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Search Engines Can Help With Demand Forecasting

Search engine optimization (SEO), a method used to increase Website page ranking on Google, Yahoo, and Bing, can provide purchasing managers much needed insight into demand for products and services.

While forecasting demand has never been easy, SEO increases the intelligence of the supply chain by monitoring specific keyword terms and the geographic location where searches are done.

Optimizing a company's Website for search engines increases the visibility for people searching on specific keywords related to products and services. Websites that rank high in query results contain the most relevant information and most useful content for a specific search term or phrase.

The Search Engine Marketing Professional Organization (SEMPO) estimates the SEM market will reach $16.6 billion in 2010, up 14 percent from the prior year. That's according to the 2010 State of the Market Survey based on input from 1,472 agencies and client-side marketers from 68 countries.

Companies on average expect to spend 43 percent more on SEO in 2010, compared with 2009. About 49 percent will reallocate budgets from print advertising to search engine marketing. Thirty-six percent will shift money from direct mail, and nearly a quarter will move budgets from conferences and display advertising, according to SEMPO.

SEO can help procurement managers track demand for products. For those not familiar with Google Insights for Search let me introduce you to the tool, using Intel as an example.

Google Insights for Search identifies the rising search terms related to Intel. It also tells us the geographic location where the most searches are done.

While procurement managers shouldn't rely solely on SEO to forecast demand, optimizing sites to rank on the first page of search queries can inform buyers on the relevance of content on their Website. If the content isn't compelling enough for Google to rank it on the first page of the keyword search query then maybe the company needs new content to describe the products.

If you're trying to help consumers find information on your company's Website to brand products or educate consumers, Google Insights also can help to find the best search terms to optimize the written copy on the site. Think about the audience you're trying to reach, and use the most important keyword terms first.

Covario, a San Diego-based search engine marketing firm, conducted a study on the likelihood of consumers to purchase a brand's product after visiting its Website, setting a specific dollar amount for each visit. It turns out that dollar amount provides insight on demand for the products and estimates on cost of goods sold (COGS).

A combination of keyword research, competitors' ranking status in queries, and understanding consumer buying habits can give purchasing agents insight into demand for their companies' products.

Companies selling or providing less-than-sexy components and services built into Apple's iPhone or iPad still need to communicate their message to consumers and understand the best way to reach them. Intel doesn't sell chips to consumers. The company doesn't need to participate in search marketing to get companies like Sony or Dell to build processors in their computers. They already do. But consumers may not know. And that comes down to branding.

Google can stand on its own as a brand, but consumers might like to know Intel will provide the Atom processor in Google TV expected to ship in time for the holidays. Maybe it's not only an opportunity to educate people about the processor and Google TV, but also to push the brand and the relationship.

Intel, sophisticated in search strategies, informs consumers of their options. Everyone knows Intel, but may not know all the products it offers. Consumers, however, don't go to retail stores and ask for microprocessors designed by small-to-mid-sized companies, so SEO works especially well for lesser known companies, too. Ranking well in search engines helps build awareness by educating consumers on how products work.

Suppy chain buyers need to work with marketers to build:

  1. Branding
  2. Awareness
  3. Sales

19 comments on “Search Engines Can Help With Demand Forecasting

  1. Barbara Jorgensen
    October 4, 2010

    This is the first time I've heard of this. What a great idea!

  2. tioluwa
    October 4, 2010

    This is a very informative post. SEO is taking the “battle of competitors” to the web, while also creating the best avenue for companies aiming to create a name on the market to do so.

    In a way, i think SEO needs to be a continous process, especially in a very competitive market. An SEO operation carried out on a site could put in on the first page of a search engine one day and down to the third page when a dozen other companies optimize their site.

    So how does  a company in a very competitive market keep its contents relevant always?

  3. bolaji ojo
    October 4, 2010

    Demand forecasting is the Achilles Heel of the electronics industry and any tools that can help should be explored by executives and managers. In many cases, inaccurate forecast data leads to inaccurate production planning leading to the industry's sometimes disastrous boom and burst cycles.

    However, will the use of search engines help cure this problem or will it add to the confusion in the industry? I am curious if there's been any research on this that indicates the level of accuracy of data gathered using SEOs. Will companies need to refine the information gathered even further and how can they drill down enough to make sure what they are generating can even be relied upon and to what extent?

  4. Laurie Sullivan
    October 4, 2010

    Barbara, 

    Yes, I began writing about search engine optimization (SEO) about two years ago and quickly realized the benefits it can bring companies. In the early 2000s, I remember writing about the difficulties electronics companies had forecasting demand in a specific geographic region. SEO can't provide the complete answer to demand, but it sure can shed insight.

    Laurie

  5. Laurie Sullivan
    October 4, 2010

    Tioluwa,

    You ask how does a company in a very competitive market keep its content relevant always?

    That's a complicated question. For starters, those responsible at the companies for writing marketing copy or updating the website need to continually add new content based on keyword searches on the website and in search engines.

    Google relies on the frequency of updates, among many other search signals, to determine where the website will appear in the query results. 

