Your Search Campaign Needs Two Brains

This article originally ran on ClickZ.com on March 27, 2009. It remains current because too few PPC search advertisers employ the correct balance of human and non-human intelligence required to get the most out of PPC search campaigns.

If you don’t use some level of automated technology to manage your bids, you may be missing huge opportunities and generating waste in your campaign. Even the engines have started to provide controls that can be used as some form of bid management. The set-it-and-forget-it (for even as much as a day or two) method of managing bids is fine if you have really deep pockets and care nothing about marginal profit. Likewise, that approaches works if you can afford to set your bid price significantly above your current billed CPC just in case a competitor goes after your current positions and visibility.

Otherwise, bid management can be the key to a double-digit efficiency gain.

Automated bid management isn’t a panacea. Used wrongly, such systems can easily drive your campaign into budget-wasting territory. Bid management technology is only as good as its programmer/designer and the human operator at its controls.

A winning search campaign must have two brains to maximize the paid search opportunity: the human brain and the algorithmic brain, and they must work in tandem. Failure of either one can have a negative effect on your campaign. So today, I’ll discuss the characteristics of both the human and algorithmic brain that are conducive to creating a well-balanced campaign.

Search’s First Brain: You

I’m amazed by how many marketers continue to manage search with a spreadsheet and pivot table. And those spreadsheet jockeys seem advanced in comparison to marketers using far less sophisticated tactics. My business partner just had a $1-million-per-month spender tell him that his “special strategy” is to be number one on every keyword. I’m sure Google, Yahoo, and Microsoft are very pleased they have advertisers for whom position is the objective, not the means to deliver scale at acceptable profit levels!

There’s a shortage of talented staff in the search marketing industry, so it’s no wonder the majority of time and attention is paid on the tactics and strategies and the teams that plan evaluate and execute those strategies. The human team — “brains” and expertise — are critical factors in the continued success and growth of your campaign and the wrong team can derail or seriously impede the progress of your campaign.

Inside Search’s Second Brain

A search campaign’s second brain is the logic within the bidding algorithm. You or your people must understand the variables that go into a well-orchestrated search campaign and, more important, how to prioritize the endless list of tasks suggested through data analysis, analytics, and general best practices. Unfortunately, many campaign-optimization tasks are still labor-intensive, even when aided by automation. For example, while keyword research has become a relative breeze compared to the way it was in 1999, when tools were sparse and inaccurate due to small data sets and poor data sources, the labor has shifted to the process of integrating and testing keywords in a campaign. Regardless of whether keywords are tested in individual silos or in groups, there’s labor involved in orchestrating the tests.

I’ve found that when prioritizing human-run activities, it’s best to factor in the predicted or expected return should the test be successful. This means doing the tests that, if successful, will yield the biggest positive impact on the campaign. There’s also value in having humans analyze data, even if a highly sophisticated bidding algorithm does the heavy lifting.

This brings me to the importance of knowing the intrinsic concepts, formulas, theories, philosophies, and factors that go into your bidding system’s algorithm. You’d be amazed by the number of marketers who simply look for a cool buzzword when shopping for an automated bidding tool or SEM (define) agency but who (perhaps due to math phobias) never dig deeper into the all-important system managing millions of their marketing dollars in real time, making choices among opportunities, and allocating each dollar both within and across engines.

What to Look for in Search’s Second Brain

Regardless of whether a marketer prefers a simple or complex portfolio model or a more nuanced data-driven segmentation model, the bidding engine should have two characteristics. It should have the capability to be set up to be predictive (some call this a learning algorithm). The algorithm must also be reactive. Reactivity is akin to the program trading software on Wall Street that reacts to a change in the financial ecosystem.

Reactivity can be important in many ways. For example, a marketer bidding on the keyword “Janet Jackson” several years ago would have seen her conversion rate (and potentially her Quality Score) drop precipitously as the makeup of search intent changed during the infamous wardrobe malfunction episode. The same can happen to any company, based on the flow of news items or changes in search behavior. Being able to react in real time provides a hedge against these kinds of unexpected changes, even though historical data might indicate that conversion rates will continue to be good. Only a reactive system is capable of shutting the campaign down until an operator is able to investigate the cause. Other causes triggering such a shutdown might involve an e-commerce merchant’s online store that unexpectedly runs out of inventory.

If you don’t know much about the mechanical brain managing your search dollars, it’s time to use your organic brain to learn about the decisions it’s making with your money.

Avoiding the ‘Winner’s Curse’ of Paid Search

This article originally appeared on ClickZ.com on March 20, 2009. It’s still timely and relevant, however, because the concept of “The Winner’s Curse” remains an important construct when marketers attempt to fathom the auction-driven marketplaces run by Google and the other major search engines.

Face it. If you’re in paid placement search, you’re often a winner of the click. But you’re probably more often a loser, meaning you failed to figure out how to profitably drive your ad listing high enough into the SERPĀ  for the keywords you wanted to get the clicks you wanted. Even in cases when you won the click away from your competition, you may have been better off not winning that particular click.

In addition to competition offline, you have competition online — those bidding against you for visibility in the search results. While not every competitor bids on the same keywords in the same search engines that you do, many of them do, particularly if you’re in a large industry and have a lot of offline competition.

