Search advertising is like an onion — simple on the outside but increasingly complex inside. Online advertising is discussed today the way bandwidth was discussed during the 1990s. Everybody is talking about it, nobody can get enough of it and much of people say about it is either nonsense or wishful boasting.
At a recent seminar on online advertising held at Adhost’s server colocation and Web-hosting facility in Seattle, I sat next to Brian Rauschenbach and Paul Uhlir of the Don’t Blink advertising agency. We listened to in-house advertising managers describe how between 25 percent and 50 percent of the money they spend on search advertising campaigns is wasted.
Rauschenbach and I first met at an advertising industry event that his firm had sponsored earlier in the year. Before founding Don’t Blink with Uhlir, Rauschenbach had been the in-house ad buyer for an online dating service that was acquired by Barry Diller’s InterActiveCorp.
I asked Rauschenbach and Uhlir if I could visit Don’t Blink for advice on how advertising managers and CEOs could get the most out the money they spend on search advertising. We spent an afternoon going through the steps that organizations could take to launch or upgrade their online advertising campaigns.
The process for buying search and non-search online ads is practically the same, at least for the major search engines such as Google, Yahoo, Ask.com and Microsoft Live Search. The same user interfaces are used for buying advertising on search pages and on content pages provided by third parties, who are called publishers. Non-search ad campaigns can be run concurrently or turned off. Their metrics are similar.
Rauschenbach recommends that buyers begin spending conservatively, with only paid search advertising. Once you see how your ads are performing and which types of ads work best, then you can try other types of online ads, Rauschenbach advises.
Uhlir said that the first step is to sit down with your team responsible for online advertising, either your own staff (if you are doing it in-house) or staff from an advertising agency, if an agency is being used. Begin by deciding on goals and how those goals will be measured.
In the initial phase of working with a new client at Don’t Blink, an audit of existing online advertising activities is conducted. The agency will then apply best practices to those existing activities. They will test the keyword landscape (described below) and take those test results back to the client.
Don’t Blink starts new clients off softly. Ad spending increases only after they have figured out what works. Starting from scratch, a new campaign may ramp up ad spending in months three through six. Optimal performance and return on investment is usually reached in months six through nine.
Success is achieved by focusing on metrics, by establishing a management process for ad campaigns and by targeting advertising resources to achieve the best results for the least money.
Television, print media and outdoor advertising often just seeks to encourage brand awareness, the results of which are difficult to measure. Online advertisers, in comparison, can choose from four metrics:
- 1. CPM: Cost per thousand viewers (CPM) is the original online advertising metric and is easy to measure. Banner ads are often priced on a CPM basis.
For publishers and aggregators, the counterpart metric is RPM — revenue per mille, or thousand impressions. Publishers and aggregators may be pushing multiple ads onto the same page, so for them RPM would be calculated by summing the total ads priced on a CPM basis. For example, if three ads are placed on a page at CPM prices of US$3, $4 and $5 per thousand impressions, then the RPM would be $12.
- 2. CTR: The rate that viewers to a page click on an ad is defined as the click-through rate or CTR. The CTRs for banner ads rarely exceed 0.5 percent, whereas CTRs for search engine ads can exceed 10 percent for individual ads displayed on pages that also include regular unpaid (organic) search results and competing ads.
CTRs for publishers are calculated as the number of page views that result in any one of the ads on a page being clicked. CTRs of 20 percent to more than 60 percent are common for landing pages reached through direct navigation and that contain only ads.
- 3. CPA: Advertising buyers are increasingly looking to link their ad spending with actions, such as customer acquisition. The acronym for cost-per-action or cost-per-acquisition is CPA. This metric can be used internally to gauge the effectiveness of ad spending. The CPA for ISPs to acquire new broadband residential customers in the U.S. often exceeds $100. CPAs for acquiring new cell phone customers exceed $300.
CPA tracking can fall apart in business to business (B2B) transactions because of the difficulty in tracking referral sources and the resulting reluctance of publishers to allow CPAs for B2B transactions. For ISPs to acquire new business customers commonly requires three to five client interactions before a sale is made. The original referrer can become lost in this process.
- 4. Cost per contact: Cost per contact is a metric that will receive greater attention as advertising becomes increasingly interactive, with businesses offering Web page visitors the opportunity to initiate inbound VoIP calls or text-based chats from their Web sites.
Keywords are terms that people enter into search engine queries. A “keyword” may consist of more than one word, with three words usually serving as a practical limit.
Search engines sell ads according to keywords. Prices are determined on an auction model. The keyword “New York Hotel” is going to be more sought after by advertisers (and therefore more expensive) than the keyword “hotel” plus the name of a small town where hotel rooms are not in demand.
Search engines create indexes of Web pages, including pages where the search companies provide ads. As part of this indexing process, keywords in the text of Web pages are identified and then fed into the same keyword bidding systems that are used for selling search ads based on keywords.
Search engines also associate the content of a publisher’s page with relevant keywords, even though those keywords may not appear on the page itself. Google calls this contextual advertising. If Google finds a Web page that provides information about tourist attractions in New York City, then it may associate the page with the keywords “New York Hotel.”
