Search Engine Marketing Increasingly Profitable
Alexis Muellner

Back stage on the Internet, there are spiders and sniffers, bridges and cloaking devices, doorways and redirects.

It's not a Tolkien trilogy trailer, but a look into the lucrative world of search engine marketing.

In South Florida, several firms with expertise and track records are feasting on a wide-open marketplace for expertise in navigating the ever-shifting landscape of search engine criteria and preference.

Search engine marketing is a niche dominated by few, and strewn with small businesses and basement consultants – all looking to make Web site-owning clients scream loud enough to be heard in cyberspace.

Heightened demandMore than eight in 10 computer users have gone to search engines to find information on the Web, according to new data from the Pew Internet and American Life project in Washington, D.C. The research also finds one in four Americans search engines on any given day.

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Those numbers spell value for vendors who can benefit from positioning on search engines.

And there are vendors large and small.

"Now, more than ever, people need business and more traffic," said Peter Stein, CEO of WebGenius in Miami. "It just goes to prove the Web is alive and well and better than ever, even though the economy has taken a beating on Wall Street."

Demand comes from the desire for targeted leads.

In Web-speak, "impressions" used to matter. But now, it's all about return on investment and creating real sales.

"Banner ads are dead," Stein said. "They are now clicked through less than a quarter of 1 percent."

WebGenius has 4,000 square feet of office space on Biscayne Boulevard in north Miami-Dade County and employs 60, double the staff it had last summer.

Stein won't disclose revenue, but said it grew 102 percent last year for the business he funded with $600,000.

The business began in 1998 as a portal for plastic surgeons. Doctors on the site ranked high in search engines and Stein realized his services were marketable.

"We have 53 programmers that do nothing but know the ever changing algorithms of the search engines," he said.

WebGenius' main competitors are Los Angeles-based 24/7 Website Results and MoreVisibility.com in Boca Raton.

That firm has 2,500 square feet of office along South Dixie Highway in the shadow of the local WorldCom headquarters.

MoreVisibility.com employs 15 and is expanding its space and staff by about 20 percent. It is run by President Andy Wetzler, a former Baltimore-based telemarketing and call center consultant, and Chairman/CEO Dennis Pushkin, former president of U.S. operations for Dryclean USA.

MoreVisibility separates itself from competitors through a detailed online marketing analysis that goes beyond submitting key words to search engines and focuses on placement and tracking services.

Changes in the business are leading to business for firms such as MoreVisibility.com. It used to be that big companies took search engine marketing to their information technology departments, Pushkin said.

"Those IT departments once needed to justify their existence but time has evolved," he said. "In-house, they haven't been so successful and that's bringing clients."

Its client base is made up of some big names, including Lucent Technologies, RealNetworks, Car & Driver magazine, Nova Southeastern University, L.L.Bean, Grant Thornton and Toyota.

"As we started to bring in clients, our goal was 50 and then 100," Pushkin said. "That was revised to 200 and then 300 and now it's beyond 350."

Pushkin declined to offer revenues for the privately held, self-financed firm but said May was a record month for revenue, which reached "the mid-six figures." The company has been profitable since it began, he said.

Most of the firm's contracts last 12 months but there is the occasional "odd-ball gig," like a recent 15-month contract for Toyota, which wanted help promoting its new Matrix model through key words online and paid listings.

A local newcomer is Philadelphia-based Unreal Marketing, which entered the market last month after acquiring Taylor Traffic, a marketing firm with 19 clients.

It took 1,100 square feet in an office on Sunrise Boulevard in east Fort Lauderdale to house a four-person sales team.

Unreal billed $1 million last year, numbers the firm expects to jump to $3 million this year, said Michael Stalbaum, CEO and general counsel.

The firm employs 18 and, like MoreVisibility, is privately funded. Clients include Kaplan Colleges and the Howard Stern Ad Network.

"A real benefit of ours is tracking ROI [return on investment], and we track what's going on," Stalbaum said. "We can tell what keyword they came with, which third-party partner companies are involved."

It used to be that anyone could track traffic. Results were another question.

"Big deal, I get 10,000 hits, but what did I get for that?" Stalbaum said. "Now we can say, you had 8,000 who downloaded this, and 6,000 who actually bought, and things like that."

Search engine-friendly

Unreal sells clients on time saved. Search engine requirements are fickle and fluid, and Unreal said it is experienced in algorithms.

Each search engine has its own criteria for listing and its own economics, said MoreVisibility's Wetzler.

The demographics at Google, for example, are skewed toward business professionals, he said. That is intelligence his clients want.

A new relationship is dawning between the marketers and the search engines themselves.

"We have beneficial relationships with the search engines, we're tech heavy and we have proprietary software we use to build the pages."

WebGenius, MoreVisibility.com and Unreal Marketing all have strategic deals with search engines in which they provide so-called XML feeds to the sites.

XML feeds summarize the content of a Web page to the search engine in the form of the most relevant keywords. It actually goes in and looks at the page and provides it to the engine on a friendly format.

