Online advertisers can spend 30 percent less and still get the same results, says the head of a search engine marketing firm. Googles advertisers mostly dont know what theyre doing and, if they did, Google could lose as much as US$2.1 billion in revenue, according to Jon Morris, founder of search engine marketing (SEM) company Internet Marketing Initiative. Online advertisers can spend 30 percent less and still get the same results if they work with a capable SEM firm, Morris said. By Morris estimate, only about 30 percentof Internet advertisers understand the intricacies of adverting analytics or are working with an SEM company. That leaves 70 percent wasting money. Google says it supports more efficient advertising and insists that inefficient advertising is self-correcting. "Google provides free tools for measuring ROI and constantly educates advertisers on the value of tracking ROI," a company spokesperson explained via e-mail. The adoption of our tools is high and customers frequently manage their bids. If advertisers are bidding inefficiently, the behavior will not be sustainable for the advertiser. Ultimately, we believe advertisers are spending in ways that deliver strong ROI and value to their business." Morris assertion isnt exactly shocking coming from someone with a vested interest in an SEM company. But its provocative speculation. If 70 percent of Googles advertisers could do just as well spending 30 percent less, that would reduce Googles US$10 billion-plus annual revenue by US$2.1 billion. Such sudden spending efficiency, however, is no more likely to happen than, say, 70 percent of the worlds Tylenol users switching to generic acetaminophen, however sensible that might be from a cost perspective. "In general, there are a lot of firms that are generating traffic, theyre happy with the leads they get, but theyre not really taking a sophisticated approach," said Morris. "In many cases, theyre paying too high of a click-through-rate or theyre not figuring out ways to optimise their landing pages to really maximise their conversion rate." For example, in a situation where a company is paying US$1 for one visitor and 30 cents for another, the temptation is to see the less expensive lead as more valuable. "It turns out that that US$1 [visitor] might have a 40 percent conversion rate, compared to a 0.5 percent conversion rate for the 30 cent lead," said Morris in an interview. "Just by having a good data analytics system, you can make much more intelligent decisions about how you allocate your dollars to maximise your return on investment." Morris says one of his companys clients, America Direct, a life insurance provider owned by Fidelity Life Association, has reduced its cost per lead from US$150 dollars to less than US$20 per lead since a year ago. Typically, he says, clients can reduce their cost per lead from 30 percent to 50 percent. A different advertising model, such as the pay-per-action system Google began beta testing a few days ago, might accomplish the same thing.