Efficient Frontier Insights

LET'S TALK DISPLAY STRATEGY

Over the past year or two, many advertisers who rely heavily on digital marketing as part of their direct response strategy that has traditionally focused on search engine marketing (SEM) and Email advertising have been dipping their toe into Display advertising.  Historically, those advertisers have viewed Display as part a branding channel of the digital ecosystem based on the silo approach of direct response and brand advertising in many companies.

As long time display channel advertisers know, display is very broad and covers a lot of different types of media inventory, buying sources as well as endless targeting options. So it is certainly a channel that can be utilized for any type of purpose or business goal.

Given this array of targeting options, what are the main strategies that successful display advertisers employ for their marketing campaigns?   Some of the top strategies include:

1. RETARGETING
For the last 2 years, every company from Google to small agencies have been promoting retargeting for their marketing campaigns quite simply because it works almost every time. Essentially, retargeting involves targeting visitors to a client’s website (usually who didn’t take the desired action of filling out a form, buying a product, etc.) and serving them display ads as they browse around the web on various sites.  The basic premise being that because of their prior visit, this audience group has a higher likelihood than the average person to eventually take that desired conversion action.

Figure 1: Retargeting (Site) Example Workflow


2. VERTICAL/DEMOGRAPHIC/SITE TARGETING
This form of display targeting in principal works in a similar manner to how a TV or print advertiser decides which television network and show or news publication to buy media advertising.

If you are offering a finance product, chances are that your messaging appearing on publisher sites like Yahoo! Finance or Bloomberg will have a greater likelihood of resonating with an audience than a lifestyle site like Babycenter. This extends in a similar vein when you are talking about demographics such as age, gender, income levels, etc.

3. 3^rd PARTY DATA
One of the limitations of retargeting is that your volume is limited to the audience that has visited your site. Thus, the only way to grow this volume is by increasing traffic to the site. Many companies have sprung up in recent years in part to help fill this void by selling data to advertisers and their marketing/technology partners to increase the qualified pool of people to target. There are many forms of this data, but a couple of the major forms include prior browsing habits on other sites and prior search engine queries.
 
For example, if you are a travel advertiser selling hotel accommodation in Las Vegas and you can target someone who recently searched for that in a search engine or indeed was browsing on another travel site but did not convert, that is a valuable audience to target.
It is important to state that this data is not personally identifiable and does not contain information that an individual would consider private like a social security number, credit card details, home address, etc.   

4. CREATIVE MESSAGING
Another benefit of display advertising, which differs from SEM, is the ability to target an audience directly. Therefore if you have a multi-stage funnel sales process as most businesses tend to have, marketers can message people individually to both the stage of the funnel that the customer is in or tailor to the specific product or service he or she may be interested in.

For example, if you are a retailer who sells red and blue shoes of various brands, you can dynamically serve that particular product or similar products to a consumer who browsed that particular product page on your site. In a similar vein, in a multi-funnel process if the marketer is in the publishing business that is offering a free 7 day trial, the company can serve those that have not signed up for the trial different messaging to those that have but not committed to a full paid subscription.

5. REAL TIME BIDDING (RTB)
Real Time Bidding probably requires a whole series of posts and as Display (and other forms of digital) advertising continues to evolve, will probably viewed less as a strategy and rather the default best practice of how media is bought and sold. Without getting overly technical, RTB is bidding for each individual impression each time a given publisher site loads. When applied with a robust algorithm and advanced platform that is able to bid for that inventory with the ROI criteria for a given advertiser in mind, it allows for each impression of media to be priced correctly given the browser who may be exposed to the creative message.

With all these Display strategies, there is lot of complexity that can be employed to maximize ROI and to avoid redundancy in marketing outlay. Ultimately, not only should these campaigns be optimized correctly and efficiently as standalone marketing efforts, they should be tracked and optimized in conjunction with other online media channels like SEM and social media to ensure the best possible return for ad spend.

Chris Jacob

The Brand Value of Facebook

In 2010, Facebook topped the list of most visited websites in the U.S., and it is estimated that overall worldwide ad spending on Facebook will likely reach more than $4 billion this year and $5.74 billion by 2012. 

