A Primer on Paid Search
Current Trends, Search Options, and Targeting, Tracking & Measuring Your Campaign
During a recent e-commerce forum, Yahoo! Search Marketing expert Marc Cote of New York provided an in-depth analysis of Internet search and how it has become a leading way for companies to drive purchases, obtain leads and increase the value of a company’s brand. This special report outlines a few of Mr. Cote’s key points, as well as some of the latest literature detailing the various paid search options available to businesses.
There’s no doubt that Internet search has become an incredible vehicle to reach the customer. Close to one hundred percent of all Internet users utilize some form of search and of those more than half utilize search at least once a day with more than twenty-percent utilizing search four or more times a day. Over the course of one recent month, Yahoo noted nearly five billion searches.
So what do all of these stats mean when it comes to revenue? Last year, search ad revenue totaled almost five billion dollars and in 2008 that number is expected to further grow into a seven billion dollar industry!
In terms of advertising, Internet search has grown in popularity due to its high level of targeting and high degree of customer involvement. This is in contrast to other forms of advertising such as television, radio, print, and direct mail where the message doesn’t always reach the customer at the opportune time.
Paid Search Options
Four different paid search models have emerged during the past two years. Their differences are outlined below:
- Pay-Per-Click – This traditional form of paid search, frequently referred to as PPC, is defined as the placement of a small ad on the search results page for a specific keyword or keywords in return for a specified payment, but only when a visitor clicks on that ad.
- Paid Inclusion – This paid search model has become a way for larger companies to upload specific pages or url’s to a search engine for a nominal annual fee, plus a cost-per-click fee. The search engine analyzes the pages submitted, selects the most appropriate search terms and then displays the most relevant pages based on the search within its database. The search engine agrees to crawl your site periodically or you upload information on a continuing basis to the search engine.
- Contextual Search – Another area of significant growth for the search engine marketing industry is contextual search. Similar to content-relevant ads, this form of paid search involves placing your search engine listing on contextually relevant areas related to the information a user is viewing. For example, an Internet surfer within Yahoo travel that is actively engaged in gathering information on Orlando would be served highly targeted results in the sponsored links section of the page.
- Local Sponsored Search – Particularly good for small businesses that want to target local customers and service-based businesses looking to drive phone calls for service, local sponsored search targets people based on where they are physically. Once customers click on your listing, a locator page appears with your address, store hours, map and other customized information. This service can define a .5 to 100-mile radius around your business.
Targeting Your Campaign
Selecting the Right Search Terms
As with search engine optimization, a successful paid search campaign begins with determining which search terms you want to target. Internet users are becoming increasingly sophisticated on how they search and how many search terms they enter into the search box. People used to type in one or two words, but now close to half type in three words or more within the search box. Cote suggests selecting a small range of relevant terms (no more than a hundred) and then testing those words to see which ones work.
There are several tools to help you with your search term research:
When selecting the search terms to target, it is also important to consider how to best tailor your terms to the buying cycle of the potential customer. For example, you’ll want to use more active terms when trying get a visitor to click through that already knows not only what they want, but the model number as well. This is in contrast to someone that may just be learning about a particular product or service.
Title & Description Targeting
For many potential customers, the title and description in your listing may be their first introduction to your company. The title and description indicates the quality of your site and communicates whether your site contains what the user is looking for. Recent research by Yahoo found that respondents are more likely to click on factual listings than those listings that come across as “salesy”.
Landing Page Targeting
Finally, ensure that you direct searchers to the page that is the most relevant to their search. For example, if a person
searches for DVD players, take them to the page that displays all DVD players, but if they are searching for a specific brand or model, direct them to that specific product page.
According to Yahoo, ninety-six percent of users prefer a specific page to a more general page. Online consumers want to take as few steps as necessary to find what they’re looking for – this is especially important considering nearly half of Internet users are still on a dial-up so every page they have to download is additional time spent online.
Tracking & Measuring Your Campaign
Once you launch your campaign, you’ll want to track the effectiveness of your listings. A word of caution - don’t bid so high that it ruins your economics, but don’t bid so low that you don’t get any traffic.
Three measures may be used to develop a smart and successful bidding strategy:
- Cost Per Action (CPA) – Divide your total advertising cost by the number of buyers. This will provide you with the cost to acquire each buyer. Compare this amount to the average purchase amount. As long as profit is higher than the cost to acquire the buyer, continue the campaign. Note: you may also want to take into consideration the lifetime value of the customer.
- Total Profit – Subtract revenue (what you took in) from your costs (what you paid to run the campaign).
- Return on Investment (ROI) – Divide profit by advertising costs. ROI can help measure the effectiveness of your advertising spend.
Smart bidding strategies balance total profit with ROI and CPA. Recent research indicates it is also important to take into consideration the latency factor. Up to fifty-percent of purchases are occurring thirty days beyond the first search. This is particularly true with more complicated purchasing decisions.
For more information regarding PPC, visit the Search Engine Marketing section of
the PenSoft E-Business Resource Center. You can also follow search mix changes as they occur at http://buzz.yahoo.com.
