Yahoo Search Marketing

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Search Engine Marketing is PVP

July 11, 2010 in Advertising, Online, Search, Search Engines by Anthony | 2 comments

EVE Online (or Spreadsheets in Space as it is also known) is a MMORPG with strong PVP gameplay. There are a large number of other ways to play EVE Online, from the market through to PVE, but it is PVP that stands out in the game. It has been called a ganking game, which is a fair comment, as there is a real risk of loss of gear and skills (comparable to levels in other games). Loss of gear and skills creates behaviours aimed at minimising this risk while maximising rewards. In other MMORPGs with little or no chance of loss, PVP activity tends to be restricted to the market.

Winning at PVP in EVE Online

Winning at PVP in EVE Online

Wining at Spreadsheets in Space

PVP in EVE Online is not fair. In fact the challenge in PVP in EVE Online is in setting up these unfair encounters. In most MMORPGs, the actual act of combat consists of a few mouse clicks and some waiting. EVE Online is no different. It is the risk of losing stuff that makes players focus on everything before the actual combat a lot more. It is taking the right mix of ships, avoiding being out-numbered and cornered by a superior foe and acting before the opponent even knows they are in a fight where player skill starts to make a real difference.

Why SEM is like EVE Online PVP

Search Engine Marketing (SEM) in very similar to PVP. It is a zero-sum environment where operators compete for a resource through actions governed by a set of rules and environmental factors generated through user behaviour. There are a few principles that carry over from EVE Online PVP to SEM.

  • Situational awareness is king
    • Know how the advertising network works
    • Understand competitive activity
    • Understand how the market behaves
  • Observe, act and assess
    • Analysis without an accompanying action is useless
    • Assess the effectiveness of activity & reassess decision making model
    • And repeat…
  • Know where you can compete and where you can’t
    • Don’t waste time & resources competing directly with advertisers intent on outspending you
    • Find alternative ways of reaching potential customers.

Information is the key. Understanding how the query space works, having good situational awareness, and knowing where in the sales funnel certain terms are is valuable. It won’t save you from the SEM equivalent of a gate camp (high margin and ‘branding’ campaigns with large budgets), but it is essential for remaining competitive without burning through your budget.

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Making Comparisons in a Competitive Market

June 10, 2010 in Advertising, Online by Anthony | No comments

In my last post, “Too soon for decisions”, I discussed applying a consistent set of rules to campaigns to assess the performance of new ads and targeting. However, in practice, assessment and tracking an AdWords or Facebook campaign can be an interesting exercise.

The data generated by a campaign is not a true representation of the population. The data is a snapshot limited by the markets targeted and the visibility available for the budget spent. Any single campaign can be exposed to direct competition over the whole market or specific subgroups. For example, just because “Campaign A” does not get traffic from Victoria does not mean that no-one in that state is searching for “Keyword B”.

A competitor could simply be focused on that market and value the traffic more. Other factors to consider are the effectiveness of the competition’s creatives and offers, the appeal of their product, efficiency of their site in turning clicks into sales and how much they return per conversion. All of these factors will influence their budget, and how much they are willing to spend per click or impression. Tools provided by the advertising networks that increase the efficiency of campaigns like Remarketing are also worth considering.

According to Wikipedia, a confidence interval is defined as:

…a particular kind of interval estimate of a population parameter. Instead of estimating the parameter by a single value, an interval likely to include the parameter is given. Thus, confidence intervals are used to indicate the reliability of an estimate. How likely the interval is to contain the parameter is determined by the confidence level or confidence coefficient. Increasing the desired confidence level will widen the confidence interval.

In use here, it is assumed that between similar competitors, the average Cost Per Acquisition (CPA) within the group is likely to be within a 95% confidence interval of the known CPA.

Confidence interval and estimated CPA

Confidence interval and estimated CPA

Confidence interval can give you an estimate of what other bidders may be paying for a conversion, assuming they are operating as efficiently as you are. In the graph included above, confidence interval of the CPA is used to estimate the most likely highest possible CPA a campaign can still compete on. In conjunction with Cost Per Click data, it is fair to assume that the competitors in the query space are willing to spend over the highest likely observed CPA. Reasons for their bidding strategy can vary from shutting out competitors by absorbing a short term loss, to a higher sustainable CPA. In a query space where a number of different verticals are competing for the same traffic, this metric is considerably less useful and your mileage may vary. For comparing CPA campaigns, creating a model for understanding the market, or simply to assess which ads are potentially performing a lot better or worse than your target in the face of direct competition, it is a useful tool.

