Efficient Frontier Insights

Efficient Frontier & Context Optional release first joint quarterly State of Digital Marketing Report for Q2 2011

Today marks an important milestone for Efficient Frontier and Context Optional with the release of our first joint quarterly State of Digital Marketing Report for Q2 2011. While Efficient Frontier’s quarterly reports have long been a trusted source of data in the digital marketing industry, we are excited to add even more valuable insights to our social media analysis, using data gleaned from Efficient Frontier’s clients as well as Context Optional’s client index representing more than 15 advertisers and 20 million fans from a multitude of verticals including retail, entertainment, CPG and finance.

Many key findings this quarter indicated how competitive Facebook is becoming in the digital marketing sphere, and show that the longer brands take to engage on Facebook, the more it will cost them in the long run. We also found that advertisers are focusing more on Return on Investment (ROI) than on volume, which resulted in slower growth compared to Q1 of last year. In addition, Bing/Yahoo’s ROI continues to improve, resulting in them gaining a percentage of Google’s coveted spend share. 

Key highlights in the Q2 report include:

• Search spend growth slowed to 8%, down from 17% year on year in Q1 of last year. We believe this is due to advertisers focusing on ROI instead of volume, as well the slower than expected economic recovery.
• Facebook advertising continues to get more competitive, with CPCs increasing 22% from Q1. This means that the longer brands wait to engage consumers on Facebook, the more expensive it will become to acquire fans.
• Brands are increasingly focused on fan acquisition and engagement on Facebook. Between October 2010 and 2011, brands in our index are on track to double their Facebook fans. Consumers on Facebook are also increasing their engagement with brands. Our analysis reveals that one post made by a brand leads to 100 comments from consumers on average.
• Bing/Yahoo! gained 3.4% points of spend share from Google since Q4.

For the 2011 outlook, we predict:

• Facebook CPCs will continue to rise at a double-digit pace, and as a result, brands should not waste any time increasing their understanding and use of the channel, acquiring new fans and exploiting new ad formats such as Sponsored Stories.
• Continued testing and investment in Facebook will see advertisers evaluate and likely increase their spend. Looking ahead, we believe that advertising dollars will shift from offline media to search, Facebook and display. While we believe all online advertising channels will continue to grow, the Facebook channel will show the strongest growth in the months ahead.
• Bing/Yahoo! will benefit if ROI improvements continue.

To get the full story, download our State of Digital Marketing Report for Q2 2011.

Dr Siddharth Shah
Sr. Director, Business Analytics

 

 

SMX München 2011

SMX (Search Marketing Expo) took place in Munich last week, this time in the Hilton Hotel Munich near Englischer Garten. Niels Jensen, Efficient Frontier’s own Account Director for Germany presented alongside Phillip Arnold from TUI Interactive on the panel "Search & Beyond". TUI is one of the largest travel brands in Europe with more than 10,000 hotels in its portfolio. The topic of the presentation was "The Adwords Strategy at TUI" and both presented insights and best practices from TUI Interactive’s Hotel Names Campaign. Efficient Frontier’s objective was to build up a search campaign for hotel names only, which are part of TUI’s hotel portfolio, without being over-reliant on TUI’s brand. 

Niels and Phillip discussed how the set up of the long tail was constructed and how the bid management for nearly 100,000 keywords was put into place. In addition, they discussed an A/B landing page test set up and how the dynamic ad copy was handled by Efficient Frontier. A key strategic decision by TUI Interactive was to replace the hotel pages of “Traveltainment” they used previously, with their own landing pages, in order to get better information to users.

Later in the presentation Niels and Phillip uncovered the results of the campaign. The overall Quality Score was increased to factor 7 and the key figures for the click through rate, conversions and return on marketing investment were increased substantially. On the whole, TUI Interactive is excited about the results they achieved with Efficient Frontier. Both Niels and Phillip were mobbed by the 80 strong audience after the presentation with many interesting questions which tells us that the topic was greatly received.

