Revving up the search engine for a profitable internet ride

Jon Ostler gave up making websites to focus on marketing them. Picture / Brett Phibbs

Search marketing and search engine optimisation are new concepts for most New Zealanders.

But for Jon Ostler, one of the founders and technical director of Auckland internet marketing company First Rate, they are big business.

Six years ago, after running a web design, hosting and promotional company, Ostler decided the local market was saturated with web designers and decided to specialise in the marketing of websites.

"There were about 750 web designers in New Zealand at the time, which for our population was a bit silly," he said

After gaining some initial investment from angel investor Sparkbox, he sold the design and hosting part of his business and kept the promotional side.

The web promotion business at that time was focused on search engine optimisation, the process of ensuring that a company's website registers highly on search engine results pages.

Because people go to a search engine to search for a product or service, the conversion rate from visits to sales is high.

"You see only what you're looking for, rather than with banner advertising," says Ostler.

The business was renamed First Rate, and started looking for work from companies and the owners of large websites.

It quickly signed up clients, including Xtra and Air New Zealand.

"We started off in optimisation, and then we got into internal investment measurement, building our own in-house solution, called Media Tracker," says Ostler.

"We wanted to show the return on investment from other marketing activities and demonstrate how good a search was.

"At the time, there wasn't a lot of education and the only way to do it was to be able to measure all of their marketing and give them an idea of the return on investment for everything they were doing."

First Rate also deals in the flipside of optimisation - search marketing, in which a company advertises in paid or sponsored searches by bidding for the use of popular search words and phrases.

"We've been doing more and more of that because it's so effective," said Ostler.

"In New Zealand it's been a bit of an easy game because there's not been that many people bidding for phrases.

"Two years ago there wasn't anyone doing it apart from us so our clients were paying a ridiculously small cost compared to overseas."

Ostler says studies show that a combination of search engine optimisation and search marketing creates the greatest impact for a business's website.

"The economics work out pretty good. All our clients do optimisation and paid search - they're complementary services."

First Rate's activities have diversified further and now include helping businesses boost conversion rates on websites for sales or capturing new prospects.

The company also has an outsourced email service, managing email addresses and campaigns for web publishers and e-commerce sites.

"We organise sponsorships for the emails and run some pretty big lists."

Ostler says First Rate's revenue has grown by about 90 per cent a year for the past five years.

The company now has a staff of 16, including one person in Australia, from where Ostler says its future growth will come.