v 2 2 2011 Dossier

special bulletin Shea gler John Ex-Goo Spearhead RKG to ounts Joins gic Acc Strate

Critical Advisories Managing Display in a Real-Time Bidding World RKG Research:Attribution Management in Action Finding Value on Search Network SEM 101: Bidding a New Program 5 Tips for CSE Product Feeds

Rimm-Kaufman Group Letter From: George Michie Co-Founder and CEO

As the world of online marketing continues to evolve rapidly, staying on top of the latest developments and research is key to keeping a competitive edge.

In this edition we dig into some of our unique findings in Attribution Management, as well as dispensing actionable tips for managing Comparison Shopping Engines, Facebook and Display advertising. We’ll share some interesting observations about the Google Search Network and get my take on the future of the SEM industry.

We think the future is bright, particularly here at RKG. We’ve always believed in the central importance of great people and we’ve just recently landed another one. John Shea, formerly Senior Agency Sales Executive on Google’s Agency Team has joined RKG as Vice President of Strategic Accounts. John left a terrific position at Google to join our merry band because we do what we do better than any other agency he has seen. From technology, to the quality of our analysts, to our ability to execute complex initiatives, to our transparency and integrity, John believes we lead the field. He believes he can help us become one of the leaders in size in addition to quality.

We hope he’s right!

v 2 2 2011

Keep up to date on our thoughts and research of these and other subjects at www.RKGBlog.com. Dossier Why Your Search Agency 2 Will (Soon) Manage Your Display Program

RKG Research: 6 Attribution Management in Action

Title

Introducing Table of Contents 10 Ex-Googler John Shea

Google Search Network: 13 Understanding Where the Value Lies

Search Engine Marketing 16 101: Bid and Manage a Brand New Program

Comparison Shopping 19 Engines: 5 Tips for Product Feeds

Facebook 101: Key 22 Strategies and Metrics Dossier Is the SEM Agency 24 Model Dead? 2

Why Your Search Agency Will (Soon) Manage Your Display Program

Display advertising, through recent technological innovations, is experiencing a renaissance. The Display space is rapidly overcoming historical challenges to become an easily tracked and profitable channel, no longer doomed to poor performance. As this space changes, one group of professionals is uniquely equipped to make the most of these new technologies: marketers.

Display Advertising, basis, the banner ad “bubble” burst in Then & Now early 2000, leading to skepticism of just According to the prevailing history, banner how valuable it was as a path to profits. In advertising began in October of 1994 with the years since, marketers have struggled a long rectangular ad, placed by AT&T, to turn display advertising into a me- on HotWired.com. “Have you ever clicked dium that could be successful from a direct your mouse right HERE? YOU WILL,” response perspective. read the banner. The capitalized “YOU But recently, there have been major WILL” echoed AT&T’s then-running (and changes in not only the way Display is strikingly prescient) “YOU WILL” television measured, but also in the way the ads them- ad campaign, the one that predicted a selves are created, delivered, and served. number of technological marvels, such as The two hallmarks of all of these changes video-on-demand, electronic toll collection, are the things that make SEM firms tingle and videoconferencing. with joy: accountability and data. While AT&T was correct in its assessment that we would one day be sitting on a beach Accountability in Display conducting business from a tablet PC, less Historically, buying Display ads was a bit rosy was the history of banner advertise- dodgy: an advertiser would pick a website, ments that was about to unfold. After a or a group of websites, and paper them with period of successful sales on an impression Display ads, buying a fixed bucket of impres-

the Rimm-Kaufman Group Display Program management 3 sions. The hope was that most (or at least ated right from the very start? Formerly, the some) of the impressions you bought would primary obstacle to bringing the “account- be seen by people who might be interested ability mindset” to Display was a lack of in your product or service. This incredibly data: targeting data, performance data, etc. broad approach to targeting, coupled with But no longer. a less-than-ideal ability to track results, made Display advertising akin to Internet billboards: probably effective at putting The New Display Data your brand into users’ minds, with varying Data drives search marketing like nothing degrees of profit-driving effectiveness. else. When you launch a keyword list of a What this helped to engender was a million phrases, write perception that Display just wasn’t very multiple versions of good at driving sales from a direct-response ad copy, utilize match – that is to say, accountable – perspective. types and negatives, The two hallmarks of As anyone who has been to a website in the record raw user search all of these changes are past decade can attest, this certainly didn’t queries, and examine the things that make stop banner advertisements from proliferat- the effects of time-of- SEM firms tingle with joy: ing, however. There existed some idea that day and day-of-week, accountability and data. Display could form part of causal chain that you are rewarded with a lead a consumer from want to purchase, but mountain of data. Imple- the data was soft, and the mindset that this ment Product Listing Ads, Product Exten- needed to be a truly performance-driven sions, Site Links, and your figures change. medium didn’t exist. Apply multiple categories to each of your Nobody who has been disappointed keywords and voila! – you now have even by a previous Display effort needs to be more data to work with. The first defining convinced, but it’s important to emphasize characteristic of SEM is the information a how important the “accountability mindset” campaign produces. is. It influences every decision that is made, In Display, a similar world of data is taking from media planning to data buying, all the shape. This, along with the technology that way through to which data to analyze and drives it, is the crucial piece of the puzzle how. It is likewise in the world of Search. that was lost for so long. Data is part of what When good SEM analysts create a keyword is making Display so similar to Search. list, write ad copy, and analyze results, they On the buying side, the ability to target do so from an almost singular perspective: specific customers and customer segments what effect will this have on performance? has been the beneficial result of a complex What data do I need to examine in order to ecosystem of exchanges and data providers. achieve even stronger results in the future? On the performance and reporting side, Finally, Display has caught up. Performance data from Display is now vastly more robust. need not be judged from a strictly direct- At a basic level, data about conversions response perspective, but advertisers, leery (both click-through and view-through) that they are buying millions of eyeballs with and sales dollars generated can be tied to little-to-no return, need – and have found – specific creatives, publishers, etc. Even more ways of calculating the success from their valuable is the coupling of advanced (data Display programs with a reasonable level provided) targeting of confidence. Services like cross-channel attribution By why did it take so long? What stopped management allow advertisers to more this from being the way Display oper- accurately calculate the value that a

