Efficient Frontier Insights

UK and Europe Q3 2008 Search Engine Performance Report Released

Efficient Frontier’s UK and Europe Search Engine Performance Report: Q3 2008 was released this week. The report analsyes data for the UK and Europe (excluding UK) separately, and shows that Google picked up one percentage point of share of search engine spending in the UK and 0.4 percentage points of share in Europe. UK CPCs dropped on all engines from Q2 to Q3, while UK CTR improved by 41.6%, likely a result of Yahoo’s improved syndicated traffic quality.

Average CTR for Google in Europe, at 3.54%, was considerably higher than in the UK, at 1.99%, and in the US, at 2.25%. This indicates that there is less competition for advertisers in Europe, and speaks to the more nascent nature of the European search marketplace. European CPCs on Google, at an average of €0.36, were 36% higher than CPCs on Yahoo, at €0.23 in Q3 2008.

For more detail, check out the press release or download the report.

Improving ROI by implementing Geo Targeting

There has been a lot of talk about geo-targeting. Google recently announced a Geographic performance report that makes it easier to look at where your traffic is coming from. Efficient Frontier is able to provide reports with Geographic traffic and conversion rates for all pixel clients through its Analytics systems.

While implementing Geo-targeting it is important to understand the reasons for doing so. There are a few major reasons for implementing geo-targeting:

1. If your product or service is only available in certain geographic regions it is better to target those regions only to improve the quality of traffic. For example, if are a local car dealership you might want to only target ads to users in that metropolitan area or city.
2. Some advertisers have variations in conversion rates across different geographic regions. Splitting out traffic by region, helps advertisers bid differently in different regions based on conversion rates. So for example, if an advertiser had a higher conversion rate in California than in Texas for the same keyword, the advertiser could bid higher in California to get a higher average position (given the same cost). The map shown below shows a sample advertiser that has different conversion rates by state. The states in blue have the highest conversion rate while the states in yellow have the lowest. The advertiser could group states with similar conversion rates together to simplify campaign structure.
   
   
3. Geo targeting helps advertisers show localized ad copy. For some advertisers, it might makes sense to use localized ad copy. For example, saying "Find Low Rates in California" might have a higher Click-Through Rate than just saying "Find Low Rates".
   For some advertisers we have seen that implementing Geo-targeting has improved ROI by up to 25% by improving the quality of traffic and improving bidding efficiencies.

Google Gains 2 Points of Search Share in Q3, CPCs rise on Google Search and Content

Today we released the Efficient Frontier Q3 2008 U.S. Search Engine Performance Report. which analyzes the performance of Google, Yahoo, and Microsoft Live Search on search engine spending, CTR, CPC and ROI from advertisers in the Efficient Frontier Client Index. Because conditions in the finance sector have been so volatile over the past year, trends were reported separately for financial services advertisers and non-financial services advertisers.

Google continued to gain share for all advertisers over last year, capturing 76% the share of total search engine spending in Q3, up 2.1 percentage points from Q3 2007. That gain in share was largely due to growth in Google content spending, which increased from 2.6% to 4.6% of spending from Q3 2007 to Q3 2008. Content spending increased by 82.8% YOY  in Q3 2008 for non-financial services advertisers, and by 16.6% in financial services.

A look at trends in CPCs across search and content gives an indication of why advertisers are investing more in Google content and continue to spend on Yahoo and Microsoft Live Search. On a YOY basis CPCs on Google search increased by 8.3% and 4.7% respectively for financial and non-financial services advertisers. CPCs declined YOY for Microsoft Live Search and Yahoo Search, with the exception of CPCs on Microsoft Live Search for non-financial services advertisers, which were up 6%. Google content CPCs increased by 20% for non-financial services advertisers, but at $0.28 a click, Google content is still 53% cheaper than Google search, which averaged $0.61 per click in Q3.

The report also found that, in an increasingly unstable economic environment, ROI improved on all three major search engines in Q3 2008 on a YOY basis. Google search ROI for non-financial services advertisers increased by 11.3%, Yahoo search by 19.7% and Microsoft Live Search by 29.9% YOY.

For more findings from the report, read our press release, or download the full report here.