Efficient Frontier Insights

Back to School – Back to Basics

It’s that time of year again; Back To School is about to hit its peak for retailers.

So, how do we maximise the return of seasonal campaigns, when the build-up is slow and steady, but activity balloons to a peak at the last minute?

It’s all very well to adopt a “make hay while the sun shines” strategy to seasonal campaigns, by increasing spend and hoping for the best in terms of conversion.  However, there’s a fine line between overspending and underspending when you’re trying to generate the optimal amount of sales without becoming unprofitable.  There is no reason why a seasonal campaign can’t be profitable/achieve its goals at every stage of its existence.

Here are some tips for getting the best out of seasonal campaigns:

1.       Look at year-on-year trends to work out when the peak will hit (but don’t depend too much on this) and devise your strategy.  The key levers are:

a.      Budgets
b.      Bidding
c.      Ad copy
d.      Monitoring performance.

2.       Be flexible about budgets when it comes to seasonal campaigns.  No two years are the same, so try to allow room for manoeuvre here.

3.       EF technology has configurable settings which make bidding more/less reactive to market shifts.  This is critical for seasonal campaigns.

4.       Monitor performance daily, and use what you see there to anticipate growth.  There is nothing worse than seeing a campaign which missed out on several sales simply because the bids were not high enough.

5.       Utilise first page bids to expose keywords which might generate sales at a time of elevated market demand.

6.       Use your ad copy to:

a.       Tell your audience you have exactly what they need at this time of year

b.      Inject a sense of urgency into the user as the peak gets closer,     especially if you are running a related promotion e.g. “free delivery on all orders received before...”

Charlotte Rogers, UK Account Director

Putting Advanced Paid Search Techniques into Practice

Last Thursday, I spoke at the Search Engine Strategies conference in San Jose on the topic of advanced paid search techniques.    I thought it was a lively discussion and that each of the panelist brought a unique perspective to help marketers take their paid search campaigns to the next level.

I focused my discussion on three areas: 1) Utilizing search query reports; 2) Mining the long tail and 3) Seasonality.

First, marketers use their search query reports effectively to improve ROI through search term performance management.    Marketers need to comb their reports to understand which search terms are matching to their broad match keywords and refine their terms accordingly.    By sorting the report, marketers can expand their keywords, add exact match types and expand their list of negative keywords to focus on improving overall ROI.

Next, I discussed the importance of mining the long tail that systematically exposes under explored keywords to uncover each keyword’s full ROI characteristics.   It also reduces the revenue reliance on top keywords and expands it down the funnel.    Also, by using mathematical modeling techniques, marketers can cluster keywords to maximize exposure efforts and understand the relevance between various keywords.  Understanding semantic similarities helps utilize click and conversion data across like keywords.

Finally, marketers can deploy the above techniques along with looking at historical data to determine if there are any seasonal trends that they should use to bid specific terms up or down based on data from previous years.   Marketers can save money and maximize ROI by following these trends more closely.

All in all, I thought it was an informative panel and I hope the audience learned some valuable tricks of the trade to take home with them.

 

Bill Lan, Vice President of Account Development

Google Moves Sponsored Links Closer to Organic Results

The keen observers out there will have noticed that Google have started displaying their sponsored ads much closer to the organic listings and away from the right hand scroll bar. Google has always expanded the results pages to fit the full width of the browser. As computer display resolutions have become larger, the sponsored ads have drifted further away from the main results. 

At first, this looked like part of an ongoing test to determine the effect on their revenues of moving the sponsored links away from the edge of the page. However given the scale of the change we have observed, it is likely that Google are already very confident about the impact this change will have. 

Changing the location of the ads has almost certainly been done to increase the number of clicks on the PPC ads but the question remains "What does this mean for advertisers?"

It will be interesting to see just how much of an increase in traffic advertisers experience and more importantly how this affects the quality of the traffic they receive. It's reasonable to expect that click-through rates for the top 3 paid listings to be unchanged, but for ads down the side to receive a boost. Of course, the data will tell us what the actual impact is.

It will be essential for advertisers to closely monitor any change in click through rates and the total traffic that they receive from their AdWords campaigns over the coming days and weeks. The important thing is then to react to these changes in the right way. Advertisers working to fixed monthly budgets may need to reduce bids to control spend levels however advertisers working towards some kind of performance goal may find that there is no need to make changes if conversion rates are unaffected. If however conversion rates do take a hit from this change then it will be crucial to adjust bids across your keyword portfolio to make sure your advertising budget is getting spent in the best way possible.  

We will be monitoring this change across our client base at Efficient Frontier and we will share any findings as soon as we have the data.

Phil Dance, UK Account Manager

Is Bing on a Roll?

