Efficient Frontier Insights

Tail Term Management: Balancing Risk and Reward

My latest SearchEngineLand “Analyze This” column discusses the risks and rewards of managing tail terms.  At Efficient Frontier, our belief is that the most effective way of managing the tail at scale is to use an algorithmic approach where you can use a finite mixture and confidence models. However, if you are getting started a simpler heuristic approach could also do the job.  Read my full column for some tips to help get you started.

Dr. Sid Shah

Searching for Brands - at the IAB

Efficient Frontier was a proud sponsor of the IAB flagship “Search for Brands” event last week in London. Speakers were members of the IAB UK Search Council for the half day conference and the 70 person  delegation was buzzing with a mix of familiar faces and newbies. 

The quality of this year’s presentations reflects the fast moving pace of the search space. The event began with Jack Wallington, the IAB Chair of the Search Council, as he reflected on the reasons why search marketing is so amazing including: the rate of change; its importance to reaching and building brands online; and the overriding idea that search marketers are a genius combination of data analysts, behaviour experts and communicators.

The theme for the event, as the name suggests, focused around building a brand through search and, appropriately, Shuvo Saha, Industry Leader at Google presented on that very topic. After effectively pointing out the enourmous amount of searches daily on themes such as babycare and healthy eating, there is a clear opportunity for brands to reach their audience via search with the right message at the right time. Interestingly, research Google conducted with Kellogg’s breakfast cereal and Flora margarine proved that appearing top on the search engine results page not only helped shape brand perception but also increased the effectiveness of TV, print and radio campaigns.

Our own Client Services Director Jonathan Beeston wrapped up the day with what might have been a rather glum topic “Demystifying Data for Search Marketers” if it wasn’t for his comic interpretation and fascinating insight.  Beginning with the premise that if you “Torture numbers, they will confess to anything”, Jonathan covered the often debated topic of bidding on brand keywords. Presenting research conducted by Efficient Frontier, it was discovered for the sample brands that total clicks did not change by bidding on your brand (traffic diverts from SEO to PPC) but the conversion rate was a lot higher on PPC which meant more orders and overall revenue. In addition, Jonathan presented interesting data anlaysis on click path analysis between generic and brand keywords which is a topic that always gets tongues wagging. If you would like a copy of the Efficient Frontier presentation by Jonathan Beeston, please get in touch via twitter @efrontier.

While we all practiced our excellent communication skills over a Guinness or two in celebration of St Patrick’s day (thanks Jack!),  I can’t help but wonder why more advertisers aren’t involved in these terrific (and free) events.  Hope to see more of my London brethren at the next one.

Merinda Peppard
Global Marketing Manager

Making the most of Yahoo!'s Partner Network Bidding Features

Recently, Yahoo! introduced some features that make it easier to manage the performance of their large Partner Network. If you've ever pulled an Ad Distribution Report to look at your performance on their Partner Network, you'll know what a welcome change this is. Jonathan Beeston recently covered this topic in an excellent post. Today's post looks at how the Partner Network performs across a larger sample of our client base and discusses some tactics for using these new features.

Partner Performance Overview

The chart below looks at the Partner Network performance for a sample of several retail clients totaling about $4MM in search spend.



The chart shows the percentage of clicks and revenue coming from the Google and Yahoo!’s respective partner networks. The dots show the RPC for each Partner channel relative to the overall SEM RPC. Note that these averages are not weighted by client spend and they represent an equally weighted sample of different businesses’ experiences.

A couple observations that are as expected:

• A greater proportion of Yahoo!'s click traffic comes from the Partner Network – about 40% vs.  30% for Google.
• Yahoo! Partner traffic does not convert as well as Google's. Google Partners have RPCs that are almost double those of Yahoo!.

Though the profile above is typical, we have seen large variance across accounts. In some cases we've actually seen better performance from both the Yahoo !and Google Partner Networks. It really depends on who Yahoo! has enlisted in your vertical. Also, Yahoo! continues to aggressively police the quality of their Partner Network traffic, so you can expect to see continued changes in the makeup, and thus the overall performance.
Looking at the same industry sample used above, the charts below show the wide variation in performance across businesses.
 




In the context of Yahoo!'s new partner bidding features, the performance disparity between Yahoo! Search and Yahoo! Partners is great news for advertisers. Without separate targeting, advertisers have been forced into a one-size-fits-all bid. Bids have been based on the blended performance of these two very different channels. Now, with separate bids you can spend more on the high converting search engine traffic and less on the low-converting Partner traffic.
 
