The Concept of Paid Search Auction Pliability

Not everyone who follows this feed reads all the columns over at SEL, so I thought I’d draw attention to a core concept in my recent review of Google’s new Bid Simulator tool for AdWords: PPC Auction Pliability. That is, on any given keyword, how much resistance is there in terms of bidders above and below you in the auction. Is a change in your bid likely to make a significant difference in your performance, or is it all jammed up so you’re more or less stuck where you are, assuming you understand your campaign economics?

There are many ways to optimize paid search performance. I favor an integrated array of techniques, heavy on response testing.

But the “old school” concept of finding “sweet spots” in the auction, keyword by keyword, is a nice way to do a little extra legwork to decide whether to bid higher or lower in certain instances.

It’s not always a good idea to look for so-called sweet spots, as some formal academic theory might suggest that in many cases, especially if you use enough automation, there aren’t any. But the ideal world aside, it might be nice to know if there are a lot of “bids overhanging the market,” as they say in the financial world. If a keyword auction is particularly “busy” above your bid, then you’ll have to raise your bid an awful lot for little improvement in volume.

On the other hand, if you’re stuck in between a couple of bidders but there isn’t much activity above or below them, I consider those auctions to be more “pliable.” You could go up a bit in your bid and reap volume associated with higher ad positions on that keyword. You could go down a lot and not lose too much volume (with the caveat that Google is under no obligation to serve your ad in every auction if your quality score won’t support low bids, so lowball bidding can reduce volume if Google really doesn’t want your dime that day). The more pliable the auction, hypothetically the more room you have to pick a bid strategy that suits you.

Case by case, it gets interesting. Take, for example, an account where you figure you’ve done a great job whittling average CPC’s down to 23 cents. Now on a lot of the keywords that you’re getting for 15 cents, you’re not doing great ROI-wise, but you’re reasonably content since the price is low by historic and industry standards, you don’t feel like risking the effort to go down to 11 cents.

I think the bid simulator may be helpful in helping advertisers decide when to take risks like that. Shaving those few pennies on lukewarm keywords, across several hundred keywords and a thousand clicks a day, can add up to a lot of saved cash you can then turn around and devote to better performing keywords or channels (or simply, profitability).

I’m told that the Bid Simulator is now in limited release. So despite the fact that you may see it in your account or several client accounts right now, it’s not in full release by any means. Its impact on Google’s revenues, and advertiser performance, isn’t likely to be felt until 2010.

“Old school” PPC auction jockeying may not be everyone’s idea of fun – but different strokes for different folks. We’re also keenly interested in when Bid Simulator data might be available through the AdWords API. This might be helpful for (for example) running dramatic one-day volume tests across an account, based on more keyword-by-keyword auction intelligence to help decide where to shake things up.

Building Ad Groups With Keywords From The Wonder Wheel

The Wonder Wheel is a great little free tool by Google.

You can use the Wonder Wheel to quickly build keyword lists and Adwords groups in a visual way. With this tool, Google shows you the terms that relate most closely to your chosen keyword terms.

What Is The Google Wonder Wheel?

The Google Wonder Wheel is an interactive graphical application that shows related keywords.

The wheel starts with your keyword in the center, and shows terms related to that keyword in the “spokes” surrounding your keyword “hub”. If you click on a related term, the wheel creates a new hub, revealing more related terms.

Here’s how to find it:

1. Search on a keyword term.

2. Select “More Options…”

3. Click “Wonder Wheel”

Let’s say your main keyword area is “culinary schools”. The Google wheel suggests related keyword terms such as “culinary arts”, “pastry schools”, “le cordon bleu”, “top 10 culinary schools”, and so on.

These keywords become your Adwords groups. Next, click on each of those terms, and you get further terms that will make up each group.

Easy, huh.

You get Adwords groups built around related keywords, which come together to form a theme.

Themes And The Content Network

The theme is particularly powerful when it comes to the Google Content Network.

The Content Network is Google’s syndicated advertising network. You can choose to have your ad appear not just on Google search results, but also on sites across the Google’s Adsense partner network. This option is turned on by default whenever you create an Adwords campaign.

