FORTUNE Small Business

Profit from hot web search tools

Never mind the odd names of these technologies. They are making it increasingly easy for businesses to find customers - outside of Google.

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(FSB Magazine) -- Ralph Fiol met the future of Internet search marketing at the bottom of the sea. Fiol lives in Miami and loves to scuba-dive. But a few years back he had a problem. "There was no smart way to quickly find wrecks I wanted to dive, get information about them, and take that information with me no matter where," says Fiol, 40.

So he took matters into his own hands. Fiol plotted the exact geographic coordinates of divable shipwrecks in the waters near Miami and beyond. Then he made the data visible to Google Earth and other online mapping tools. He created a cool tool that measures the distance from one wreck to another, posted the whole shebang on the web, added personal comments about all the wrecks that he had dived, and invited other divers to annotate the site with their dive logs and photography. Divers could also access the data using mobile phones or any of the newfangled GPS receivers now hitting the market.

Up bubbled Divespots.com, essentially a homemade, highly specialized search engine that helps scuba enthusiasts plan their diving adventures, providing them information far richer and more relevant than that from a standard search on a big engine such as Google or Ask. "It's about people finding what they want," says Fiol. Tapping the power of modern search technology has allowed Fiol to build a thriving web-based business. He says he has 30,000 registered users, about 210,000 monthly page views, and annual revenues in the low six figures -mostly from banner ads and listings from dive shops and other vendors. The search technology he uses is simple, user friendly, and often free. "I do have a background in this Internet stuff," says Fiol, who has worked as a Web site developer. "But honestly, it's not that big a deal."

Fiol is one of a growing number of small-business owners tapping into next-generation search. It's a spooky world, full of weird names and concepts. But don't be put off: Today's search tools offer huge potential for many small businesses looking to make money on the web. Total U.S. spending for search advertising jumped 62% year over year, to $9.4 billion in 2006, according to the Search Engine Marketing Professional Organization (sempo.org). By contrast, offline business-to-business advertising will shrink 2.7% from 2006 to 2007, predicts TNS Media Intelligence (tns-mi.com), a market research firm.

The two main search-marketing options are paid and organic search, but both have offered diminishing returns of late. You can tweak the language on your site to increase the probability that it will turn up on the first page of results from "organic" (free) searches on Google, Yahoo, and other mainstream search engines. You can also buy search terms using tools such as Google Adwords (adwords.google.com) or Yahoo Search Marketing (searchmarketing.yahoo.com), bidding for the right to have your small text ad appear on the results page when users search using terms such as "flower delivery" or "in- jury lawyer."

But Google, which handled 65% of all searches as of May 31, remains an opaque organization that constantly changes its search algorithms, with unpredictable results for the millions of sites that depend on organic search for their traffic (see "Get Right With Google" in the September 2006 FSB). Meanwhile, paid search is becoming expensive because of increased competition for the more popular terms, as well as click fraud and other unsavory practices. Even a modest paid-search effort can easily cost $50,000 a year, says James Speer, a vice president at IAC (iac.com), an Internet marketing and content company based in New York City. "Prices for common terms are spiraling," adds Speer. "You have to be spending a minimum of $500,000 a year on search advertising before Google will pay any attention to you." By "attention" Speer simply means that Google will be more likely to return your calls if you have a problem with, say, fulfillment. And there's no guarantee that your $500,000 campaign will be successful.

Enter next-generation search - the host of new tools and services you can use to help potential customers find you online. They range from "vertical search" engines that specialize in particular subject areas such as health care or sales leads, to sophisticated tools that convert web clicks to phone calls. The good news: Most of these services are cheap, easy to use, and readily available online. "I think smart businesses can do tremendous things with the latest developments in search," says Chris Copeland, managing partner of Outrider (outrider.com), a St. Louis-based search-marketing company that was one of the pioneers in its field.

Control Your Costs

Step one: Get smart about paid-search spending. Online fashion retailer Bluefly.com wins at the paid-search game through constant vigilance. "You pay for every click," says Bluefly marketing VP Gerri Gussin, who manages the New York City firm's paid-search spending. "If you don't make the sale right there, you can lose money fast."

Publicly traded Bluefly's 100-odd employees generated revenues of about $77 million last year. "My job is making sure my next incremental dollar invested goes to the search terms that generate the most sales," says Gussin, 33, who uses a two-pronged approach to this end. She buys terms Bluefly has defined, which include hundreds of clothing labels. She does this herself and writes checks directly to the search engines.

