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

Finance vs Travel: The Mobile Landscape

Mobile is a hot topic at the moment. Search engines, agencies and clients are all talking about its relative performance to desktop, and the growing opportunity for advertisers. This post examines this relative performance across verticals (specifically finance and travel) to understand for whom this opportunity is greatest, and where first-mover advantages still exist.

We have taken mobile data from several UK accounts in each vertical, over the last three months. Brand campaigns and Google Display Network  campaigns have been removed from the equation for clarity (volumes for these vary by account, skewing the stats) and the results have been indexed against desktop performance. Here are the results:

Travel

 

 Finance

 
As we have seen before, mobile is still small-fry compared to fixed-line search, accounting for approximately 4% of searches here (although note that as the CTR is higher, mobile accounts for a greater proportion of traffic, at around 6-7%). Both CPCs and conversion rates are much lower on mobile. (Note: the percentage rates will vary according to the campaign, but what is important – and consistent - is the relativity between mobile and fixed-line search.)

Finance vs Travel (mobile indexed to fixed line search)

 

Not surprisingly, click-through rates from a mobile device are higher for travel brands than for finance.  Travel advertisers’ CTR on mobile as opposed to fixed line is twice as strong as the CTR of finance advertisers. This highlights the greater click-volume opportunity for travel advertisers than for finance companies. Another interesting point is that the CTR for finance companies on mobile  is lower than on desktop. Again, this is most likely because of the nature of the product, where the application process is more time-consuming and there are concerns over mobile security. However, this does not necessarily diminish the importance of mobile, since it is feasible that users perform a generic search (e.g. for ‘credit cards’) on-the-go, without clicking through, before following up with a brand search on their desktop.

This somewhat hidden branding value is possibly a factor in the next result – CPCs. Again, since mobile search is generally more developed for travel brands, you might expect CPCs to be higher (relative to desktop) than for finance brands. However, the difference is not as significant as you might think. This highlights that competition is strong across both verticals, as finance PPC campaigns chase this ‘branding’ value.

Conversion rates on mobile are 50 percent those of desktop search for travel companies, and 25 percent for finance companies. Again, this underlines the opportunity that exists for travel brands compared to finance.

Conclusion:

Travel sites are clearly better placed to directly benefit from mobile search, with higher CTR and conversion rates, and similar CPCs to Finance. There is still a question mark over what effect ‘optimising’ a site for mobile campaigns has on these numbers .  Conversion rates won’t match fixed-line search immediately, but the potential uplift (especially in travel) is significant.

Finance metrics are a fair bit behind travel, which is mostly down to issues such as users’ trust of mobile security, and practical issues of having to fill out large amounts of data on a mobile screen. But the increasing use of mobile search (and the likelihood of consumers using mobile to research, if not buy, financial products) means that there may well be an indirect impact on the performance of branded search on a desktop, which shouldn’t be ignored.

Scott Laidlaw - Associate Account Manager - UK

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

Facebook 101 – Images/Ads

In case you haven’t heard, you can advertise on Facebook now. Great! So how do you get started? Here are some things we have learned so far (through our own testing, as well as conversations with Facebook reps and engineers). It’s not an exact science yet, and I wouldn’t presume to define it as “best practices,” but it’s a good place to start. Enjoy!

Image Size
Our recommendation is to use a 110 X 80 or 85 X 62 image in your ads. Facebook accepts various sizes, but they are then resized down to the 110 X 80 size, and the image can become foggy or distorted. Therefore we recommend the 110 X 80 size so your image will appear crisp and clean.

Image Quality
There are three main recommendations in regards to which images to use. The first is to try not to use white space in the image. Since the background on Facebook is white, an image with a white background will blend into it, whereas an image with a dark background will be distinguished from the rest of the page. The second two recommendations go hand-in-hand: try to avoid using logos, and product action shots work best. Logos are great, but images where the user can click on the product action shot perform best. For example, if you are offering a travel deal, use a shot of a plane taking off or a picture of the beach. If you are selling laptops, show someone using one, instead of your logo. 

Ad Language
Facebook recommends the following as good drivers of click-through-rate (CTR):

• Ask questions in the ad
• Use third person
• Include a time prompt (now, today, limited time)
• Emphasize discounts & free offers

On the flip side, Facebook suggests avoiding the following pitfalls (so CTR is not diminished):

• Being too wordy
• Being too trendy in verbiage
• Using first person
• USING TOO MANY CAPS
• Percentage signs (it works better to include the actual dollar discount)

We hope these suggestions will help maximize your Facebook advertising campaigns. Happy Facebooking!

