www.did-it.com 1-800-601-4181 confidential & sensitive 1 getting on top in paid search ses...

www.did-it.com 1-800-601-4181 Confidential & Sensitive

1

Getting On Top In Paid SearchSES Winter, 2006

Kevin Lee, Executive Chairman


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Sleep Depravation:

In case some of you missed me yesterday at the show, I was busy…

At 705AM March 1, 2006, 15 days early, my first child, Kira Vivienne Lee was born.

How well can I present on three hours sleep after 40 hours without sleep?

We shall see.


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Kira Lee, the SES baby:Ten minutes old… What is this place? Kira is already high tech. The maternity ward puts a leg bracelet on containing an RFID security chip. No more missing baby stories.


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Search is a Win or Lose Game:

When Danny named this session, I knew I couldn’t resist an off color analogy:

Question: How is PPC search marketing like sex?

Answer: Only one person gets to be on top.


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Search is a Win or Lose Game:

But seriously…

SEM and SEO are a zero-sum game.

Only one marketer gets the maximum potential visibility. You have heavy competition for a scarce resource. The market is Darwinian for every keyword.

Plus now most keyword auctions factor in relevance.


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Are Marketers reaching their Limits?

From the Motley Fool:

FTD Group, which sells flowers over the net, said the ad rates at Google, which have been going up, are not worth the hit to their bottom line.

Companies such as eBay, travelocity, Priceline and others are saying that the escalating costs of doing business with Google are "unsustainable".


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Seattle Times regarding Blue Nile:

The highest bidder receives the best placement in a search engine's sponsored-links area. But the competition for keywords has become irrational, said Blue Nile Chief Executive Mark Vadon.

In December, Blue Nile paid 50 percent more to Google for paid search than the year before. For its top five keywords, the company's paid-search costs rose by more than 80 percent.


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From Barrons regarding FTD:

"During the Christmas season, certain online search engine costs increased significantly over the prior year, and as such we made the decision not to pursue the resulting high-cost order volume," said Michael Soenen, chief executive officer.


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PPC Auctions, Two Types at the TOP:

There are only two kinds of marketers at the top of the PPC search results:

• Brilliant Marketers

• Total Lunatics

Success requires figuring out how to either:

a) Be the brilliant marketer that can afford a top position

b) Deal effectively with the total lunatics


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SEMPO Research, 2005 Survey:• Four out of five respondents said they could tolerate further rises in paid placement

prices• 21% report they cannot afford to pay more for leads/conversions because they are

currently at maximum efficiency.• Even among advertisers who report the capacity to increase ad expenditure, the vast

majority can afford 30% or less. • Despite increasing ad spend and year-to-year growth in the value of search engine

marketing, we are likely nearing a pricing plateau as advertisers near their maximum efficacy.

1%6%

1%2%

11%

0%0%0%1%

19%21%18% 17%

4%

0%

10%

20%

30%

Nothing; maxed

out already

10% more 20% more 30% more 40% more 50% more 60% more 70% more 80% more 90% more Twice as much Three times as

much

Four times as

much

More than five

times as much

Ability to Afford Further Price Escalation in Paid Placement Ads

"Given the current efficiency you experience with Paid Placement programs, and the quality of the leads that this tactic generates, how much more could you afford to pay for the leads / conversions this channel provides before you could not justify the expense?"


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Are YOI reaching You Limit?

I’m in the middle of a column (Friday’s ClickZ.com is “Paid Search Strategies”):

If you think you have reached your limit for click prices on critical power keywords, raise your hand.

If you would love to have the budget to aggressively pursue position on power keywords, raise your hand.

If the only thing holding you back from bidding more is ROI, raise your hand.


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Every Keyword Phrase has Elasticity

What you think of as bid wars is what an economist would call elasticity. When you bid higher and obtain a higher position the following can happen:

• Competition let you keep higher position (elastic)

• The competition react in an attempt to recapture position as soon as their automated bid management (or campaign management) software recognizes the change, often within minutes or several hours. (inelastic)

• The competition manually reacts to regain position (inelastic)

Each keyword’s elasticity determines the outcome of a price increase sufficient to change position.