www.rimmkaufman.com 4 Display Program management

Display program brings to the marketing RTB allows marketers to buy only those mix. Instead of a nebulous, “before launch impressions that are most valuable to them. and after launch” type of assessment that It’s easy to see how such a feature has an an advertiser might have used to gauge the analog in the search world. The value that an effectiveness of a media buy, advertisers SEM analyst – or, more likely, the analyst in are equipped with a robust ability to cal- conjunction with powerful software – places culate which of their users were influenced upon a keyword is the crucial determinant by a Display ad prior to a purchase in of success in the world of PPC advertising, conjunction with other forms of online and second only to the keywords themselves. offline marketing. Good bidding practices in the Search world make explicit the need to bid as granularly Bidding in a Display World as possible: bid each keyword, taking into account match type, the time of day, the day An intelligent bidding strategy will determine of week, etc., to its own performance. the degree to which a Search or Display Nobody would seriously suggest bidding campaign is successful. The ability to syn- all of the keywords in an adgroup or cam- thesize a mountain of paign the same amount, despite similarities data into intelligent bid between the keywords. Why bid a $1.00 CPC decisions across a huge Real-Time Bidding, for 1,000 keywords when the likelihood that number of ads, taking commonly abbreviated those keywords will convert is not uniform? into account almost “RTB”, represents one of the And so it is with Display: why bid a $1.00 innumerable factors, is most influential technologies CPM for a thousand impressions when the exactly what successful that have wrought change value of those impressions is not uniform? search marketers do upon the Display landscape. day after day. While in one instance the data Not Twins, but Certainly is keyword data and in Brothers another it is creative, publisher, or audience All of this is not to say, of course, that Search data, the necessary mental toolkit remains and Display are perfectly analogous. Obvi- the same. ously, there is the (somewhat) superficial Once again, however, new technology is distinction that Display ads are images or bringing Search and Display ever closer. videos, while Search ads are a comparatively Real-Time Bidding, commonly abbreviated plain four-line representation of a business “RTB”, represents one of the most influential or product. technologies that have wrought change upon More substantial is the theoretical the Display landscape. Quickly summarized, difference that Display is primarily a “push” RTB allows an advertiser to calculate and medium. Unlike Search, where users who see place a value on each individual impres- and ultimately click on ads have performed sion before the ad is served. Rather than an action – they’ve done a search – Display merely bidding a flat amount for a bucket of ads are not driven by such an explicit sign one-thousand impressions, Real-Time Bidding of intent. allows an advertiser to make an instanta- The third and related major difference neous determination about the specific user between Search and Display is the way that will see the ad, and hence how much to in which advertisers target audiences. value that impression. Rather than paying a Keywords are the stuff of Search marketing: flat amount for a bucket of one-thousand if a retailer sells televisions, you launch a impressions that are not all equally valuable, campaign full of television-related keywords.

the Rimm-Kaufman Group Display Program management 5

A strategy to find users looking for televisions ing ads to users who frequent a certain in the world of Display might take a few kind of website, or users who fit a certain forms: advertising on related websites, using demographic. third-party data, and advertising to a target In short, both Search and Display are not demographic likely to purchase televisions monolithic examples of “intent” and “no in- (among others). tent”, respectively. In search, not all keywords But to a large extent these are distinctions are equally likely to convert, as very specific without a difference. First, how much intent keywords tend to have higher conversion is truly implied by a keyword search? No rates than very generic matter how successful, a user searching keywords. The same is Further, as technology for any keyword – no matter how specific true for Display: very has improved, so has – can’t reasonably be assumed to be on the specific segments, such the ability of Display verge of making a purchase. Given the mas- as “women, in-market for advertisers to target users sive success of SEM, Search marketers may vacations”, perform bet- who are most likely to make be forgiven for overlooking that the vast ter than “men, over 18.” a purchase. majority – usually well over 90% – of the Learning which keywords clicks their keywords gather do not convert perform well is not vastly into orders. It is, perhaps, slightly hubristic different from learning which segments for Search to look down on Display for not perform well, and the advertising mindset is being “intent driven.” the same in both cases. Further, as technology has improved, so has the ability of Display advertisers to target users who are most likely to make a Search Analysts are the purchase. Retargeting is the most obvious new Display Buyers manifestation of this: a user who has been Search and Display have a similar goal: bring- to a website has already shown some past ing users to a website to make a purchase. intent. Through new technology, advertisers And despite their superficial differences in can now set bids based on how many times method, both are increasingly underpinned an ad has been viewed by a user, or how by the same elements: an increased focus long it’s been since the user was on the on accountability, a flourishing of new site, and the ads themselves can display the technology, and ever-expanding pool of products that the user viewed. exploitable data. Even more broadly than retargeting, More importantly, success is wrought by intent can be captured in the Display world bringing the same set of tools to bear in by methods such as using in-market data, the process: an analytical mind, technical which allows advertisers to show ads to and experiential knowledge, and a felicity people who have actively demonstrated that with numbers. As Display becomes more like they are shopping for a specific product. As Search in almost every respect, there’s a mentioned above, other more established natural heir apparent to your current Display targeting options also exist, such as show- buyer: your Search analyst.

