A recent report from Jupiter Research entitled, Paid Search Precipitates Decline of Search Engine Optimization suggests that search engine optimization (aka SEO) - the practice of making detailed modifications to a site’s contents and technical architecture in order to enable it to rank higher in the search results for a given set of keywords - is soon to meet its demise.

Although we don’t concur with Jupiter’s dire prediction, we do agree that the craft of search engine optimization has evolved rapidly in terms of technical complexity, and note that the number of SEO providers has quickly ballooned into the hundreds, thereby further cementing the widely-held belief that SEO is more imprecise black art than systematically scalable marketing tactic, and making it increasingly difficult for many marketers to assess what role search engine optimization can legitimately play in the context of their wider internet marketing strategy.

That said, it’s a well known fact to industry insiders that search engine optimization is an often incomparable addition to the marketing mix. Research from NPD Group buttresses this thinking, showing that conversion rates (click-to-purchase) from search engine listings are five times higher than with Banner ads, and that the top three search engine listings generate a significantly higher degree of aided and unaided Brand Awareness, and Brand Favorability than do traditional Banner ads.

While these facts may come as surprising to the uninitiated, as one of the originators of the field of search engine optimization, Fredrick Marckini has been harnessing the direct marketing and brand-building capabilities of SEO since the mid-nineties, eventually turning search engine optimization agency iProspect - which he founded and now helms as CEO - into one of the world’s premier SEO agencies, serving such clients as Sharp Electronics and 3M.

avant|marketer recently caught up with Marckini to talk with him about the state of search engine optimization from a marketing strategy standpoint - and, in particular, to take a high-level look at search engine optimization and its role in the overall marketing mix.

In what follows, in Part I of our interview, Marckini discusses metrics for assessing ROI from SEO efforts, how accurately search engine optimization campaigns can be tracked, whether pay-per-click (PPC) search engine marketing of the sort offered by Overture will soon overtake search engine optimization as the main form of search engine marketing in the marketer’s toolkit, and whether there are relevant differences in the ROI that can be achieved using traditional SEO efforts as compared with PPC search engine marketing campaigns.

avant|marketer: A frequent criticism of search engine optimization is that its business impacts are “not measurable.” What are the metrics that should be looked at to determine ROI from search engine optimization efforts?

Fredrick Marckini: A good ROI measure will take into consideration the entire gamut of behaviors, actions, and outcomes that can be tracked back to a search engine marketing campaign - and, there are many of these. I’m constantly surprised at how many large companies are still struggling to determine both the outcome they expect from their sites, and how to measure it. The first step, therefore, is for the site owner to determine what is the desired outcome behavior. Is it lead forms completed? Subscribers added? Files downloaded? Data sheets printed? Products purchased? Is it some combination of these? Once this is determined, ROI will be far easier to quantify. Many site owners say they want “improved ROI,” but prove to have difficulty determining what this really means in their business case. In these situations, it’s necessary to work through various possible ROI calculations until it makes sense to their business case, and they agree on the success metrics.

If you look at the history of media, more broadly, you see that the effectiveness measurements for Radio and Television advertising have evolved significantly. Similarly, effectiveness metrics for search engine marketing are still evolving. But, for today, I truly believe that the best metrics for tracking the ROI of search engine marketing are bottom-line, macro measures, determined on a company-by-company, site-by-site basis. Some companies will measure the number of leads generated and track that to specific referral sources. Other companies track completed transactions. Whatever the case, the important thing to understand is that the required outcome and the value of that outcome varies greatly between companies. So, I would submit to you, no one metric is sufficient.

avant|marketer: Even where ROI metrics can be agreed upon, marketers often complain that search engine optimization can’t be tracked in a completely closed-loop fashion (i.e. from impression through conversion), in a way that they are used to from other online channels such as banners and email. How precisely can search engine optimization campaigns be tracked? And, what are the implications of this for the viability of SEO as a marketing strategy?

Fredrick Marckini: The fact is that many of our clients do track their search engine optimization efforts in a tight, closed-loop process. What does that tell you? Search engine optimization is, in fact, measurable in this way.

That being said, in instances where branding and other soft conversions or offline conversions are a company’s goals, closed-loop ROI tracking from search engine query to purchase is not going to provide valid figures, because it assumes that the purchase is the result of a linear process. In particular, there are some pretty intense problems with how to track and calculate ROI on the “shop now/buy later” visitor. The person sitting at an office looking for “golf vacations” during lunch, might use a search engine to find a site about golf, but does not book a vacation on the site until later from a home computer, returning to the site via direct navigation. In this case the vacation was booked as a result of a search query, but no closed-loop ROI tracking system could account for this result. For these reasons, we have to look at alternative tracking measures. In this sort of case, here’s what is most telling - and we have seen this with virtually every iProspect client: As we increase a site’s search engine referral traffic, the direct navigation and bookmark traffic increases dramatically.

In one case, we worked for an online seller of textbooks. We grew their search engine referral traffic from zero to 17,000 visitors per month over a period of six months. During that same period, direct navigation and non search engine referral traffic increased to 70,000 visitors per month. The explanation? The search engine-referred visitor was such a qualified visitor, and the site was so relevant to their search that these visitors bookmarked or direct navigated to the site after having initially found it in a search engine. We’ve found this to be such a consistent outcome from search engine optimization that now when we initiate a campaign for a client we take a baseline measurement not just of the site’s search engine referral traffic, but also that site’s bookmark and direct navigation traffic. With this metric we are able to demonstrate to clients that the search engine referral traffic is “sticking” and producing, not merely short term, but long-term benefits for their company.

