Efficient Frontier Insights

Managing Events-driven Campaigns

How do you decide what to spend if your business is heavily driven by events? For instance, you may be a concert ticket advertiser planning for a major gig, or perhaps a sporting advertiser planning for the upcoming 6 Nations Championship (a major rugby tournament in Europe). Do you simply try to bid to as high a position as you can on your top keywords and hope that the impressions you gain will bring you sufficient conversions to make the spend worthwhile? But is it really worthwhile? How far will you be from your cost per order (CPO) goal? Will the average order value (AOV) be the same, lower or higher?

The challenge of events-driven campaigns

Events-driven advertising campaigns are challenging because:

(1) you know something is going to happen, but

(2) you are unsure the scale of the impact, therefore

(3) you are uncertain how to prepare for it, hence you implement the “spend and wait and see” strategy.

As a result, you may find your CPO fluctuates wildly indicating your budget had not been allocated in the most efficient manner (assuming constant AOV). The chart below illustrates such a situation. The red circles highlight the instances where events took place and the advertiser bid up to such a level that CPO was much higher than what it was worth. The green circles, on the other hand, highlight the occasions where no event took place and the advertiser pushed down the bids. As a result, the CPO was too low leaving demand to be exploited.




The myth of chasing impressions

The strategy many advertisers employ when managing event-based campaigns may simply be chasing the impression volume. When they can foresee there will be a rise in search interest they plan to spend more, by raising bids, to gain more clicks. However, we will argue that the value of a click is the key factor at play here instead. If the upcoming event only drives impressions but the conversion rate and the average order value (AOV) stay the same, then the revenue per click would remain unchanged and there is no value in raising spend. It is only when an event drives a change in conversion rate and/or AOV, where it is worthwhile to adjust bids to spend more.

So if we know the value of a click is the key, then how do we actually decide the budget on a given event-affected day? The answer is complimenting simulation with analogy adjustments.

As Will Senior, an Account Manager at Efficient Frontier, commented “to ensure you always pay the correct amount for each click, you need to accurately predict how upcoming events will impact click value. The easiest and most reliable method to predict a change in the click value is to use historical data from identical or lookalike events. The click value change could come in many forms, from a conversion rate shift to customer value adjustment.”

Best practice = simulation + analogous data

At Efficient Frontier we are proud of our sophisticated modelling and forecasting algorithms. We build click and revenue models on individual keywords and bid on them at the most efficient levels given the client’s business goal. Our platform’s simulations allow the advertiser to establish the spend level required to achieve the specific CPO or ROI goal based on historical data. When there are forthcoming events, whether a one-day sports event or the week leading up to a major music festival, we will also consider the previous similar (analogous) events and their conversion rates/AOV in relation to the average conversion rate/AOV. The latter ratio will provide us a conversion rate adjustment factor to build into the simulation that is automatically generated by our technology.

This could be illustrated by the graph below. Let us consider only CPO for now and assume constant AOV. The blue line illustrates what the simulation tells us for an average day about the relationship between spend and CPO of a campaign. When an event is to occur and similar past events suggest that there is a higher conversion rate than normal, the curve moves to the right (green line) so that we can increase the spend from just under $3,000 a day to over $4,500 and gain more conversions for the same CPO of $120.

 

This approach of combining simulation with analogous data gives the advertiser control in two ways for managing event-based campaigns.

First, the budget can be determined in advance and the advertiser simply sets the budget for each day of the coming week or month in the bid management platform rather than on the day.

Second, this reduces the daily variation in CPO from the target CPO. For our clients, on average, once this structured approach is implemented (from an intuition-based approach), the variation of CPO from target is reduced by 50%. The more similar historical events there are, the more you can refine your estimate of the adjustment factor used to build into the simulation.

Even if your current bid management platform does not readily provide simulations, using past similar events as reference to your forecasts for the upcoming event would still prepare you better than intuition alone does, as evidenced by academic research (e.g. Green and Armstrong (2007)).

Applying a more structured approach, your “spend and wait and see” strategy can be transformed into “analyze and anticipate”. You’re in control.

Dr Wing Lee, Business Analyst

Multi-Click Data, Multi Frustrations?

In my latest Search Engine Land column, I take a look at click paths. While they may seem mundane or complex they are very useful tools when broken down in understanding how consumers behave. For instance, one can tell how much time consumers spend researching purchases, how some keywords help other keywords convert, and when coupled with attribution they can inform bidding decisions.

