SEO

Search Marketing : Most Cost Efficient Customer Acquisition Tool

Internet Retailer reported on a Piper Jaffray study, which finds that search is the most cost-efficient customer acquisition tool. Print yellow pages ranked second. Here’s how the various media fared:

* Search: $8.50
* YP: $20
* Online display ads: $50
* Email: $60
* Direct mail: $70

I know nothing about how the study was conducted or how these numbers were calculated (although it’s a relatively straightforward process) and so can’t comment on its accuracy. But let’s assume these figures are accurate. The independent variable here is consumer usage.

Media that go up or down in terms of traffic and usage will likely see those costs increase or decrease. The only categories on this list that are likely to change are search and yellow pages. The others — in terms of consumer response rates — are likely to remain constant. Email could get more expensive over time if consumers ignore it or RSS/feed-based marketing supersedes it over the long term.

The challenge for search is to more efficiently monetize traffic and usage. Google is doing a very good job, Yahoo! should get better with Panama and the corresponding “marketplace design,” which factors relevance into ad serving.

The challenge for print yellow pages is to hold on to consumers as the Internet (including IYP) and mobile become more common use cases. The cost per customer acquisition is going to be higher in some categories than others, and as fewer consumers use the print book over time those costs will go up.

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Greg Sterling is the founding principal of Sterling Market Intelligence, a consulting and research firm focused on online consumer and advertiser behavior and the relationship between the Internet and traditional media, with an emphasis on the local marketplace.

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