In the study, Los Angeles retailers were the most active merchants in paid search and the most visible, 72%, in natural search. Consumer brands came in at 69%; catalogs and call centers, 68%; and retail chains, 66%. Only 7% of the domains, not companies, surveyed showed a significant number of their terms in the top results. No companies appeared consistently in the search results, and the number of companies that had zero visibility brought down the average for each category.

Still, 36% of the companies studied showed mid-to-strong presence for their most advertised keywords.

Overall, the visibility in natural search results for the top 500 Internet retailers decreased as engine queries grew longer.

The report analyzed the effect increasing the specificity of words, phrases and terms has on natural search visibility. For long-tail keyword searches, companies followed a downward curve similar to the Fortune 500, as the number of words in search phrase increased.

Nathan Safran, senior research analyst at Conductor, points to a three-tier solution for retailers: define and understand the opportunities in terms of size and scale; set up a plan to carry out the strategy; and continually compare the results of both your company and competitors.

“Too many organizations treat SEO as an after-thought,” Safran says. “It needs to be ingrained in the company’s culture.”

Evidently not all company execs who hold the keys to the budget listen, though a Search Engine Marketing Professional Organization (SEMPO) survey reveals that 43% of roughly 1,500 client-side and agency search marketers plan to spend more on SEO in 2010 than they did last year. SEMPO also says 37% of companies expect to spend more on paid search in 2010 than they did in 2009.