Traditionally, many Adwords advertisers have turned off the content network because of perceived abuse and junk traffic. However, attitudes are changing as the network matures and the bid prices on Google’s search engine head into the stratosphere. The ROI from the content network starts to look more appealing.

It all comes down to ROI. If it’s positive, run with it.

In Google’s whitepaper entitled “CPA Perfomance Trends on the Google Content Network“, Google found that:

…..half of the advertisers had a Content Network CPA at least 2.6% lower
than their average Search Network CPA. In total, 51.6% of advertisers analyzed had an average Content Network CPA equal to or better than their Search Network CPA

It has taken a while, but it looks like Google and advertisers may have got Google’s content network figured out. As the report suggests, it is important that the advertiser pay close attention to landing page optimization and site exclusion.

How does this all relate to the Wonder Wheel?

When Google looks to place your ad across the network, it does so based on themes.

If you use terms that are defined as being related in the Wonder Wheel throughout your text, particularly in your ad groups, you’re more likely to show up on relevant sites across the network.

Google describe this affect on their Adwords Agency blog:

One particularly useful application of the tool is to identify new ad group themes for content campaigns. Since your ads are matched to publisher pages at the ad group level, creating different ad group themes helps you target your ads more precisely on the Google content network…..

You can then use the Google keyword tool, and your other favorite research tools, to flesh these groups out further.

As the blog notes, this is no guarantee of better performance, however the Wonder Wheel is a great – and fun – place to start.

Other attempts at keyword clustering can also be useful for campaign creation. Such features are offered via search suggestions on major search services, via synonym search (using ~) on major search engines, and as keyword clusters on many meta search engines. Specialty search services like the Quintura keyword map, Microsoft Search Funnels, Google Sets, and Google Squared can further help you come up with relevant keyword ideas.

PPC: The Differences Between Countries Can Cost You

Do you run your PPC ads in different countries? If so, do you change your ad copy and landing page copy when targeting those different markets?

For many years, global brands have altered their marketing campaigns to target different countries.

An advertisement for a food product running in Australia may be markedly different from an advertisement for the same food product in the USA.

Why?

Whilst we share a common language, cultural values and norms differ markedly from country to country, and even region to region.

For example, what is considered soft sell in the US is often considered hard sell in the UK due to differing acceptance of overt commercial activity in those two cultures.

There are many differences:

Viewed from commercial America, British advertising looks like something bent out of shape by a culture so consumed with embarrassment it can’t look a salesman in the eye when he’s making a pitch, particularly if that pitch is laden shoulder high with emotion – love of country, family or God. From a mainstream US perspective our quirky elliptical leave-them-guessing advertising approach is kind of charming, but kind of unworkable too in America, with its fragmented audiences and ethnicities, its raging sensitivities and, above all, its huge risks. American advertising is risk averse because there’s so much at stake with those huge clients and their mega-spends. It means everything is researched to death so all backs are covered.

If you’re running a PPC campaign in different geographic markets, then you’re running a global campaign. So, you need to think about approaching such a campaign as a global brand would do, and tailor your message accordingly.

Your competition – who may understand those local markets intimately, as they live and work in them – will be designing their pitch based on local norms, so too should you, if you want to convert.

Here are a few ideas on how to target different cultures effectively:

1. Watch What Others Do

Take a look at how your product or service is advertised in other media in your target country. What language do they use? What imagery do they use? How are they making the pitch? Is it subtle? Hard sell? Humorous?

Now evaluate the ad copy and landing pages of your PPC competitors. What similarities do they share to each other? To ads in other media? How do they differ from how you would advertise in your own local market?

2. Spelling

A PPC ad written using US spelling displayed in another country screams “not relevant to this market”, especially when surrounded by ads that use local spellings.

Use “s” instead of “z”, and watch those vowels! Color becomes colour, center becomes centre and check becomes cheque.

Here’s a good reference guide to common differences.

3. No, They Don’t Think “Because It’s American, It’s Great”

Every culture thinks what they do is great, and what foreigners do is suspect.

