In a new report by a Conductor, a New York Company, that analyzes paid and organic search strategies of Fortune 500 companies they found that Fortune 500 companies spend $51 million per day in aggregate on 88,792 keywords, and only 20.82% rank in the top 100 of natural search result. This means that 80% of the $51 million a day, $40M a day is completely waste.
The study, measures the maturity of natural search efforts in comparison with the pay-per-click (PPC) spending. The study also examines whether investments for paid search terms made by Fortune 500 companies are paying off. The company published a similar study in November 2008, but this time it looked at the top 200 keywords, rather than the top 10. It also considered branded keywords.
“It remains alarming that although we included branded keywords in the study for the Fortune 500, more than the lion’s share are not showing up anywhere in search results for their most important keywords, including their own names,” said Seth Besmertnik, Conductor CEO.
“As a group, the Fortune 500 continues to remain largely invisible in natural search results.”
When you start thinking about $40 Million dollars spent a day to get moved up on the search food chain it shows hwat a bargain toys.com was at $5.1M.
It also shows you the amount of money being spent trying to build traffic, we our domains naturally have.
One day these companies are going to wake up and take some of the daily tens of million and do what they should have been doing for over 10 years now, by domains that have natural traffic covering any of their businesses, brands or products.
Here’s a great example.
3 weeks ago I went to a movie and of course you have the commercials. One of the commercials was for a new dove product for damaged hair.
The 60 second commercial talked about the product, how it works and how it fixes damaged hair.
The next night I saw the same commercial run during a prime time show.
I couldn’t tell you the name of the product, just that it fixes damaged hair.
The next day I bid on the domain damagedhair.com that was at namejet.com and won it for $1,900.
I figured if a company is going to spend millions advertising a product specifically for damaged hair, how could the domain not be worth a couple of thousands.
Would’t Dove, owned by one of those Fortune 500 companies, have been better off buying that domain for $50K then spending money trying to move up in Google under the keyword damaged hair, especially considering that 80% of the time, they miss?
How about pending this money in the PPC channel.
The Fortune 500 through their Madison Avenue reps have always talked about not spending more money onliner advertising “because there are so little metrics or accountability” yet they are willing to through away collectively $40M a day on ineffective methods. If they put the whole $51m into PPC advertising wouldn’t that be more effective than spending it on something that failes 80% of the time?
i think big companies waste a ton of money on search, but this is an oversimplification of a slanted study.
You can’t say that just because company X doesn’t rank for some random long tail keyword, that they are in turn wasting that percentage of their search spend. If they rank #3 for insurance, but aren’t ranked for dublin, ohio insurance rates – is that really that surprising, or a big deal?
how much traffic does damagedhair.com get? Go into a meeting and tell someone that they could have an extra 144 visitors per month (my random number) for just $50,000. They could buy those same clicks for $20 per month, so traffic is a tough argument.
Now branding could (and should) be the convincing sell for someone like that.
The dove site is great – in a branding / we don’t care about SEO kind of way….
Gordon
Your assuming details of the results that we don’t have.
I can also argue that 10 of Fortune 500 companies are spending money trying to get ranked under the term “health insurance” but I see of the major players only Aetna listed on the first page.
So lets not guess on how these numbers were figured.
Bottom line, there is a lot of money being wasted in SEO that could be spent buying PPC or domains.
Regarding damagedhair.com if I was going to invest millions in rolling out a new product, probably tens of millions, judging by the ad campaign, and didn’t acquire the domain that exactly matches the primary use of the product, for $2K, I would be a idot.
Hello,
Some of the information in this post is incorrect, particularly in that spend is attributed to *paid search*, not *SEO*. Also, that spend for the F500 is way too high – way exceeds entire industry estimates. If anything, the data shows that Fortune 500’s need to invest more into natural search.
I’m also not sure how it was determined that $40 MM is wasted – the study does not say anything to this effect.
Rob
The study says that $50M a day is spent and sites achieve success only 20% of the time, meaning that 80% of the money or $40M is spent without producing results.
“Fortune” 500 sounds like a real misnomer….
Saying that they fail 80% of the time because they bid on a keyword but don’t rank for it naturally is a big stretch.
Once upon a time I got a top 3 ranking for my (division of a top 10 US company) company for a surgical procedure term that is highly profitable and highly competitive.
I spent a ton of time on the SEO – and that single term was the #1 goal, far and above all of the other keywords that we happened to be bidding on. All stakeholders were very satisfied with the results.
Using the logic from this article, even though the SEO was wildly successful in achieving our #1 goal, because we bid on a bunch of long tail words but did not rank for them our SEO may have been judged to have failed 80% of the time.
Also – the “wasting $40 million a day” appears to from the very convoluted logic that they spend $50 million per day overall on PPC, and if they only rank organically for 20% of those terms, then somehow they are wasting the rest of the money. If that is where the logic comes from, it makes no sense.
MHB – The success 20% of the time is comparing SEO terms to PPC terms.
The argument that somehow the $40 million is wasted doesn’t work . if the article said “80% of PPC spend doesn’t convert” then you could use that logic.
Just saw this as an alert- and wanted to clarify how the study was done, and to also clarify that this wasn’t the conclusion that we were making.
We looked at the top paid search terms of the fortune 500 – the ones they spend $51 million / day on, and then we looked at if they ranked in the top 100 search results for those same terms – the ones that they obviously feel are important, since they’re spending so much money on them in paid search.
When we looked – only 21% of the paid keywords ranked in natural search. so yeah, 80% fail, but not that they’re wasting money on SEO, but rather that they have a long way to go.