Because of the tremendous potential it holds for our clients, Efficient Frontier has been in the unique position of working up close and personal with Facebook engineers and account reps for the past several months to optimize performance and enhance our clients’ user experience. Thus, we bring you the first in a series of blogs about how to maximize Facebook advertising campaigns, supported by our data so far, and the insights gleaned from working closely with the social networking giant. 

How are Facebook advertising campaigns performing? How do they compare to search? Are they effective? Can we integrate them into other channels? In short, the answers are: the campaigns are performing well thus far; in comparison to search, it depends; yes, Facebook is an effective advertising tool and; yes, campaigns absolutely can and should be integrated.

How are Facebook advertising campaigns performing?

For our clients, Facebook is performing very well. Luckily for Efficient Frontier, our clients tend to be smart, savvy, and open to new strategies, especially the dozen or so forging ahead into the realm of Facebook advertising under Efficient Frontier’s management. Staying open to new strategies is important when advertising with Facebook since you need to be able to move away from the direct marketing results that take place on Google and MSN and into more of a branding mindset. This is not search, it’s Facebook.

Yeah, but how does it compare to search?

It depends. The data varies by industry and client right now and there is no set standard for performance. Facebook is not an advertising platform that has been around for 13 years as search has, so that’s okay. On the cost per click (CPC) side, the performance has varied on either side of the norm. We have seen CPCs on Facebook 3X cheaper than on Google, and with other clients, 1X more expensive. The consistent factor is that the CPCs on Facebook have been relatively competitive with those on Google. On the cost per lead (CPL) side, the performance favors Google because it converts better. But it should convert better because users are looking for you on Google, whereas on Facebook, they are not. Though the CPLs are consistently trending higher on Facebook than on Google, that number varies (between 1 X – 7X) depending on the client, though 3X – 4X tends to be the current average.

So is this effective?

Yes. There is a branding value to Facebook that can’t be overlooked. It’s the Friends of Connections (FOC) effect, or more simply, the friends of users who like your page. The effect is highlighted below:

If you only account for direct leads from Facebook, you are missing half the story. Looking at the above graph (which I made up for demonstration purposes), giving 100% credit to FOC leads brings a CPL of $50 down to $16.67, or giving only 50% credit to FOC leads, brings the CPL down to $25. Though we can target connections of a brand, the FOC metric on Facebook is currently not something you can track (although there are betas around the corner). So then, how do you measure what you can’t see? You don’t. But, you move towards the branding mindset to understand that the effect is there, and how it impacts your bottom line. And you leave a little leeway in your CPL goals for it, and look to a more holistic, cross-channel CPL.

Should we integrate this into other channels?

Of course you should. How? Efficient Frontier can help.

Was that too obvious? In all seriousness, being able to dissect and analyze data from SEM, SEO, display, and Facebook, and measure the value/impact they have on one another and your business is paramount right now. Being able to look at a forecast at various budget points and from there allocate costs across search, display, and Facebook, so that you are getting the best bang for your buck overall, is key. We’re doing it right now at Efficient Frontier, and it’s exciting!

Accurately measuring your brand value is just one of many important issues to consider in regards to Facebook advertising. Stay tuned for several more blogs on Facebook topics in the coming weeks.

Karen Maciolek
Senior Account Manager

January 2011 Display Publisher CPMs: Less time to watch You Tube?

As we continue to analyze and publish display trends for CPMs (cost per thousand impressions) from a seasonal perspective, it is interesting to reflect on what we have learned from both effective advertising and user behavior.

Last week, we published the Month over Month (MoM) CPM trends by exchange and there were some mixed signals between the different exchanges. In terms of the types of publishers and their respective MoM trends, the CPMs are more in line with the Google AdX overall trends with CPMs being down MoM.

We note in many of our posts regarding CPMs, that end of quarter prices are often inflated as particularly brand advertisers often rush to spend unused budget, artificially inflating the biddable inventory CPM levels.  Often advertisers may end up with a declining inventory costs comparing a last month of a quarter with a first month (i.e. Dec 2010 v Jan 2011)

Figure 1 shows the different publisher types compared against each other and Figure 2 shows actual numerical performance per Publisher type and how they trended MoM

Figure 1: Efficient Frontier US Client Publisher Type CPMs - January 2011

Figure 2: Efficient Frontier US Client Publisher Type Summary – December 2010 

January 2011 saw a decrease in all Publisher verticals, except commercial sites (a web presence for a specific business which also has ad space). Not only did CPMs decline MoM across the board but so did the CTR (click through rates) and thus the propensity of browsers to interact with the ad creatives.