How can you find out which keywords are most in demand by both advertisers and search engine users? The major search engines provide free keyword tools that help advertisers and Web site publishers figure out what keywords people are using and the relative popularity of different keyword combinations. To find keyword tools, enter “keyword tool” into a search engine.
Ad agencies use proprietary tools to help them identify, evaluate and manage keywords.
Prices for advertisements that appear with search engine results are determined according to keyword popularity. Advertising customers bid against each other to purchase desired keywords. Search engines factor other considerations into keyword prices and the positions that ads receive on pages. CTRs and relevance of the landing page are two quality factors that search engines use to determine placement on a page.
Ads with high CTRs and relevant landing pages may be placed in one of the top three spots on a search results page and cost the advertiser less per click than poorly performing ads that point to irrelevant landing pages. Merely buying keywords and pushing ads onto pages is only a small part of successful advertising campaigns.
The most common pitfall faced by companies that manage their own advertising campaigns is that they neglect to use negative keywords.
Buying a keyword exposes a buyer to the risk that it will be used in a search query that is irrelevant to the product or service being offered by the buyer’s ad. In the example of Rauschenbach buying keywords for a dating service, “carbon” would be a negative keyword. Few people searching for carbon dating services online will be clicking on ads for online dating services.
Search engine firms use formulas to determine prices and positions of ads on search pages. Ad buyers that have lower CTRs can pay higher prices for ad placement and find that their ads appear lower down on a search results page. Failure to use negative keywords depresses CTRs and raises prices for buyers’ campaigns overall.
Uhlir said that when Don’t Blink takes over ad programs formerly run in-house, they usually find that clients have not been buying enough keywords, that they are often buying the wrong keywords or the most expensive ones. They also find that too few (if any) negative keywords have been used.
Controlling for syntax and broad search can raise CTRs. To specify a preferred syntax, put “quotation marks” around the keyword.
Broad search leads to ads being served up regardless of how many other words are included in a search query. In Google, broad search can be controlled by placing brackets around keywords. In Yahoo, it is controlled in the administration area, under advanced or standard match type.
For an online dating site, eliminating broad search by specifying [dating] will prevent those ads from being served up in response to search queries for tree dating. An alternative to eliminating broad search is to rely on negative keywords.
Keyword buckets are put together at the beginning of ad campaigns and should be periodically reviewed. Similar keywords are grouped into buckets. Ad copy is tailored for groups of keywords. Multiple ads should be rotated within an ad group.
Most individual buyers limit themselves to a relatively small number of keywords (usually fewer than 200) and do not expend enough effort looking for opportunities for using cheaper keywords that provide better value for money.
CTR statistics on individual keywords enable advertising managers to immediately adjust their use of keywords, dropping bad keywords with low CTRs and shifting resources to keywords that are bringing in the best results.
Keywords that fall below certain CTRs in paid search advertising can be banned for that client by a search engine company. Hence the need to monitor results and pull a keyword or change the ad copy before a keyword is banned.
Campaigns run in-house are more likely to have keywords banned because of poor campaign organization and inadequate testing and monitoring. If a company is not careful, their most valuable keywords can become banned.
Creative Ad Copy
Writing advertisements combines the originality and economy of haiku poetry, the preciseness of newspaper headline writing and the catchiness of a circus showman. Ad copy needs to excite readers and draw them in. This can be done through topical relevance, the occasional use of wit or humor and by offering special deals. It can also be done by rotating ads within ad groups.
The mechanics of text ads vary from one search engine firm to another. One size does not fit all. Ad copy needs to be tailored to the limits set by each search engine company. In addition, they should be:
- Display a Web address or domain name
- Rotated and run simultaneously (especially on large campaigns)
- Monitored so that poorly performing ads and keywords can be withdrawn or replaced
Ad viewers are more likely to become customers if ads, landing pages and e-commerce systems are not too complex, confusing or intimidating. The same principle applies to television ads, which are often dumbed down to make viewers feel docile and in control.
In business rhetoric, the first task in introducing yourself to potential customers is to make them attentive, benevolent towards you (or at least not hostile), and docile enough for you to inform or persuade.
“And when we think we lead, we are most led,” wrote the English poet Lord Byron in his historical tragedy, The Two Foscari, in 1821.
Placement and Pacing
Top placement on a search results page costs more money than being in a lower position on a page. Some ad buyers try to consistently place their ads in the top three spots. Others are happy with positions four through seven.
Ads can be geotargeted so that they are only seen by Internet users in specific geographic areas. They can also be limited to specific times of day.
When companies decide to increase their ad spending, it is often done by simply increasing bid amounts. This moves ads into higher positions on search results pages, which can decrease return on investment, especially for expensive keywords.
A more economical approach would be to expand content advertising, on publishers’ pages served by paid ads. Unlike search advertising, content advertising does not penalize an advertiser for poor CTR performance. Additional advertising can be placed on free e-mail services operated by Yahoo, Google and Microsoft.
