Efficient Frontier Insights

Search Trends Indicates Growth in Travel in the UK

We’ve just released our UK Digital Marketing Performance Report for Q3, and the findings are encouraging. Search spend has increased for the third quarter in a row (up six percent over Q2, and also up six percent over the same period last year). The UK is still lagging behind the US (which saw year on year growth of 19 percent), and of course the drastic cuts and sluggish consumer confidence in the UK means overall annual growth will be between five and 10 percent. But growth in these difficult times is good news for the industry overall.
 
Interestingly, travel companies are out-performing the market in their search campaigns: cost-per-click rates are up five per cent over the same period last year; and click-through rates are up 14 per cent year-on-year. Spend by travel advertisers is in line with the rest of the market (up by six percent). Click volumes stayed relatively flat, which is an indication that despite spending cuts, consumer interest in travel has stayed level, although competition is fierce (this is indicated by higher CPC rates).
 
Hopefully this signals good news in 2011 for the travel companies that manage to weather the worst of the economic storm last year and this year.
 
And next year? The early indications are that demand for buying display advertising via ad exchanges, and Facebook advertising, have intensified in the UK. It’s too soon to have trend figures available, but trends will begin to emerge in 2011.
 
You can see the full UK Q3 Digital Marketing Performance Report here.
 
Merinda Peppard

Global Marketing Manager

Google Instant: Brand Analysis in the UK

In my last blog post, I had mentioned Google Instant’s preference to show brand results when letters were typed. We tried the same experiment in the UK and here are the results.

Here again, we are seeing a very strong preference for branded terms. The implications are the same as mentioned last time. First, top suggested brands such as Argos, Next, Tesco and Very, among others, should benefit from increased traffic. At SMX’s panel discussion on Google Instant, I had shown how certain US brands such as Pandora, Mapquest and Zillow are seeing increased traffic.

Second, expect increased competition on branded keywords. In my experiments, I have found that in general, advertisers in the UK are more reluctant than US advertisers to bid on their competitors’ branded keywords. Google is in a way, going to force this competition. Net-Net: Higher CPCs on branded keywords over the long run.

Currently in the UK, Google Instant only works if you are logged in to your Google account. As a result, traffic trends have not changed much yet. However, when Google Instant becomes the default way of searching, expect these trends to manifest.

Dr. Siddharth Shah
Director, Business Analytics

Economics of Microsoft/Yahoo Alliance

Note: Two important updates regarding the transition:

First, the transition is complete! Currently all traffic is now being served through AdCenter. The new era has begun! Stay tuned for more updates on how this is playing out.

Second, we have received an important update from our contacts at Yahoo in response to the original post. Automatic Bid Discounting has been implemented for AdCenter and is in effect now. Having this in place addresses one of the major sources of concern for the transition to AdCenter. Instead of removing discounts and potentially increasing traffic from poor performing Partners we can now expect performance from Partners that is similar to what we’ve seen in the past. Here is the official word from Yahoo:

“When you advertise on the Bing and Yahoo! Search marketplace, you can reach out to searchers on Bing, Yahoo! Search, and partner sites in our extended network. We recognize that not all clicks are created equal, and to help you with campaign ROI management, we automatically make adjustments to your click charges based on our assessment of the performance of traffic coming from sources within our network. Ultimately, this means you may receive discounts on click charges for lower-performing traffic.”

Of course with the transition complete the hard part is just beginning. Advertisers should closely monitor their own volume and performance trends while implementing the best practices described below such as domain exclusion and dynamic, highly-targeted bidding.

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We are midway through the most aggressive part of the Microsoft/Yahoo alliance traffic transition and there is intense interest in the economics of this brave new search world. Efficient Frontier manages over $1 Billion in spend worldwide so we thought it might be helpful to share what our relatively large sample of the market shows. As always, marketers should pay attention to their own data and make dynamic adjustments based on empirical insights.

AdCenter CPCs Up But Moderating

Like many, we are seeing an increase in CPCs on AdCenter. At one point, the seven-day average for AdCenter CPCs was up 15% versus the September baseline but they have recently backed down to about an 8% increase. One possible explanation for this increase is that right now people are struggling to find the right budget allocation and may have over allocated to Yahoo! ahead of the traffic change.

Historically, CPCs for Yahoo! and Bing traffic combined are about 25% lower than those for Bing alone. In the long-term we expect CPCs on AdCenter to revert to that norm as performance bidders adjust to lower conversion rates from Yahoo!’s partner traffic.  CPCs may settle a little above historical levels as scale efficiencies enable smaller advertisers to access Bing traffic.

Clicks are halfway there but many of the Partners have yet to arrive

This week, we saw Microsoft’s AdCenter click share just reach the 50% mark but impressions have lagged behind.

