Efficient Frontier Insights

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

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

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
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• 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

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

Google’s new broad match modifier launches today in the UK and Canada.

Murmurings of a new Google match type have been circulating the industry for a while but today we can reveal that Google has launched a new match type: Broad Match Modifier (BMM).  This new match type will allow part of the keyword to be matched to part of a search term.
 
Let’s look at this in practice for the keyword “Sony Phone”. Say you want part of that keyword to be matched to other similar search terms, i.e. misspellings, e.g. “Sonny”, but not matched to “mobile phone” (broad match), now with BMM simply apply “+” in front of that part of the keyword (+sony phone). This can be applied to any or all parts of the keyword, e.g. “phone” instead of “sony” would be: sony +phone
 
This is pretty new, and is only available in the UK and Canada, but we will be testing it on our clients who are eligible. Using the example of “+sony phone”, I would imagine this would have much cross over for keywords already in a well structured account, and so should be aimed at new keywords rather than existing ones, unless there are plans for a restructure.

Effectively, it is mimicking Yahoo’s Standard Match (matching the keyword to plurals and common misspellings).  It sounds as though this would be useful for initially uncovering new keywords based on a more selective criteria than the normal broad match, as the search terms should be much more filtered. Although, as with normal broad match, it would skew the performance, and therefore models, of the keyword as it would be matching to a much larger breadth of search terms – some of which will not be entirely relevant. We have discussed in previous blog posts, the perils of Broad Match.

Therefore, when using the new match type, search query reports should be regularly run to enable the highly abundant search terms to be added as Exact Match keywords, reducing the fluctuation in performance of the BMM keywords. Having said this, as we see an ever growing trend in Broad Match taking the Exact Match’s share of search terms, I would expect to see similar trends for Broad Match Modifier.
 
Ginal Patel
UK Account 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

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

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.

U.S. Search Engine Report: Q4 2009

Yesterday, we released our Q4 2009 State of Search Report that covers trends for the sector. Highlights from the  quarter include:

• Both sequential Quarter on Quarter (QoQ) and Year on Year (YoY) growth for Search was up 6%.    
• Spend in the retail sector grew 17% YoY and 46% QoQ.
• Search ad impression volumes that result from retail queries spiked 90% YoY and built on four quarters of positive sequential growth.
• Google’s share of clicks rose to 74.4% and reversed a downward trend in share since the launch of Bing.    
• Yahoo! was the biggest loser in paid click share giving up a full 3.4% since Q3, moving from 24.4% to 21%.    
• Bing held steady at 4.6% in Q4 vs. 4.7% in Q3.
• After a strong Q4 and continued recovery in the overall economy, we expect 15-20% in SEM spend growth for the full year of 2010.

Still want more stats and analysis? You can download the full report here.