Interestingly, both the number of sites and impression share of shopping sites increased proportionately slightly in January, possibly indicators consumers are still chasing bargains long after the official holiday season.

One of the most obvious trends occurred with the video publishers, whose CPMs declined 34% in January with a similar decline in their relative Impression share. Combined with the overall decline in CTRs, can we conclude that browsers have less disposable time in January than in the more holiday friendly month of December?

January is traditionally a “back to work/school” month, and many industries - finance, legal, real estate - start to get busier again after the holiday period. So while a December 23^rd day in the office might afford the luxury of an employee checking personal email and forwarding You Tube videos to friends, a January 12 work day does not.

From an advertiser’s perspective, all of these trends are important to note as it relates to designing strategies to garner more volume and broadcasting their message at different times of the year. For example if you are targeting a user demographic that is more inclined to video sites, take advantage of the lower rates on offer.

If you are a direct response advertiser concerned about falling CTRs of your creative messages in January, look at it in the context of the overall season. The maybe test your current messages on gaming or finance sites specifically where the CTRs are more constant to gauge whether a mass creative overhaul is really necessary.

We will continue to look at these trends to give advertisers insights in how to best analyze and optimize their display marketing dollars.

Chris Jacob

The Valentine's Effect in Display

A lot of people in society both in relationships and single are very cynical of Valentine’s Day as a commercially manufactured day designed to drive sales of flowers, chocolates, cards, jewelry, etc. While that is an argument for another day, we wanted to see if consumers’ behavior online changes as a result of Valentine’s Day and thus give advertiser insights into marketing through this period.

To this end, we looked at Valentine’s Day and the surrounding period in 2010 to see whether Display Publishers saw any traffic variations and whether advertiser creative on these sites tends to be more effective at capturing people’s attention.

Figure’s 1 and 2 below show 3 Publisher sites; one popular social networking site and two well known dating sites and their daily volume and Ad CTRs (click through rates) over 4 periods;
a) Feb 8^th – 12^th Feb (week before Valentine’s Day)
b) Feb 13^th (day before Valentine’s Day)
c) Feb 14^th (Valentine’s Day)
d) Feb 15^th – Feb 19^th (week after Valentine’s Day)

Figure 1: Publisher Traffic Volume from EF US Advertisers 

Figure 2: US Advertiser CTRs (click through rates) on Publisher Sites

Last year Valentine’s Day fell on a Sunday, meaning the 8^th-12^th period and 15^th-19^th period was a Monday to Friday and of course the day before was a Saturday.

It is evident from there is a definite spike in traffic on the 13th which holds into Valentine’s Day. This then drops sharply the following week at a level of around 20% for the Social and Dating A side and over 12% for Dating B from the Valentine’s weekend level. For Social and Dating A, the traffic volume was a similar level below the previous week’s (Feb 8-12) traffic level.

Now while it is probably not surprising that these types of sites garner elevated traffic levels in the lead up to and on Valentine’s Day itself, it is also interesting that all sites also recorded higher CTRs for ads appearing on their site. Bear in mind the ads on the site were not necessarily anything to do with Valentine’s Day, dating or indeed anything social and could have been advertising a Financial product.

Often in both Display and Search, elevated traffic levels lead to lower CTRs but from this sample set in 2010, we show that Display advertiser’s regardless of their vertical can benefit from ad placements on Social and Dating sites during this time.

The data may also indicate that our loud cynical statements about Valentine’s Day may not match our actions. Love is certainly in the air online!

Chris Jacob

January 2011 CPMs: Mixed Trends

Just as Efficient Frontier regularly does with search CPC (cost per click) trends, we have decided to begin reporting on display CPM (cost per thousand impressions) trends.

Figure 1: Display Trends
 

In January, CPM levels on Display followed search CPC trends and are down Month Over Month (MoM) but more similar Year Over Year (YoY).

In display, it is often the case that CPM levels become more volatile at the end of quarters as many Display advertisers have to adjust their spend to meet pre-determined Quarterly budgets. Additionally a lot more inventory is sold on a guaranteed basis in December, particularly the more premium placements, meaning less of that type of inventory available in the biddable market.  All of this makes CPM levels a lot more varied and combined with the fact December is a low season for traditionally larger Display spend advertisers like Finance, this may be influencing the large MoM differences.