What all this tells you is that search engine optimization is not direct response marketing, and - though one can attempt to measure it as such [i.e. in a closed-loop way] - this is an incomplete, dare I say, inadequate means of doing so.

In truth, search engine optimization falls somewhere in between advertising and public relations. SEO frequently ramps up slowly, and isn’t predictable with pinpoint accuracy, and often the final campaign outcomes can only be measured completely on a year-over-year basis. Nonetheless, it still yields a dramatic ROI. Just because you can’t predict with unfailing accuracy the outcome of search engine optimization, is that any reason to ignore its power or make less of an investment in it than in paid media?

avant|marketer: It’s interesting that you contrast SEO with paid media, since the line between search engine listings and paid media is itself blurring. As you know, pay-per-click search engine marketing, of the sort offered by Overture, is increasingly thought of as an outright alternative to search engine optimization.

In light of this, do you believe we will see PPC search engine marketing supplanting SEO, in the near future, as some analysts such as Jupiter Research’s Marissa Gluck believe?

Fredrick Marckini: No, and an analogy may help here: Pay-per-click is advertising, SEO, like public relations, is editorial. Companies will continue to need both.

Pay-per-click search is sure to become an integrated component of many SEO campaigns going forward. But, unless search engines become purely advertising driven, with all search results being sponsored, the two will stay separate and both will be needed.

The only way that paid search outperforms any other paid advertising on the Web is by positioning its results as editorially pure search results. In reality, pay-per-click search is not search at all - it’s text advertisements disguised as actual search results. Why do PPC search results resemble an actual search result? Why not a paragraph of text? Why haven’t any of the [PPC search companies] clearly displayed the word “advertisement” next to their search results? Why haven’t they put a bright yellow background with the words “advertisement” on all sides of the text ad? Because, in order for the PPC search results to be able to perform, they have to make people believe that the paid search results are in fact “search results” and not advertisements. Even “advertorials” in magazines have the disclaimer, “special advertising section” on the top of every page. Notice, they don’t say, “special sponsored article” because the word “article” might transmit some degree of endorsement or editorial credibility to something that is not, in fact, an article. It ‘s an advertisement.

avant|marketer: If both pay-per-click search engine marketing and SEO ought to be used together in an integrated fashion, as you suggest, what is the proper role of pay-per-click search engine marketing vis-à-vis search engine optimization in the marketing mix? When should one be used, versus the other?

Fredrick Marckini: Pay-per-click search engine marketing offers companies an immediate way of bringing in site traffic. Because search engine optimization is both time and labor intensive, pay-per-click can provide short-term, stopgap results, to fill in gaps between campaign launch and rankings attainment, and - longer term - gaps in rankings when a site does not gain sufficient prominence on a keyword. But with pay-per-click the instant you stop paying for the positions, the traffic stops. By contrast, search engine optimization will continue to drive qualified traffic over a longer period of time. Search engine optimization, although long-lasting, does require updating and continuous attention for solid, long-term effective results. It’s not a project. It’s a process. Pay-per-click search engine marketing, then, should play a supporting role in the search engine optimization program. But it must be recognized as being incremental to a traditional search engine optimization campaign, and as not elemental to the overall online marketing mix. SEO, by contrast, is fundamental and elemental to the online marketing mix.

avant|marketer: You say that pay-per-click search engine marketing should be seen as incremental to a search engine optimization effort. But, many marketers see it fit to simply substitute a PPC campaign for a search engine optimization campaign. From a bottom-line ROI standpoint, is this move justified? Are there noticeable differences in the ROI from pay-per-click search efforts versus search engine optimization efforts? If so, what are these?

Fredrick Marckini: As search engines begin to comply with the Federal Trade Commission (FTC) and begin to clearly differentiate their paid listings from their pure editorial content - that is, results delivered via their mathematical algorithms - we can expect the [ROI] differences between the two to become more dramatic. The fact is, today, the typical search engine user is often unaware of the advertising that is being fed to them as “sponsored listings”.

We do hear lots of anecdotal evidence from companies that their paid listings do not perform nearly as well as their listings in the actual search results. In fact, this claim was made by number of the speakers at the February 2002, Search Engine Strategies conference in Boston. More than one speaker claimed that their Google listing produced a far better outcome than clicks from their paid listings. We’ve seen no studies that document the differences in clickthrough behavior, however, we believe that most marketers know intuitively that the clickthrough behavior on paid advertisements will always be poorer than the clickthrough behavior from an “actual” search result.

The other thing the marketer must recognize is that pay-per-click auction bidding models, such as Overture’s, continually place upward price pressure on bidded keywords, while natural SEO continually produces a lower cost-per-click, since it’s a fixed-priced offering. Most SEO firms charge a fixed flat monthly fee, usually in the $12,500 to $25,000 per month arena. Thus, the more traffic a search engine optimization campaign drives, the lower the cost-per-visitor. And, the important thing to see here is that the traffic volume SEO produces is cumulative, gains momentum, and lasts beyond the original engagement. We have clients we worked with in 1997 who are still enjoying a first page listing on keywords as competitive as “car parts” in Yahoo!. We know that in years past that single listing would drive several thousand visitors per month to that client, and we expect they are still enjoying that traffic today - for free. Overture, and the other pay-per-click engines cannot match that.