It appears that this is because the traffic that has come over so far has been disproportionately Search traffic with Partner traffic being left behind.  This means the traffic still being served on Yahoo! is largely Partner traffic with lots of impressions but not as many clicks.

Yahoo! Search is similar in performance to Bing so the transition to date has been relatively smooth. Expect increased volatility in the next two weeks as the remaining Partner-heavy traffic comes over.

Some important notes about Partner traffic:

-          Domain Exclusion: As noted in a previous post, domains excluded in Yahoo! do not automatically port over. If marketers haven’t reproduced their exclusion list in AdCenter, those domains will be back in their account and presumably hurting the bottom line.

-          Bid Discounting: Yahoo! was automatically discounting bids on Partner sites based on their assessment of individual Partners’ performance (they also provided features for setting your own partner bids and discounts). This bid discounting isn’t currently available in AdCenter so marketers can expect the Partners to see higher bids leading to more volume and higher CPCs from the least desirable Partners. AdCenter has some nice reporting tools for publisher performance. Marketers should pull them regularly to see how they  are doing.

-          Remember that these Partners are a significant source of volume and should not be shut off entirely.  AdCenter does allow targeting of Partner and Search traffic separately which will let you set bids that capture this volume at an affordable price.

At times like these, with both volume and traffic quality changing rapidly, it is essential to bid and allocate budget dynamically at the keyword level based on data not suppositions.

If marketers are having to arbitrarily shift budgets in large chunks or, worse, turn off spend altogether they are losing out. The search world will continue to evolve rapidly and turbulence is going to become the norm (think Google Instant and Facebook on Bing). You need a platform that will let you adapt quickly.

 

Shay O'Reilly, Business Analyst

 

Joining up marketing: eConsultancy’s JUMP event in London

This week saw the first JUMP event put on by eConsultancy at the beautiful Old Billingsgate (the historic site of London’s old fish market, on the banks of the Thames).  JUMP was designed to focus on ‘joined-up’ marketing: creating integrated marketing campaigns that cross channels and platforms, online and offline, to create greater impact.

I was invited to represent Efficient Frontier and be part of a panel of experts discuss the issues faced by brands as part of the event’s Optimise stream - one of eight streams running concurrently at the event (among the others were ‘socialise’, ‘engage’ and ‘analyse’). The focus was how to optimise marketing online and offline; and with me were Barry Louth, head of media for British Telecom, Jude Brooks, head of digital for Coca-Cola GB & Ireland, and Margaret Robertson, marketing director for Canvas Holidays. 

There were some important issues raised with the panel, many of them themes that recurred in other sessions throughout the day. Perhaps the most pressing take-away from the event was the need to break down siloes within organisations, so that marketing disciplines work together to have the greatest impact on sales (and that agencies ‘play nicely’ together, in Jude Brooks’ words). Joined up marketing must mean the impact of the whole is greater than the sum of its parts. Customer attribution was a recurrent theme, too: how to understand the journey that customers go through to arrive at the point of sale (or registration / subscription / other customer action).

Through the day, there was much to be learnt from people in varied industries, and thinking that could be applied to different marketing situations. Earlier in the day, Penguin’s Anne Rafferty talked about creating ‘the long wow’: sustaining interest from customers rather than relying on a single stunt to draw their attention to a book. In performance marketing terms, our equivalent is paying attention to the long tail - the activity that, although it doesn’t necessarily bring in the sudden influx of customers to your site, but brings in lower-level, sustained and profitable site traffic.

But the overall lesson of the day was that digital and social media marketing can’t exist in a bubble away from the rest of the business, but must be integrated right across the business and from the board down; through IT, customer service, sales and marketing. The focus is firmly back on the customer, and on providing them with relevant information and engagement over all appropriate channels. We heard stories of how customers are more likely to buy from a store if they’ve read an email from a brand; how online activity can influence offline purchase; and how TV advertising can increase results of paid search campaigns.

The future of marketing really is joined-up.

Jonathan Beeston

European Client Services Director

Social Search: Facebook + Bing’s partnership and its implications

The announcement of Bing and Facebook joining forces to present socially influenced search is an important yet inevitable evolution of the search industry.  The total time spent on Facebook now exceeds Google and Yahoo!. Further, a Nielsen report stated that the average user spends 23% of her Internet time on social networks, up 77% from a year ago. With such rapid adoption of social networks, it is inevitable that it will (and probably, already has) influenced the way people search and buy products.  If one does the analysis on these changing trends, the following patterns should emerge increasingly on Search.

Virality: Showing friends who like a product will bring the viral nature of social network into the purchasing funnel. Products that would take time to become popular could become popular instantly much like YouTube hits. On the flip side, initial adopters having bad product experiences could make a movie instantly unpopular. Companies will have to be especially careful when launching new products.

