Efficient Frontier Insights

Google Becoming More Efficient: Improved CTR

The recently reported decline in Google paid clicks caused what may be an unnecessarily strong reaction in the investment community this past week. Efficient Frontier's US Client Index, which covers more than 20 million paid clicks each month, did indeed see a 5% drop in click volume on Google when comparing January 2008 to January 2007. But same advertiser spend was up on Google by 7% in the same period, and click through rates improved by 10%. CPCs were up by 13%. This data suggests, as Comscore posited, that Google is becoming more efficient at serving ads by delivering more relevant clicks to advertisers. Thus it is able to charge a higher premium for those ads, hence the increase in CPCs.

Our Search Engine Performance Report: Q4 2007 showed that ROI on Google was up 7.5% from Q4 2006 to Q4 07, which does not spell disaster in my mind. Next week we'll take a look at overall statistics for February on this blog. Stay tuned!

Average CPC - Search vs. Content

Last week Search Engine Watch posted Efficient Frontier's average CPC by vertical for search advertising. I've been asked to compare that data to content advertising. Our average CPC across all clients in January 2008 was $0.65, while for content it was about half, at $0.32.

Content CPCs for Auto, Dating and Travel are closest to their respective search CPCs. I showed in this post that Auto and Dating sites are spending the largest share of search engine advertising on content, so it makes sense that they can afford a higher relative CPC on content. Financial advertisers' search CPCs are well more than double their content CPCs, showing that search is a more targeted and valuable channel for them.

 

Average CPC by Vertical

Today Search Engine Watch posted Efficient Frontier data on average search CPC by vertical for December 2007 and January 2008. You'll see how widely CPCs vary by vertical, with credit and mortgage advertisers spending the most per search click, and retailers and dating sites spending the least. It's interesting to note that credit companies and retailers paid higher CPCs during the busy season of December than in January.

This data will be published monthly in both Search Engine Watch and ClickZ.

Search Engine Results Page - Wealth of Information

Search engine marketplaces provide tremendous opportunities for marketers to learn and understand competitive activity, better plan and execute ad campaigns and constantly monitor their standing in the market. You can achieve these objectives by quickly examining the search engine results page (SERP) for your top keywords and following the tips below.

1. Ad Campaign Planning

Before you launch your ad campaigns, you should look at the SERP for the top keywords and try to answer these questions:

How relevant are your keywords to the product? One word can sometimes represent multiple products. For example the word "portfolio management" may refer to investment management, IT portfolio management or project management. Users searching for "portfolio management" could be looking for any of the above.

A quick review of the Yahoo! SERP for "portfolio management" clearly shows that investment portfolio management dominates the page.

The search engines' algorithms display results based on what most searchers are looking for when using that keyword. If your product doesn't belong to the dominant results for certain keywords, it's a good idea to keep a low profile on such keywords to avoid getting irrelevant clicks. Clearly stating the product offering in the ad copy would further help you avoid irrelevant clicks.

Are you competing with unrelated products for placement? Different products can afford different keyword CPCs, and if you are competing with a completely unrelated product for placement, you might end up paying a higher CPC. Inspection of the SERP for your top terms can help you identify and deal with such a situation.

For example, assuming that based on product price, marketing budget and other factors, an investment portfolio management vendor is able to pay a CPC of $5 for the keyword "portfolio management." An IT portfolio management vendor may only be able to afford a CPC of $2 to meet ROI targets. In order to compete with investment portfolio management, the IT portfolio management vendor will need to bid higher and pay a CPC that might not be within budget.

2. Ad Campaign Evaluation

Search engine marketing makes it easy for marketers to evaluate their competitive standing. You should exploit this opportunity to constantly ensure that your ad copies are unique and they differentiate your offering from those of sponsored and non-sponsored links.

Competitive offers vs your offer. Many advertisers are always on their toes writing the most effective ad copies which highlight their best offers. You can easily understand their messaging strategy and approach through the SERP.

Natural search results vs your offer. You are not just competing with other sponsored links but also the natural search results. Advanced SEO enables search marketers to highlight their special offers even in the natural search results. Furthermore, Yahoo! Search Marketing's paid inclusion product Search Submit lets advertisers control the messaging in the natural search results by allowing them to create titles and descriptions that are displayed as algorithmic search result listings. Thus, advertisers are able to highlight their offer even in the natural search results.

Conduct searches using your top terms and ensure that your ad copies and offers stand out from your competitors.

3. Ad Campaign Monitoring

SERPs can help you monitor ad campaigns by providing insights on the infringing actions of your competitors, affiliates and even other business units in your own organization.

Competitors using your trademark keywords. Yahoo! Search Marketing and Microsoft adCenter do not allow this and have prevention measures in place but you should also consider it your responsibility to ensure that others are not using your trademark in their keywords and ad copies. Google's trademark policy is more lenient but if you find out that your trademark is being misused, you should file a complaint.

Affiliates bidding on your top keywords. Your own affiliates bidding on your brand and top keywords can cause unnecessary CPC inflation if you get into bidding wars with them.

Other business units bidding on your terms. A business unit belonging to a large enterprise sometimes can inadvertently bid on terms representing another business product. This can cause a bidding war within the same organization and unnecessarily increase keyword CPC. Collaborative bidding techniques, as used by some clients of Efficient Frontier, can help optimize spend in these situations.

Throughout the ad campaign life cycle, the SERP can provide valuable insights. By proactively understanding the marketplace and the competition you can avoid unexpected post-launch surprises. You should stay updated with your competitors' strategies and actions on an ongoing basis, and take measures if your trademark and brand are being misused.

Finally, if you are short on ideas, you can look at competitor ad copies and offers on the SERP and use the information to create your own campaigns. As they say, "imitation is the sincerest form of flattery."

Seasonal SEM Shift - from Retail to Travel, Finance Growth Slowing

As the new year begins, it's no surprise that online retailers cut back search engine spending as the shopping season wanes. The US retailers among Efficient Frontier's client base decreased spend by 31% from December 2007 to January 2008. Travel, on the other hand, receives a huge surge in consumer interest, and therefore ad spend, in January - our travel search engine spending was up 64% from December 07 to this January.

Search spending from finance, auto, and dating advertisers increased slightly from December to January. The news here is that the December - January growth in the finance sector was much slower this year than last. Financial advertisers spent 24% more in January 2007 vs. December 2006, while this year spend grew only 3% in that period. It seems the economic slowdown, particularly in the mortgage space, could impact the search engines.