Efficient Frontier Insights

SEM Tools: Risks, Limitations & Best Practices – Part II: Content Targeting

In the second post of the series, I will focus on another popular search engine marketing tool: content targeting. This post mainly covers various setting options in content targeting to be aware of and ways to avoid common mistakes.

Part II: Content Targeting

Content targeting implies the use of the SEM platform to place bids and advertise on websites which are part of the search engine’s content network. There are few points to keep in mind while using content targeting for SEM campaigns.

1. Do not turn on search and content for the same campaigns

Search engines provide the option to have the same campaign targeted to both, the search and the content network. Creating a single search+content targeted campaign seems like an easy choice, but in order to be more effective, it is better to create two separate campaigns, one search targeted and the other content targeted.

Content advertising is quite different from search advertising. Through content targeting your ads show up when someone is browsing a web page/website which contains keywords related to your campaign. In search advertising your ads only show up when a user enters a keyword in the search box that you have placed a bid on. The intent of the searcher is much stronger than the intent of the user browsing a website, where they may already be viewing the content they were searching for. Thus, content advertising has much lower click through rates and lower CPCs, but can give your campaign broader exposure outside of search.

In order to show ads relevant to a web page, the search engine algorithm needs to match the keyword with web page content. Since it is not possible to find relevant web pages simply by looking at one keyword, the search engines look at all the keywords in an ad group and identify the dominant theme represented by that ad group. Once they have identified the theme, they find relevant web pages and place ads on them. In search advertising the algorithm just looks at the keyword to show the ads.

Therefore, it’s a good practice to have separate campaigns targeted only to the content network. Within these content campaigns group similar keywords together in ad groups so that each ad group has its own theme.

2. Be careful what you bid

As mentioned above, content CPCs are much lower than search CPCs, because of less competition and lower conversion rates. There is no reason you should bid same amount for search and content placements, especially when search engines provide options for separate bidding. As recommended earlier, always try to have separate campaigns for search and content but in case you have the same campaigns targeted to both the search and the content network, you should separate bids for search and content clicks. For example, to separate bids in Google AdWords you can check the box "Content bids" during campaign set up.

3. Understand Billing Options

You should understand and if required, use the various billing options available for content targeting. For example, Google currently offers several billing methods such as CPC (Cost per click), CPM (Cost per 1000 impressions) and PPA (Pay per action).

In CPM you pay for 1000 impressions whether or not anyone clicks on your ad. CPM is applicable to the advertisers who want to reach customers early in the advertising cycle, with ads designed to increase awareness but not necessarily generate clicks or traffic.

In PPA, you don’t pay for the clicks but pay only when certain action (for example, subscription or lead capture) is completed by the users on your website. You can set this action and the price you are willing to pay for it. PPA billing is useful when click-to-conversion rate is extremely poor and when the advertisers know exactly how much each conversion is worth to be able to set its value.

In conclusion, for a campaign to be effective on content network ensure that similar keywords are grouped together (as discussed in my post on campaign organization) for the search engines to identify the dominant theme, campaigns are set up for the most efficient bidding and you are using the billing method most appropriate for your business.

 

SEM Tools: Risks, Limitations & Best Practices – Part I: Geo Targeting

Should you use all the search engine marketing tools currently being offered by the search engines? Maybe yes, maybe no. If you do use them it is very important that you understand them correctly and use them in the most effective manner. As the competition among search engines increases and advertisers have more options, search engines have to offer more and more SEM tools to attract and retain advertisers. These tools are definitely useful and tempting, but you must understand their limitations and applicability to your business before using them for your campaigns.

This 3 part series will explore risks, limitations and best practices in using some of the currently popular tools: geo targeting, content targeting and demographic targeting.

Part I: Geographical Targeting 

Through geographical or "geo targeting", you can target your advertising to any US or international region(s). Your ad will be shown only in the selected regions. However, before using this tool for your SEM campaigns you must understand:

1. Your Business type

Geo targeting is useful for businesses whose offering or product prices vary by location, such as online home listings, online dating and web-based job listings. In all these cases there is strong likelihood of the searcher having a location preference.

It is also useful for small businesses who can only serve a local market. Obviously, the neighborhood pizza place in San Jose, CA would not want to show ads in New York and pay for the non-converting clicks.

Geo targeting is most likely not useful for businesses like online retail and enterprise software, since the product offering and prices do not usually vary from one location to the other. You can avoid spending resources in setting up geo targeting if it does not make sense for your business.

2. Bidding limitations

Without careful planning, you will end up placing the same bid for keywords across different locations. This is dangerous and ineffective because keyword CPCs vary across locations based on what competitors are bidding for the keyword in that location. You should create separate campaigns for each geographical region you are targeting, in order to avoid placing the same bid for a keyword across multiple locations.

In the Google AdWords example shown, the campaign “Online Dating” is targeted to Australia, Germany, United States etc. The problem with this structure is that the keywords in this campaign will have the same bid across multiple countries. 

 

 

If there is a keyword “singles dating” in this campaign and if we bid $5 for it based on its performance in the US, we will end up placing the same $5 bid in Germany, in Australia and in China. While its performance might justify the bid in United States, $5 might be very high for China and very low for the Germany. With this bid you might end up at the top position in China, which may not be the most optimal position there. On the contrary, in Germany you might lose out on good traffic because of the low bid and hence low position. 