Changes in buying behavior:  Collaborative filtering is a new research area that aims to predict one’s preferences based on multi-dimensional user data. The highly publicized “Netflix prize” was a contest for the best collaborative filtering algorithm to predict user ratings for films, based on prior ratings.  Recently, newer algorithms have emerged that use Social Network data (Social Network Collaborative Filtering or SNCF) do a great job in predicting preferences. These have the added advantage of not being computationally intensive and hence can be used for a high volume of data.  From a business perspective we can now confidently assert what marketers always knew – a consumer’s preference for products and services are well influenced by our friends and family. Hence, with the Bing and Facebook integration, we should expect consumers to buy products and services based on what their friends like. Further, the research phase of the purchasing cycle should be shorter. Net-Net: Higher conversion rates for advertisers on Bing and shorter buying cycles.

Greater integration of Facebook and Search: When Bing ads include Facebook data one should expect a greater degree of overlap between Facebook and Bing in the purchasing funnel. All this makes it more important than ever for advertisers to integrate tracking across both channels to maximize their performance.  Needless to say, advertisers have to consider Facebook as part of their overall marketing strategy.

Finally, what about Google ? While Google has made recent forays into the social sphere with products such as Buzz and Orkut, it has been reported that not having Facebook data could be a cause of worry to the company. However, I learned to never underestimate Google a long time ago.

We will keep our eyes open on how these changes are affecting both consumers and advertisers and will report on anything noteworthy as soon as they occur.

 

Dr Siddharth Shah
Director, Business Analytics

Does TV Advertising Help Search Marketing Performance?

My latest SearchEngineLand "Analyze This" column examines the issue of TV's influence on search marketing effectiveness.   Proponents of TV and SEM advertising often have contentious debates. SEM advertisers love the trackability of the channel and the immediacy of response while TV advertisers love its reach and its ability to build awareness. However, what is not clear is how the channels interact and how to find out the right media mix to maximize overall returns across the channels. We do a lot of modeling and analysis to answer both questions, and the full article presents a few insights.   

Read the full story is here.

Dr. Siddharth Shah  - Director of Business Analytics

Q3 2010: Digital Marketing Growth Continues and SEM is up 19% YoY

Today we released our Q3 2010 State of Digital Marketing Performance Report. The third quarter was strong for all digital marketing channels including search, display, and social media advertising. Search extended its 2010 growth streak with a 19% YoY spend growth and 6% QoQ spend growth. Return on investment in search is up 8% YoY.

All sectors showed growth in Q3 with Retail leading the way at 20% growth YoY. Financial services posted positive spend gains, rising 14% YoY and 20% QoQ. Travel extended the strength seen through 2010 with an impressive 38% YoY Rise. Additionally, the automotive sector posted 20% growth YoY.

The early winner from the Bing-Yahoo! integration appears to be Google as its share of paid search spend rose from 75.8% in Q2 2010 to 77.9% in Q3 2010. Google's paid clicks are up 9% YoY, CPC is up 14% YoY, and impressions are up 6% YoY.

Our outlook for Q4 2010 remains positive and we believe search will continue to grow in the 15-20% range. We also see demand for Facebook and Display accelerating in Q4. For more info on our outlook and the state of digital marketing in Q3 2010, please download our full report here: http://www.efrontier.com/research/search-engine-report/Q3-2010.

 

Margarita Golod, Senior Product Marketing Manager

Making Full Use of Google’s AdWords Platform: Location Extensions with BMI Healthcare

Google recently launched a new Ad extension called Locations Extensions.

Location Extension allows the user to click into an info window which opens up to reveal a map showing the advertiser’s location along with the advertisers local contact address, phone number and other interactive features such as ‘get directions’ & ‘search locations’. This feature is great for businesses with a strong local connection.

  

Hostels, hotels, hospitals and takeaway businesses are some examples of advertisers who would benefit from saving money on unnecessary clicks from users looking for contact details and directions because clicks on the info window, ‘get directions’ and ‘search location’ cost nothing. Only clicks on links that take the user to the advertiser’s website will be charged.

Some of the key benefits of Location Extensions :

•          Easy to set up: Google reads the IP address of the user and shows the location if appropriate.

•          More competitive by promoting your local connection.

•          Allows you to scale your local ads

•          Availability of rich ad formats

•          These ads appear on Google.co.uk search for mobile and maps

•          Takes up more space so more prominent on the SERP

At Efficient Frontier, we are constantly looking for new ways to drive more efficiency to our clients’ campaigns. We immediately, saw an opportunity for some of our advertisers who would benefit from this functionality. One of the candidates who fit the criteria was BMI Healthcare, the UK’s largest independent provider of private healthcare, with more than 70 hospitals and healthcare facilities across the country.

