more generic you go, the more expensive it gets. Your breakeven for that keyword may not be as good as others. Budgeting has a lot to do with what keywords to choose.”

Money then, as in everything we do, is clearly a deciding factor.

Fahncke says SEO costs vary depending on whether you choose to hire an outside agency or bring the talent in-house. Outside agencies can charge you from $2,000 to tens of thousands of dollars per month.

He adds, “Pay per click is more ‘pay as you go,’ with the ability to get started testing for as little as $50 in actual marketing costs, plus the cost of the expertise to manage your program.

“Once you’re up and rolling, a good rule of thumb would be that your overall SEM budget will be 30 to 50 percent of the revenues it brings in.”

Another factor that must be addressed is monitoring your position on search engines.

Monitoring paid ad positioning on the search engines and managing bids individually for more than a handful of keywords is time-intensive, says Siminoff, adding that it can also lead to an inaccurate measurement on a campaign’s overall real rate of return on investment (ROI). The most effective way to manage a successful search campaign, she says, is through a portfolio approach that accounts for all the various keywords in the campaign and adjusts to maximum performance and ROI.

Just as important, technology is the key to making search marketing as large as it is today.

“Every day, I read some new feature being tested by Google, Yahoo!, MSN, AOL, Ask, etc.,” says Carpenter. “As the ‘new age’ of advertising continues to grow, I can only predict a win-win for everyone involved.

“Think about it, consumers now have several choices on finding information online, whether it is video search, local searching, mapping or specific shopping sites. Advertisers have the advantage of utilizing the latest in search technologies, as it results to demographic, psychographic and geographic targeting resources, and every company has the key benefit of reaching targeted consumers looking for their specific products-as well as obtaining information about their customer’s spending habits that were never before available through traditional marketing methods.”

Obeck says technology is necessary to efficiently manage the bid/rank dynamic to SEM.

“Keep in mind,” he says, “advertisers can change the price they are willing to pay for a click (the bid) for a certain search term in real-time 24/7. The order of listing in the search engine (rank) is influenced or directly tied to the bid. The rank correlates to the amount of impressions an advertiser receives within the search engine for that particular term.

“For a campaign of any magnitude, technology is almost a prerequisite in order to be efficient. In order to be effective, however, technology does have some shortcomings. It can’t write copy, it can’t design landing pages and it can’t decide marketing strategies. It is also important to note that the major search engines offer their technology to help you manage your account, but each of their technologies are only able to be used with their proprietary search engine. Having one technology to manage all search engines is a more efficient way to go.”

Obviously there is a lot to digest before making the plunge. Here are some ways to avoid SEM/SEO pitfalls.

“The biggest pitfall is forgetting to measure progress,” says Glick. Without good reporting, it is impossible to tell if your SEO/SEM campaign is working.”

“Good technology to monitor click fraud for potential fraudulent activity is imperative,” says Obeck.

“You must do your homework,” says Sziklai emphatically. “Because people are not familiar with SEM or SEO, they get taken for a ride. They pay a lot of up-front fees and give up a large percentage of their sales to search engine optimizers.

“Go on Google. There are tons of materials to educate you on how pay per click works and how SEO works. That way, when you talk to a media buyer or an ‘expert,’ you can kind of gauge if it is a fair SEO you’re negotiating with or [if] you’re possibly being taken advantage of.”

“The most important aspect for both search engines and users is the development of a web site that has good keyword rich content,” says Carpenter. “There will always be those who try to capitalize on ‘sketchy’ practices to make a quick buck, but the general public and the industry as a whole will continue to establish best practice techniques to make search engine the best form of finding information online.”

How Do Key Court Decisions Impact Internet Marketing?
By Greg Sater

There have been a number of interesting court decisions recently in the field of Internet marketing, with more expected in the coming months, especially as more cases of first impression move through the legal system. The recent court decisions have focused on two things: (1) the fairness or unfairness of using someone else’s trademark as a keyword search term in order to have one’s Internet domain name come up as a “sponsored result” in search engines such as Google and Yahoo!; and (2) the fairness or unfairness of using someone else’s trademark in order to trigger one’s “pop-up” ad.

In terms of the legality of using another person’s trademark as a keyword search term, it was the federal court of appeals for the Ninth Circuit that got the ball rolling in 2004, with its decision in Playboy Enterprises, Inc., v. Netscape Communications Corp., 354 F.3d 1020 (9th Cir. 2004). There, the court considered Playboy’s challenge to the fairness of other adult-content providers paying for the term Playboy as a keyword search term, resulting in their domain name links coming up as “sponsored results” for “Playboy.”
The court found this to be trademark infringement/unfair competition, because the adult-content links and banner ads that were coming up in response to queries for Playboy were unlabeled and/or were not labeled in a conspicuous enough way to make it reasonably clear to the public that the links and banner ads were not Playboy and were not affiliated with it, but actually were from other content providers.