If you define winning the search marketing war as having every keyword in a position higher than your competition, all the time on every keyword, it’s unlikely you’ll remain profitable. Instead, you may be in for a wild ride. You’ll also make Google (et al) very happy.

For any combination of industries and regions, you and your competitors will often want clicks on the same keywords. It would be unusual if you were the only bidder on even half your keywords (especially in Google where the number of advertisers is well over one million, according to Securities and Exchange Commission documents uncovered by The New York Times).

Google doesn’t publicly disclose how active its millions of advertisers are and how competitive they are with each other. One thing’s clear: there’s only room for 10 to 15 paid listings in a SERP. Available data for click density across SERPs shows that clicks are heavily concentrated in the top four or five positions, particularly if one to three ads are displayed above the organic (unpaid) results.

As a result, most search engine advertisers fail to capture the lion’s share of clicks they’d love to have but can’t afford. The majority of advertisers have to make do with the scraps (lower volume clicks occurring at lower positions). If you recently launched a campaign, you will suffer from several disadvantages, including a poor Google relevance score (Quality Score) and a campaign that isn’t freshly optimized.

Consequently, you may end up as a SEM who is forced to live on scraps. After all, your campaign is much newer than that of your competition.

If your competitors are smart (and some of them may be), they’ve had months or years to experiment with ad copy, landing pages, offers, and keyword match types. Unless you’ve got something really special to offer or have a very strong brand to trump their finely honed campaigns, chances are you’ll have to pay more to grab clicks away from them.

This brings us to the concept of the “Winner’s Curse,” which generally applies to common-value auctions for items such as paintings, houses, or cars where the winner is the high bidder. In these auctions, a bidder clearly estimates an asset’s value as being greater than the value placed on the asset by all the other bidders. In many cases, that estimate differs so much from the other estimates, it’s highly likely that the winning bidder overpaid.

In paid search, every marketer puts a different value on clicks from a specific keyword, engine, time of day, and geography. Because there isn’t a common utility or value of the click to the marketer or advertiser, each advertiser should bid rationally based on estimates of a click/visitor’s value to them. The “winner” in paid search doesn’t even necessarily get the click every time (each time a SERP is displayed, it’s a new auction); your bid only controls your likely position and the odds that your improved visibility will get the click.

There’s another interesting factor in paid search that makes the Winner’s Curse analogy more fascinating. Sometimes there’s more than one winning bidder per search result.

In a single SERP, a searcher may navigate to you or your competition and then hit the back button. Or, the searcher might open several paid or unpaid pages in quick succession in order to take advantage of background content loading while perusing the first result to load.

What’s important to take away from the concept of the Winner’s Curse in the context of paid placement keyword auctions billed on a CPC basis? You or other bidders may overpay if you’ve misestimated a click’s value. Additionally, in the absence of information about the click, you may be forced to push bids higher than you normally would.

Because you aren’t given an opportunity to re-bid in real time on a SERP-by-SERP basis, you must manage bids based on a variety of targeting and campaign settings. A particular search within the Google network, for example, may be originating from Ask.com, AOL.com, or Google. Plus, a new or a returning customer may have performed the search.

Lacking this information, you’re typically going to err on the aggressive side. That’s because once you’ve missed the opportunity to grab this searcher, you may never get that opportunity again and lose out to your competitor.

The better you are at estimating the true value of a click from a particular keyword, engine, and set of targeting parameters, the less often you’ll end up with the “Winner’s Curse” — a paid click that doesn’t convert to a profitable sale, become positively influenced, or take other positive steps toward a purchase while visiting your site.

Thinking Beyond the Shopping Cart

This article was originally published on ClickZ.com on March 6, 2009, but I think you’ll agree with me that it remains highly current, because PPC search advertisers need to continue to work hard to realize all possible opportunities in this difficult economic climate, and that means “thinking beyond the shopping cart.”

The economic recession is the perfect time for retailers engaged in paid search marketing to think beyond the “thank you” page when establishing metrics to optimize campaigns. If you’re a retailer and only consider revenue generated at the instant of the sale, you may be missing huge optimization opportunities.

Many marketers think online retailers have it easy because they collect revenue data online. Online shopping carts are the primary way that customers order, so these shopping cart pages — and the resulting revenue — are often the only means by which campaigns are optimized. The most common way that a shopping cart-based campaign is optimized is based on a return on ad spending (ROAS) ratio. This optimization metric and ratio works well if retailers:

  • Have a consistent profit margin across products.
  • Prefer to focus purely on the immediate measurable results of the campaign, thus ignoring:
    • Lost cookies: Tracking is generally accomplished via a piece of code called a cookie. A significant percentage of cookies are lost due to cookie blocking programs and cookie deletion. Conversions may therefore be occurring that aren’t tracked. Estimates are that from between 10 to 30 percent of cookies are lost over a period of a single month.
    • Lagged conversions: Cookies have expiration periods and conversions sometimes occur after a cookie’s expiration. Does this matter to you?
    • Cross-computer use: Some buyers research on one computer and then consummate the purchase on a different computer, for example work versus home computer.
    • Influencers and designated searchers: Some households or workplaces have a designated searcher. Sometimes this designated searcher uses one computer to locate a particular product. After searching and finding the requested product, the link to that product can be e-mailed or sent by instant message to the requestor, who subsequently makes the purchase. Cookie tracking isn’t possible in this scenario. So, what fudge factor should you use to reflect influencers?
    • Brand lift or influence: Not every customer is ready to buy today, or even this week. Some marketers prefer to include lift in branding metrics as a success factor. Considered measuring or factoring in brand lift.

