Efficient Frontier Insights

UK Search Syndication Traffic Quality

Our post on search engine syndication network performance in the US showed that in general, pure search converts better than syndicated traffic. Efficient Frontier UK data shows a similar trend, as shown in the table below.

We looked at conversions from UK advertisers in 4 different verticals, and found that, on average, 78% of Google's paid search clicks came from google.co.uk or google.com, while only 54% of Yahoo's paid search clicks came from search.yahoo.co.uk or search.yahoo.com. (Note: this data does not include clicks from the engines' respective content networks) Microsoft Live Search doesn't show ads outside of its own search properties in the UK, so was not included in the table.

Yahoo had a wider discrepancy between the percentage of clicks and percentage of conversions than Google (78 - 82% vs 54 -66%), which suggests that Yahoo's average 662 syndicates covert at a much lower rate than Google's average 228 syndicates. Ask and AOL are Google's two biggest UK syndicates, and account for a similar share of clicks and conversions, showing that they drive high quality clicks in comparison to Yahoo's largest syndicates, which include sites like couponmountain.co.uk and findstuff.co.uk.

Data from our UK Search Engine Performance Report: Q1 2008 showed that Google accounted for 85% of UK search engine spending in Q1 2008, compared to Yahoo's 12%. Google's high volume of pure search paid clicks and smaller syndication network relative to Yahoo speaks to the strength of Google's brand in the UK, both as an advertising platform and a destination site.

Increase returns by tracking and optimizing the right web metrics

Metrics are important, both in online and traditional marketing but it's the trackability which makes online marketing so exciting. What's even more exciting is that the technological advancement in online marketing has enabled maximization of multiple success metrics simultaneously.

Track right metrics

Tracking provides visibility on business relevant metrics like return on investment (ROI), cost per order (CPO), return on ad spend (ROAS) and user lifetime value (LTV). You should try to track as many metrics as possible, even if they are not needed at the time the campaign is set up. It's frustrating not to have the data you need at a later time.

Conversion data on various steps in the process can provide useful insights on visitor bounce rates, page views, links clicked and actions taken. Having this information can help understand how users navigate through the site and the pages where users drop off.

Optimize to success metrics

If the conversion is a single step process, it's easy to choose the optimization metric. However, often the conversion cycle involves multiple steps. Marketers are faced with the challenge of selecting the best optimization metric in such situations.

For example, for an online dating advertiser it could be confusing whether the optimization metric should be registrations or subscriptions. By trying to maximize only subscriptions, the advertiser runs the risk of ignoring registrations which could potentially bring subscriptions. On the other hand, by trying to maximize only registrations, the advertiser might end up with too many registrations which may never turn into subscriptions.

These metrics are interdependent and for optimization purposes one can not be chosen over the other. This is when multi-metric or "blended" optimization is necessary.

Blended optimization

At Efficient Frontier we use a blended optimization approach which allows our clients to optimize their ad campaigns concurrently to multiple business metrics. For example, the marketing objective for one of our banking clients is to maximize new customer sign ups. The sales process involves three steps: application form completion, approval and final sign up. The campaigns or keywords driving final sign ups are more valuable than the ones driving approvals and form completions. With Efficient Frontier's tracking technology, the client is able to track entire sales funnel and the user drop off at each stage in the funnel.

Efficient Frontier's optimization technology allows our clients to assign different weights to different stages in the sales funnel based on the value of each stage. Using this technology, the banking client is able to maximize customer sign ups while maintaining the constant inflow of the leads or application form completions.

Web metrics can tell the advertisers exactly where the marketing budget is being spent and what they are getting out of every marketing dollar. If implemented, tracked and optimized right, these strategies can certainly help increase the return on investment.

UK Search Engine Performance Report Released

This week our UK Search Engine Performance Report: Q1 2008 was released. Google is by far the dominant search engine in the UK, with 85% of search engine spending in Q1 2008. Its ROI by increased by 14% since Q4 2007, despite a small drop in CTR from Q4 07 to Q1 08.
 
Q1 2008 showed a difficult quarter for Yahoo in the UK, with a CTR decline of 38% and a subsequent decline in ROI of 6% versus Q4 2007. Much of this decline might be attributable to Yahoo's expansion of its partner syndication network into high volume, lower quality sources of search traffic, as seen in the US and explained here. MSN increased its share of search slightly from Q4 07 to Q1 08, to account for 3.5% of UK search spending in Q1. MSN also maintained its lead as the engine with the highest ROI in the UK.

