Originally reported on TechCruch, I found this an interesting post. Google has launched a Digg-like voting feature to organic (free) search results. As seen in the screenshot below, if enough people click the up or down arrows, those votes are counted and will have an impact on SEO ranking. Google is also allowing consumers to enter comments for a search result, if you are logged in. Adding these social features helps convert Google searchers into “logged-in” Google clients and helps them overlay an intelligent social filter. Also, if enough people are encouraged to log-in, Google will amass a ton of knowledge about searchers and refine their behavorial and geo-targeting capabilities.
Geo-targeting has recently become an important part of our lead generation efforts because we service car dealers in particular geographies. The technology is not perfect, but it has allowed us to spend our ad dollars more efficiently as our revenue-per-lead is largely dependent on geographic location.
Our goal is to acquire the right traffic for our car dealers. We’ve approached a variety of ad networks, and no company has been willing to work with our ever-changing coverage maps and serve geo-targeted ad placements. Our only viable option has been the geo-targeting features offered by search engines. When we sign a car dealer as a lead buyer, we immediately launch geo-targeted SEM campaigns to mirror their coverage and target local consumers shopping for their products.
Although we’ve been successful at increasing revenue-per-lead through SEM geo-targeting, we’ve exposed flaws in IP location detection and a search engine’s ability to accurately serve ads in specific markets. At a high level, it’s difficult to drive significant volume through geo-targeted campaigns, and our geo-targeted cost-per-lead is considerably more expensive than our cost-per-lead across nationwide SEM campaigns.
For a case study, we chose a variety of zipcode and radius combinations and tried to generate Volvo leads in those areas through SEM geo-targeting (the same zipcode and radius combinations in which our Volvo dealers have agreed to purchase leads). The results weren’t what we expected.
To simplify our findings, we generated leads in our target markets. But only 50% of the total lead pool fell under our specified geography filters, suggesting a large percentage of our traffic came from unwanted areas. There are only two possible explanations:
- People are interested in purchasing vehicles in areas far away from their location at the time of completing our forms (highly unlikely)
- Search engines don’t always know exactly where each person is located, or they make false assumptions at times. Internet service providers such as Comcast and AT&T know where each IP address is located, but due to privacy concerns they cannot share everything with the search engines, placing limitations on geo-targeting (a topic for another post).
Regardless of which option we’re battling, the inability to accurately target specific locations significantly reduces our revenue-per-lead and invites wasteful spend. Advertisers need a better solution.
Serving businesses throughout the country, if we acquire visitors outside of our target geographies we can monetize the traffic and justify the expense. We’ve seen margin gains from our geo-targeting efforts, but not nearly the types of gains our financial modeling suggested under the assumption that IP location detection is 75% accurate.
Many local advertisers want to buy geo-targeted traffic, but the end result of a geo-targeted SEM campaign isn’t necessarily what they’ve signed up for. These types of inefficiencies make running profitable, geo-targeted SEM campaigns very difficult.
This begs the question—what options exist that will allow an advertiser to avoid inefficiencies in IP location technology and acquire traffic ONLY in the areas of their choice?
On Monday, Google announced changes to their AdWords quality score algorithm, the technology used to determine sponsored search engine rankings for each keyword. Google’s goal is to improve the quality of AdWords, but the enhancements they’ve introduced may come at a cost to advertisers.
The three main changes announced on Monday are as follows:
- The AdWords quality score for a keyword is now evaluated at the time of each search query. Google notes that landing page quality is “evaluated less frequently.”
- Google has abandoned the minimum cost-per-click (CPC). Because all keywords are evaluated at the time of each search query, they are all considered active.
- In lieu of the minimum CPC, AdWords now displays the cost for an ad to be placed on the first page of search results.
Why do advertisers think costs may rise?
Most advertisers are happy to see the first two changes above. By allowing all keywords to remain active and more frequently measuring a keyword’s quality score, an advertiser may be able to gain incremental traffic from keywords that were previously banned from search results. More search engine impressions will always be welcomed by advertisers.
The third change has received a different response from AdWords clients. Many advertisers fear the transparency of costs introduced by the “first-page bid estimate” could lead to price wars on the AdWords battlegrounds. If advertisers frequently increase bids to reach first-page placement, the cost for top rankings will rise as advertisers outbid each other. The amount of the potential price increase will depend on the degree of value advertisers place on first-page rankings.
Being on the first page of search results drastically increases search volume for our top keywords, causing us to place a high value on top placement. First-page rankings are also important to us because better position results in higher click-through rates, which factors into the AdWords quality score for each keyword.