Other forms of optimization take the above issues into account either through a fudge factor or through testing or research. When information is available within your e-commerce platform at the time of the purchase, you have several choices for where to collect data for analysis and optimization. These choices include:

  • Collecting data in your e-commerce platform and attempt to reconcile or integrate data from the search engines (click price data, for example).
  • Using the tracking systems provided by the search engines to transmit the sales and related conversion data to the search engines so that you can see the ROI (define) or ROAS within their standard reporting formats.
  • Collecting data in your Web analytics platform via a tracking code similar to the one used by the search engines. Some Web analytics packages are owned by the search engines; others are independent. In both cases, there are instances where the analytics packages can import click cost data directly into the reporting provided by the search engines. This is important for generating the ROI or ROAS ratios.
  • Sending and collecting data in a campaign-management platform that will report the revenue and sales data in relation to the search campaign (by keyword and other metrics) and also make the appropriate bid changes to your keywords and adjust campaign settings to optimize your campaign. Campaign management platforms and systems typically let you optimize based either on a target ROAS, ROI, or CPA (define) basis, or you can provide a budget and the system will maximize revenue, profit or registrations based on that budget.

Campaign management starts once revenue, profit, or conversion data and cost data are combined to generate ROAS, ROI, or CPA information. A core element of campaign management is bid management, which comes in many flavors. The type of bid management system you’ll need will depend on your campaign’s size and your data needs.

Tracking conversions drives bid decisions. When conversion can’t be tracked precisely, many marketers prefer to estimate conversions or use a process or mechanism to factor in gains in influence brought about by a SEM (define) campaign. Direct marketers are more likely to ignore these fuzzier metrics and focus exclusively on metrics that can be reasonably tied to an eventual sale. When an integrated solution isn’t available, the happy medium is often to take as much quantifiable influence or customer value data and overlay this data on your ROAS bidding strategy.

Measuring Exit Clicks

Counting exit clicks (a traditional index of failure) as a success metric might seem to require some kind of mental leap. But if you regard exit clicks correctly, you may find that they can inform your campaigns in unique ways. This article was originally published on ClickZ.com on March 6, 2009, but it remains current because too few PPC search advertisers correctly reckon the importance of exit clicks.

Search visitors don’t stay around forever. One way or another, they’ll eventually leave your site. There are a limited number of ways a search visitor leaves your site, and (depending on your business) one or more of those exit paths may be a positive one worthy not only of measurement but also of being an objective of your paid search campaign. Exit click percentages on particular pages can also tell a story of the relative merit to a visitor of staying versus leaving.

So what happens to search visitors (or other visitors for that matter) when they exit your site?

  • Searchers hit the “back” button. The dreaded “back” button is the worst way to lose a search visitor to your site, even if you are a publisher whose sole revenue source is display advertising. Whether you paid for a visitor or she arrived as a result of organic SEO (define), other marketing, PR, buzz, or serendipity, it’s a shame to lose an opportunity to engage that visitor unless your business is truly irrelevant to her. For search marketers, the most aggravating thing about a back-click is that in many cases the search engine results page waiting for the searcher when she back-clicks is loaded with competitors’ listings. Google’s analytics program and others call this “back” button off the initial landing page the bounce rate.”
  • Exit clicks occur when searchers move forward through links you’ve provided to other sites. These links to other sites are there for a reason. That reason may vary based on the industry, site type, or even where the page resides within a site. Not all exit clicks need to be measured. However if there are exit paths you’d like to have data on, it makes sense to use some form of measurement. The two most common are a redirect (typically something called a temporary redirect or a 302 redirect (define), which routs the click through a click-counting system) and a JavaScript implementation that works on most browsers and reports on the click simultaneously with the click action without redirecting the click. In both instances an exit click could hypothetically leave your site behind, because many link types allow for the spawning of a new browser window.
  • Searchers transact with you either by placing an order or registering (converting to a lead). Once they reach your thank-you page, they may navigate out via an exit click.
  • Searchers close the browser (or browser window) with your site loaded, whether or not they’ve engaged in a transaction or have registered, navigating away using the URL bar, a search toolbar, bookmarks, or other means. Google Analytics calls this exit behavior the exit percentage or exit rate.

Because exit clicks are clicks from your site to some external site page that you’ve selected, an exit click can often be included as a success metric for a campaign. Exit clicks, therefore, are an important measurement and may be defined as the primary or secondary success objectives of your paid search campaign.

Some publishers sell advertising on a per-click basis, one reason exit clicks are so important. A publisher may be buying paid search clicks (or image-ad banner-based clicks) as well as selling search clicks to other marketers. Called arbitrage or click arbitrage, this is quite challenging to do. That’s because if the landing page is relevant to a keyword, one would need an exit click rate of nearly 100 percent, assuming one was charging a bit more than one was paying for clicks. Several years ago, there was a wave of “made for AdSense” sites that used the large difference between CPCs (define) for top positions and bottom positions to make arbitrage work, but most of those sites got caught in the Google Quality Score changes.

