Friday, May 1, 2009

Natural Search vs. Paid Search

Googling has become the synonym for search.

Traditional marketing theory has it that a purchase stems from a need (maslow's hierarchy for the B-schoolers :) ) ----> need for information ---> search for information ----> evaluate alternatives ----> buy decision
No wonder that in the online world, Searching or Googling is the easiest way to get the information - and hence one of the major sources of visits/traffic to a website

Google, Yahoo, Microsoft have used this crucial link in the buying process to monetize/get revenue in the form of advertisement links. Anytime somebody clicks on the sponsored links on the right or wherever they appear on the web page, they make money.

E.g: The diagram is a snapshot of my search on for 'buying books online'. Google has intelligently figured out that I live in India (my airtel account??) and shown me results in the India context.

If I click on the "blue" box, then Google makes no money, while Google makes money if i click on the "red" box

Clicking somewhere in the 'blue' box constitutes 'natural search' while clicking in the 'red' box constitutes paid search

This presents an interesting question:
If the same page, e.g:, were to be displayed in both the 'red' box as well as the 'blue' box what would happen.

For all visitors that click on ebay in the red box, ebay would pay money to google, adding to its advertising spend.
For all visitors that click on ebay in the blue box, ebay need not pay any money to Google

So from an online retailer's perspective, increasing the visits from natural search would greatly contribute to optimize the advertising spend.

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