February 2011 CPCs: Robust YoY increases in most sectors as Financial sector sees increased competition

 

CPCs in February, increased more than 15% YoY in the Finance, Travel and Automotive sectors while they remained relatively flat in retail. We are seeing increased competition in the financial sector which drove up spend by 15% YoY in February, primarily driven by CPC increases. On a MoM basis, Finance saw a 9.1% seasonal decline which was lower than the 16% decline in the same time frame last year.

Dr. Siddharth Shah,
Sr. Director, Business Analytics

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

Google Changing its EU and UK Trademark Policy

Yesterday Google announced that it will modify its Trademark policy on the 14 of September 2010. How is this likely to affect search marketers, you might ask?

What is changing in Europe?
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As of now Google has been monitoring trademarked terms so that no one apart from the brand owner could buy those terms as keywords. On the 14 of September Google will no longer monitor this.

As a result, advertisers will be able to buy their competitor's brand without having to fill in an exception request. While buying trademarked terms will be allowed, using those trademarked terms in the adcopy won't be permitted.

What is the likely effect of this change
-------------------------------------

• Your brand CPC might increase during the first weeks. With time the Quality score should play its role and allow you to keep a fairly low CPC on your brand keywords
• Based on how appealing your competitors ads are, it might lower a little bit your CTR
• Advertisers that are not currently buying their brand will now need to buy it otherwise competitors might take sales from them

What is changing in the UK?
--------------------------
While buying trademarked terms has been possible for a year now in the UK, it was not possible to include trademarked terms in the adcopy. On the 14 of September, selected advertisers will now be able to include trademarked terms in their ads. Advertisers will only be able to do this if they have sufficient content on their site regarding the trademarked term that they want to buy.

I would encourage all search marketers to keep a close eye on their brand performance on Google before and after the 14 of September 2010. If you have any questions please feel free to send me a tweet @efrontier or @efrontier_fr

Olivier Lemaire
Account Director, France

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

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

UK Search Engine Report: Q4 2009

 

In addition to releasing the Q4 U.S. Search Engine Performance Report yesterday, we also released it's sister publication for the UK. The UK Report covers trends for the sector based on data from our UK Customer Index. Highlights from the quarter include:

• Sequential Quarter on Quarter (QoQ) growth is up 27% and Year on Year (YoY) growth is up 16%. 
• Click through rates on all engines increased year on year (YoY).
• Google’s share of clicks rose two percentage points to 86.9% and while Google’s share of spend rose one percentage point QoQ to 87.6%, Yahoo! gave up one percentage point in spend.
• Bing held relatively stable at 3.3% share of clicks in Q4 vs. 3.7% in Q3. Bing also remained steady at 4.3% share of spend.
• UK also expects 15-20% range in SEM spend growth for the full year of 2010 (based on current economic conditions).

Download the full report here for more analysis.

UK Search Engine Performance Report Released

This week our UK Search Engine Performance Report: Q1 2008 was released. Google is by far the dominant search engine in the UK, with 85% of search engine spending in Q1 2008. Its ROI by increased by 14% since Q4 2007, despite a small drop in CTR from Q4 07 to Q1 08.
 
Q1 2008 showed a difficult quarter for Yahoo in the UK, with a CTR decline of 38% and a subsequent decline in ROI of 6% versus Q4 2007. Much of this decline might be attributable to Yahoo's expansion of its partner syndication network into high volume, lower quality sources of search traffic, as seen in the US and explained here. MSN increased its share of search slightly from Q4 07 to Q1 08, to account for 3.5% of UK search spending in Q1. MSN also maintained its lead as the engine with the highest ROI in the UK.

With the exception of Japan, Google captures the vast majority of search engine advertising spending in the major global markets in which Efficient Frontier operates.  Europe is the most Google-centric, with Google accounting for nearly 96% share of search advertising spending in Q1 2008. In the United States, Google accounted for 77% of search spending, while 93.5% of spending went to Google in Australia. Despite Yahoo’s dominance in Japan, Google gained 6.2 percentage points of search spending in Japan from Q4 2007 to Q1 2008. It's no surprise that in Q1 international markets accounted for 51% of Google's revenues.