Publishers, however, aren’t the only paid search advertisers seeking to measure and optimize around exit clicks. Manufacturers often list their retail partners on a “how to buy” or “where to buy” section of their sites. Similarly, distributors and financial services companies supporting a distribution channel may send clicks to trading partners as part of their natural mode of doing business. There are often reasons you might want to count or measure these kinds of exit clicks in much the same way that a publishing site charging for clicks does. You may want to show evidence to your distribution or sales channel that you are sending over clicks that should turn into leads and sales for both of you. You may be interested to see clicks to a parent company, a subsidiary, a press release, an investor relations site, or even to an industry association.

If positive exit clicks are a success metric, you should put a method for tracking them in place at the individual session level.

Conversion Data: How Much Is Too Much?

This article was originally published on ClickZ.com on February 27, 2009. It remains current and relevant, because the consistent use of analytics to inform PPC search campaigns remains highly spotty in the industry. As I note in the text, PPC search advertising enterprising marketers a wealth of data that they can (and should) take maximum advantage from.

Many marketers don’t even bother looking at the data they have. In paid search, however, data drives decisions, so the more data you have, the more options you have. You can elect to use this data or decide that the incremental data either doesn’t have sufficient value to warrant analysis or can’t be fed into the decision-making process you use for bidding, segmentation, campaign structure, or keyword refinement.

If you’re lost about how much data to use, you aren’t alone. Studies and surveys of marketers differ on exactly how many use analytics to measure the results of marketing campaigns. The audience polled by these surveys has a huge impact on the estimates of level of analytics use.

One recent survey by Alterian reported that: “less than half (47 percent) actually use analytics to measure their campaigns.” Yet, if you ask a different audience and phrase the question differently, you’ll get vastly different results. The CMO Council asked a similar question last year and reported that: “when asked how they tracked and measured return on marketing spend, nearly 20 percent of marketers said they did not.”

You must ask yourself whether data is at your disposal that will allow you to either manually or automatically improve your campaign. Larger data sets in the hands of sophisticated analysts with powerful software can give rise to some great epiphanies.

But most marketers don’t have large enough data sets, even when they choose to capture a lot of information about every visitor. It takes a lot of data to build an accurate predictive model that isn’t out-of-date by the time you want to use it. Marketers of all sizes can benefit from at least evaluating whether additional data fields in their conversion data might be useful for building better models and, in the case of the largest marketers, influencing real-time bidding.

On most e-commerce and lead-generation platforms, you capture a lot of data during the sales process. You may even have pre-existing data from prior orders from the same individual. Of course, you already know all the details about the current order or lead generation session as well.

Because all this data is accessible to your systems, with the right coding, your “thank you” page has the ability to pass a variety of data into a third-party campaign management, analytics or business intelligence package. Some of this data’s importance is often overlooked.

You may want to consider looking at data you might have overlooked before. The obvious data point that one collects on the “thank you” page is the fact that someone made it there, i.e. accomplished a yes/no binary conversion. This fact alone is valuable in tying this event back against all the targeting variables at your control, particularly:

  • Keyword and listing ID (exact searched query and therefore match type)
  • Time of day
  • Geography
  • Engine (not just the account, but the specific search engine or site source)
  • Ad creative (some engines)
  • Landing page (assuming you’re doing a A/B split test or fractional factorial experiment)

The real value accrues when you start moving beyond the convert/don’t convert data and look into variable data. For example, the following variables give you more options on how to manage and optimize your campaigns. I’ll cover the e-commerce data points first and then address some of the data points that service providers, B2B (define), and other marketers might have available as part of a lead-generation campaign.

  • Revenue: With revenue data, you can manage your campaign based on a return on ad spend (ROAS), also often called revenue per-dollar spent.
  • Net immediate profit: On either a dollar basis or as a percentage of revenue, many e-commerce systems can calculate the profit (or profit margin) of a sale. This ties in more to the bottom line than to the top line and many ROI-driven marketers (where return is defined as profit) would prefer to manage to an ROI (define) ratio.
  • Number of items in shopping cart: The breadth of the shopping cart may be indicative of, or a predictor for, lifetime customer value (LTV).
  • Use of coupon code and coupon-code type: May also predict LTV or whether the customer is sensitive to price (could be regressed against promotional or non-promotional creative elements).
  • Repeat customer: Is the customer a repeat purchaser or a new one? This may be interesting if you want to know the different keywords used by new versus returning customers or it could be regressed against any of the targeting variables above.
  • ZIP code: Does the stated ZIP code match the ZIP code derived from the IP address?
  • Lead score data: For lead generation, were there variables that can be used to construct a lead-quality score? For example:
    • Company size
    • Time to purchase
    • Title (for a pull-down list)

Each business has its own data set and I can’t cover them all in one column. In some cases, I can’t even begin to imagine the diversity of those data points and how powerful they will be in honing your campaign. Yet if you fail to take advantage of the extra data available at your conversion pages, you’ve definitely got a sub-optimal campaign running.

Provide Benefits That Resonate in Your Ad Copy

This article was originally published on ClickZ on February 20, 2009. It remains highly current, because PPC marketers always need to be able to “put themselves in the searcher’s shoes” and devise copy that provides appealing, tangible benefits to searchers.