Direct response advertisers have to be more vigilant and sophisticated in optimizing their campaigns during these periods as they experience the unique nature of the Display marketplace. We would expect CPM levels to continue to rise through Q1 2011 with more volume from current display advertisers and newer entrants to biddable display continuing to enter the market.

Chris Jacob

Display Publisher CPM Trends - December 2010

Both direct response and brand-focused advertisers on display are concerned about the performance as well as the type of publishers their ads are appearing on. Whether their ultimate goal is some type of lead/revenue metric or an engagement metric like increased traffic or time on site, the “quality” of the publisher plays a significant role in achieving those targets.

Even when conducting a retargeting campaign where the advertiser is serving ads to those that previously engaged with their site but may not have completed the advertiser’s intended action (i.e. lead form or sale), the type of publisher and ultimately domain itself is still key to success.

Eg. A credit card advertiser retargeting users is likely to show a higher conversion when the retargeted audience is on a site like Yahoo! Finance or Bankrate than when they are on You Tube. This ultimately should play a role in the bidding level for that given impression.

Each publisher domain of course has its own unique characteristics as it relates to CPM, CTR and overall ROI performance for advertisers. This can further vary between the vertical of the advertiser on the publisher domain, the nature of the messaging and other components like seasonality and time of day.

There are some broad level insights we wanted to show across the EF Advertiser set to help people gauge the performance of their campaigns as well the opportunity for marketing spend in display to achieve business goals.

In Figure 1, we classified the various publishers into 8 category types and show a CPM Index for December 2010. These are the top publisher domains by impression and comprise over 80% of the traffic across the advertiser set.

Figure 1: EF US Client Publisher Type CPMs

In Figure 2, here is an overall summary of December 2010 data for the 8 different types including the proportion of domains within that category (i.e. Type %) as well as impression share of that category relative to total impressions in this period.

Figure 2: EF US Client Publisher Type Summary – December 2010

  

One of the more obvious points of note is how much traffic comes from video sites, especially relative to the low amount of publisher domains (4%) within that category. Video publisher CPMs are also extremely expensive relative to the other categories (61% more expensive than the 2^nd most expensive publisher category which was Shopping sites).

It should be noted that the Efficient Frontier platform for any display campaign, allocates bids agnostically to meet the advertiser’s ROI target within given business parameters such as a monthly budget. Therefore, the reason why video inventory may also be that much more expensive that other categories is due to its relative performance for EF advertisers and the platform pushing spend to that type of publisher.

Looking at CPMs for categories over time will be interesting especially with those where seasonality has the potential to play a large part in inventory cost. December is clearly a strong month for retail and thus could be the reason why that was among the most expensive inventory overall. Interestingly, only 3% of the Impressions were on shopping sites. This may be due to the fact that  most publishers with retail content not wanting to send users away from their domain so they can sell to them and thus there was less inventory available on those types of sites.

It was also interesting to see a lot of commercial sites make up the top publishers in December. These were publisher sites which were business corporate sites advertising the company product or service offering. It may be a case of these sites wanting to monetize some of the traffic to their sites (i.e. corporate blog pages) beyond their core offering. The fact that the CTR was the highest for the commercial category may vindicate their decision to go down this route.

There are of course other factors such as (ad size), frequency capping, above the fold, page context, etc. which also determines inventory cost, quality and ultimately performance. With this inventory also being increasingly available for bidding in real-time, it is important that a robust platform is employed to manage an advertiser’s campaign to maximize performance.

Chris Jacob

(Ad) Size Matters in Display

One of the most common advertiser questions in display relates to ad sizes. While there are many sub factors relating to ad sizes such as frequency capping, above/below the fold, ad format, rich media, etc., at its core, the ad size itself certainly is an important factor in any successful display campaign optimization.

The five most common Display creative sizes are:

-          120 x 600 (narrow vertical tower)

-          160 x 600 (wider vertical tower)

-          300 x 250 (box)

-          468 x 60 (small horizontal banner)

-          728 x 90 (large horizontal banner)

There are many other ad sizes as well, both smaller and larger but we will focus on the inherent performance and delivery differences of the main 5 ad formats.