With the exception of Japan, Google captures the vast majority of search engine advertising spending in the major global markets in which Efficient Frontier operates.  Europe is the most Google-centric, with Google accounting for nearly 96% share of search advertising spending in Q1 2008. In the United States, Google accounted for 77% of search spending, while 93.5% of spending went to Google in Australia. Despite Yahoo’s dominance in Japan, Google gained 6.2 percentage points of search spending in Japan from Q4 2007 to Q1 2008. It's no surprise that in Q1 international markets accounted for 51% of Google's revenues.

Search Syndication and Traffic Quality

Our Search Engine Performance Report: Q1 2008 reported that MSN had the highest ROI among the three major search engines. Advertisers know that MSN has the highest quality traffic, but many people do not understand the concept of traffic quality when it comes to search. Below is an explanation of syndication and analysis of search traffic quality on Google, Yahoo, and MSN.

To increase their reach, and therefore increase revenue, Yahoo and Google have built a business of syndicating their search results on other sites across the web. These sites can include ISPs (e.g., Verzion, RoadRunner), meta-search engines (e.g., MyWay, Dogpile) or other search engines (e.g., Ask, AOL). They can also include media sites (e.g.,CNN.com, Weather.com, MySpace.com) as well as domain parking sites (e.g.,airlinetikets.com, coldwell.com). Search results are also served on retail sites like Shopzilla and eBay. To see this in action, go to one of these sites, and search for an item, say "table lamp." Scroll down to the bottom of the page, and you will see syndicated search results. In Q4 2007, Yahoo began serving search ads on eBay, which resulted in a huge impression increase and corresponding decline in CTR (as reported in the Search Engine Performance Report: Q4 2007), since users are far less likely to click on these search ads at the bottom of a page of product results than the ads on a typical SERP.

MSN, unlike Yahoo and Google, does not syndicate its search results. The chart below will show you why this is important for ROI. We took a sampling of advertisers across 4 different verticals and calculated 1) the average number of sites the the search results were shown on that resulted in clicks, 2) the percentage of total clicks that came from the engine's pure search property (e.g., www.google.com, search.live.com) and 3) the percentage of conversions that came from the pure search property. This analysis did not include ads shown on the search engines' content networks.

Nearly all of MSN/Live Search traffic is being served on pure search. The few remaining "syndicates" are within the MSN network, where search intent is generally high. Thus people are actively seeking a relevant search result when a search ad is served on the MSN adCenter platform.

Google and Yahoo!, however, have large syndication networks. Yahoo's syndication network is the largest, with only 45% of its paid search clicks coming from search.yahoo.com. However, 58% of its search conversions came from clicks on search.yahoo.com, showing that in general, syndication traffic does not convert at the same rate as pure search traffic. There was an average of nearly 1,200 sites per advertiser where Yahoo search ads were being served during a 7-day period.

Google's syndication network is not nearly as large, with an average of 431 sites per advertiser that captured clicks. Searches on www.google.com accounted for 59% of total search click volume and 75% of conversions, again showing that pure search traffic converts better than syndicated search traffic.

One point of speculation about the Microsoft/Yahoo takeover is what they would do with the search properties. The Q1 report showed that MSN captured 5% of US search spending in Q1 2008, while Yahoo accounted for 18%, which leaves the two to battle Google's 77% share. Which search platform has the better chance of competing against Google: adCenter or Yahoo Panama? That question cannot be taken out of the context of traffic volume and traffic quality. AdCenter had great conversion rates because its traffic quality is high, but its volume of traffic is low, as represented by its share of spending. Yahoo has higher traffic volume, but its quality is poor due to its large amount of syndicated traffic. Adding bells and whistles to an ad platform will not help it increase volume, nor will it increase traffic quality. Google has high volume and decent traffic quality, which is why advertisers continue to flock to it, and Yahoo and MSN will continue to struggle to compete.

April Search Average CPC Data on Search Engine Watch

Today average search CPC data by vertical for April was published on Search Engine Watch. CPCs in retail, travel, automotive, and dating remained relatively stable compared to March, while there was some fluctuation in the finance verticals.