I’ve discussed the pros and cons of including search keywords in your ad creative at length in the past. While there are benefits of doing so, over using this tactic can result in boring homogeneous ads.

Let’s examine whether you should consider mentioning additional benefits and incentives in your ad copy.

Benefits that Resonate

If you aren’t conveying benefits with your ad copy and your competition is, are you cutting your odds of achieving success? What are the unique benefits of your product or service? I’m not talking about touting special prices or other promotional incentives here. You can’t rely on promotions as a crutch.

Consider making your ad copy benefits-driven. What will searchers receive if they choose your ad? What promise do you make in your ad and then fulfill on the site (and afterwards, when the customer buys)?

Searchers — regardless of economic climate — are looking to solve a need and are weighing factors other than price and promotion. If you can find a way to address these factors in the few short characters, your best bet may be to emphasize emotional benefits. These benefits must resonate with the heart, not just the mind.

To determine what benefits may resonate with your audience, remove yourself from your role as a search marketer who knows everything about your product. Instead, put yourself in the place of searchers who are scanning Google’s results, looking for the perfect solution to a problem. They had a motive for the search that occurred seconds before. The more you can intuit their motives, the better you can write an ad that contains benefits that resonate.

The biggest problem in moving beyond the searched keyword and staying away from simple promotions is that the searchers seeing your ad may not all be homogeneous. They aren’t the same in every way and may have different emotional hot buttons.

Some marketers describe these different audience clusters and assign them demographic differentiators, assuming that age, gender, wealth, or geography are the appropriate ways to think of different audience groups. Other marketers, particularly recently, have preferred to think of groups with different needs, desires, motives, and behaviors as having different personas.

Personas must be identified using one or more of the targeting variables over which we have control; otherwise, they become a moot point. To pinpoint large groups of customers with a similar mindset through additional targeting options, consider splitting your campaign up to market to these different segments with different messages. In the meantime, look for a message that resonates with the largest percentage of your target audience.

Incentives (Pros and Cons)

The obvious incentives are ones that increase the likelihood of a click but don’t degrade post-click quality (conversion to a lead or a sale or meeting whatever other success metrics you desire). Search engines prohibit you from asking (or telling) the searcher to click or take action.

Let’s look at the types of incentives and promotional language that may improve your CTR (define). Many of these tactics are more appropriate for online retail, but services, businesses, or local businesses also looking for drive in-store activity, phone calls, registrations, or an inbound e-mail should think about the psychology of incentives.

Price may seem like the obvious choice as an incentive to click, but price is a dangerous area for many marketers. Before including pricing in your ads, consider the following:

  • Your brand position may not be as a price player in the market. An aggressive price may actually convince people to look elsewhere. If you compete on other variables, price can be a dangerous incentive.
  • Sometimes people prefer to pay a bit more if they believe there are additional service benefits. Buyers may have been burned in the past by lowest-price providers and the simple mention of a price may cheapen your image.
  • If you can’t win the price war, why start it?
  • Do you want a price shopper as a customer? Some studies (and some evidence I’ve seen from clients) show they have the lowest predicted lifetime customer value (i.e. they are always shopping for price).

There are other ways to communicate value besides price. Free shipping is another favorite. This is just a pricing message in disguise, though it seems less aggressive.

Messaging for sweepstakes and contests can be woven into ads. However, if you choose to explore this area of promotion, be aware of laws and regulations. Check with your legal team before doing even the simplest contest or sweepstakes.

Remember, if a searcher is looking to solve a problem and is in the late stages of the buying cycle, a contest or sweepstakes may be a distraction and add little perceived benefit. At the same time, for a shopper still in “browse mode,” the incentive of winning something may be enticing. This means you’ll be paying for clicks that have a lower conversion rate to sale and instead are simply registrations (which, depending on your business, may be highly valuable or nearly worthless).

Free trials work well for certain online or offline services where trust is required before a long-term business relationship ensues. Not everyone perceives a free trial as a benefit, so the result may be a cheapening effect similar to that suffered when offering low prices.

Great return policies have taken some online retailers to the point of no longer having to compete on price. Their customers will pay a premium to have a liberal return policy. If something is unique about your policies, and this uniqueness can be expressed in a few short characters, consider weaving it into one of your ads to be tested.

Bundles (buy one thing or a particular level of purchase and receive something else free) can also be interesting, but it’s rare that you pre-identify a bundle that will be of interest to the majority of searchers. Unless you can increase your CTR, your efforts in bundling products or services together should be focused on the landing page.

Classifying Brand and Generic Keywords

This article originally ran on ClickZ on February 6, 2009, but it remains highly current, because being able to group keywords in branded and non-branded categories is still a very useful practice.

I recently discovered that many of my readers are somewhat new to paid search and to my 300-plus columns, archived under “Paid Search Strategies.” In addition, many marketers aren’t necessarily familiar with intermediate topics. Therefore this week, I’ll cover keyword classification.

Keywords (and keyword phrases) are the foundation of a search engine advertising campaign and represent a searcher’s needs and desires. Each search represents the searcher’s best attempt at converting those immediate desires into something the search engine can understand to yield a positive user experience. Within the millions of searches performed daily are concepts that represent a specific advertiser’s business. The keywords you select define when a specific ad is eligible to be served.

Many search marketers fail to classify their keywords into buckets along the continuum from brand to generic. These classifications are a continuum, not set in stone.