As the industry comes together this week at the Search Engine Strategies conference in San Jose, we thought it was appropriate to take another look at Bing trends to see if they were holding, folding or on the uptick.

We last reported a 13% increase in paid click share for Microsoft. Our data now shows that as of the first week in August, Bing has lifted their click share 44% since the beginning of June.  

They did particularly well in both the Travel and Finance categories showing an 11% and 22% click share lift in these categories. Microsoft's new category focused Bing features may have helped them capture more of the seasonal summer travel searching and the additional query volume related to the stock market recovery. Furthermore, the announcement of the Yahoo!/Microsoft deal may have promoted additional searches on Bing as users check out for themselves the new service.

We'll need to continue to monitor their progress but the current trends are boding well for Microsoft.

Justin Merickel
Vice President, Marketing and New Product Development

Yahoo! Gives French Advertisers a Reason to Rejoice - Part 1

Have you heard the news? Yahoo! has decreased the minimum bid for keywords for French advertisers from 0.15 € to 0.10 €. This means 0.10 € is now the absolute maximum French advertisers have to pay for any keyword to participate in Yahoo!. We saw the first changes to French accounts on the 30th July 2009. For advertisers that are working against very low margins, this will certainly have a positive impact. Let us look at the historical changes to Yahoo’s minimum bid.

Before October 08 – Minimum bids were static

Yahoo! used static minimum bids that varied from 0.05€ to 0.15€ depending on the keyword. For those advertisers that were working against very low margins, it was difficult to justify paying 0.15 € per click given their business model. 

October 2008 – Minimum bids are dynamic

Minimum bids were changed to update regularly based on factors such as CTR and relevance. This was a very positive move from Yahoo! as French advertisers were forced to be more targeted with their campaigns, which resulted in an improved user experience.

Initially advertisers and agencies expected to see the 0.15€ minimum bid decrease for a large number of keywords but in reality, lots of cheaper keywords actually saw their min bid increase to 0.15€. French advertisers were impacted by this change which resulted in eroded performance and budget cuts.

The example below shows anonymised data from one of our French clients that has a high ROI target and is working against a low margin. The table below compares the average CPC of the client’s top keywords on Google against the keywords minimum bid on Yahoo! after the October 2008 changes. This client clearly couldn’t afford to buy any of its top keywords on Yahoo! anymore. This resulted in a strong decrease in investment.

July 2009 – Minimum bids reduced further

At the end of last month, Yahoo! brought the highest min bid down to 0.10 € which will be hugely beneficial for those French advertisers like the example above that were impacted by the October 2008 changes. The July reduction will help more advertisers bid on all keywords, allowing some advertisers to get back in the game. If we look at the example above, our client is now able to bid on all of its top keywords. I expect this client and all those in similar situations to see an increase in performance on Yahoo! in the coming months.

Time will tell how much this change will help low margin advertisers increase their performance on Yahoo! I will publish part 2 of this post in a few weeks to discuss the real effect on our French client base.

Olivier Lemaire – FR Account Manager

Are you losing money by ignoring marginal ROI?

How much revenue did you get from the last dollar you spent? If you don't know the answer, it's very likely you lost money on that last transaction. In a tough economy and an increasingly competitive SEM landscape it's essential to know how much you make (or lose) on each transaction. In short, incremental ROI not aggregate ROI is true measure of profitability.

The table above illustrates how aggregate values hide the metric that matters most – the profitability of each transaction. For a campaign with a target CPL of $20, if you spent $100 to get 5 leads your CPL is fine right? Probably not. What if the first 4 leads cost a total of $40 and the last cost $60? At $60 that last lead was probably far below your breakeven point.

In any search account, the first dollar spent is usually very profitable. The last one – much less so. The Efficient Frontier chart above illustrates the dramatic spike in marginal CPL that comes with diminishing returns. Aggregate CPL increases steadily belying the fact that the cost of incremental leads has ballooned dramatically. You need to see incremental return on spend to know whether you are at the right spend level.

Looking at more granular aggregate values like keyword level performance is not the solution. It just chases the problem into smaller buckets. You still won't know how much you got for the last dollar you spent on that keyword. To do this you need a reliable way to predict what will happen with incremental changes in spend at the keyword level. With every bid change on every keyword you are essentially buying more business. You need to know whether that change is worth it.

The beauty of performance marketing in the digital world is that with the right data and tools you can tune your marketing efforts this precisely. At Efficient Frontier we model the incremental cost and return for every keyword at every bid level. Our clients know exactly how much money they made on their last dollar spent. Predictive models allow them to not only spend precisely but to know the exact spend level that maximizes their profit.

Shay O'Reilly, Business Analyst