Efficient Frontier Insights

New Whitepaper - A Guide to Performance Marketing

Last week we released “A Guide to Performance Marketing” a new whitepaper that takes a look at the growth driving performance marketing.  For many of us, marketing disciplines are no longer seen as isolated divisions, operating in silos with independent budgets. Marketers are now understanding how to integrate marketing channels which were traditionally seen as independent from each other. The holy grail of course is to understand what the impact of one channel has on the performance of another.

The guide examines technology innovation such as ad exchanges, demand-side platforms (DSPs), predictive modelling and automated bidding tools which are driving the growth of the performance marketing sector.  It also details some of the key trends that will shape the future of performance marketing, including:

• Integration of search and display
• The increasing importance of Facebook
• Cross-platform campaigns and location-based targeting
• Move away from banners to performance ads
• The importance of attribution analysis, and understanding the route a customer takes from first search to sale
• Better performing landing sites, to allow the brand site to perform at the best level
• Increased transparency, led by Google’s insistence that ad partners reveal the cost of campaigns to clients - a welcome move

For more information and to download a free copy of "A Guide to Performance Marketing", visit the whitepapers section of our website. 

Merinda Peppard
Global Marketing Manager

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

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

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

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

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

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

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

 

Dr Siddharth Shah
Director, Business Analytics

Does TV Advertising Help Search Marketing Performance?

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

Read the full story is here.

Dr. Siddharth Shah  - Director of Business Analytics

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

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

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

Strike The Right Match Type: Part 2

In Part 1 of this blog, we spoke about common mistakes made by PPC marketers when using match types in their search campaigns.   It is easy to highlight areas where campaigns are falling down, but we wouldn’t be doing our job if we didn’t highlight some practical ways to redress the match type balance.

The example below shows some of the keywords which Google deems to be related to the term iphone.  Would an advertiser selling iPhones want to bid on steve jobs or should they, in fact, exclude this term altogether?

 
The Google AdWords Keyword Tool and the Wonder Wheel give a great insight into how Google’s matching algorithms work.  Insights aside, for practical implementation purposes, there is no substitute for a search query report (SQR).  

Here are practical steps you can take to ensure that you’re making best use of match types in your campaigns:

1. Run SQRs on a regular basis (weekly for high volume generics)

• This is the most valuable insight you have into your audience’s interaction with your search campaigns
• SQRs will help you to build highly targeted campaigns which give you every chance of maximizing your potential to convert
• If there is sufficient volume available for a search query which has been matched to your keyword, then consider adding it into your account on all three match types
• Exclude search terms which are irrelevant to your account/a particular campaign

2. Don’t be tempted to bloat your account by triple matching all terms

• As a rule of thumb, consider how many words make up the keyword.  If there are more than three, there is no need to add exact/phrase match versions to begin with.  
• Use your common sense to inform what does/doesn’t need to be triple matched; cheap flights is a high volume generic which needs to be on all match types, but find a three star hotel in Paris probably only needs to go on broad match in the beginning

3. Don’t assume that Google will always match the search query to the exact match keyword, just because you have that version of a keyword in your account

• SQRs will give you an insight into where the ad rank of your exact match terms is being trumped by that of their phrase or broad match counterparts
• You may have to add negatives just to ensure that the traffic is channeled in the way you want it to be

4. Ensure that your ad groups are tightly themed

• Also ensure the keywords are clustered according to the message you want to serve to the user.  This will mean that, when your exact match terms are triggered, the ad returned speaks to the user’s intent.

As ever, we’re interested in hearing your thoughts on this and all other performance marketing topics!

Charli Rogers, UK Client Services Director