Figure 1: EF US Client Ad Size Performance 2010

Historically, there has been more display inventory on publishers’ sites in the 300x250 and 728x90 ad sizes due to that format working best with the general layout of publisher web pages. The EF data in 2010 would also support that notion, with 63% of all inventory coming from those 2 ad sizes.

These sizes also represent the ads that have the highest likelihood of being clicked by a browser as well which certainly speaks strongly as a major component of how an advertiser should optimally bid a given ad creative. The 300x250 and 728x90, along with the 120x600 narrow tower, also have the highest CTRs.

Now, this does not account for ROI for a given advertiser to their success metric or the “quality” or vertical of the publisher. The impact of view-throughs (where a consumer completes the advertiser’s conversion goal such as a lead or sale subsequent to being served and viewing a display ad but not actually clicking it) is also not encapsulated in this data.

The fact that 428x60 ads have the lowest amount of inventory and the lowest CTR should be balanced against the fact it is also the cheapest inventory to buy judging by EF’s 2010 data. At $0.39 CPM, it is just a bit over one-fifth of the price of the next cheapest inventory size in 2010 being the 728x90 ads.

For any advertiser wanting to optimize a display campaign successfully, they should not neglect any of the major ad sizes as having more options to display your creative will allow for greater efficiencies. It is important to note that if you have 5 different ad sizes, for each different message/product/special offer/display exchange, etc. that you are promoting, the number of bid/ROI permutations multiples very quickly.

Given this, for best results, as well as the ability to test different messages, a sophisticated algorithmic and cross channel  platform should be utilized so you are bidding optimally each day (and in the case of Real Time Bidding, each second).  Advertisers need to look at results across all your digital channels together, be it SEM, Facebook, etc. as most users are browsing across the Internet and marketing media spend should not be looked at in silos.

Chris Jacob

US 2010 CPM Trends in Display

The display landscape historically has been a publisher's market where the supply side largely dictated the CPM prices that advertisers had to pay. As advertisers were isolated from each other in this model, price savings in the form of lower CPMs as a result of low demand for given inventory was harder to come by.

Enter the display exchanges which are trying to recreate the successful model of bringing an auction based system for display inventory as exists for Search. This is where advertisers compete (now with option in real time for some inventory) via their bids for inventory which is based on their propensity to pay given their respective ROI or Business Goal metrics. Publishers can put their unsold display inventory on the exchange for advertisers to bid in a similar vein that advertisers in Search bid on keywords.

One of the criticisms from the publisher side of the market is that now the new marketplace has put much greater power on the advertiser side and as such CPMs would go down a lot effecting their online revenues and ability to put out quality content.

The Google (formerly DoubleClick) Ad Exchange (AdX) is a good place to see how CPMs for the Display Inventory have trended in 2010. It is a better place to assess a wider market trending than the Right Media Exchange (RMX) due to a large proportion of their inventory coming from Yahoo! owned properties.

In Figure we show on AdX, the EF US client trends for CPMs in 2010. We have not included real-time bidding inventory in this chart due to the fact it hasn’t been available publisher wide through all of 2010 on AdX.

Figure 1: EF US Client CPM Trends - Google AdX

As you can see, since the middle of the summer, CPMs have doubled through November as ever more advertisers are entering the display marketplace. Direct response advertisers who primarily spend their marketing dollars online on search, email and affiliate advertising and brand advertisers who have traditionally spent their money on offline channels like TV and print have entered the display market in 2010 in increasing numbers.

With the increased number of participants of the advertiser side of the Display market and the improvement in optimization technology in display and tracking across channels, the demand for quality content to meet ROI and business goals will continue to grow in. Therefore, the concern on the publisher side for lower CPMs could be offset by the increased demand from evermore market participants looking to take advantage of the new opportunities in the display channel.

Chris Jacob

The Next Chapter in the Display Wars -- Google vs. Yahoo!

If search was World War I, we are currently in the middle stages of World War II in display and a similar pattern is emerging. Yahoo! was once the market leader in search and today, Yahoo!’s search is powered by Bing.  As a result, Yahoo! has continued to lose search market share through 2010 (see figure 1).