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Elasticity: you can’t predict position

Elasticity is one of the major reasons that you can’t use simple estimators or spreadsheets in order to:

• Predict position (as a result of a bid change, especially an upward bid change)

• Predict CPC (the one you are actually billed, not the MaxBid)

• Predict CTR (your position may be fluctuating resulting in a changing CTR)

• Predict spending (over a specific period of time)


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Yahoo Bid Landscape is Simple

The Good Old-Fashioned WYSIWYG Auction:


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Understand Position/Pricing in Google

In Google, you are billed based on an AdRank formula that ranks advertisements in order of effective CPM, then the CPC is calculated from the bottom up based on the CPM. There may also be some adjustment based on the Google “SmartPricing algorithm. You can’t see any of this calculation, so Google requires a level of trust.

In Google, the bids are not the only thing that influence position. Quality Score is a score Google uses to calculate AdRank. Quality score is a click through rate predictor and correlates highly with relevance of the ad, including factors such as domain name, copy, offer, and keyword match.


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Google’s Quality Score

Google’s Quality Score is a predicted CTR, (all other things equal) and includes:

(Mentioned by Google)1) CTR history (normalized based on the position at the

time the impression/SERP occurred.) 2) Ad Text (a keyword matching algo against the query)3) Historical keyword performance (not just for you)4) Landing Page (“In general, build pages that provide

substantial and useful information to the end-user.”)(Not Mentioned by Google), but likely to be some of the

“other relevancy factors” 1) Domain Name: (brands predict higher CTR so before

an ad has history, the domain predicts CTR)2) Overall account history (a new ad or adgroup has no

history, but your overall account has a history)


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Google’s AdWords AuctionGoogle: You’ll see average position in reporting. Higher

CTR (predicted CTR or quality score) or higher bid may raise position or it may take a combination of both.


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MSN’s Score-Based System

Like Google’s Quality Score :(Mentioned by Google)1) CTR history (normalized based on the position at the

time the impression/SERP occurred.) 2) Ad Text (a keyword matching algo against the query)3) Landing Page (“In general, build pages that provide

substantial and useful information to the end-user.”)

Not Mentioned by Google, but likely “other relevancy factors”

1) Domain Name: (brands predict higher CTR so before an ad has history, the domain predicts CTR)

2) Overall account history (a new ad or adgroup has no history, but your overall account has a history)


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If you could afford top position, you’d take it

Before we talk about ways to afford to raise your bids, let’s talk about ways to raise position.

The best part about raising your quality score

1. Improve Ad CTR (more volume, similar ROI)

2. Make landing page better fit to keyword (better conversion AND higher quality score)

3. Change ad creative to make it seem more relevant

4. Change adgroup structure

5. Change MatchType


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Better Ad Creative works for all engines

MSN and Google reward high CTR, but good Ad creative rewards you in many ways:

• Higher Position

• Lower Cost

• Higher CTR resulting in more scale on the ads with the highest ROI (ROI went us as cost dropped in MSN and Google and was already acceptable in Yahoo)

We have seen efficiency gains of 35%+ from ad creative changes, across industry segments.


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AdGroup Structure

AdGroup structure makes a big difference:

Like keywords in an AdGroup (sharing a common tested, killer ad creative) or test several ad creative units.

Tag keywords individually for tracking.

Can’t tage ad creative and KW simultaniously.

Number and grouping method for AdGroups is critical.

AdGroup Structure is also critical to making contextual (AdSense) work optimally.


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Keyword Match TypesThere are several match types in Google &

MSN. The default match type is “broad match.” Match Types include:

• Broad Match: including (in Google) Expanded Broad Matches (synonyms) if not negative-ed out with negative match.

• Phrase Match

• Exact Match

For Yahoo Search, Standard Match trumps Advanced match (regardless of CPC).

Advanced is Broad and Phrase combined.


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Bidding Separately For Content

You can bid separately for content in Google and Yahoo. MSN when it goes contextual gives every indication that bidding will be separate.

• Contextual position is far less critical (less drop off by position).

• Decide where in the buy funnel your contextual traffic falls.


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When To Target By Behavior:

Behavior Segmentation:

Which behaviors correlate with increased profit?

• Better conversion from click to lead/sale

• Higher immediate value

• Better lifetime value of the customer

• Offer responsiveness

Look at your data and determine if behavioral targeting makes sense.


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Conclusion, Search is numbers driven

With all the simultaneous options available and those options constantly changing search engine marketing is becoming a complex arithmetic exercise.

Marketers must educate, implement best practices, hire smart people, and use effective technology.

To be a survivor and a winner, that means hiring a firm like Did-it Search Marketing.

Questions? e-mail Kevin Lee Executive Chairman of Did-it.com. [email protected] Copies of PPT? Send me an e-mail as well.

www.did-it.com 1-800-601-4181 confidential & sensitive 1 getting on top in paid search ses...

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