Just as you don’t assume that something from Germany is great, Germans aren’t going to assume that something from America must be great. Some may even be hostile to the US – it just comes with the territory of being the new Roman Empire

It’s not that you have to cave to others demands, but it does pay to be aware of them. If you’re trying to convince someone to buy something, then you need to talk the customers language, on their terms, no matter if they live in New York or, well, York.

4. There Are Regional Differences

Just to complicate matters, there are significant differences between language in different regions in many countries, and particularly in the UK.

Just like there are differences between New Yorkers and Angelenos, there are differences between those in the north of England, and those in the South.

The South tend to think of themselves as intellectually and culturally superior to Northerners, and Northerners tend to think of Southerners as soft, fake and, well, elitist. These are generalisations, of course, but be aware that they exist, as these differences may alter your pitch.

5. Test

As always, test.

Change the language of your landing pages and ads depending on the accepted norms of local markets. Align your language and style with the most successful PPC ads targeting those markets.

Run with the winners and cut the losers.

Final Thoughts

The world is get smaller. The internet, and tech in general, is being driven from America. Naturally, it comes bundled with US cultural values.

This is leading to the Americanization of other countries and making boundaries, both physical and cultural, less of a block than they have been previously.

A pitch that works in America can translate into other cultures without change, but that won’t happen as a matter of course.

Think local.

Google’s Display Ad Strategy

AdAge highlighted Google’s Campaign Monitor, a display ad measurement tool which has been in beta for the last year:

With Campaign Insights, Google takes data from the advertiser’s server logs to determine who was shown an ad and when. Then compares that to web searches and site visits culled from data from the millions of Google toolbars on computer desktops. Those results are compared to a comparable group that didn’t see the ad.

Then Google measures the difference between the number of brand searches and site visits between the two groups. To filter out the impact of other media or influences, such as a TV campaign, Google compares the data to the two groups’ behavior before the campaign began. The incremental difference is attributable to the display-ad campaign.

So you have to give Google your server logs, and in return you get Google massaged data. Yet another form of market transparency through opacity.

Off the start I am sure it will be fairly accurate, but 3 years from now when…

• the market is more mature
• Google introduces quality scores and other such levers
• Google is trying hard to hit the quarterly numbers

…I am not sure how much it would make sense to trust Google for these kinds of measurements. Of course opinion won’t matter if Google is the only game in town. It would benefit Microsoft and Yahoo! to push hard on this front because whoever gets the data partnerships locked up first will end up with a more efficient market and higher yields…eating market-share from other ad networks.

If they are honest with the data it might be a bit of an up hill fight. Even within the search channel the idea of attribution is iffy. Andrew Goodman wrote:

Problem: 74% of purchases can only be attributed to a single click anyway. By definition, that’s the last click. Attempt to “attribute” that purchase to prior clicks or other factors? Good luck.

…

So the next revelation: when you bucket keyword queries down into distinct types, only 7% of sales can attribute significant influence to some kind of click other than the last click.

And large advertisers, growing more aware of that lack of search buying funnel, are starting to spend more on longtail search keywords while avoiding bidding wars on top keywords, as reported in the WSJ:

Sprint is buying the top ads tied to phrases consumers tend to search for when they are close to making a purchase, such as “cellphone rate plans” and specific products like “Samsung Reclaim,” rather than more generic phrases they search for at the beginning of the shopping process, like “Sprint,” “AT&T” and “cellphone.” Pricing for the more-generic terms tends to be higher, yet less for important to driving sales, Mr. McPhillips says.

Of course if lots of big advertisers follow the same strategies they may leave holes in some markets. In a recent interview, researcher Jim Jansen claimed just the opposite…that the broad keywords were cheaper and provided more bang for the buck:

In terms of classifying queries in terms of what advertisers’ payoff is, I think the most interesting finding was that the purchase queries, the last stage of the buying funnel, were the most expensive and had no higher payoff than the awareness or the very broad, relatively cheaper queries. From talking to practitioners, that is a phenomena that they have noted also… which is why a lot of people bid still on very broad terms, to snatch these potential customers at an early stage.