Managing Partner Traffic

There are actually several tools provided by Yahoo! for managing you this traffic, so the implementation possibilities deserve some discussion. First some historical context, separate targeting for the Partner Network is the latest in a series of advertiser-friendly new features from Yahoo! designed to improve the performance of their search network. For a long time, they have provided the ability to use domain exclusion to block individual partners. Then, during the last year, Yahoo! has started actively trying to improve the quality of their Partner Network by excluding the most egregiously poor performers. In addition to this, they instituted Dynamic Pricing to automatically discount the CPCs you pay based on partner quality. (Quality being click-based so not necessarily aligned with conversion rate).

Now Yahoo! has provided two new tools for managing partner traffic.

First, users can apply a blanket discount on bids for the partner network. So if you chose a 20% discount to Partner Network bids, a keyword bid of $.50 would be $.40 on the Partner Network. Note that the minimum bid constraints still apply. If your discount puts you below the minimum bid, your bid will be inactive on the Partner Network.

Second, advertisers can target the Partner Network separately. You can mirror campaigns to have one targeting Search and one targeting the Partner Network.

Here are our guidelines for implementing these approaches:

• Proceed with caution! As outlined above there is significant upside but there is also risk. These are new features whose actual behavior and performance have not been validated. Start with a small test or, if you’re risk averse, wait a couple months to see what happens to others.
• If you’re not already doing so, look at your Ad Delivery reports to see if there are partners that are consistently delivering very poor traffic. Consider blocking partners with particularly bad traffic.
• For high volume campaigns consider mirroring campaigns and having them target Search and Partner Network separately. This is where the real opportunity lies. If you bid smartly, you should be able to unlock significant efficiencies here.
• For low volume campaigns, use bid discounting. Mirroring campaigns adds to administrative overhead and also slices your data more thinly. If either of these are a concern then at least experiment with discounts (or premiums) for partner bids. Again this is uncharted territory so proceed with caution.
• Whatever you do keep a close eye on your performance. Yahoo! is aggressively managing their partner network quality. The volume and quality of traffic coming from the partner network can change quickly. Also, as your competitors take advantage of these features their bids will change. Specifically expect Yahoo! Search traffic to get more expensive. Be vigilant and be ready to adjust.

At Efficient Frontier, we are excited about the changes Yahoo! has made. Combined with domain exclusion and the relative size of the Yahoo! Partner Network this represents a major opportunity for increased efficiency and growth. These are exactly the kind of tools that smart, data-centric, and scalable SEMs can use to their advantage on behalf of their clients.

Shay O'Reilly

The Energy Was Up at SMX West 2010

The market reacted well today to encouraging signs for the U.S. economy. Retailers said that store sales in February were up by the largest amount since November 2007. And US factory orders rose by the largest amount in 4 months. Well, let me add some more positive news to the mix: using SMX West as a sample, the energy level at search conferences is up 2X year over year (for you statisticians, I made that up).
 
Danny Sullivan and team put together a strong event in SMX West 2010. Kicking it off with Steve Ballmer was a coup for SMX and his energy and enthusiasm for search carried throughout the event. And the level of interest in the sessions and enthusiasm for search (and display) marketing was evident among the attendees I spoke to over the last few days.
 
I participated in two very different panels. On Wednesday, I spoke about the opportunities in integrating search and display marketing. A clear take away from the search and display session was that marketers are hyper-focused on making progress against the challenges of attributing success correctly across marketing channels. We’re eager to partner with our clients and prospects in tackling the complex problem of attribution!
 
Today, I spoke about the Microsoft-Yahoo deal. I received many questions (asked in different ways) about the future relevance of Yahoo! without a core search offering. (Note to Yahoo!, it doesn’t seem like your messaging around “controlling the user experience in search” is breaking through with advertisers.) Clearly, Yahoo! has some amazing properties that most of us use every week if not every day (ex. Finance, Mail, News, Sports). They will remain very relevant for the foreseeable future, just perhaps not as a search engine.  

It was fun to engage with peers on the coming trends in our industry. The cloud of “cautious retrenching” that very appropriately dominated events in 2009 may have lifted. With the search landscape evolving, display shifting to auction pricing, and mobile coming of age, we have huge opportunities on the table over the coming months and years in digital marketing. 

Justin Merickel
Vice President, Marketing and New Product Development

Monthly CPCs for February: Mixed news

The CPCs from February  2010 are presented in the table above. From a CPC perspective, there are some interesting trends. While automotive CPCs experience a seasonal decline, the decline in finance CPCs dropped significantly. This is not surprising if one notes the performance of the S&P 500 in February. The overall index fell 9-10%. We have noted in the past that the financial vertical spend and stock market performance is very tightly correlated.
 

On the flip side, we saw a double digit rise in retail and travel CPCs  This is noteworthy because travel and retail CPCs typically fall in February (see 09 data) due to seasonality.  In the case of travel, could this be the first sign of an uptick after a year and a half in the doldrums? We shall see what March brings us.