Keyword terms and phrases are more than the foundation of any paid search engine advertising campaign: they are a bridge to the other form of search engine marketing: organic search, also known as natural search or SEO. Whether you show up in the paid advertising listings, the unpaid results, or both depends on your keywords.

Another common theme between SEO and paid search is that for those words to perform optimally in either case, your site’s pages must be relevant to those keywords or you’ll lose search visitors seconds after they arrive.

Keywords can be broadly defined as branded and nonbranded keywords, but different marketers define these two segments differently. In reality, the break between brand and nonbranded is more of a continuum. Define brand and nonbranded keywords based on your business in the same way that other marketers do. The primary reason many marketers choose to put keywords into brand and nonbranded buckets is that they often assign different success objectives to brand words. Doing so may include setting different ROI parameters, translating into different position preferences.

To illustrate the diversity of keywords that can be defined as branded, let’s use We-Care.com, a site I founded that creates online marketplaces or malls for nonprofit causes, as an example site. Building such marketplaces involves a process where each cause gets its own URL. In this instance I could define brand keywords very narrowly, so that only the terms “we-care,” “we-care.com,” and “wecare” qualify, reasoning that those are the only brand names specifically tied to the corporate name and permutations thereof.

But a broader definition of branded keywords for We-Care.com would include the names of all the nonprofit causes for which we have built marketplaces. Those might include single keywords in some cases (where the cause name is one word) or phrases (where the full nonprofit name is also a phrase or where portions of the domain name or broader phrases include the nonprofit’s name). For example:

  • save the children
  • savethechildren
  • support save the children
  • donate to save the children

Another way to look at brand keywords in a paid search advertising campaign for We-Care.com would be to consider bidding within the search results for the names of the merchant stores within the marketplace, as well as relevant phrases that include those, such as:

  • Best Buy
  • David’s Cookies
  • Brooks Brothers coupons
  • Expedia deals
  • Target.com

However, in many instances the trademark prohibits brand bidding, and this may be the case with your business as well (even if you have the right to sell the product in question). For example, Marriott currently prohibits online travel agency brands such as Expedia, Hotels.com, Orbitz, and Travelocity from bidding on Marriott trademarks.

The next set of keywords that might be classified as brand keywords for the We-Care.com campaign go one layer beyond the merchants. It is quite possible that one might want to bid on names of products carried by the merchants participating in the We-Care.com marketplaces. As you might imagine, that list of products and services is huge. Unless one thought it possible to provide a better shopping experience with regard to landing pages than provided by the merchant site itself (or a similar experience with a higher conversion rate to sales), it would be unlikely that such a bidding strategy would be successful. This is because one would be competing with all those merchants eligible to sell the brands in question within the search advertising auctions.

Finally, some marketers include their competitors’ brand names as brand keywords. Those brand names might include the name of the competitor and the middle portion (between the “www” and the “.com” or “.net”) of that competitor’s domain name. Again, using We-Care.com as an example, one might include the following competitors’ keywords in a campaign:

  • I Give
  • Igive
  • One Cause
  • Onecause
  • Good search
  • goodsearch

Another reason so much time is taken in defining and obsessing over brand keywords is that searcher behavior is different when it comes to brands. All other things being equal, search result listings for branded URLs get a higher click through (percentage of clicked ad listings) than nonbranded URLs. Similarly, when searching for a brand, consumers are generally very close to making a buying decision (most often for a product or service associated with that brand), but they may be open to persuasion in the last stages of their purchase decisions. Brand search clicks are coveted by the brand owner, the marketing channels for those brands, and competitors who can pull a double whammy if they capture a competitor’s customer just before that customer is about to buy.

When you put your keywords into buckets, think about whether those keywords are a brand for you and whether they are a brand in general.

Scale or ROI? The PPC Search Conundrum

This article was originally published on ClickZ on January 30, 2009, and I think its lessons remain highly current. Even today, too few PPC search professionals truly understand the dynamics of the auction-driven keyword ecosystem of Google and the other search engines or how to make optimal tradeoffs between campaign ROI and campaign scale.

Would you prefer a high-volume, high-revenue search campaign or a high-ROI, low-revenue campaign? Many top marketing executives don’t understand that it requires a combination of technology tactics and strategies to even come close to achieving both. There are inherent limitations to the PPC search ecosystem that constrain volume/scale. If your managers don’t understand this fact, it will come back to bite them, not just in search but increasingly in other online media.

In 2009 — more than ever before — marketers and their executive managers must understand the dynamics of auction-driven media marketplaces. Too many senior managers fail to understand how Google works. Because Google is the general paid-placement model for the overall industry, accounting for the lion’s share of available inventory, misunderstanding Google means misunderstanding search. We could forgive them this lapse if search wasn’t so material to their survival amid the prevailing economic uncertainty.

Both consumers and larger marketers are slower than they should be in adopting technology, and many marketers are only beginning to leverage digital marketing’s power. Case in point: at the Kmart in New York City’s Penn Station this week, the cashiers were more aggressively asking for e-mail addresses to receive a $10 coupon via e-mail. This had happened sporadically in the past and perhaps the cash registers were reminding cashiers or management was pushing for greater compliance, but the cashier asked the couple ahead of me, both in their 60s. The couple said (perhaps truthfully) that they didn’t have an e-mail address. Curious as to what providing my e-mail address would get me, I gave mine. Today I got a multichannel offer: two $5 coupons, one for online and one for offline. Sure, this should have happened 10 years ago, but better late than never.