LEARN MORE TODAY. CONTACT Andrew Morgan, Director of Product Development [email protected] (434) 970-1010 www.rimmkaufman.com

www.rimmkaufman.com 6

RKG Research: Attribution Management in Action Cross-Channel Interaction During the Holidays

Online retailers are conscious of the fact that users do not interact with a single marketing vehicle before making a purchase. But how does online shopping behavior during the holidays compare to the non-holiday period?

We investigate this question from the we could imagine it changing in one of two perspective of multi-channel interaction: opposite directions. do customers rely on more channels prior Users during the holidays, we speculated, to making a purchase, or fewer? Do they would be more likely to convert quickly, require more visits to the website? Sales relying on fewer channels in order to make increase throughout all channels, but do a purchase, and fewer visits to the website. some channels gain more than others Deals offered by retailers, combined with through interaction with other marketing? the naturally high conversion rates of the RKG explores these and other questions holiday season, would cut down on users through deep data analysis of current needing to shop around before ultimately clients utilizing the proprietary RKG Attribu- buying. And of course, for those of us who tion Management Solution. Our findings do all of our holiday shopping at the last follow below. minute, multiple trips to the website before buying isn’t an option. Two Competing Hypotheses On the other hand, users might ultimately Our expectation before this analysis was use a greater number of channels and that user behavior would change, though more visits to a website before purchasing,

the Rimm-Kaufman Group Attribution Management in Action 7

because their goals aren’t quite as refined prior to purchase, users might also use as when making purchases for themselves. more or fewer marketing channels to arrive And because they’re making a lot of at the website. They might need fewer visits purchases, we could speculate that users before being convinced to buy, but get to are especially price conscious – leading the site in different ways. to comparison shopping and reliance on During the holiday period, 83.6% of affiliates for coupons. orders were associated with a single While data certainly varied between marketing channel. After the holiday, this retailers, we found fairly consistent pat- dropped to 80.1%. These figures exclude terns across our Attribution Management touches on brand searches, both paid and client base suggesting that our first theory organic, treating them instead as naviga- more closely reflects reality. tional aids. Including those touches changes the percentages to 75.9% vs. 72.4% if The Data brand clicks are treated separately, holiday We compiled data for our Attribution vs. non-holiday, respectively. Management clients to complete this analy- Fewer visits and less multi-channel sis. All of the averages are unweighted, so interaction support the theory that large clients with many sales do not hide users are more quickly convinced to shifts in the data for smaller clients. purchase during the holidays due to For this analysis, the “holiday period” is time constraints or deals from retailers Thanksgiving Day (11/25/2010) through that are strong enough to eliminate the Christmas Day (12/25/10), though sales need for shopping around. on our clients’ sites typically drop off a few days before Christmas due to shipping Shopping by Brand deadlines. The “non-holiday” period is Another question we were interested in 1/1/2011 through 3/31/2011. Our Attribu- exploring was whether users are more tion Management clients are predominantly likely to shop by brand during the holidays, large retail organizations. or whether they are more likely to use competitive channels. Are users more likely Overall Results to turn to the brands that they are familiar The first question we wanted to answer was: with to do their holiday shopping, or are How many visits to a website does it take, on they more likely to be brand-agnostic, average, before a user places an order? For caring less about where they purchase and the period following the holiday season, our more about what they purchase? clients averaged 10.7 visits – 8.6 visits if one One way to look at this is to see how excludes direct visits to the website (such users begin their shopping during the as typing in the address directly or using holiday, at least within the context of a bookmark). For the holiday period, these marketing online. To do this, RKG can averages were 9.4 and 7.7, respectively. calculate what percentage of total sales Shoppers seem to visit a retailer’s website are associated with channels like brand about one less time during the holidays paid search, brand organic, and email in a before finally making a purchase. first-touch allocation scheme. If users are In addition to visiting the site fewer times more likely to shop from familiar brands,

