Efficient Frontier Insights

Efficient Frontier Master Classes - Online Marketing Show

The dynamic nature of online marketing was never more prevalent than at the Marketing Week Live and Online Marketing Show events held in London last week.

The trade show floor was swarming with brands seeking to evolve their strategies to keep up with the fast moving marketplace.  The team at Efficient Frontier hosted two full days of master classes covering best practices, trends and future advancements in search marketing and beyond.

During the show, more than 300 visitors attended the Efficient Frontier Master Class Theatre and stopped by the booth to get tactical advice on how to increase their online performance marketing effectiveness.
 
For those of you who missed the show and would like to view the presentations, please email me and I will be happy to forward them on. Here is a summary of the master classes we presented.

Search Meet Display – Display Meet Search
Jonathan Beeston, European Client Services Director, Efficient Frontier
 
Case Study: A practical guide to tracking offline conversions effectively
Robert Levetsky, Senior Account Manager, Efficient Frontier
 
Case Study: How to distinguish new customers vs existing customers in your paid search campaigns
Jimmy Felstead, Account Manager, Efficient Frontier
Sheila Pen, Account Manager, Efficient Frontier
 
Top Tips for Mobile Search
Charlotte Rogers, UK Client Services Director
 
Getting the most out of Search Engine tools
Phil Dance, Client Development Manager
 
Inside PPC Campaign Management
Mark Nall, Business Development Director, Efficient Frontier

Merinda Peppard - Global Marketing Manager

Cannes Lions International Advertising Festival

Last week I was generously invited by Microsoft Advertising to attend the Cannes Lions International Advertising Festival.  Thousands of marketers and advertisers from across the globe meet in Cannes, France, to rub shoulders with the luminaries of the media and creative industries such as Sir Martin Sorrell , Mark Zuckerberg and Spike Jonze.  Yahoo even managed to get Hollywood superstar Ben Stiller to spend time talking about creativity.

As a major sponsor of the event, Microsoft featured heavily throughout the programme.  SVP of Marketing, Mich Mathews, contrasted the different approaches Microsoft takes for dominant brands, such as Windows 7, to challengers, such as Bing.  Of course, it wouldn’t be Microsoft if we didn’t get a sneak peek at some technology.  Windows Mobile 7 is Microsoft’s hope to gain ground on Apple, RIM and Android in the smart phone battle.  The launch of Xbox Kinect in November should bring gaming to a broader audience with its revolutionary no-controller, natural interface.  Both of these technologies will give marketers new ways to connect with their audiences.

With so much going on, it’s impossible for one person to follow everything at Cannes.  There was certainly a sense of optimism compared to last year and no doubt that technology increases to play an important part of creating and delivering effective advertising.

Click on the above image to see a short video live from Cannes with Microsoft's Mel Carson.

Jonathan Beeston | Client Services Director, Europe

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

Where were the head honchos at SMX Advanced London?

This week was a busy one for online marketers.  Google’s annual Zeitgeist attracted diverse speakers such as Archbishop Desmond Tutu, Howard Schultz and Sir Tim Berners-Lee who spoke to a crowd of Europe’s leading CEOs and CMOs.  Over in Munich performance marketers gathered for the a4u Affiliate Marketing Conference.  And on the doorstep of Efficient Frontier’s London office, SEM practitioners flocked from far and wide to SMX Advanced.

SMX London attracted an enormous number of industry folk from continental Europe and also the US to take part in the event.   No doubt this underlines that search conferences are just as valuable for networking as they are for learning.

Jonathan Beeston, Efficient Frontier’s search guru, spoke on two panels. His first session “PPC Logistics”, covered structuring accounts in a scalable fashion through a multitude of dimensions. Importantly to Jonathan’s presentation was the illustration of Efficient Frontier’s advanced campaign management features including;

• Dynamically creating keywords from product feeds
• Using feed columns as dynamic parameters for use in account structure creation, mapping
• Automatically creating ad variations tailored to the ad group them
• Integrating with Google Live Ads to dynamically update ads with NO impact on QS

His session, Making Sense of All the Numbers began with the principle that “Errors using inadequate data are much less than those using no data at all” and drew some controversial but substantiated conclusions;

• Don’t worry about click assists. They form a small part of all conversions.
• Do not use last event attribution models for sales funnels that are long and multi-point.
• Use multimetric regression models and multi-point attribution models to estimate the value of long tail keywords.

If you would like a copy of the Efficient Frontier presentations by Jonathan Beeston, please get in touch via twitter @efrontier. We now look ahead to SMX Advanced in Seattle where our own Dr. Siddharth Shah will present Targeting The Search Funnel on Day One and on the Mad Scientists of Paid Search Panel on Day Two.