With consumer confidence at an all-time low and daily news of massive layoffs, even the employed consumer is changing behaviors. Purchases are made more cautiously, and previously planned purchases may not be made at all. No one knows yet whether this will result in a shortage of search impressions or a drop in conversion rates. In any case, this isn’t the year for simply tweaking current campaigns.

This year, failure to understand the implications of budget decisions with regard to search could be the difference between success and failure of both a marketing campaign and a company.

At most companies, senior management grew up with traditional media. Sure, they use search engines every day. But when it comes to understanding the fundamentals of an auction-based media environment, they have trouble wrapping their heads around the auction-based media environment’s most basic concepts. For example, they don’t understand that you don’t buy a click from Google, Yahoo, or Microsoft; you buy it away from your competition. Even if your competitors don’t react to any perceived loss in position, you still lose ROI if you bid higher for higher position and click volume, unless with your specific campaign dynamic the conversion rate rises as position rises. (This phenomenon exists in some cases but typically disappears as you get close to the top spot due to compulsive clickers who click on high-ranking listings without reading them thoroughly.)

In any case, there’s certainly no position higher than the first, which limits any search marketer from growing volume on a particular keyword beyond a certain level. After exhausting CTR (define) improvements, that marketer must move to other keywords and engines and face the same problem with each of those.

Senior marketing executives understand they are in a fight for the consumer’s share of attention and share of wallet. Nowhere is this fight more obvious in auction-based media than when a consumer is ready to make a purchase decision. For most products and services, only one marketer gets the sale or lead. So any time you don’t get the sale, your competition does.

In the past, it wasn’t unusual to have a major marketer call up, ask to double their budget, and maintain the measured online ROI — immediately. Have we gotten there for clients? Absolutely, but it takes work. These days, with marketing budgets in jeopardy, marketers are more frequently asking, “How do I cut my Google bill without losing sales revenue?” The same challenges apply in an auction-based media market, and again, achieving the goal of lower spending without revenue loss is possible, but it often takes more than a day (unless the marketer is bidding manually).

Marketing executives must understand the auction-media marketplace, because the proliferation of ad exchanges means they’ll have an opportunity to buy more media in that way.

A Tale of Two Search Marketers

This article was originally published on ClickZ on January 24, 2009. I think it’s still highly current, given that this past year has revealed a major schism in the spending patterns of major PPC advertisers. Some “conservative” search marketers have responded to this difficult economic climate by drastically retrenching, while others (the “aggressive” ones) have taken advantage of the competitive void by racheting up their SEM campaigns. This article explains the merits of each approach in the current environment, which remains highly challenging.

For the last five or 10 years, SEMs specializing in paid placements nearly always increased paid search spending year-over-year. This year’s different for some marketers, and not always for the reason you might think. Today’s column is a tale of two SEMs whom I’ve talked to recently: one’s aggressive and the other’s conservative.

Some industry verticals are seeing significant drops in daily search query volume in January 2009 compared to January 2008. With consumer confidence and disposable income lower than last year, Google and other engines may not have as many searchers as last year for a whole slew of categories and industries. At the same time, other categories and industries may be picking up.

The general reduction in advertising is another factor driving a possible reduction in query volume over last year’s levels. After all, search behavior doesn’t occur in a vacuum. We’ve long seen how search and other media affect each other — both in terms of client spending and spending on the part of their competitors. Consumers exposed to a barrage of informative advertising often get curious and enter research mode, which these days means doing a search query.

It’s interesting to see just how much search volume has changed over the years. Google Trends lets you look up any keyword or phrase. Here’s one I randomly picked: Apartment rental. Google indicates that volume for this query is down to one-third of its 2004 query volume level. A travel query like Orlando also shows weakness and may get even weaker in 2009 because inauguration euphoria isn’t likely to juice up the economy all by itself.

This situation poses a challenge to search marketers. In other media, one never thinks about one marketer buying inventory away from its competition. There’s always plenty of similar inventory around. But in search, this inventory is so special that marketers are willing to cut other budgets and fight for the visibility, the click, and of course the revenue.

This illustrates Google’s position of power. Google is in the middle — between the marketer and the consumer — and it controls where the consumer goes and what the consumer sees. Compare this with the control exerted by a newspaper or a radio/TV station and you can see the contrast.

Search budgets are often set either purely based on ROI or on ROI/CPA targets and are often fixed (short-term) budgets as well. If the pie of searchers gets smaller and a marketer wants to maintain order, lead, and click volume, that marketer needs to take those clicks away from the competition by bidding higher or by bidding smarter. Bidding higher across the board on keywords will escalate CPCs (define) and unless conversion rates improve, ROI will suffer.

So, marketer number one (the aggressive marketer) will often take advantage of his superior staying power and reduce ROI to maintain or gain market share. Search is a great place to do this because, whether we like it or not, search is frequently the last touch point. Marketers who realize this and can weather the storm will find their businesses stronger after the fact. Some customers acquired during these challenging economic times will offer a lifetime customer value that makes the short-term customer acquisition costs worth it.

