Thursday, April 22, 2010

Is The Pareto Rule An Understatement in SEM?

I've often wondered whether or not a very small percentage of searchers generates a disproportionally large % of search engine revenues. This belief is based on the observation that, of most people I know, there are two types: those who rarely/never click on paid ads, and those who *always* do, using paid ads almost as their primary means of search-based navigation.

Does anyone care to comment or share data anecdotes on this topic? The only data I'm aware of on this topic was put out by Comscore in 2009 and in which they categorize searchers as light, moderate & heavy, with heavy searchers (20%) accounting for 80% of searches. I'll bet, though, that that was a generalization and not a specific fact.

If you have data or meaningful anecdotes on this topic, I'd love to hear from you and suspect Searchquant readers would too. More accurate data on this subject would, I think, have a material impact on SEM strategy.

Any thoughts?


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Blogger John T. Shea said...


Thanks for writing this excellent blog. Are you writing about display anywhere now?

One question on this post - if true, I could see how this theory would inform engine partnership, marketing and product strategies. However, I'm not sure how this would inform SEM strategy under current targeting constraints. Can you explain?


John Shea

7:28 AM

Blogger searchquant said...

Hi John,

All my writing's here, and I'm afraid there's not too much about display; I have some comments on and on Twitter (@searchquant).

If the theory holds true, then I think it's post-click site design strategy that would be impacted. Namely, you'd want to work hard to find ways to get as high a % as possible of search navigators to change their behavior so that they come to the site via lower-cost channels (bookmarks, direct navigation in URL address bar, email, etc); even small progress in this area would greatly diminish cost of acquisition. Also, advertisers would want to conduct multichannel attribution studies to see what upstream channels are bringing those few people who account for disproportionately high % of paid search clicks, and then be aggressive about reallocating ROI there and away from search.

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This post about the search engine marketing is very fruitful. Especially the comments. People who never click on ads are more in numbers than people who actually does that.
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The cumulative line on the Pareto chart runs diagonally down through the chart. It is used to add the percentage values of each bar, starting with the top bar. This allows us to see which values bring the most impressions, and also how much of the total contribution it represents down the road.

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