The Playboy decision left open the question of whether and under what circumstances it is lawful and fair to use someone else’s trademark as a keyword search term when one’s link in the “sponsored results” clearly uses a different mark (e.g., “BMW” bidding on the mark “Porsche” but having its link clearly labeled with its own mark, as www.bmw.com) or otherwise clearly communicates to the reasonable consumer that it does not lead to the web site of the owner of the mark but, rather, leads to the web site of a competitor. Many would say that under the latter scenario, there should be no consumer confusion as to source, origin or affiliation and, therefore, the conduct should be considered fair and legal.
In 2005, that question was considered and answered, based on a very specific set of facts, by a federal district court in Government Employees Ins. Co. v. Google, Inc., 2005 WL 1903128 (E.D. Va. 2005). In the case, Geico complained that Google was letting Geico’s competitors buy Geico as a keyword search term and come up as “sponsored results” for that term. After a full trial, the court ruled for Google with regard to the “sponsored links” that did not reference the Geico mark in its text or headings, finding insufficient evidence of likely consumer confusion as to source, origin or affiliation. It was a closer call, however, as to the links that did use the term Geico in their headings or text. Based on survey evidence that indicated a high level of confusion among survey respondents presented with that scenario, the court found in favor of Geico and against Google, with regard to the links that were using Geico in their actual headings or text, finding that those links were likely to cause confusion.

The Playboy and Geico decisions would seem to indicate that, in each such case, a fact-specific inquiry is necessary to decide whether, in the particular case at hand, the average customer is or is not likely to be confused by the links that he or she sees as “sponsored results.” The fact-specific nature of the issue was recently confirmed by another district court, in Google, Inc., v. American Blind & Wallpaper Factory, Inc., 2005 WL 832398 (N.D. Cal. 2005). There, although Google argued in its defense that the court could rule as a matter of law that the “sponsored links” on its search engine were lawful because they each displayed a different trademark from the plaintiff’s mark, the court refused to rule on this defense as a matter of law, without a full factual record.

In terms of using someone else’s trademark to trigger one’s competing “pop-up” advertisement, a court ruled that on the specific facts presented to it, that practice was neither unlawful nor unfair. In 1-800 Contacts, Inc., v. WhenU.com, Inc., 414 F.3d 400 (2d Cir. 2005), the Second Circuit considered claims pending against a company, called WhenU, that has software that enables advertisers to have “pop-up” ads appear on the computer screens of computer users, whenever those computer users go online and search for certain web site addresses (in this instance, www.1-800-contacts.com, which not only was the plaintiff’s URL but also its trademark). The court held that WhenU was not making a commercial “use” of the plaintiff’s trademark, within the meaning of trademark law, because WhenU merely was using the plaintiff’s URL, and was using it in a directory of triggering terms inside the software program (to trigger “pop-ups” for certain terms), so the computer users who were searching for www.1-800-contacts.com would never actually see the defendant making any “use” of the mark, 1-800-Contacts.

Earlier this year, the 1-800-Contacts rationale led another court to hold that when one purchases another’s trademark as a keyword search term, one has not made a “trademark use” of the mark, within the meaning of trademark law, because one has not physically displayed the mark on goods or containers as an identifier of source. In the case, Merck v. Mediplan Health Consulting, 2006 U.S. Dist. Lexis 14826, at 31-32 (S.D.N.Y. 2006), the ruling went in favor of the defense because “the Zocor mark is ‘used’ only in the sense that a computer user’s search of the keyword Zocor will trigger the display of sponsored links to defendants’ web sites. This internal use of the mark ‘Zokor’ as a key word to trigger the display of sponsored links is not use of the mark in a trademark sense.”

The view expressed by the court in WhenU, however, can be contrasted with the view of a different court in another recent case. In Tdata Inc. v. Aircraft Technical Publishers, 2006 WL 181991 (S.D. Ohio 2006), a different court strongly disapproved of a company’s use of its competitor’s trademark in metatags on its web site, which metatags were causing the company’s link to come up in the organic search results of the major search engines, when people were searching for the competitor’s trademark. The court found this to be unfair and unlawful under trademark law, even though, as in WhenU, consumers were not actually seeing the defendant making “use” of the mark.

Clearly, in the coming months and years, we can expect to see additional court decisions in this interesting, rapidly developing area of trademark/unfair competition law.

Greg Sater is an attorney with Rutter Hobbs & Davidoff Inc., a law firm based in Los Angeles. He can be reached at (310) 286-1700, or via e-mail at [email protected].

David Lustig is a contributing writer to Electronic Retailer magazine. We would appreciate your feedback. To submit comments, please e-mail the magazine at [email protected].


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