www.rimmkaufman.com 8 Attribution Management in Action

we would expect these brand channels to brand in mind and seek the best price account for a larger percentage of total for their desired purchase regardless of sales. Users who click on brand PPC or the retailer. organic links deeper in the conversion funnel may be using those as navigational Holiday Coupon Hunting? aids, but users who use those as their first Lastly, we were curious to know whether interaction with a website clearly had that or not affiliate use increases or decreases site in mind previously. during the holidays. Specifically, are us- If we allocate 100% of sales to each ers more likely to seek out a coupon at user’s first touch, brand ads -- both organic a time when they’re making significant and paid – account for 37.3% of sales after purchases for themselves and others? One the holiday. During the holiday, this figure is way to measure this effect would be to 39.3%. The proportion of sales tracked to see how affiliates behave in the context of emails – a channel that is, unsurprisingly, other marketing vehicles. If coupon-hunting dominated by existing customers – simi- becomes more popular during the holidays, larly remains essentially unchanged. 27.7% we would expect to see affiliates receive a of first-touch sales went to emails sent by greater share of credit under a last-touch each client; this figure was 27.8% during model during the holidays than after the the holidays. holidays. In addition, if affiliates are being The most competitive channel – and utilized more heavily after other marketing the channel most likely to bring in a campaigns are touched, we would expect new customer for most of our clients to find that affiliate touches are more likely – saw more of a change from a first- to be preceded by other touches during the touch perspective. Across all of our holidays than after. Attribution clients, non-brand PPC During the holidays, a last-touch attribu- accounted for 17.3% of all first touch tion model credited affiliates with 56% sales during the holiday period; this more sales than a first-touch model; in number dropped to 12.9% post-holiday. the post-holiday period, this increased to Naturally these figures vary widely 70.2%. Take a different view of the same between clients: some have a much larger question: after the holidays, 55.6% of percentage of their sales coming from non- orders that had affiliates as their last touch brand PPC, while those with smaller brand- had previous touches from a different mar- name recognition have fewer branded keting channel. During the holidays, 49.5% sales, while others have larger or smaller of last-touch affiliate orders had a previous email programs. Consistently, however, touch of a different kind. there was little change for each individual Together, affiliates are less likely to be client’s brand channels across the two time utilized during the holidays. Many retail- periods. There are differences between ers during the holidays offer broad deals clients, but not within them. The higher or discounts to the public to remain percentage of non-brand PPC first touch competitively priced; shoppers are able sales credit during the holidays suggests to find the prices they want without that customers are more likely to approach seeking a promotional code or coupon their holiday shopping without a particular to use at checkout.

the Rimm-Kaufman Group Attribution Management in Action 9

For comparative numbers, we also looked accustomed, starting their shopping with at sales credit for PPC and Comparison shop- either a brand search ad or email. ping. As we’ve come to expect, non-brand Our findings support our first hypothesis PPC has fewer sales dollars attributed to it that consumers are under a last-touch model than under a first. more likely to convert CSE tends to be more mixed. Regardless, quickly during the During the holidays, a last-touch model credits non-brand PPC holidays. Although they consumers are less likely to with 21.9% fewer sales than a first-touch may employ non-brand employ multiple marketing model, which inches to 22% during the PPC more often to channels within online holiday. Numbers for Comparison Shopping start their search, they marketing, and arrive on see a similar slight move: a 7.9% first-to- decide from which the site fewer times prior last drop during the holiday and a 5.8% retailer they’d like to to a purchase. drop after. purchase in short or- der. Widespread deals Conclusion reduce the need for both affiliate coupons From a channel interaction perspective, the and shopping around. way in which customers interact with online What does this mean for retailers? With marketing during the holidays is slightly largely unchanged first-touch brand sales, different from their interaction during the retailers with strong brand loyalty can post-holiday period. Consumers are less expect their customers to stick with them likely to employ multiple marketing channels through the holidays. For those relying within online marketing, and arrive on the heavily on their top-notch holiday promo- site fewer times prior to a purchase, during tions, there is more opportunity during the the holidays. holidays to capitalize on consumers that In addition, users are less likely to use start their shopping without a particular affiliate coupons before they make a brand in mind. From a multichannel interac- purchase, but are more likely to begin tion perspective, most retailers seem to their path to purchase with a non-brand win at a time with high sales, great order paid search ad. However, they are equally volumes, and elevated conversion rates. likely to shop the brands to which they are

LEARN MORE TODAY. CONTACT Melissa Rowland, Product Manager, Attribution Mgmt [email protected] (434) 970-1010 www.rimmkaufman.com

www.rimmkaufman.com 10 Title Introducing John Shea Q&A on Leaving Google to Spearhead Strategic Accounts at RKG

Formerly a Senior Agency Sales Associate with Google, John Shea led the company’s business development activities with many leading agencies. Through outreach, training and strategic consult- ing, he improved SEM Agency business models and service offerings in order to advance the marketing outcomes of shared clients. Throughout his four years at Google, John routinely contributed to advertising product development and overall sales strategy.

I.Why did you decide to digital agencies develop full reliance on leave Google and join RKG? off-the-shelf campaign management plat- forms and struggle to retain and attract While at Google I had the unique opportunity quality talent. In sharp contrast, RKG has to consult, train and evaluate the largest buyers of search advertising in the world elevated its proprietary technology and - SEM Agencies. After four years of collabo- expanded its roster of premier statisticians, ration with the SEM programmers and analysts. community and inter- Most marketers now understand that SEM is a powerful vehicle through which they I decided to join RKG to nal teams at Google, can connect to interested buyers and are show companies what I recognized that RKG taking appropriate measures to integrate it truly brilliant data-driven had developed the into their larger marketing strategy. How- marketing can do for most sophisticated ever, few have found agency partners with their businesses. solution and became interested in a closer the intellectual depth, marketing acumen partnership. and technical infrastructure to take full Exceptionally effective digital marketing advantage of the opportunity. I decided requires tight coordination between tech- to join RKG to show companies what truly nology and humans and cannot be done brilliant data-driven marketing can do for without careful integration into a company’s their businesses. I’m thrilled and honored larger marketing strategy. In the past two to join a fast growing company with such a years, I’ve watched many of the leading proven track of success.