    Although there are hundreds of signals, others include Quality Scores determined by the relevance of the content on the website, back links to other reputable websites, and optimization of title tags in the browser window.

    I'll follow up in a later post to provide additional insight.

    Laurie

  6. Laurie Sullivan
    October 4, 2010

    Bolaji,

    Search engine optimization is a science based on numbers and algorithms. I do not believe the use of search engines to forecast or balance demand will cure the problem or add to the confusion, but I do believe the data can shed light into where the demand is for products or services based on keyword searches on engines like Google and Bing.

    The industry offers dozens of free tools, such as Google Insights for Search, and there are hundreds, if not thousands, of reputable companies that can provide direction. 

    Yes, companies do need to refine the information further by pulling it into analytics tools, but SEO can be relied on to offer insight. Covario, a San Diego-based search engine marketing firm, uses signals from SEO to help companies like Intel determine demand for specific products in geographic regions throughout the world.

    Laurie

  7. Hawk
    October 4, 2010

    Laurie,

    I like the idea of using search engines to track demand and interest in products for any industry. The high-tech sector can certainly use this. Since not everyone is on the web, however, how will companies compensate for the fact that they not only won't be getting the full picture but also won't even know what percentage of the actual demand they are actually tracking using search engines? If the value of the information is not easily determined or verifiable, should companies rely on it at all for demand forecasting?

  8. Terry Van Horne
    October 4, 2010

    Interesting article and use of keyword research. I have seen keyword research used to develop new products, discover new uses and identify unknown audience for a product in addition to demand. I have also used the onsite search to find products that users think should be on the site or a new brand in a category. Search data can provide all kinds of data that with a little imagination can be used for several things outside of targeting search engine rankings

  9. Laurie Sullivan
    October 5, 2010

    Hawk,

    SEO isn't the tool for every company. I realize many companies still use spreadsheets rather than analytics tool, though there are free versions from companies like Google. For procurement specialists in need of an additional metric, SEO might help gauge demand.

    Laurie

  10. Laurie Sullivan
    October 5, 2010

    Terry, 

    Thank you for taking the time to share your thoughts.

    Laurie

  11. Barbara Jorgensen
    October 5, 2010

    Hi Laurie,

    I am very intrigued by this. I have a follow-up question. Parametric searches are used on distributor sites (as well as component supplier sites) because so many buyers don't know exactly what they are looking for. So I am wondering–and this exposes my ignorance in the matter–does SEO work best when you know the brand of the product–such as Intel in your example–or can it work in reverse? Example: I need microprocessor x with performance characteristics y in z packaging and I happen to be located in the Boston area.

    This may be beside the point, but I'm just curious–thanks!

  12. Laurie Sullivan
    October 5, 2010

    Hello Barbara,

    Generic keywords such as microprocessor, or unbranded keyword terms, seem to work best for lesser-known companies. Google recently released a feature called Google Instant, which attempts to predict the searcher's intent as the person types in the query. It will likely impact SEO, but experts are just now trying to determine the implications.

    Laurie

  13. disty advocate
    October 7, 2010

    lets be careful here. just because someone might see sizable numbers in searching for product {and lets make sure we are talking about elect component forcasting} whether by part number or manufacture—first you need to validate the quiery{s}. random searches thur the most popular search engines dont mean anything unless you can track and validate…just ask Avnet they know how to do it.

  14. Laurie Sullivan
    October 7, 2010

    Disty advocate,

    Yes, I am talking about electronic devices; but no, not by part number. By category of product type such as Apple iPod. Not a green Apple iPod. 

    You mention Avnet, thank you disty advocate.

    Hey Mr. Roy Vallee, do you or your marketing department monitor social buzz? The last time we spoke I was in your office and we were talking about the next great technology innovation that would take the electronics industry out of the slump. 

    What say you about search engine optimization to help forecast demand?

    Laurie

  15. SP
    October 7, 2010

    Interesting article. Are these features of Google paid one? If yes how do they charge?

  16. Laurie Sullivan
    October 7, 2010

    Hello SP,

    Google Insights for Search is a free tool. You can find it here: http://www.google.com/insights/search/#

    Laurie

  17. bolaji ojo
    October 8, 2010

    Disty Advocate, Very valid point. Apples and oranges comparisons could sink a business especially in the delicate world of demand forecasting. Laurie's article talked generally about using SEO as another tool in the process but she didn't address whether this would be for components or finished goods. This makes me wonder whether there's a way to separately track this. You mentioned Avnet is doing this. I'll like to find out how and what their experience has been. Over to you Laurie and Avnet, Is SEO able to help companies create the fine distinction between OEM goods and components?

  18. SP
    October 8, 2010

    Thanks Laurie

  19. Laurie Sullivan
    October 8, 2010

    Hello disty advocate and Bolaji:

    The SEO tool would be used to provide insight into demand for finished goods because most consumers would search on words related to a specific product like “apple ipad” or “droid.” From there the manufacturer would need to determine the components required to make the product. I'm looking for demand based on finished product to determine how many widgets I need to ship to a specific region or geographic area. From there I would need more specific forecasting tools to determine demand for component. This is a backward approach.

    Yoo-hoo Avnet, you're up!

    Laurie

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