Retail Search Presence Study™
On-Line Retailers Winning Internet Search Battle
Internet-Engine, a leading Internet marketing firm, analyzed search results from the three major search engines ---Google, Yahoo and MSN Live --- for the past three years during the holiday season and found that on-line retailers, such as Amazon, are winning the Internet search battle against traditional retailers.
The project, called The Retail Search Presence Study, included visiting and categorizing over six thousand web pages that were found when performing typical Internet searches. (More details on methodology) The results show that on-line retailers have a very strong presence, representing well over 30% of the listings shown, while bricks and mortar retailers consistently have had the weakest presence of any group showing up only 12% of the time. With consumers’ search activity growing to more than 10 billion searches each month and Forrester Research reporting that 24% of all off-line purchases are influenced by the Internet, the importance of a strong search presence is clear.
“On-line retailers have developed and maintained a dominant presence in search marketing” said Thom Disch, Internet-Engine’s CEO and the director of the study. “To put this in perspective, when a shopper does a search on the Internet, he or she will find three listings from on-line retailers for every one listing from a traditional retailer. I find it very surprising that brick and mortar retailers have not invested more dollars in search marketing, since e-commerce sales have grown 28% since 2006 (according to comScore) while total retail sales have grown by only 3% over the same time period.”
“The results of this study are confirmed by the financial performance of Amazon released just last week,” noted Steven Rogers, Professor of Entrepreneurship at Northwestern University’s Kellogg School of Management. “This is a classic example of how the more nimble entrepreneurs will use new technology and innovation to replace old school marketers. Traditional retailers are relying on brand awareness to drive their Internet marketing programs, while these start-up on-line retailers are reaching consumers in new and creative ways. The end result: entrepreneurially oriented organizations, like Amazon, increase market share and show record profits while the traditional brick and mortar retailers are reporting sales declines and profit shortfalls.”
While traditional retailers have increased their search presence slightly over the past three years, they still remain behind every other group including manufacturers who usually do not sell directly to the consumer. Disch states that “The manufacturers are looking at the big picture by establishing their web presence and using the Internet and search marketing to get in front of the consumer when the shopper is in the decision making process.”
Shopping comparison sites showed the largest year over year drop in search presence, dropping from 27% in 2007 to 19% in 2008. A quick look at Google Trends for the number of visitors to sites like Bizrate.com and Pricegrabber.com confirms that the amount of traffic has also dropped over the past year. “While it’s a little early to tell, this data might indicate that the shopping comparison sites might be in trouble in the coming years,” Disch stated.
The study also compared “paid” and “free” search results, finding that the free or organic listings of the traditional retailer websites have only a 2% share of the total listings. This is dramatically smaller than the share for free listings for eCommerce sites at 17%, shopping comparison sites at 11% and manufacturers’ websites at 10%.
“Not appearing in the free listings means that the brick & mortar retailers must spend more of their money on paid search listings which ultimately will have a negative impact on their overall profitability,” said Disch. “Investing in search optimization techniques to increase the organic or free listings would help these traditional retailers by balancing their listing placements, reducing their overall costs and increasing their market presence.”
“Traditional retailers may not be keeping up with changes in consumer behavior since they are relying on a brand-push marketing strategy while the on-line retailers using search marketing present a consumer-pull strategy, meaning the product is presented to the consumer by the search engines when the consumer is looking for information about that specific product, when they are ready to buy,” Disch concluded. “This may be contributing to some of the major retailer bankruptcies we have seen recently such as Linen ‘n Things, Circuit City, Tower Records, and FAO Schwartz.”
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