Figure 1: EF Q3 State of the Market Report

In display, where content is king, initially Yahoo! had a clear head start over Google. It owns some of the most trafficked and highly sort after content on the Internet. It has a long history operating in the display marketplace and understanding advertisers’ mindsets as it relates to that channel. It even first acquired a stake in a dedicated display exchange with the Right Media acquisition a few months prior to Google’s acquisition of DoubleClick largely for a similar purpose.

However, despite all these advantages, in 2010, advertiser spend trends are following what happened in search. Google via the DoubleClick Ad Exchange (now largely merged with the Google Content network to form the Google Display Network), has provided advertisers, agencies and vendor partners alike with a far more straightforward advertising platform to attract ever more of the biddable (aka. Tier 2 or Non Premium) display ad dollars.

Google’s platform incorporating many of the successful features of their AdWords platform for search has in particular allowed marketers who have never operated in the display ecosystem to much more easily begin campaigns on the channel. This includes the large spending direct response marketers who previously limited themselves to channels like search, email and affiliate marketing.

In 2010, according to Efficient Frontier client trends in the U.S .(figure 2 below), Google’s AdX has attracted more advertiser dollars as the year has progressed. In Q4 thus far, this has represented about 70% of advertisers’ display media spend outlay. One point that should be noted is that Yahoo, which makes up a large portion of the RMX inventory, put less of their owned and operated properties’ inventory on the Exchange.

Figure 2: EF US Client Display Proportional Spend 2010

Looks like history is beginning to repeat itself.

Chris Jacob

Celebratory Cup Cakes at Efficient Frontier Innovation Summit – London

 
Last week, Efficient Frontier hosted its 2010 Innovation Summit in London.   It was a long anticipated event after the original event was postponed due to the Ash Cloud flight chaos.   The purpose of the event, which was attended by more than 70 clients and industry luminaries, was to engage with our UK clients in discussion on improving their digital marketing performance.

As the name of the event would imply, the theme of innovation was front and centre as speakers and delegates alike reflected on how the challenging economic times of the past few years has increased the pace of innovation in the digital marketing industry.
 
David Karnstedt, Efficient Frontier’s CEO kicked off proceedings by pointing out the large gap that still exists between online spend and consumption – some $50 billion per year -  representing  a significant opportunity. 

David was followed by Mark Howe, Country Sales Director, Google who presented Six Pervasive Trends in the Internet, covering timely themes such as Social, Local, Personal, Commerce, Mobile and Enterprise.
 
Our own European Client Services Director Jonathan Beeston then took the stage to moderate his Power Panel of brand advertisers. Special thanks goes to Mark Howe, Graham Donoghue, Managing Director of moneysupermarket.com, Nick Rudge, VP of Marketing at Holiday Cottages Group and Roland Mueller-Buchner Head of Marketing at TUI Germany for sharing their thoughts about the recent economic downturn, their experiences and what might be in store for the future of performance marketing.
 
After celebratory cup cakes marking Efficient Frontier London’s fourth birthday, Google’s product managers presented fascinating best practices on post click strategy for web conversions and wowed delegates with some seriously cool mobile innovation demonstrations, including voice search.
 
Efficient Frontier’s VP of Marketing and New Product Development, Justin Merickel was next up to present on the company’s progress in search innovation and expansion into new business areas. Stand-out innovations included product feeds for automating frequently performed campaign management tasks, as well as the ability to dynamically change numerical values in creatives without causing Google to consider the creative as new. The customised cross channel reporting templates were also a well discussed topic, as were the updates to the Efficient Frontier multi-channel algorithms.
 
One of the core themes to the day was Efficient Frontier’s move into the display exchange marketplace. After hearing from Laurent Cordier, Google’s EMEA Director for ad exchange and display partnerships, Justin talked about how Efficient Frontier has built the first integrated Search and Display management and optimisation platform by integrating with the largest ad exchanges, including Yahoo!’s Right Media and Google’s AdEx. He went on to cover real-time bidding capabilities and seamless reporting and attribution spanning search and display.
 
Signing off the day we were privileged to hear from special guest speaker Richard Eyre, Chairman of the IAB who presented his thoughts on innovation and change as the recession recedes.

If you would like a copy of any of the presentations from Efficient Frontier’s Client Innovation Summit, please get in contact via twitter @efrontier.

Merinda Peppard | Global Marketing Manager