In the current business climate, companies are relying more than ever on new sales opportunities to replace business that has been lost with current customers. And it’s pretty clear by now that “search” has emerged as the form of online promotion that generates the best lead generation and conversion results — outstripping other e-promotional tactics such as online display advertising and newsletter sponsorships.
This isn’t surprising, of course. Search advertising captures the interest of online viewers precisely when they’re in “search mode” for specific products and services, rather than when they’re just surfing the ‘net for news and updates.
(In fact, some advertisers have come to believe that even print advertising outperforms online display advertising. That’s because readers are more likely to browse all the way through print publications. Compare that to visiting informational web sites where viewers are far more prone to selectively pick and choose the pages that they open. A well-placed display ad on a “new technology news” page, for example, might be invisible to the vast majority of viewers who come to the home page and then decide to click through to only one or two additional pages on the site.)
But back to search. Many advertisers wonder which is most effective: gaining high “natural search” rankings that occur based on the content of the web site, or opting for pay-per-click search listings such as Google’s AdWords program with their entries on the right side of the screen.
As it turns out, both tactics have their pluses.
In fact, a new year-long study that ended June 30, 2009 of more than 25 e-tail web sites by Engine Ready, Inc., a search engine software development firm, found that visitors who clicked through to the sites from paid search ads were ~50% more likely to make a purchase, compared to visitors who came to the same sites via clicking on a natural search link.
Specifically, Engine Ready discovered that the conversion rate from pay-per-click links measured 2.03%, while the conversion rate was only 1.26% from organic search clickthroughs.
On the other hand, various research studies conducted over the past few years demonstrate the clear popularity of natural search listings over paid search listings. It’s been shown pretty consistently that around two thirds of total clicks are made on natural search listings, compared to just one-third on pay-per-click listings.
So the key takeaway is that any marketing program worth its salt incorporates search marketing as a key component. And in most cases, that effort should encompass search engine optimization for natural search rankings along with a pay-per-click advertising program.
Nones Notes 
Online advertising has to be integrated with print and other media to be effective. Certain companies think online ads can simply replace all print ads…not true. You say search is the key? Great. But does the Raffles in Singapore want people to search for “Raffles Singapore” or for “hotel Singapore”? Print, TV, etc. can make that difference. Online advertising cannot.
Good points you raise. “Brand building” is going to occur offline more than online. A hotel like Raffles wouldn’t have been able to build the strong reputation it has through search marketing only.
For some other hotel properties that compete at a “lower plane” (to be charitable), search marketing strategies hyping price or locational convenience may be more central to their success, because brand reputation cannot carry the day. (Ever looked at the customer ratings for run-of-the-mill hotel properties on TripAdvisor.com? Start with the Leland Hotel in downtown Detroit. Not pretty.)