Certain situations will tempt us to increase keyword bids based on the first-page bid estimate, and if other advertisers are thinking the same thing, AdWords click prices may quickly increase. As we reported earlier, Yahoo will begin serving Google AdWords ads in their search results, which could cause a spike in costs across both search engines. It looks like paid search will soon become more expensive for advertisers, and we’re estimating a 4-7% spike in our costs.
We’ll keep you posted on our reaction to these changes.
Reuters reported yesterday that the U.S. Justice Department has hired Sandy Litvak (former antitrust chief & Disney former Vice Chairman) to consult on Yahoo’s proposed search outsourcing deal with Google.
On the surface, this may seem like the normal process of evaluating near monopolies—but consider Yahoo’s strategic planning/blunders for a moment:
- Plan A – Panama (aka the Google paid search killer): The company pulled the best and brighest minds from around the company and culled them into a super-search team to quickly rollout a platform capable of competing with Google. The result: they created a better platform than Overture’s first rev, but they have continued to lose search share and search revenue despite the investment. As someone that deals with Yahoo’s search team on a weekly basis, I am always shocked how frequently I have to speak to a “human” to get work done. In contrast, Google has built a highly-scalable system, Adwords editor, and a process for computer-to-computer interaction that has significantly streamlined buying clicks. Layer on top of that the Google website optimizer, and we get to learn how to spend more money, more efficiently, with Google for free.
- Plan B – Sell to Microsoft for $34/share: We all know how that ended: $20 billion in eroded market cap and, as of this morning, they are trading below $18/share.
- Plan C – Outsource Paid Search to Google: We will see how this plays out. Reply! spends millions in paid search across all the major search engines, and I can tell you that Yahoo has less reach, with lower CPCs, than Google. The rumors are that the GooHoo deal (Google serving ads on Yahoo) starts in October. Advertisers I have spoken with are concerned that minimum CPCs will increase 15-20% on Yahoo, getting closer to Google levels. Then the Justice Department hires Sandy, and maybe the deal gets blocked. After all, I am not sure if 90% ownership is a monopoly, but we could always ask Microsoft for their input.
- Plan D – Sell to Microsoft for $25/share: I have no data, knowledge, or insight into this possibility; I would just find it painfully ironic if the Google search deal falls through and Yahoo has to jump back into Microsoft’s arms to create a viable alternative to Google’s search dominance.
Search is critical to those of us in online acquisition and it remains to be seen if GooHoo is a good or bad thing.
I have spent the last couple of days at Search Engine Strategies, San Jose. I have found the show very helpful in a number of ways with online marketing. I will update this post with more information and context but I wanted to broadcast that all presentations can be found here. (user name: sessj2008, password: august08). It is a wonderful resource for those that couldn’t attend the show. Tools for keyword research:
Tools for keyword research:
- Google AdWords keyword tool
- Google Trends
- Microsoft’s adCenter Labs keyword forecast
- Trellian’s free search term suggestion tool
- Wordtracker’s free keyword suggestion tool
- SpyFu – useful for tracking competitors
If you are new to search / PPC advertising, I recommend you read all this documentation before you jump in.
- Google: http://www.google.com/adwords/learningcenter
- Yahoo: http://help.yahoo.com/l/us/yahoo/ysm/sps/index.
- Microsoft: mostly inside application, but also at http://advertising.microsoft.com/microsoft-adcenter/faqs
- Marin Software – Reply! uses Marin and we are very happy with the results and company and highly recommend them.
- Efficient Frontier – solid solution with a agency model if you need the help
- DoubleClick Performics
- Keyword Max
Yahoo just announced a non-exclusive search agreement with Google. There wasn’t a timeline specified in the release. Both sides have tested search integration, so rollout may happen very quickly. This has the potential to cause significant disruptions across SEM campaigns (paid search), but does not appear to touch SEO (free listings). I wonder if Yahoo will continue the funky policy of “paid inclusion”—ya know, paid ads in the SEO area.
It appears that, with Jeff Weiner’s departure, they will start outsourcing paid search to Google and connect their two IM products together. Yahoo is left with algorithmic search, the portal, banners, and mail. Who knows how this implementation of meta-search (blending paid advertising) will pan out for lead generators? This is something we all need to keep a close eye on.
According to the release: “Under the terms of the agreement, Yahoo! will select the search term queries for which—and the pages on which—Yahoo! may offer Google paid search results. Yahoo! will define its users’ experience and will determine the number and placement of the results provided by Google and the mix of paid results provided by Panama, Google or other providers. The agreement applies to paid search and content match and does not apply to algorithmic search. The agreement also applies to current partners in Yahoo’s publisher network.”