the Rimm-Kaufman Group Introducing John Shea 11

II.What three things most 3. Client Focus: Devoted solely to the pursuit differentiate RKG from of client objectives, RKG develops the most the other leading SEM and trusting and productive agency-client rela- Digital Agencies? tionships possible. With such partnerships, they are able to construct and execute 1. Intellectual Depth: The RKG analyst thoughtful marketing experiments that team is the the sharpest, most innovative return business intelligence, incremental collection of marketers I’ve encountered in revenue and truly innovative data-driven four years of consulting ad agencies for marketing. RKG routinely elevates the Google. They easily pick apart data and careers of its client-side partners by technology to design cutting edge optimi- working together to drive innovation and zation practices and consistently execute outstanding performance. at the highest levels. Unlike account managers at other agencies, III. What are the top the RKG Analysts are all fluent in SQL and three opportunities for advanced math; they have the quantitative RKG in 2011? chops to answer hard questions and deliver In the last two years, RKG expanded its service actionable business intelligence that leads offering to include Mul- to better results. tichannel Attribution, 2. Powerful & Flexible Technology: In Facebook, Display and RKG routinely elevates order to provide truly optimal search CSE management. The the careers of its marketing solutions, agencies must be able Attribution product is client-side partners by to integrate a diverse range of client data the culmination of ten working together to drive into their optimization support and quickly years worth of work. Its innovation and outstanding test emerging ad innovations. Off-the-shelf advent allows RKG to performance. campaign management platforms can limit get much deeper with these capabilities diminishing the value of clients and will acceler- dependent agency services. ate adoption of Facebook and Display services RKG’s technology is infinitely flexible and while also making RKG more attractive to a can respond directly to a huge array of wider customer base. client-side systems and bend to accom- Display: modate new ad features the moment they Online ad exchanges have created a real- arrive. The RKG technology stack was time market between buyers and sellers of built for massive scale and designed for online ad space. As a result, we’re finally industrial digital marketing. seeing an efficient market where the price

www.rimmkaufman.com 12 Introducing John Shea

of online media is based on actual advertiser participate in the channel but still unsure demand. Meanwhile, technological innova- how to evaluate success. RKG works with tions like dynamic creative optimization have marketers to determine the economic value made display ads more effective at driving of consumer engagement on Facebook and consumer response. This combination of then optimizes ad targeting, messaging and efficient pricing and more effective ad units bidding accordingly. RKG’s Facebook service is very promising. continues to attract interest from both new RKG has focused on adding value to and existing clients. display management through careful Client Service: measurement. Though many performance In the last couple of years clients have agencies and networks continue to evaluate become much more savvy in search and display ad effectiveness in terms of impres- digital advertising. They’re asking excellent sions, clicks and view-through conversions, questions in RFPs and demanding their agen- none of these accurately signal top or bottom cy partners deliver accurate cross-channel line improvement. RKG measures display ad measurement, rapid innovation and improved effectiveness in terms of true incremental lift performance. Recognizing the power of their by executing careful split testing. They use customer data, clients are eager to apply it these calculations to drive audience, media to online marketing. and creative optimization and to deliver RKG lifts client results based on this trend powerful results. RKG’s unique approach to as these marketers increasingly need agency display advertising is extremely attractive to partners with tremendous marketing intu- marketers who need to show the true busi- ition, statistical sophistication and flexible IT. ness impact of participating in the channel. RKG continues to appeal to direct marketers Facebook: across the retail, travel and financial ser- Smart marketers are excited about Facebook’s vices sectors and is scaling up Analyst and IT massive audience and wide breadth of avail- resources to accommodate many new clients able demographic data. They’re eager to in 2011.

LEARN MORE TODAY. CONTACT john shea, VP for Strategic Accounts [email protected] (434) 970-1010 www.rimmkaufman.com

the Rimm-Kaufman Group

Title 13 Google Search Network: Disparity in Value and the Need for Greater Advertiser Control

Google’s Panda algorithm change brought Overall though, the Google Network, a great deal of attention to the content comprised of Search and Display partners, farm business model where search engine is big business. In Q4 2010, Google part- friendly content is generated in bulk at low ner sites generated $2.5 billion or 30% of cost in order to squeeze a profit off of the ad Google’s total revenue. Google made traffic revenue generated by those pages. At the acquisition payouts of $2.07 billion in the time, we offered our insights on the value of fourth quarter of last year, the vast majority content farm traffic to paid search advertis- of that to its AdSense partners ($1.74 billion). ers and noted how it was quite low, both in While it appears unlikely that Google will comparison to the core Google.com domain make sweeping changes, giving advertisers and to other search partners. greater control of where ad dollars on the Given that opting into the Search Network Search Network are spent, it is interesting to is an all or nothing endeavor (advertisers consider where those dollars might shift if cannot block or differentiate bids for indi- advertisers did have the power to customize vidual domains), the reduction of content their campaigns. farm traffic was a welcome change for Addressing this question, we reviewed advertisers, but ultimately a minor one since Network performance by domain for Q1 2011 content farm traffic comprises less than 2% focusing exclusively on Search partners (i.e. of Search Network traffic. not contextually targeted ads). We classi-