Multiple campaigns can be run with each of the four market leaders. One campaign may be just starting out at $20 per day, testing keywords and ad copy. A mature campaign can be running alongside it, spending over $1,000 per day.
In placing search ads, Google is the market leader, followed by Yahoo. Yahoo is notable for its strength in business to business advertising.
Microsoft Live Search enjoys good sales conversion rates but its traffic volume lags behind Google and Yahoo.
Ask.com is in fourth place, with advertisers sometimes restricting their search strategies to exact keyword matches on Ask. Eliminating broad search enables advertisers to control the quality of their results and their spending. Ask is owned by InterActiveCorp and is based in Oakland, Calif.
Retaining an Agency
In retaining an ad agency, clients will initially decide how much money to invest and how much personal attention they want from the agency. Uhlir said that clients can select the data that they want reported and how they want it reported. This is a client decision, Uhlir said, because it has cost implications.
Agencies that begin to work with new clients need to gain insight on keywords that will be the subject of ad purchases, Rauschenbach said.
Don’t Blink’s approach is to research a new client’s vertical, the competitive landscape and the wider industry in which a client operates. They use those research results to help clients set expectations and to develop bidding strategies for clients.
Ad agencies usually work on a retainer amount, starting as low as $10,000 for initial creative work and an equal amount for ad spending for an initial project period. Agencies may work on the basis of a percentage of the amount spent on ads. Or they may work on a combination of retainer and a percentage of the ad budget.
Standard practice is for the ad agency to supply the contract. Start of work is accompanied by a client providing an agency with login and password information for existing search engine advertising accounts.
The user interfaces set up by search engine firms to sell ads are designed to encourage buyers to spend too much money, according to Rauschenbach. People spending money on ads need to know how to opt out of options and features that will not produce desired results. It is usually cheaper and more effective to hire an agency to manage online ad programs.
Small businesses can run their own ad campaigns, but to do so requires training or recruiting a professional. Otherwise they will end up wasting money without surpassing their competitors. It is a long, complex learning curve. Agencies have the advantage of access to proprietary tools that allow them to select and manage keywords and other aspects of campaigns.
It is easy for in-house campaigns to get lost while no one is paying attention. In-house campaigns often end up running on auto-pilot, going for a week or more without being monitored or adjusted. Ad agencies, in contrast, often assign three people to each client, thereby bringing greater expertise and quality assurance to campaigns.
The division of labor at Don’t Blink is for one person to be assigned to generate reports, another to bid management and a third person to interface with the client. The third person is responsible for updating the ad copy, expanding and updating keywords, adjusting bid strategies and overseeing the campaign.
With an agency, campaigns receive more attention than they would in-house. For agency staff, running ad campaigns is their only focus. Search engine advertising changes constantly and it is difficult for in-house operations to keep up.
Do clients ever take campaigns back and run them in-house? Only rarely, said Uhlir, and only when a client has dedicated additional resources and recruited new staff who are specialists in online advertising.
“In selecting an agency, make sure that you are going to be on their radar,” said Uhlir. “You don’t want an agency with too many clients per employee, or to be a huge client at a small agency.”
Uhlir advises new clients not to initially sign a year-long contract right away. Go for three to six months instead, he said. This encourages the client and the agency to both feel that they are benefiting from working together, before they enter a contractual relationship of a year or more.
“The number one reason for clients switching agencies,” Rauschenbach said, “is that they are not getting enough personal attention at their old agency.”
A client’s technical team needs to be ready to implement Web site changes to handle incoming traffic from ad campaigns. This includes setting up reporting tools, using pixels to track traffic once it enters a site, and setting up customized landing pages.
Microsoft was buying ads through Google on the placeholder page for WarSpace.com, for example. The ads invited viewers to find out how Microsoft could help gamers improve their performance. Clicking on the ad simply dumped the viewer onto the Microsoft.com homepage. Good traffic from a well written ad was wasted by the lack of a relevant landing page.
Search advertising can be precise. Advertisers dumping traffic onto their main page are leaving money on the table, Rauschenbach said, both in terms of lost sales revenue and increased prices for ads. Search engines review the relevance of landing pages and factor relevance into buyers’ quality scores.
Companies that advertise for a wide variety of products need to pay attention to specialized landing pages, Rauschenbach said, especially with highly specific online ads. Companies that use paid search ads for products with stock keeping units (SKUs), need landing pages that feature the specific product referenced in each ad. If a company does not have the expertise or personnel resources available to maintain customized landing pages, then this could be added to the work assigned to an ad agency.
“Clients need to view their ad agency as part of their team,” Rauschenbach said. “You have to have a buy off from a client’s technical team, and confirm that they will put in the effort and attention on their side,” he said.
At companies that have run their own campaigns in house first, before bringing in an agency, there is a risk that the company will step back too much.
“Once you assign an agency, you need to have faith in them, be transparent, and be ready to spend the time and money to make the campaign work,” said Uhlir.
Anthony Mitchell , an ECT News Network columnist, has been involved with the Indian IT industry since 1987, specializing through InternationalStaff.net in offshore process migration, call center program management, turnkey software development and help desk management.