For more on the subject and some helpful tips, visit this link to my recent analysis:
http://searchengineland.com/making-sense-of-multi-click-data-88571

Dr. Siddharth Shah
Sr. Director, Business Analytics

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

 

 

Tips For Managing Ad Fatigue on Facebook

In my latest Search Engine Land column, I take a look at the phenomenon known as “ad fatigue” and offer tips for how to combat it when managing your ad campaigns on Facebook.

Due to the nature of Facebook, it’s likely that users will see your ad repeatedly, which may potentially render them less effective over time. So what can you do to keep your Facebook ad campaigns fresh and effective and combat “ad fatigue”? Here’s a link to my analysis and several tips:

http://searchengineland.com/tips-for-managing-ad-fatigue-on-facebook-73554

Dr. Siddharth Shah
Sr. Director, Business Analytics

 

Best Practice on Google ACE

Google ACE is an excellent tool that came out in October last year, which allows for scientifically significant testing across many features within an Adwords Campaign. In this blog post we won’t discuss how to actually implement ACE tests (Google has that covered), but will focus more on the functionality and best practice when setting up one of these tests.

So what is ACE?
ACE stands for Adwords Campaign Experiments, and it is a tool that allows you to split potential Google traffic at its source. It is applied at the campaign level, and traffic can be split in a number of ways (usually we opt for 50:50) between a ‘control’ group and an ‘experiment’ group. You can also put parts of the campaign into both groups at the same time. Best practice here is to have everything you aren’t testing in both groups, the new part of the campaign you want to test in ‘experiment’ group, and the current part of the campaign (i.e. the part that you want to replace if the test goes well) in the ‘control’ group (this is explained in more detail further down).

What can you test?
You can currently test anything you can change within a campaign. You can add new keywords, negatives (Adgroup level), placements, different ad copy and alternative Adgroup structures. However there is currently no functionality to test anything applied at the campaign level. I have heard talk that the next thing to be added to ACE is the functionality to test site links, which would be nice, but our wishlist also includes GEO-targeting, campaign level negatives, networks, devices, location extensions, dayparting and campaign budgets.

How do you test?

We have found that the biggest limitation with ACE is its reporting.  Google was obviously keen to get this useful tool in the marketplace as soon as it could, so reporting seems to have been neglected. The way we get round this at EF is by building duplicate Adgroups (a generic example is below).

Campaign: Holiday Destinations:
Control \ Greece Experiment \ Greece
Control \ Portugal Experiment \ Portugal
Control \ Spain Experiment \ Spain
Control \ France Experiment \ France
Control \ Italy Experiment \ Italy

This is the starting point for an ACE test (the above experiment adgroups are exact replicas of the control groups). We would then make the changes we wanted to test (i.e. a new landing page URL) to the experiment groups only, and start the ACE test to split the traffic 50:50 between both groups. Many of our account managers now maintain a continuous ‘test’ campaign, purely for ACE testing as they always have several tests running at any given time. This ethos of continuous testing is important in PPC (and a policy that Google itself has always championed) because it is the only way to keep learning ways to increase the performance of your account / business in the long-term.

So what is the benefit of using ACE?
In short, flexibility and accuracy. Previous tests relied on the before and after technique of making a change and comparing last week’s data with this week’s. The problem with that approach is that no two weeks are the same. Anyone who has been running a PPC campaign for some time (particularly those working on large-scale, complex accounts) can tell you that performance changes because of  a variety of conflicting variables, including consumer demand, seasonality, the weather, even the quality of what’s on TV!  Using ACE means both the control and experiment group are being exposed to the same market conditions. You can write off all of those variables because they should affect both parts of the account equally. You can be more confident that any differences in performance are due to your changes, rather than a statistical fluke.

As well as being more accurate, ACE is more flexible. Previous ad copy tests relied on putting the whole campaign on even-rotate. This approach is inefficient as your worst performing ads in other ad groups are now being shown more often than they should, dropping quality score, inflating CPCs and decreasing conversion rates. Using ACE allows you to test just the two ads you want to test, leaving everything else in the campaign as it is.

Conclusion
Used correctly and extensively, ACE is a great way to discover actionable insights into what drives performance in your account. It doesn’t take long to set up, is fairly intuitive and can help you drive performance. I would highly recommend anyone not using ACE to start using it as much as possible.