"Now with our relationship with Inktomi.com, we get them 10,000 pages a night," Stalbaum said.

"It's always been a cat-and-mouse game with the search engines, but now they embrace us," WebGenius' Stein said.

The company now sends direct feeds to AltaVista and expects a similar arrangement with Inktomi soon.

"We have a volume of clients in the hundreds and they are wanting to be a search engine and not be in the business of marketing," Stein said.

FTC wants more search disclosure

The phenomenon of "pay for performance" sites has altered the landscape.

The Federal Trade Commission in June said it would send letters outlining the need for clear disclosure to companies that offer Internet search services, according to CNET News.com.

It was responding to a complaint by Portland, Ore.-based Commercial Alert.

The FTC said it would not take formal action now and noted that many of the sites named in the original complaint were already flagging paid listings.

Of the 12 search sites owned or operated by the seven search-engine companies named in the complaint, 11 divide paid-ranking results by placing them above nonpaid results, the agency found.

"Some people like it and others feel like those who pay will get more exposure, and that goes against the supposed spirit of the Internet, which is free navigation," said Joao Ribeiro, owner of Option4 Interactive Solutions in Miami.

The pay sites may actually lend some credibility to those paying. It shows an investment into the site, Ribeiro said.

Option4 has seven employees and an office it owns on Brickell Key in Miami. It does Web page development, but ask Ribeiro what's been hot lately, and he'll say a Web business integration program.

"We offer those service and have a specialist," he said. "It's going pretty fast now with two or three requests a week, and that seems to relate to problems with the economy as people want to promote better."

At Option4, it undertakes search engine marketing in 30 to 60 day chunks.

"After our optimizing work on their site, we teach them how to keep using pay-for-click and how to apply it and keep promoting the Web site on their own," Ribeiro said.

The company charges $75 an hour and needs 15 to 20 hours to make some real progress.

"The rules change fast about how and what they accept and we're not trying to make $2,000 and get out," Ribeiro said.

It has worked for the past year with http://www.clickseguros.com and http://www.global insurance.com, which provides insurance for non-U.S. residents.

"The number of insurance plans sold on the site went up 300 percent in a year," he said.

Link2City.com in south Miami-Dade offers Web design and Web hosting, but its livelihood these days is Web marketing.

Smaller Web marketing firms less apt to have the direct pathways into the search engines need to focus on keeping track of what the engines are doing, especially when it comes to spiders.

This is software they develop that goes scampering around the Internet scouring Web sites based on a range of criteria.

"They do the job of what the Web site owners used to do by submitting links," Link2City.com CEO Danny Sibai said. "Making submissions doesn't really work anymore."

Search engines' focus was to build databases with highly qualified sites.

"They don't care about having any more Web sites in their databases," Sibai said.

Microsoft Network has 125 spiders it sends out, he said. Sometimes they are called sniffers.

"When they come to your site, they look for elements, key words, and graphics and the way things link," he said.

It is all based on algorithms – each of the spiders in the same engine looks for different things. The first step is getting indexed. Once the spider visits, the indexing begins.

"It could be 1 of 10 million but you are in," Sibai said.

Each one of the spiders has a certain schedule they go out with.

"If this is what you do for a living – you create a search engine that tracks down the spiders – you learn how to get the IP addresses, some by ethical means and some underground," Sibai said. "And each company has its own technology and its own ways."

Link2City charges $1,800 to optimize a site. Fees could vary from $25 to $2,000. Its biggest site is South Motors Group and Vista BMW. It also works with North Miami toymaker Safari Ltd.

"With the IP addresses, you try to manipulate and manage the spiders to come to your Web site," he said.

Exactly what the spider is supposed to do is the search engine's secret.

"Each one of those spiders looks for different things," he said. "MSN changed its algorithm three times in a week recently."

What Sibai stays away from is cloaking, an unethical way of gaining ranking. Other than spamming search engines, cloaking is the quickest way to a permanent black list. A page is created that is invisible to all except for the spider.

"I can design a porn Web site and it will have the look and feel to the spiders of a church," Sibai said. "So the spider reads me as a church, come and pray, and they give me a ranking, but it's porn."

But even cloaking has its place, said WebGenius' Stein.

"We wrote some of the first cloaking scripts out there, but it's not a devil's word," he said. "It can hide an ugly doorway page if it's used responsibly. Matches can start a forest fire if used irresponsibly. Cloaking could be used to do tricky things and divert people from a search for ink jet cartridges to Pamela Anderson nude."

Businesses spent more than $13 billion to promote their Web businesses in 2000, according to a report by ActivMedia Research, which found business-to-business and business-to-consumer sites will easily outspend those in the media/portal/information space.

"Where are the people going on the Web?," asked Unreal Marketing's Stalbaum. "The No. 1 answer is search engines, and if you aren't in the first three pages, forget it."

E-mail Managing Editor Alexis Muellner at amuellner@bizjournals.com.

© 2002 American City Business Journals Inc.