Then Gussin turns to a search-optimization firm - in this case, New York City -based Reprise Media (reprisemedia.com). Reprise handles Bluefly's nonbranded search terms: the several thousand words and phrases, from "black cocktail dress" to "designer handbags," that potential customers are most likely to enter into search engines. Reprise runs a first round of terms from Bluefly through synonym and phrase creators, taking standard typographical and spelling errors into account. Because Bluefly serves national and international markets, all this data must be correlated to zip codes and other geographic indicators. After all, paying for "bathing suits" in Alaska in February is probably a losing strategy, while paying for the same term at the same time of year in Miami is a likely winner.

This process yields a vast stock of search terms - several million for a typical campaign, according to Reprise managing partner Peter Hershberg. Because the web is a real-time affair, click rates, terms, and sales are tracked as they happen. Terms that generate enough sales to cover the cost of the inbound click live on in the portfolio. Those not worth the click fees are killed off. "It all begins to look like trading in stocks rather than traditional marketing," says Gussin, who calculates that she generates about $8 in sales for every dollar that she spends on search marketing. That's an above-average return by industry standards, according to experts contacted by FSB.

Generate more calls from customers

Some of the most effective new search-marketing tools help bridge the divide between web and offline commerce. Radiator.com needed an alternative to pay-per-click search marketing because the online radiator distributor closes most sales over the phone. Radiator.com needed more calls to its headquarters in Benicia, Calif., not more clicks. The privately held company, which expects $100 million in sales in 2007, turned to marketing consultancy Ingenio (ingenio.com), a pioneer in delivering qualified sales leads as phone calls rather than web traffic. Ingenio's competitors include Click-to-Call, Google's beta pay-per-call service (google.com/help/faq_clicktocall.html), along with UpayPerCall.com and Voicestar.com. Based in San Francisco, Ingenio takes search queries from several sources, including Yellowpages.com and AOL Search (search.aol.com), matches them to Radiator.com's company profile, and connects the customer to a phone rep. "Calls come in a form my sales people can use immediately," says John Thys, 28, Radiator.com's director of sales and marketing. The cost of a lead varies according to the timing and volume of calls. But Thys says the $12,000 a year that he spends on his Ingenio marketing program generates about $120,000 in sales.

One problem: Because Ingenio doesn't command the massive traffic of Google or Yahoo, it often can't generate enough leads to satisfy Radiator.com. "I would love to get ten times the traffic," says Thys. Ingenio says it is trying to strike deals with more search engines to drive more traffic, but had no specific deals to announce as FSB went to press in early June.

Dig Deeper

One of the challenges of Internet marketing is finding useful sales information on the so-called Deep Web: the vast trove of Internet content that remains invisible to mainstream search engines because it lives on subscription-only sites, is dynamically generated from a database in response to user queries, or is encoded in standards other than HTML. The average Google or Yahoo search is also unlikely to find data contained in forms or wrapped in Java script and other bits of code that tend to frustrate search-engine spiders.

Bullhorn (bullhorn.com) sells software that helps human-resource specialists track hiring prospects. The Boston company faces a common sales challenge: how to find the key decision-maker within large corporate organizations. Bullhorn recently started using a service called ZoomInfo (zoominfo.com) to gather sales leads at roughly 3.8 million companies worldwide. ZoomInfo scans the web for company directories and other public but hard-to-find information. Its leading competitors include CrossEngine (crossengine.com), pipl (pipl.com), and Yahoo Subscriptions (search.yahoo.com/subscriptions) a beta tool that searches subscription-only content.

ZoomInfo's basic service starts at $99 a month for listings at the vice president level and goes up to $5,950 a year for more extensive listings. In early 2006, Bullhorn bought a $4,000 package, which it says drove $12,000 in sales in the first six months. "We had other web tools like job boards and stuff, but they were cumbersome," says George LaRocque, 39, Bullhorn's vice president for sales. "ZoomInfo gives us contact information we never had before." Entrepreneurs, take note: Given the wealth of new search technology, you no longer have to settle for mainstream search results.

To give feedback, or tell us about a technology that gives your company an edge, please write to fsb_mail@timeinc.com. Or share your experiences with our online community. To top of page

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Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer.

Morningstar: © 2014 Morningstar, Inc. All Rights Reserved.

Factset: FactSet Research Systems Inc. 2014. All rights reserved.

Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved.

Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor’s Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2014 and/or its affiliates.