The value of a paid search click google search network sales per click by category varies significantly based on the type of search partner provid- $1.20 ing the traffic. On average, if a $1.00 click from the core Google.com $0.80 domain generates $1.00 in sales, an ad clicked on a content farm $0.60 will only generate $0.20 for the $0.40 advertiser. This disparity speaks $0.20 to predictable differences in user

intent and the need for Google to 0 om om ses c c

provide greater advertiser control retail retail le. online h sites h domain c g portals related? over partner traffic. malware lassifieds oo c ISP traditional traditional g sear ontent farms ontent c

www.rimmkaufman.com 14 Google Search Network

fied each domain in one of about a dozen Online Retailers (Amazon, etc.) categories ranging from content farms This is an interesting one. A good number to ISP search portals to online retailers, of online retailers send millions of users and determined the directly to their competitors every month. relative traffic value to It’s a risky choice, but potentially very lucra- advertisers of each. Even with its flaws, tive. The hope would be that you’re able Here’s what we advertisers need to be on to generate a lot of ad revenue by sending found for some of the Google’s Search Network, away traffic that isn’t likely to convert. larger groupings. In no but they need to handle That’s precisely what we see. Traffic from particular order: it smartly. Network traffic online retailers is only about half as valu- should be segmented from Search Sites able as Google.com traffic and we have Google.com traffic and bid (AOL, Ask, etc.) to wonder if a large percentage of these according to its own value. These are sites that us- users are even aware they are clicking on ers are likely to be uti- ads that will take them away from the site lizing as their primary they’re shopping. search engine of choice. A number of these Traditional Retailers (Target) sites tend to perform better than the core Traffic from the online sites of traditional Google domain, but on average they are a (brick and mortar) retailers is even worse bit weaker. AOL is an example of a site worth than that from online-only retailers. This devoting a much higher spend as compared makes sense. In addition to the factors to others in the Network, but as currently dragging down online retailer traffic perfor- structured that spend can’t be made without mance, traditional retailer traffic is also less buying significant “bad” traffic as well. likely to be interested in buying online at all. ISP Portals (Comcast, RR.com, etc.) These users are often merely researching Similar to the Search Sites classification online before intending to make the trip to above, these are the homepages for the physical store. Internet Service Providers, which serve Content Farms (About, eHow) as news portals and the primary search As we have noted, traffic from content engine choice for many. On average, ISP farms just doesn’t work well for advertisers. portals perform better than other Search Users of these sites are generally research- portals and even the core Google domain. ing topics for informational purposes and Limiting this to ISP sites reduces the chaff not anywhere near the mindset of making that drags down Search Site performance a purchase. Fortunately, this is one the in general and ensures a certain level of smaller groups of search partners. legitimacy and traffic quality.

the Rimm-Kaufman Group Google Search Network 15

Comparison Shopping Engines remove any association with an experience (Shopzilla, Bizrate) that can be very frustrating to the user. On its face it is a bit surprising to see such poor performance from users that are clearly Our Conclusion in a purchasing mindset; however, there Even with its flaws, advertisers need to be on are a couple factors that go a long way Google’s Search Network, but they need to towards explaining the traffic value of CSEs handle it smartly. Network traffic should be being only a third of Google.com. These are segmented from Google.com traffic and bid price sensitive shoppers looking for specific according to its own value. Google’s smart products and if you don’t have that product pricing, which attempts to reduce maximum at the best price, you are very unlikely to CPCs automatically for certain Network pages get the sale. Also, as with traffic from retail does not appear to adjust sufficiently for the sites, these are not people actively looking to lower value of Network traffic. While sales scour the web for other sites to browse and per click for the Search Network is roughly many probably aren’t aware they are clicking 30-40% lower than it is on Google.com, smart an ad when the do so. pricing only appears to reduce CPCs in the Malware? neighborhood of 10-20%. This is a difficult classification to make, but it If you or your paid search agency are not is fair to say that a sizable portion of Search accounting for this differential in traffic value, Network spend is going towards outfits that it may be time to work with someone who will. are a bit shady at best. This can vary from Advertisers should have mirrored campaigns toolbars that users unknowingly install in place, at least for high traffic terms, with and have difficulty removing to the one targeted to Google.com only and the other outright hijacking of a user’s search targeted to the entire Google Network. With results. This issue is certainly not exclusive this basic setup, bid differentiation becomes to Google, but with Bing, advertisers are possible and advertisers are able to drive more at least able to block these sites and overall traffic at the same efficiency level.