To effectively fight for the most profitable clicks as query volume declines, aggressive marketers may increasingly focus on analytics, technology, and campaign management. Many marketers I talk to have never been under much pressure to adopt a cherry-picking strategy for click acquisition. A bit of waste in the campaign was considered a cost of doing business.

Interestingly, the conservative marketer may need to adopt a similar focus on campaign management, analytics, and technology, but for the opposite reason. This marketer will want to trim the least profitable clicks, reducing budget and seeking out the highest ROI while maintaining a reasonable sales/lead volume.

The conservative marketer and the aggressive marketer are both trying to figure out what a click is worth before they bid on it. Keyword-level decision making no longer passes muster in this economic climate.

Regardless of whether your marketing budget got slashed or you’ve been given the imperative to kill the competition now that it’s weak, approach your search campaigns analytically and ensure you’ve got the tools and technologies in place to cherry-pick the great clicks while passing on the ones with a poor profit profile.

Learn How to Say No to Dumb Ideas

This article was originally published on ClickZ.com on January 2, 2009. It discusses how SEM and PPC specizlists should respond to requests for projects which, in the judgement of the search professional, have a dim chance of succeeding and/or a high opportunity. I think it’s still highly current because the hazards of being a “yes man” or “yes woman” have never been greater.

Have you said “no” to a dumb idea recently? If not, you may want to look back and determine whether you would have been better off if you had. We all like to say yes to clients and bosses. Sometimes the most valuable thing you can do within your organization or for your client (if you are on the agency side) is to say no. The term “yes man,” which is really gender neutral, even has a negative connotation within business. Yet, I see yes-man behavior all the time, particularly within the agency and service community.

Beware “Pet Projects”

There are always plenty of tasks and projects on any road map or agenda, many of them with a high likelihood of success. Otherwise those tasks and strategies wouldn’t have made it onto the roadmap (assuming the team putting the roadmap together was competent). Yet it isn’t unusual to see a strong personality on a team or outside supervisor suddenly derail a highly profitable project plan with some pet project. Saying no is scary, but as a professional who knows your way around search marketing and online marketing, you have a responsibility to point out flaws in a change in direction that has a poor predicted outcome.

Saying no or at least learning how to argue for the optimal solution is a skill that’s vanishing. It’s time to bring it back. This skill is actually both knowing when to say no and how to present a cogent argument as to why a new path is inferior to an existing one. It’s rarely taught but among my team it’s become one of the major predictors of an account manager’s success. Interestingly, the same seems to be true on the client side. I’m not talking about an abrasive personality that just says no and doesn’t support the utterance with facts. I’m talking about a person who feels comfortable enough with his/her level of expertise on a subject to assertively make the case for a position.

Remember: You’re Being Paid For Your Expertise

Sure, saying no feels dangerous. And there’s still a decent chance that a superior or client will override your objections. In reality, once you become a search marketing professional, your opinions (backed up by experience and expertise) are what you get paid for. There are a multitude of tasks and strategies to implement both within a search marketing campaign and within a company. Many of the failures in campaigns and within companies could have been avoided if experts who had the expertise and data to avert disaster had spoken up and convincingly made their case.

Some agencies in the online marketing space seem to have decided that any time a client asks for something, that agency should do it, even if such a project is at the fringes or completely outside their area of expertise. The same thing happens at the investor level. We’ve all seen agencies take on new investment (nothing against all you venture capitalists out there), along with either board of director control or at least significant board presence, and suddenly that firm is moving in directions counter to its brand, competence, and experience.

Fully Analyze the Cost of Changing Directions

The question becomes how do you present your case when you think a campaign is about to go off track due to a “pet project” inserted by a well-meaning senior manager or a client. The first method that can be effective is the pros and cons discussion. Often called the “Ben Franklin technique,” you create a list of pros and cons and weigh them individually and as a group to assist the team and the pet project’s owner to understand the dynamic. Another method that I actually prefer is an opportunity cost analysis. Opportunity cost is an analysis examining the missed opportunity of taking one path over another when working with limited resources. A good opportunity analysis includes an in-depth look at expected returns of the options presented. For example, the long-shot pet project might have a low chance of success but a high payout in the unlikely event that it’s successful. By multiplying the percentage chance of success against the value of the successful project/idea, one gets an expected net present value of the project. While risky projects may not be inherently bad — if they divert the team from a lower-risk project with a good expected return — the opportunity cost of changing direction may be unacceptably high.

Search Engine Reps Will Never Have Your Unique Expertise

Interestingly, as a search marketing expert, your responsibilities include protecting the marketing budget and campaign from outside influences who promote projects that have a low expected return. Those projects sometimes come from alternate agencies, bosses, media vendors, or in our case, the search engine reps. Some sales reps at the search engines have never tried to run a search campaign themselves.

So, beware when the management at a search engine decides to package up a new traffic opportunity, and sends the reps out to convince your team to opt into a setting that brings in more traffic be it contextual behavioral, video, audio, maps, advanced matching, or an extended match type. Make sure you fully weigh the costs against the promised opportunity before proceeding. Sure, testing new things is key to a campaign’s success, but only you have the expertise to evaluate the tests worth exploring, determine the order, and select the vendors. Use your experience to guide your campaign to optimal profit, even if it means that you must sometimes say no.