Confidence interval can be a guide to how much your competitors expect to spend per conversion, assuming a lot of similarity in product and business practices. Arbitrage and industries with heavily commodified products are prime candidates for this, as well as campaigns with a very aggressive high cost bidding strategy, such as those competing directly with another member of your industry.

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Too soon for Decisions?

June 6, 2010 in Advertising, Online by Anthony | 1 comment

When can you start to assess and optimise online advertising campaigns in a meaningful way? Adwords, Yahoo! Search Marketing, LinkedIn and Facebook ads allow for an amazing level of market segmentation. Small, highly specific populations can be targeted by a large number of different variables. By their very nature these highly specific campaigns sometimes only generate low levels of traffic and sales, and consequently have a high level of apparent volatility over short time periods.

This volatility is an interesting challenge for account management, and can create a risk in responding to rapid changes. Low traffic and conversion numbers make it difficult to collect meaningful data over short time periods, making it hard to tell the difference between an emerging negative trend and an outlier. This creates problems in both managing low activity campaigns, campaigns in highly competitive and volatile markets, and new campaign testing.

Averages, Standard deviations and Confidence intervals

Averages, Standard deviations and Confidence intervals

Averages, standard deviation and confidence intervals are a few statistical tools available for analysing the data. The actual figures used to determine response will vary from campaign to campaign even for the same product, due to other factors such as the size of the audience and the means used to reach them. The tools used to explore the information and create heuristics for guiding analysis often will not change.

The sample data tracks a gradual upwards trend in the average cost per conversion in a focused Adwords campaign. There is an outlier at double the mean that skews the mean and standard deviation in the third reporting period. Normally this would be discarded, as its apparent effect on both the reporting period and ongoing mean and standard deviation is significant.

It is only on the fourth reporting period that the data starts to become consistent. While there is still some volatility in each reporting period, the reporting period mean remains within one standard deviation of the ongoing mean. The hypothesis that the ongoing campaign mean at four reporting periods can be used as a guide for this campaign is supported by the confidence interval of the whole campaign data set. In the example campaign, it can be assumed that after four reporting periods, there will be enough information to make decisions regarding optimising this campaign.

The figures based on the whole campaign can be used as a guide for assessing the effectiveness of specific ads, placements and keywords while minimising the risk of removing a creative that can still be productive. These metrics provide a guide for deciding when a campaign, keyword or creative needs direct intervention, or may just be having a bad week.

The model that you create using data from previous and current campaigns is ultimately only a guide. It can be used as a framework for assessing creatives and traffic, but these heuristics will only ever be as good as the data they are derived from. There is need to review of any model used to guide the decision making process periodically. The market is constantly changing, be it SEM, social or display advertising. Factors such as seasonality of the product, external environmental factors and competitor activity can have a significant impact.

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Text ads and Disruptive advertising

November 23, 2009 in Advertising, Online, Search, Search Engines by Anthony | 2 comments

Text ads on a Search Engine Results Page (SERP) are a disruptive form of advertising. The intention is to distract the viewer whilst they are engaged with one mode of product search, to use an alternative means which produces revenue. In relation to search, the relevance of the ad served is calculated using a different method to that of organic search, and is heavily influenced by both click through rates and money bid per click. AdWords advertising is visible next to and on top of the organic results, on Google Maps, within the AdSense network, in the Search Suggestion box, and so on.

With the option of now adding additional links and other content to an AdWords listing, the look of some AdWords ads is closer to that of organic search. If I were to have a tinfoil hat moment, I might go so far as to say this could potentially lead to the effective monetarisation of organic SERPs returned for branded terms.

NIB Search Engine Result Page

NIB Search Engine Result Page

There is one thing that has driven this renaissance of the text ad by Google, and that is the fact that disruptive advertising can work. AdWords, Yahoo Search Marketing and Microsoft’s adCenter have worked because with all the tracking available the advertiser can prove that the money spent has a return, without falling back on nebulous metrics such as branding. With SEM, disruptive advertising does work, provided it is relevant enough.

One product of effective performance measurement is the emphasis on terms that denote an information search close to the point of purchase. The most competitive terms are those that indicate a pre-purchase search. With the exception of a few groups of generic terms, this mindset has left the research and discovery keywords in most markets ignored and possibly undervalued.

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