3. Technical limitations

Geo targeting works by the search engine’s ability to capture a user's IP address or other identifying information, check that information against a database that suggests the likely geographic location of that user, and then serve up targeted ads based on this geographical location. The database is not 100% accurate and there could be IP addresses which are missing from this database. No geo targeted ads are served to the users with missing IP addresses.

Secondly, company firewalls and large internet service providers (which use several IP addresses) tend to skew geographical location. This could result in ads to show up at unintended locations. Geo targeting therefore, is not 100% accurate and sufficient to saturate a regional market with search engine advertising.

To conclude, before you set up any kind of regional or international geo targeting for your campaigns, it is important to ensure that the targeting applies to your business and it is set up for the most effective bidding. In addition, you must understand that you might lose out some traffic volume because of the technical limitations.

Get on the Google Rocket

Every month, web measurement companies such as Hitwise, Comscore, and Compete post search engine rankings that show Google gaining in share of search queries. Every quarter, Google posts rapid gains. In his keynote at the Search Insider Summit last week, Jordan Rohan stated that Google was appropriately valued at $700 per share, and it's time to buy if it falls down to $600.

Google's revenues are partly dependent on hundreds of thousands of AdWords customers, but large SEM firms like Efficient Frontier control a significant share of search engine spending. How we allocate client spend across the search engines is determined in large part by performance. So if users are are migrating toward Google, as the metrics firms indicate, search engine spend must move toward Google in order for advertisers to achieve the volume of impressions and clicks that will result in conversions. Even if conversion rates are high on other engines, as they have been on MSN, the volume of searches may not be high enough to increase spending.

The share of Efficient Frontier's total search engine spend on Google increased from 71% in November 2006 to 77% in November 2007. Yahoo Search dropped from 23.5% to 18%, while MSN dropped from 4.9% to 4.1%. Incremental spend grew on all the engines during this period as we added new clients and legacy clients increased spend, but a disproportionate share of that growth has been on Google.

I don't mean to sound like a broken record with all these blog posts about Google's growth, but watching the company grow over the past 3 years that I've been in this industry is sort of like watching a shuttle launch over and over again - it's amazing and slightly shocking. We can't take our eyes off of it part of us and wishes we were on it. Even if we don't work for Google, we actually are the rocket that powers the shuttle, since so many of us have businesses and livelihoods that depend on and profit from Google's growth. I think it's fun. Do you?

Clickable Area Change: Effect on AdSense Performance

On November 13, Google announced that it would change the clickable area in AdSense ads. Since Efficient Frontier has over 70 clients that advertise on Google AdSense, I thought I would take a look at how it performed before and after the change.

As might be expected, our data shows decline in CTR of 12% when comparing the week of November 5, 2007 (before the change) to the week of December 3, 2007 (2 full weeks after the the change). While some felt that this might decrease revenue for Google, average CPC actually increased by 13% (from $.30 to $.34) in that same period, while overall spend remained about the same.

Financial Services - not feeling the pinch yet

Today I spoke on a panel at the Search Insider Summit called "Managing Search in an Uncertain Economy" (Lee Odden liveblogged the session here) I specifically wanted to look at trends among our financial services clients, which would be the first to react to market conditions and could indicate how the search engines might be affected if an economic downturn might occur.

It turns out that spend has grown 35% from November 2006 to November 2007 among the financial services clients we have had at least a year. Spend normally drops for many of these clients between October and November due to decreased consumer interest. A quick look at Google Trends shows this seasonal decline. Our financial services client spend was down 12% from October - November this year. Similarly, it dropped by 14% from October to November last year. That similar seasonal decline combined with the 35% overall growth rate leads me to believe that we don't need to worry, at least not yet.

What lenders and other financial companies are doing though, is getting smarter about where they put their dollars, and monitoring their campaigns more closely. One way Efficient Frontier helps clients increase revenue is by optimizing where they are spending their dollars. Not surprisingly, it's headed toward Google, as you can see on the chart below. Year over year (November 06 vs. November 07) spend on Google was up 55%, MSN up 13%, and Yahoo down 6%. In November 07, Google accounted for 74% of our financial services search engine spend, up from 63% in November 06. When will this growth slow down??

Just How Dominant is Google in European Paid Search?

If you ask any European search marketer about the differences between the European market and the US, the first thing they will most likely say is "in Europe, it's all about Google." Indeed, Hitwise UK data shows that Google accounted for 85% of UK search query volume as of October 2007.

The breakdown of search engine spend for Efficient Frontier Europe also shows this dominance - in October 2007, nearly 88% of our UK client spend occured on Google Adwords or AdSense. The other European countries in which our clients are advertising (France, Spain, Italy and Germany) show an even greater trend toward Google, which claims 94% of client search spend in those countries.

Although Google dominates in Europe, just as in the US, it's important not to discount the other engines in your international campaigns. That additional 15% of search queries not performed on Google can add to your bottom line, and provide good learning opportunities. MSN offers demographic targeting and high quality traffic in the UK, and Yahoo! Search is improving the quality of their traffic with site exclusion and CPC discounts. However, given the growth of Google's paid search share in the US, as I showed in this post, it makes me wonder how long it will be before Google reaches 90% share in the UK.

On Monday at SES Chicago, Efficient Frontier President James Beriker shared this data along with best practices for EU campaigns in the "Search Around the World: Europe and Latin America" panel . Marty Weintraub covered the session here.