The Virtues of Getting Vertical

As a term within the search industry, “vertical search” may have outlived its usefulness. In its original form, it was used to describe search engines that didn’t set out, like Google and Yahoo!, to index the total Web but only concentrated on a small portion relevant to a specialized user market—design engineers, for example, or bass fishermen.

But as general search tends to adopt more personalization features, those narrow search engines are becoming less viable. Meanwhile, “vertical” search engines—particularly comparison shopping engines, but also engines for travel and financial services– are melding with vertical sites, adding the informational content, buying guides and consumer reviews that will encourage users to engage with and trust the sites. The results are an amalgam: not totally a content site, but not a straight-ahead search engine either.

That can make it all the more difficult to decide what part these sites should play in an online marketer’s media mix.

According to a presentation by Jupiter research analyst Patti Freeman Evans at this week’s Internet Retailer 2006 show in Chicago, that decision depends partly on how consumers are using those vertical sites. In its most recent survey of consumer engine usage, Jupiter found that consumers cited low price as the most influential factor in determining where they would buy a product online. Forty-three percent of “undecided uninfluenced” shoppers—those who did not have an idea where they would make their purchase and who had not been influenced by information they had already found on the Web—said “low price” would direct their purchase. For “undecided influenced” shoppers, who haven’t selected a merchant but say they were influenced by Web information, low price was even more important (54%).

Those price influence figures were up about 36% from Jupiter’s last round of research in 2004. “Low price is becoming more important, and one of the reasons is that many Web sites are very similar,” Evans said. “It’s very hard to express the difference between my digital camera and my competitor’s on a site. It’s just easier to compare based on price than on attributes o the store or the product itself.”

But other factors do matter to consumers: low-cost shipping options, past experience with the store—these criteria were also mentioned as buying influences. “that means that information you’re providing, both on your site and on vertical sites such as comparison shopping engines, should be full and complete, to help them make their decision based on something other than price, especially if you’re not the low-price leader,” Evans said.

And comparison shopping engines still only lead 4% to 5% of shoppers to a retail Web site. That pales compared to the number of visitors who get to the sites they want to shop via direct navigation (26% of undecided uninfluenced, 20% of undecided influenced) or general search engines (15% and 25% respectively), Evans said. In their influence, comparison shopping sites are about on a par with catalogs, promotional e-mail or mass-media ads.

“That means there’s importance in ubiquity and in spreading your message across a number of locations,” Evans said. “Offline advertising still works in this area, so it’s not something you want to let go of.”

Where comparison shopping sites flex their muscles is late in the buying process, when consumers have decided on the product they want and, in large part, researched the general price range for what they want. When it came to simply finding prices for the object of their desire, 37% of shoppers polled told Jupiter they did that at retail Web sites, while only 15% said they amassed that information from comparison shopping sites. But when it came time to evaluate price—that is, to compare prices and locate the best deals—comparison sites won out. Twenty-seven percent of shoppers reported that they compare prices at comparison shopping engines, versus 17% at retail sites; and 24% said they looked to comparison shopping engines for the best buys, as opposed to 17% who did so on retail Web sites.

“Retailers should be on comparison shopping sites in order to capture those later buying-decision stages,” Evans said. “Consumers may have figured out that $100 is the right price for a DVD player, but who’s got free shipping? Who’s got a rebate? That’s where many of these niche and vertical search engines come into play.”

How are retailers reacting to this broadening by consumers? By spending more on search engine marketing (SEM) than the average marketer ($143,000 in 2005 compared to $122,000), for one thing. Retailers also tend to get more directly involved with their search marketing; 46% of them have never outsourced their SEM.

And 31% said they were adding new search engines to their marketing campaigns last year, as opposed to 22% of all marketers. On average, retail search marketers included 4.4 search engines in their SEM campaigns in August 2005, compared to 3 for all search marketers. That figure increased in February to 5.9 search engines for retailer SEMers and 3.3 for all Web marketers.

Continued exploration of the search options beyond Google, Yahoo! and MSN will be a necessary survival tactic, Evans said, because click prices—now about 32 cents in the shopping category, although much higher for some sub-categories– are only going up, Evans said.

“The advice is to be broad and test as many of these engines as you can,” she said. “Then refine down to the ones that are appropriate for your business. Even if you don’t get a lot of traffic from these vertical search engines, it might be very qualified traffic and convert very well. So it might make sense to keep a small investment in some of these vertical search engines.”

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