LEARN MORE TODAY. CONTACT Mark Ballard, Senior Research Analyst [email protected] www.rimmkaufman.com

www.rimmkaufman.com 16 Title Search Engine Marketing 101: How to Bid and Manage a Brand New Program

As much as RKG has written about paid We can then calculate that the efficiency search bid management, we’ve never really target that makes sense is: 10% x $1,000 x addressed how to bid and manage a brand 90% = $90/lead new program when no paid search data exists to drive smart decisions. Let’s take up Step 2: Evaluate that challenge. Risk-Tolerance If you trust Google with your conversion Done well, paid search is a data-driven data another good way to wade in is to use game; the more data, the more predict- their Conversion Optimizer. This will only help able the performance. At the outset, there with relatively high-traffic campaigns and is no hard data to go on, so the question that by itself limits its value. Nevertheless, by becomes: how do you want to strike the most accounts Conversion Optimizer does the balance between financial risk and rapid basics reasonably well, with minimal effort. learning? Conversion Optimizer, of course, won’t set At one extreme: you’ll learn the fastest by bids on Bing, and not everyone is eager to throwing all the ads to the top of the page share conversion data with Google, so what with no budget caps in place, and adjusting follows is advice for the rest of us. as the data pours in. These lessons will be learned at a high price, too high for most. Step 1: Establish a At the other extreme: the most cautious Success Metric approach would be to launch with bids of What is the purpose of driving traffic to $0.01 on everything and ratchet up the this site? bids as little as necessary to begin gather- What action(s) marks a successful visit? ing data. This is much safer, but with data What is the value of those actions to your trickling in it will take a long time to tune business? the program, incurring opportunity costs. Neither of these approaches is sensible, What fraction of that value are you willing but there is much room in between. to spend on marketing? In Steps 3 – 10 I’ll outline a moderate Can you spend an unlimited amount of approach capturing some of the fiscal re- money on marketing if the target efficien- sponsibility of the most cautious method but cy metrics are hit, or must you budget? with a faster track to a well-tuned program. Let’s say that for Acme, the goal is to generate qualified leads, and that the Step 3: Estimate Likely success metric is therefore contact form Success Rate completions. Let’s say that on average, What fraction of paid search traffic is likely 10% of web leads turn into customers, and to convert? those customers are worth $1,000 to the A bad proxy for this might be your overall business. Your goal is growth and you’re website conversion rate. If you have no therefore willing to plow 90% of that value other option, you can start with that, but back into driving new business. hopefully you have better options. This is

the Rimm-Kaufman Group SEM 101: Bid and Manage at Launch 17 a poor proxy because a big chunk of your Step 6: Establish Guardrails existing site traffic already knows your Create campaign daily budgets that reflect brand and will therefore convert at a much how much you’re willing to lose on the first higher rate than competitive search traffic. day when we’re really taking SWAGs at A better proxy: if you have some website bidding. Hopefully our guesses are good analytics find out the conversion rate of enough to deliver some success with the existing organic search traffic. Clearing out money spent, but you don’t know for sure the direct load and email traffic will greatly until you see the proof. improve the accuracy of the conversion Campaign daily budgets are absolutely rate estimate. the wrong way to budget a program once Better still: parse the organic search it’s up and running efficiently, but they traffic into search on your brand (trade- serve as useful guardrails as we’re learning mark, domain name, etc.) and search on what works and what doesn’t. other terms related to your offerings but not referring to your business by name. Step 7: Let ‘er Rip Like before, people who search for you by name will convert at a much higher rate Throw the switch in the morning and make than strangers. Since the main value of paid sure you’ll be in the office the next day to search is attracting the folks who aren’t make adjustments. already looking for you by name — and likely to find you — this non-brand conver- Step 8: Damage Control sion rate is the best predictor of paid search After you’ve collected a good blast of data conversion rates. on day 1 it’s time for triage. Let’s say this non-brand organic search As the saying goes “crap floats”. Sort a conversion rate is 5% keyword level report by cost descending This suggests that on average you might and see what the performance looks like be able to afford to spend 5% of $90, or for the highest spending terms. If you see $4.50/click. major bleeders adjust as needed; use the methodology for estimating initial bids but Step 4: Get Granular substitute in the actual observed conver- Averages lie. Can you break this down into sion rates in place of the proxy guess. {Note: its components? Do some categories of if you have significant latency between terms convert at a higher rate than others? initial visits and leads you may need to do Do leads from some of these categories an additional calculation to account for this. tend to be more valuable than others? For example, on top of the overall conversion Apply the methodology in step 2 with as rate, understanding the same session or much granularity as you can, developing same hour or same day conversion rate best-guess initial bids. will allow you to scale up your conversion rates appropriately. For example, if half of Step 5: Enable Tracking the conversions you see organically happen and Reporting within the first hour of the first visit, typically, You can’t play in this space if you can’t track apply those same stats to your paid search the performance. Most Analytics packages performance to figure out whether doubling have tracking capabilities that will tie costs the observed number of conversions would to results at a granular level. Google Analyt- make the stinkers look better and the solid ics is free, which is a very good price. performers look like stars}

