Search Advertising: In search of an edge

Search is still the biggest driver of online ad spend and of advertiser success, but its competitiveness and complexity grows as its popularity increases. So where will advertisers thirsty for ROI find their next competitive edge? By Warren Cowan

Warren Cowan Greenlight
Chief executive officer 

2002 Chief executive officer, Greenlight
2000 Freelance SEM consultant 2000: Business development manager Espotting (now Miva)
1998 Business development director, Origin Consulting

Spend on internet marketing is growing like never before. The sector is propping up the UK advertising economy with an extra £1.3bn in the first half of this year alone, according to the IAB. Search engine marketing continues to be the online medium that is attracting marketing spend. Nearly 60% of all online budgets are being committed to those most innocuous yet powerful little text ads, proving that media doesn’t have to be rich to produce the returns marketers are looking for.

Search plays a crucial role in almost half of all e-commerce transactions. In July alone, internet users conducted 1.4 billion searches, with over 80% of them clicking through to a website.

This puts search in a league of its own in terms of marketing effectiveness. It is the only medium able to reach researching, active and motivated customers. With 80% of users actually clicking through and converting at the levels seen in the last 12 months, it’s easy to understand advertisers’ enthusiasm for search.

And therein lies the biggest problem. The barrier to entry with search advertising is very low and, because many marketers know the power of the medium, they are fiercely committing to search. This makes it more and more volatile, costly and competitive to operate in. To add to that, search engine advertising programmes have become larger, more complex, opaque and fragmented, increasing the effort required to stay on top in this powerful medium.

But this year represents more than just a growth in search investment for most advertisers. It is also the year that marketers are starting to look for an opportunity to gain even more from their investments. So where are those competitive edges lurking? 

The integration debate
People have discussed integration this year as one panacea for getting the most out of search. The notion that integrating search tightly with other marketing activity will provide huge gains is common, but how has that panned out? 

Perhaps it’s no surprise to any savvy marketer that tying activities together can deliver a more rounded return. But is this the answer to making search even more effective? 

Certainly, search might be able to support your other advertising activities, but this is ignoring its true potential. You might pick up an extra ten or 20 browsers a day who typed your advertising strapline or domain name into Google for the few weeks after your ad campaign. But what about those thousands of people every day of the year who are searching for “car insurance” or “loans”, regardless of whether you run a press, poster and broadcast campaign or not. Those few extra “drop caught” users who searched Google for your tagline pale in significance to the size of that opportunity. There’s also no evidence that advertising integration supports that longer term, larger and more critical opportunity.

So if integration can’t do all the lifting, what else can marketers do to get more out of their search spend? 

In-house skills
Manpower and internal skills have been explored this year and have seen the number of in-house search positions sky rocket. People have fallen over themselves to recruit in-house skills, to take the strain of managing the monoliths of campaigns that marketers have found themselves with.

But those skills have been painfully thin on the ground. In fact, 2007 will go down in my book as the year in which anyone who could just about spell SEO or PPC with a two-letter headstart, could get themselves an interview for a £30,000-50,000-plus search job, no questions asked, and if you’ve had to go through trying to seek out in-house search skills, you’ll know what I mean.

But is manpower the key to breakthrough ROI? Even with in-house attention, the workload of a large enterprise search campaign continues to produce more data than you could shake your wireless mouse at. The assistance of technology can help, but in-house expertise can still quickly become lost among a sea of spreadsheets and menial data crunching, requiring the installation of a team and even a departmental structure, which few had anticipated.

It’s not because these companies are in any way deficient. The rapidly changing face of search requires continual investment in technology, automation, process and people, and for many companies this isn’t justifiable as a further cost of sale, especially when compounded with the lack of capable people around to fill the jobs.

So manpower has only provided a limited solution to ROI-thirsty marketers this year and has often pushed the problem around the department rather than off it. So what else is there? 

DataThe analytical battleground
If there’s one thing few marketing departments suspected could improve their ROI, it was a PhD in mathematics and computer science. But for true efficiency, you can’t beat the kind of analytical insight that comes from a team of PhD qualified statisticians, quantitative analysts and data mining experts. This is where we’ve found the biggest opportunity lies – in advanced quantitative analytics.

With enormous amounts of current and historical performance data pouring in on search campaigns, techniques that combine data mining, portfolio analysis, predictive modelling algorithms and other methods that sound like the playground of maths geeks, have been mining through campaigns.

These techniques are uncovering new ways to find better returns by automating the management of PPC campaigns and are breaking through ROI plateaus – often in ways that would never have occurred to most of us as we fiddled around with excel exports late into the night, or naively adjusted our bid rules.

All this boils down to finding the devil in the data. It has been there all along, and we just needed the tools to see it; and certainly for Greenlight, and our clients, this is where we’ve seen the biggest ROI impacts of all.

Many of us are now past the “why search”question. We’re now all looking for an edge. While there’s plenty of room for improvement, some of which can be achieved by bulking up on staff or campaign synergies, the real glass ceiling over our ROI ambitions is the size and level of complexity of modern search campaigns. The battle we face is knowing everything about, and being able to control, the 500,000 or more keywords investments, across two, three or four networks, that we’re trying to manage all day long, all year round to a stellar ROI.

Thus, the real ROI breakthroughs will come from areas that can make sense of this level of complexity and direct the management of the search accordingly. If you can focus there, that’s where you’ll find your competitive edge.

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