My  SEO experience and PPC experience has been more inline with seeing great ROI on the longtail keywords. But with SEO for some really long-tail cases the page can be set up to pull in traffic that is so niched that it becomes harder to find relevant advertisements and offers to match up against the traffic stream. And of course the issue with longtail PPC is getting much volume.

Google AdWords Testing New Flat Rate Local AdWords Ad Pricing Model

Local businesses tend to be easy to service (because of limited competition), but tend to be hard to service profitably (due to big demands and small budgets).

Such companies are still spending billions of dollars advertising in yellow page directories across the United States because it is easy and flat rate. Search advertising makes advertising more granular and trackable, but most small businesses could not be bothered with it. While the dead tree advertising model is in decline…

Only the local interactive segment will show growth throughout the forecast period. All other local media will experience marginal to rapid declines in the next 18 to 36 months. A small number of traditional media will rebound with a revived economy beginning in 2011, though most traditional media will continue to decline, albeit at a slower pace.

…Google is looking to help transition small local business advertisers over to search by employing familiar flat rate advertising services, as highlighted in AdAge:

In a bid to get more local advertisers to buy search ads, starting this week Google is trying out a new type of search ad and pricing system in the San Francisco and San Diego markets.

Rather than ask businesses to set up a campaign and bid for keywords, they’re offering local advertisers (or non-advertisers) a search ad for a flat fee. The fee is set by Google and based on the average that similar businesses are paying for a given keyword in that market.

Lets go ahead and take one more look at that last sentence

The fee is set by Google and based on the average that similar businesses are paying for a given keyword in that market.

So Google is using your keywords and your bid prices to automate setting up accounts for competing businesses. You pay them for traffic and they arbitrage your efforts by using you as a free market research tool for competing businesses. And imagine if/when Google has 5 companies in your market all bidding based on the same flat fee average strategy. Some keyword prices could fluctuate wildly as the house decides to arbitrarily bid up or down a particular keyword or basket of related keywords.

In an earlier piece Mona Elesseily mentioned a recent Nick Fox keynote where he mentioned the idea of keyword-less paid search accounts, and how Google could run them:

Nick mentioned that keywords were used as a proxy for relevance. Conceptually, there is no reason an advertiser couldn’t achieve the same results without having to directly manage a keyword list. Down the road, Google wants to state outcomes and have machine-based learning and algorithms come up with the best method of achieving specific outcomes. In the case of no keyword search, an advertiser (like a retailer) would provide information on products, product descriptions, pricing, etc. and Google would use the information to find the most effective way to place ads in front of potential customers.

Those machine-based learning algorithms need input to become efficient. What happens if you share your conversion data with Google? This is one of the areas of opportunity on the web for 3rd party analytics providers. As Google continues to make advertising easier (and seemingly cheaper – at least up front) there will be added value in operating outside of their ecosystem and/or limiting how much data you hand over to the borg.

Presumably as this gets easier to automate and test it will increase the value of related services like website design and conversion testing (until those are automated and commoditized as well). But some smart business owners who enter the search game via these automated technologies will likely eventually want more granular control of their strategy, as it is hard to build a long lasting sustainable business based on market averages – especially when the fox is guarding the hen house. Over time those who evolve their model to increase lifetime customer value, increase conversion rates, and build distribution outside of search will eventually make the average price too expensive for an average business to be able to afford advertising.

Depending on how successful this test is, there are all kinds of implications for advertisers like…

• building and maintaining sustainable profit margins in an environment where machine learning algorithms see your max bids and work against you with every search and click
• deciding how much data to share with Google
• deciding if it makes sense to mix together multiple regions on 1 site to make it harder for search engines to use your campaign as a seed for competitors
• deciding if new business lines (and perhaps some longtail keywords) should be bid on for different websites that are not bidding on keywords associated with the obvious core industry keywords

And the general theme for online service providers is that if you are not thickening out your service prepared to be commoditized. Google does not need to create more value than you can, they only need to make businesses believe that you don’t add enough value to justify the additional expense, and that it is just easier for them to go with Google. Time to invest in brand building! Sometimes the SEO and PPC markets seem like mirror images.

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