Michael Taylor, Associate Account Manager, Efficient Frontier

Facebook: True vs. Unique CTR

In the search world, we calculate click-through-rate (CTR) as clicks divided by impressions, and it measures the number of times an ad was clicked versus the number of times it was viewed. This works a bit differently for Facebook. Here, a user can see the same ad multiple times per day, which leads to both a true versus unique CTR for that ad.

For example, assume you and I see the same ad on Facebook 10 times a piece, and at the end of the day, you click on it and I don’t. This would equate to one click on 20 impressions, or a CTR of 5%. But, if we were to look at unique CTR, we each saw one ad throughout the day, you clicked, and I didn’t. This would equate to one click on two unique impressions, or a CTR of 50%, which is obviously quite different.

Looking at this on a larger scale over the course of a week, we see the following trend:

If we analyze this campaign based on true CTR, we might assume a steady trend of clicks to impressions. But, if we include the unique CTR in the analysis, we see an increasing trend in the proportion of clicks to impressions (or user interest), which starts to decrease after the third day.

This brings up the next line of questions in regards to ads on Facebook. When does ad fatigue kick in? At what point do we need to refresh ads or images to interest the user again? At Efficient Frontier, we’re currently testing these questions and uncovering some interesting findings, so stay tuned for more on this topic.

Karen Maciolek

Senior Account Manager

 

 

 

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

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

The value of a Super Bowl ad: A performance marketer’s perspective

Super Bowl ads are a brand marketer’s dream. Last year’s Super Bowl set a new record for the most-watched program in television history, bringing in a whopping 106.5 million viewers across the U.S. Major brands including Google, Coke, GoDaddy, and several automotive and retail companies bought millions of dollars in advertising spots during the game to capitalize on this massive market.  

Yet the value of TV ads is a subject of much debate among performance marketers. While many marketers believe that TV ads improve marketing performance in the long run, others believe that they are an expensive way to build awareness. At Efficient Frontier, we have attempted to answer this question for many advertisers, and since the Super Bowl is only four days away, we thought it would be an opportune time to present some of our research on the connection between TV advertising and Search Engine Marketing (SEM).

First, does TV advertising help build online traffic? The answer is, undeniably, yes.

The chart above shows the brand impression volume for eight weeks during a TV flight. One can clearly see that the impression trend is very closely tied to the trend in TV spend. A closer inspection reveals that the connection between the two is more nuanced. A well established brand with a high degree of awareness will see a smaller jump in online traffic during a TV flight than a small brand. Furthermore, a big TV ad campaign will lead to a bigger impression spike than a small one. As a rule of thumb, a TV flight causes between a 60 and 80% jump in searches for the brand terms and between 40 and 60% for generic terms.

Super Bowl ads provide a huge spike in awareness. Does the spike translate to sustained online traffic? Some of our research attempts to answer this question. Using vector-auto-regressive models, we were able to estimate that a big spike in TV spend increases SEM traffic for four to six weeks.

 

For all Super Bowl advertisers, we advise the following to maximize your ads’ effectiveness online:

1. Anticipate a spike in traffic volume on your site both from paid and organic searches. Ensure that both your brand and non-branded terms are at high positions to capture all the traffic.

2. While you may be worried about spending beyond your allocated SEM budget on Sunday and perhaps for the coming days, you will also see much better than average conversion rates. This is good as it means lower acquisition costs.

3. Ensure that your Facebook campaigns are aligned with your TV efforts and link your Facebook pages to the video of your Super Bowl ads. Measure the effectiveness of your Facebook campaign using upper funnel metrics such as average time spent and engagement, and less to lower funnel metrics such as conversions.

4. Measure the effectiveness of your Super Bowl ad on your online marketing efforts right after the ad runs, then again after a week, a month and beyond. The results may pleasantly surprise you!

While our analysis of TV and SEM data has provided us with valuable insights, it also opens the door to tantalizing media mix questions. What is the right mix of online and offline budget to maximize a marketing campaign’s performance? How should the online budget be spent when TV flights are known in advance? What are the long-term branding effects of a TV campaign and how can they be measured online? What is the effect of TV advertising on Facebook, which is an upper funnel marketing vehicle? We do not have all the answers yet, but we are working on finding them and we’re very excited about the possibilities.

Dr. Siddharth Shah
Director, Business Analytics