A new study released by Piper Jaffray shows that search is the most efficient marketing channel for acquiring new customers, more than twice as efficient as yellow pages, which placed second. The cost per acquisition for search is on average $8.50, whereas the Yellow Pages was the second-most efficient channel at $20 per customer acquisition. These two are followed by online display ads at $50, email at $60, and direct mail at $70. The study also found that because of the explosive growth of local search, the number of online advertisers could reach 2-4 million over the next five years from the current number of 700,000.
It is no surprise to me that search delivers such a positive ROI. It is unique from most advertising mediums in that the person searching is already in the mindset of actively looking for something. The same could be said of Yellow Pages but this type of advertising not only continues to decline but is so expensive compared to search. The other three channels mentioned (online display ads, email and direct mail) face the obstacle of trying to get a person to change what they are doing or thinking about at the time they encounter the ad. The same is true of most television, radio and print ads. With search, they are actively looking for a product, service or more information on a particular topic. They are seeking as opposed to being sought.
That is why search is such a powerful advertising channel that more and more businesses are realizing they cannot live without.