Search Engines Have Over Twice Conversion Rate of Other Acquisition Sources, Says WebSideStory

January 31, 2006 - Search engines have more than twice the e-commerce conversion rate of other traffic acquisition sources, showing why marketers have paid so much attention to the online channel over the past few years, according to a first-of-its kind study from WebSideStory, Inc. (Nasdaq: WSSI), a leading provider of on-demand digital marketing applications.

During the last three months of 2005, the search engine conversion rate at business-to-consumer e-commerce Web sites was 2.30 percent, more than twice the conversion rate of other acquisition sources (0.96 percent), which include banner ads, affiliate marketing links, shopping search engines and other referring links, according to the WebSideStory Index, a new statistical barometer that features techno-graphic and e-commerce trends culled from the millions of users that visit Web sites using the company's award-winning Web analytics technology, HBX.

However, search engines, including both paid and organic listings, still trailed direct navigation* conversion rates (4.23 percent), including bookmarks, by nearly double, according to the index.

"For several years now, search engine marketing and optimization has dominated online marketing, and this data shows why: it's far more effective at converting visitors into buyers than most other acquisition sources taken as a whole," said Ali Behnam, senior digital marketing consultant for WebSideStory. "But as this data also shows, the best conversion rate still comes from good old fashioned branding and customer loyalty, where visitors either bookmark your site or type your URL directly into the address bar."

The disparity in conversion rate between acquisition sources can vary by e-commerce category. For example, the search engine conversion rate for "toys" jumped to 4 percent - nearly equaling the 4.85 percent conversion rate for direct navigation in that category - while dropping to 1.35 percent for "computers and electronics." "It makes sense that search engine users, who arrive at sites they may not be familiar with, are much less likely to purchase a big-ticket item, such as a computer or television, than they are for a toy," Behnam said.

"This unique study provides a high-level view of conversion rates by acquisition source, but for much more granular information, including up-to-the-second ROI data, marketers will want to use an enterprise-class Web analytics solution to properly refine and adjust their marketing spend," said Jeff Lunsford, chairman and CEO of WebSideStory.

HBX Analytics is an award-winning, on-demand Web analytics solution that provides actionable information about online visitor and customer behavior. It is part of WebSideStory's Active Marketing Suite, the industry's first suite of integrated, on-demand digital marketing applications including Web analytics, site search, Web content management and, later this year, keyword bid management. For more information, please visit www.websidestory.com.

Definitions

Direct Navigation: Includes bookmarks and URLs typed directly into the address bar. Also includes e-mails from non Web-based e-mail clients and poorly implemented redirects where the referring domain is stripped out or masked.

Search Engines: Includes all paid and organic keywords from major search engines worldwide. 

Internet Links: Includes banner ads, affiliate marketing links, shopping comparison engines, and other referring links.

E-commerce Sample: The select sites used in this study generate more than $3 billion in annual sales online in five categories, including apparel, toys, computers and electronics, sports and leisure, and other.

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