When you look at the fact that paid spend is about 10-15 times natural investment, that’s not suprising, but since 65-85 % of the clicks occur in the natural space, it’s a missed opportunity.
Hope that clarifies it, and the original study can be downloaded here:
http://www.conductor.com/research/q42008/natural-search-trends-of-fortune-500
Seth
Thanks for the info and the link
Very helpful, thanks.
“these dopes are spending so much money on PPC, but probably not investing nearly as much in SEO”
You should go to the movies often.
Bring me the popcorn…please.
Close your mouth, open your eyes and ears—the ideas will keep on flowing.
Thanks for the article.
Interesting comments by everybody here as well.
This just goes to show you that while the PPC market is struggling and on the decline, the SEO (natural search branding) industry is booming.
The SEO industry as a whole is also a very young and immature industry because most companies still do not “get it” but it’s really where the money is.
Most of the marketing / consulting companies that deal with all of the Fortune 500 big dogs do offer integrated solutions and do tackle SEO, PPC and domains.. Pretty new “marketing” solutions which definitely do work.
Slamming SEO as a whole is kind of stupid.
SEO professionals know the value of good domains and recommend to their clients each and every time to go after the exact match keyword domains.
SEO experts + Domainers = see eye to eye on most of the important issues.
I agree with wannadevelope, also it shows that 80 % out there doing seo have no clue of what they are doing.
It’s easy to explain to a company what needs to be done even if you have know real clue about seo, because these companies also have no clue and can only realy just hope on finding the SEO expert.
Good post MHB
Sometimes I am realy messed up Lolll
” Duane”
MHB – Good post and suggests to me that there is a lot of learning yet to occur with Fortune 500 around effective online marketing in particular.
On a different but related note, I was taking a glance at expiring domains the other day. And was shocked at the enormous ocean of bad names that people had registered. Bad judgement apparently exists on all levels, Fortune 500 included.
To anyone who has really studied domaining, never underestimate the value of the knowledge and experience you have gained. Maybe the Fortune 500 companies need to hire you!
This is basically a gap analysis against paid media spend – I do this all the time for clients and prospects, and it provides a great launch point for keyword targeting in natural search.
The title of the post is misleading – it’s spend for paid search, not SEO, so there is no need to bag on SEO (MHB – correction perhaps, or clarification?).
The research shows a tremendous opportunity, though I will say that the analysis is only touching on a portion of what enterprise sites are actually getting from natural search channel. I work on many large F500 accounts, and can say first hand that they do quite well in natural search on the whole – some are getting over $1 billion annually. But the study wouldn’t be able to validate that, because they have no access to their subject’s analytics data. Still, the more popular paid search terms with no visibility are a great place to start an optimization campaign.
Domains with natural traffic through direct navigation were scooped up years ago and are prohibitively expensive for most domainers. Besides that, there are not enough of these rare words to fuel the domain industry as we known it.
The big secret that nobody will share is that three and four word keyword domains based on popular searches will do 90% of the job of getting top search engine ranking provided the page is not parked, is a .com, and you aren’t trying to game the system.
While the entire domain industry bids single and two word domains through the stratosphere, it is the three and four word domains that appear at the top of their respective categories day after day after day.
Never mind about Madison Avenue, when will domainers get it?
Dave
I think domainers get this, at least I do.
Listen to my radio show on domainsuccess.com last week and you will hear me talk about the second best domain, or the 10th best domain, many of these are three words.
I have a ton of these
If you look at the names chosen for the major live auctions, this criteria doesn’t even seem to be on the radar screen. Nor does this criteria seem important for the the majority of online domain buyers in the aftermarket.
If price is any indicator, the amount most domainers are willing to pay for a three or four word .com (related to a marketable product or service) with an average monthly volume of EXACT Google searches in excess of 1,000 is barely above reg fee!
Instead they opt to spend hundreds and even thousands of dollars on two word .com domains (and single word off label TLDs) that have so much keyword competition and so many competing published pages that their newly published sites are unlikely to ever digitally grace the first few pages of any search engine results.
All the while, they’re singing the praises of SEO and the placement they will have someday, while at the same time three and four word .com domains are quietly moving into a top ten placement position within weeks of publishing.
Because keyword metrics and other real word results are freely available for analysis, it is beyond my understanding that many domains which seem to be among the least capable of generating any sort of income without throwing significant marketing dollars at them still manage to be the domain darlings of the resale market.
Dave
Your not going to see 4 word domains chosen for major live domain auctions but I have seen them and bought them in the extended or silent part of the auctions.
Your response sort of begs the question:
If a three or four word .com domain with a monthly average search volume of 1,000+ exact searches has a high likelihood of quickly attaining a top ten search result position, why shouldn’t it be sold in a live auction along side the one word and two word off label TLD domains?
Dave
There are only so many live auction spots and I think that they try to average at least say $10K per spot.
If a domain is only going to fetch $3K they probably won’t put it in.
You want to change the perception then go out and spend 5 figures for these domain and repoirt the purchases, or sell domain like these for 5 figures and report the sales.
If people see success they copy it.
shhhhhhhhh…….I want to buy lots more of these, many at reg fee, before their values jump up.
This blog from December of 2006 (!) does a nice job of summing up the longtail keyword domain concept:
http://www.wordtracker.com/academy/three-good-reasons-to-target-long-tail-keywords
Big companies have big budget but don’t have much time to find much cheaper sources of effective traffic.
They were happy to spend their money to promote their brands than buying domains in this way.