We worked with BMI Healthcare  to set up Location Extensions on one of their key treatment specific campaigns, as a test. Along with the 4 existing  sitelinks in the adcopy, the full ad easily occupied twice the normal space on the results page. This certainly gave us an advantage over competitors. We let this ad run for two weeks, the whole time monitoring the performance closely. The results were outstanding. CTR increased by 108% and conversion rate by 22%! 

To be able drive this kind of uplift in such a short period of time is extraordinary and demonstrates the importance of making full use of AdWords Platform.

Rekha Patil - UK Account Manager

October Surprise: Surviving and Profiting through the Search Alliance Transition

The official switchover of Yahoo to AdCenter is slated to complete later this month but a significant portion of traffic has already started migrating from Yahoo. We’ve seen traffic gradually increasing since Mid-July and for several weeks now Yahoo.com traffic has made up about 10% of total Bing traffic (see chart below). As that traffic increases dramatically through October, the nimble and alert search auction players will be able to find the right bid and possibly gain as competitors misallocate their budgets. To survive, and even prosper, advertisers will need to be monitoring this landscape daily, adjusting bids dynamically for all keywords, and carefully managing Yahoo partner traffic. Now more than ever ‘set it and forget’ means a direct hit to your ROI. Below we’ve outlined some guidelines for handling the October Surprise.

What’s happened so far?

The chart below shows the weekly trend in traffic coming from Yahoo. Traffic has risen in stages and even tailed off recently however all indications from Yahoo are that traffic will spike significantly starting this week. You can expect to see as much as 10x increase in the coming days.

You can see that to date the traffic transition has been this is fairly consistent across the verticals we’re managing.

What to do going forward?

Monitor and update bids regularly

First and foremost you need to be monitoring this landscape daily and assessing the implications for all of your keywords.  As traffic migrates, you will need to shift your budgets from Yahoo to Microsoft to maintain the same efficiency. Of course if you leave your bids fixed you will automatically see spend shift from Bing to Yahoo, but that will not account for changes in performance as the mix of traffic changes (not to mention the competitive landscape). Yahoo generally does not convert as well so expect your Bing RPC’s to drop as Yahoo makes up a greater proportion of that traffic.

Manage Yahoo Partner Traffic

With Yahoo traffic comes it vast and unruly Partner traffic network. This is valuable volume but must be managed carefully. Last week AdCenter got the new era off to a great start when they released controls that allow targeting of Search and Partner traffic. You can now target Search, Partner, or Both. (Note that you cannot make any distinction between Yahoo or Bing). You can also exclude individual partners based on domain level reports. It’s important to note that by default you are opted into both Search and Partner and that your excluded Yahoo domains are not carried over. This means that, by default, as Yahoo traffic transitions to AdCenter it will be completely unmanaged making for a scary October for those who don’t actively manage this traffic.

Heres’ a  quick review of the new AdCenter features and how you should use them:

-          Domain exclusion: This has been available for years on Yahoo and should have been widely used. As noted these exclusions are not carried over automaticall soat a minimum you should port over your excluded domains from Yahoo.

-          Separate targeting and bidding for Search and Partner: This is a great feature that the best SEMs were taking advantage of Yahoo and should absolutely take advantage of in AdCenter. This is a new implementation on AdCenter so proceed with caution in case there are ad-serving or operational glitches with this new feature.
 
Note: Do NOT simply opt out of Partner traffic and divert spend to Search. Search alone will not be able to support the same volume you get through both channels. Partner traffic is perfectly good if bid to the right level. To paraphrase a great marketing maxim: “There is no bad traffic, just mispriced traffic”.

In summary, the combination of Bing and Yahoo Search brings a lot of flux and with it some risks but through dynamic, targeted, and fine-grained management of your accounts you can ride out the volatility. It may even turn out that October’s surprise is a few more dollars in your pocket.

Shay O'Reilly, Business Analyst

Google Instant’s Brand Bias

Google Instant “predicts the most likely completion and streams results in real-time” as per the official Google blog. If that is indeed the case, we must be searching for a lot of brands. I typed all the letters in the alphabet and noted the suggestions Google Instant gave me. I then noted if the suggestions included a brand (dark blue) or not (light blue). Here are the results:

Of the 26 letters in the alphabet, 21 have brands as the first suggestions. Further, most of the other suggestions have brands too ! If we are to accept Google’s statement about the logic behind Google Instant’s suggestions, most of us are searching for brands all the time.

These results prompted me to analyze keyword data comparing trends pre and post launch. Many of the trends are revealing. I shall present my research at SMX East on Tuesday, October 5th. I will also be presenting our thoughts on Cross Channel attribution and optimization on Wednesday.  I hope you can make it. If you cannot, do email us and we will be happy to send you copies of the presentations.

Dr. Siddharth Shah
Director, Business Analytics

Footnote:  I would like to thank Elizabeth Horn, Sr. Account Manager at Efficient Frontier for helping me prepare the above graphic.