Merinda Peppard, Global Marketing Manager

Efficient Frontier Wins TiE50 Award

I attended the TiEcon 2010 conference in Santa Clara, CA this past weekend where Efficient Frontier was honored as a winner of the TiE50 Award. Our co-founder, Anand Ranganathan, accepted the award which was given to the most enterprising companies worldwide in five sectors that are driving today’s economy: Internet, Software, Wireless, Cleantech, and BioSciences. We are honored that Efficient Frontier was chosen as a winner in the Internet Sector.

TiEcon is the world’s biggest conference for entrepreneurs, and the 2010  conference was packed with illuminating sessions on entrepreneurship, and state of the technology industry across different verticals. I felt privileged to meet and learn from business leaders such as Jeffrey Hayzlett, CMO and VP of Eastman Kodak Company, Dr. Anji Reddy, founder of Dr. Reddy's Laboratories, Reid Hoffman, Co-Founder & Executive Chairman of LinkedIn, and executives of companies such as Google, Facebook and Twitter.  There were exciting discussions about several different topics such as the future of the social web and mobile applications, innovation in services, how to raise funding and build an entrepreneurial venture, exit strategies for startups,  the new rules of marketing in the digital age, and even the inner workings of the human mind!

All in all, we were excited to participate in such a prestigious event and look forward to next year.

Sameera Inapakutika
Business Analyst

Is Bing about to Bang? – Data from our UK Search Engine Performance Report

In addition to the Q1 2010 U.S. Search Engine Performance Report, we also produce a UK version which looks at spend data from a sample of our UK advertisers. Similar to our friends in the U.S., spend for UK advertisers grew a healthy 21% when compared to Q1 last year. Overall return on investment (ROI) in search is up 6% YoY as consumer’s return to purchasing with a more favourable economic outlook. Consistently, the increase in query and click volume is another indicator of this strong consumer demand.

The Efficient Frontier report also appears to be in line with the IPA Bellwether report, published last week, which agreed confidence was up in the sector.
 
The news this quarter focuses on Bing. As we wrote back in October, the big Bing marketing push we saw in the U.S. really affected their share in a positive way. This quarter, Bing made a splash in the UK via various UK advertising mediums including TV.  Although on a smaller scale than in the U.S., Bing did gain spend share this quarter from Google while Yahoo! remained flat. Bing also saw the highest increase in impressions and clicks QoQ out of the search engines and saw a 9% increase in click share on last quarter. Bing spend share in Q1 2010 increased to 4.7% which represented YoY and QoQ gains of 9%. It will be interesting to see if this trend continues.

Also in this quarter’s UK Search Report, we have included an international spend chart for the first time due to popular demand. Although we produce a separate U.S. Search Engine Performance Report, it is interesting to see spend comparisons for different markets together in one place. Looking at Efficient Frontier’s International Customer Index, the market share split between the engines shows Google still dominates when coupled with its Content Network in UK, USA, France, Germany and Australia. Yahoo! has maintained dominance in Japan against Google Search.

We are just as enthusiastic as our U.S. colleagues about the positive Q1 trends we are seeing and we also increase our SEM growth prediction for 2010 to 20%.
 
The Q1 UK Search Report can be downloaded from our website and the full press release can be found here. Comments gratefully received!
 
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.

The Fat Tail

We all know the importance of the long tail. Below is a quick graphic emphasizing the importance of it and how to best analyze your data.

1. Look at all of your keywords their conversion over the last year.
2. Bucket them by the number of conversions they had in the last year. If you've got a head term with a large number of conversions, for example 5/day, that's 5*365=1,825 for the year.
3. Multiply the number of keywords getting that many conversions.
4. Graph it out.

The result is a chart like the one below showing the total volume of conversions coming from the head to the tail.

This chart is based on actual client data and displays a typical head-tail distribution. Collectively, the most insignificant keywords, the ones that have only one conversion all year, account for as many conversions as the largest head term.

Head terms and Brand terms are always going to be a major part of your spend and revenue but it's these low volume terms that are crucial to account growth and profitability. Therefore, they should be an important part of your account strategy. There are two components to a healthy fat tail: coverage and efficiency. You need all possible converting searches included in your account. A retailer, for example, should endeavor to have their entire product catalog included in their account. Second, you need to tailor your bids efficiently. This is an art and a science unto itself but at the very least you should be evaluating and bidding on each term regularly - ideally daily. Setting a bunch of flat $.10 or $.20 bids is just leaving money on the table. The fat tail highlights the importance of managing your long tail keywords effectively. If managed well, not only is the long tail economical but is also a big volume driver. 

Shay O'Reilly
Business Analyst