Karen Maciolek
Senior Account Manager/Master Social Media Strategizer

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

New guide to performance marketing for retailers

As we’re working closely with a number of retailers to integrate search, display and Facebook, we thought it would be useful to share some of our best practices in a free guide available to download here.

We recently presented this paper at the Internet Retailing Expo and also at the inaugural Efficient Frontier Performance Institute Breakfast Seminar called “Top Tips for Retailers” at the Covent Garden Hotel in London.

The guide highlights six trends that retailers need to be a part of if they want to maximise the results they can generate via performance marketing. These include: utilising campaigns which link real time stock information to advertising; ensuring that the adverts are not making promises that the retailer can no longer fulfil; and tailoring results to customer intent and making an effort to understand the journey that the customer makes prior to purchase. (The customer may make several generic searches via search engines before they even search for a specific brand name, and by that stage their research may have led them to the same brand at each stage. How many ads had the customer seen before finally clicking on the one that led them to that purchase? What can that information reveal to the retailer?)

It’s also important for retailers to optimise cross-channel campaigns effectively. Our research has shown that TV ad campaigns can have a significant impact on search term performance, for example. Retailers have to abandon a silo mentality. If a customer sees a good deal online, they want to be able to walk into a store and get that deal. Using unique identification numbers on online coupons that the customer can redeem in store can make tracking conversion much simpler for the retailer. It can also encourage customers to make a purchase, especially if they were reluctant to shop online.

Facebook is a really interesting channel to watch. Facebook Credits are being sold offline in stores such as Tesco and Game, encouraging customers who are reluctant to part with their payment details to spend money via Facebook. With such a large number of users providing a rich source of data about themselves there is no doubt that Facebook is becoming a major consideration for retailers undertaking a performance marketing campaign and something that retailers should keep an eye on.

Download the full report here or to request the PowerPoint presented at the two events, please get in touch via @efrontier.

Merinda Peppard
Global Marketing Manager

What we learned from Valentine’s Day: How retailers can navigate negative effects of “romantic” holidays on Average Order Value (AOV)

At Efficient Frontier, we love to tease out patterns and use data to inform decisions. One pattern we’ve noticed is that the Average Order Value (AOV), or the average dollar amount spent for each customer order, tends to drop for retailers during the peak Christmas shopping season. One theory to explain this unlikely phenomenon is that consumers who purchase gifts for others tend to buy less expensive items than if they were shopping for themselves. We can also surmise that certain people only become customers during certain seasons, so the mix of customers changes.

The graph below shows the AOV trend for two groups of clients. Group A contains retailers that skew toward romantic and sentimental items commonly gifted during Christmas or Valentine’s Day. Group B contains retailers that tend to sell more practical wares that are not typically considered romantic. We can see from the graph that both groups dip in AOV during the Christmas shopping season. However, Group A also dips to mid-December levels beginning around the third week of January. Group B also takes a slight dip beginning on the 1^st of February, just before Valentine’s Day.

That’s not to say that order volume doesn’t play a role. It most certainly does, though the volume trends are not quite the same.

Besides the obvious fact that not all retailers have the same seasonality trends, we can see some similarities that arise across the board. So why does any of this matter?

Whereas Christmas has a well-defined holiday shopping “season” (beginning on Black Friday), other holidays, such as Valentine’s Day, don’t have such clearly defined shopping seasons. A change in AOV can indicate a change in the mix of customers. To capitalize on this, retailers can tailor ad copy towards customers who are seeking to purchase gifts.

Also, since only Group B showed a spike during Thanksgiving when there were a lot of deals, this suggests that retailers should experiment with NOT discounting romantic goods by much.

In addition to ad copy changes, campaigns need to be set up to capture the increase in demand. This means dynamically changing budgets and bids with the appropriate spend mix on high and low AOV campaigns. All of this could help maximize conversions from customers who are planning to buy gifts during the holiday season.

Based on this data, we also recommend that retailers:

• Use historic data to anticipate demand, and pace budgets accordingly
• Experiment with pricing on less time-sensitive but essential retail goods, which show a high degree of elasticity. “Romantic” goods are time-sensitive, and do not usually capture additional demand from low pricing during the high season
• Align your campaigns in a cross-channel fashion. Use Facebook for upper-funnel optimization to generate demand early on in your holiday campaign, and get aggressive on search to capture lower-funnel intent late in the campaign

Ultimately, it all boils down to predictive modeling and proactive account management. In order to maximize your ROI, you need best-of-breed adaptive learning algorithms to place the right bids at the right times. You also need a world-class team to provide human insights and provide the right creative elements.

Joe Romero

Business Analyst

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

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

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