www.rimmkaufman.com 18 SEM 101: Bid and Manage at Launch

Repeat this process aggregating by Step 10: Lather, rinse, repeat AdGroup and Campaign. Ideally, knock out Repeat steps 8 and 9 as the data builds, the data from the individual high traffic KW looking at longer and longer windows of data to get a feel for the performance of ‘the rest as the data grows. Richer data sets give a of the AdGroup/Campaign. truer, less noisy picture of the traffic value In these assessments at each level, are at more granular levels. Ideally, looking at a there any obvious negatives that you might couple of months worth of granular data will have missed in the build out? If so, add them get the program pretty well tuned. and continue collecting data. A search query In these solid performing campaigns, make report may shine a bright light on these. If sure you’re not hitting budget caps. It’s silly to unsure, try flipping to exact match to see if stop spending if you’re getting positive ROI. that dramatically changes the results. Hitting budget caps in the early stages of If you’ve put the appropriate time and at- tuning is okay. Ongoing it’s a disaster. Budget tention into the build-out, most of these kind caps are the WORST way to control spend of structural issues shouldn’t be the issue, and hitting them routinely is a sure sign of but it’s worth checking. The other explana- mismanagement. If for some reason you tion is that the quality of traffic is simply not can’t spend more than X on a collection of worth what you’re paying and you should pay keywords, reduce bids proportionately until less — not nothing — for it. you average about the right spend. This gets you more traffic, leads and sales for the same Step 9: Release the Hounds! money than slamming into caps. Are there KW, Ad Groups, Campaigns As I’ve said before: budget caps are like performing better than anticipated? Feel free guardrails: useful safety features, but no to raise bids if the new calculation (using ac- substitute for steering. tual paid search conversion rates instead of predicted values) is better than anticipated. Are there KWs or Ad Groups that ought Conclusion: to work well (you have very strong offerings Rocket-Science bid management systems compared with the competition) but aren’t are essential for big spenders in competi- getting any traction because you aren’t bid- tive marketplaces; quality search agencies ding enough? Try bumping up to the first page wouldn’t have spent years in research and minimum and see what happens. Budget caps development if it didn’t make a difference. are essential here: You may find that the traffic But not everyone can afford such a system, quality is better than anticipated and the extra and for smaller programs the ROI of sophisti- spend for the traffic is justified; you may find cated stats approaches may not make sense. that the market is irrational and that the value That doesn’t mean bid management doesn’t of the traffic isn’t worth the price. Either way, matter. It does mean that relatively simple ap- it’s important to find out for these keywords proaches like the one outlined above can get and categories that are core to the business. you pretty far with very little investment.

For more information contact RKG Today Cady Condyles, Director of Marketing [email protected] (434) 220-5209 www.rimmkaufman.com

the Rimm-Kaufman Group Title 19 5 Tips to Help Make Your Product Feed More Effective on CSE’s

There are many ways to manage a successful Worth noting, the information provided in these Comparison Shopping Engine (CSE) campaign columns is not shown to the customers, but it is on multiple engines. The place where the suc- very important for establishing relevance. cess starts, however, is in the product feed. Another set of feed requirements worth Every company has different capabilities review and consideration are for Amazon Prod- for how much information they can pull into uct Ads. You can find their requirements in the their product feed. The universal goal is Seller Central account. If you do not have an simple: include as much information as pos- account with Amazon, you can contact RKG for sible on each product. This allows the person a copy of the file with all of the requirements. or agency charged with managing the pro- In addition to the columns that Google accepts, gram to customize the information on each Amazon also includes a number of category- product, optimizing the data and fulfilling the specific columns and additional description requirements of each engine. Easy, right? columns called Bullet Points. Here are five tips to keep in mind. The Bullet Point columns are limited in the number of characters that you can provide, Tip #1: Methods to Improve but they give you more options to give details Product Feeds on your products. While Amazon Product Unfortunately, there is no silver bullet. Ads is a cost-per-click CSE, relevancy to the At RKG, our process begins by pulling in search made on Amazon is still important to all of the columns of data that can be useful the results that are shown. for each engine, and begin the process of This tip may sound like common sense, but formatting that data. For reference, a good we have seen many clients who are not utiliz- place to start is the Products Feed Specifica- ing their feeds to their full potential because tions at the Google Merchant Center. While they are only providing the Google required there are six required columns – id, title, columns. If you have a feed that you would link, price, description, and condition – there like us to evaluate, feel free to contact us. are a further 26 columns recommended to optimize performance. Now, not all 26 of the Tip #2: Pay Attention to Unique Identifiers recommended columns are applicable for all As you may have seen recently, Google is products, but there are always several that changing their policy and will be requiring will be applicable to your feed. two out of three Unique Identifiers. Below, we

www.rimmkaufman.com 20 More Effective on CSE’s

provide a chart featuring the unique prod- the company has a separate row for each uct identifiers that you can choose from to different color of this sweater. One way to provide to Google. optimize this title would be to add the brand before the original title, then the title and Category Identifiers necessary for each product then the color. For a company like Bedford Media Fair, the title would look like this, “Bedford (i.e., Music, Movies, Video games) UPC, EAN, or JAN Books ISBN (Either ISBN-10 or ISBN-13. Fair Cardigan Sweater Red”. Exceptions apply for books published before 1970.) This title is stronger than just “Cardigan Apparel, Sweater” because it is showing the brand of custom made goods No identifiers are required at the moment the sweater and the color is helping make All other At least two of the following three identifiers: UPC, EAN, or JAN the product more relevant for searches. Brand Remember, if you do not show the color MPN and the brand in the title, they may not be seen initially in the search results. Testing In addition to the UPC, EAN or JAN different permutations is highly encour- values, you can choose to provide the aged. While the above example will most Brand or Manufacturer Number (MPN). For likely work better than the original title, you companies that use the MPN as their inter- might find better performance for the prod- nal unique identifier (or “id” for Google), it uct if you change it to “Bedford Fair Red can also be utilized in the MPN column. It’s Cardigan Sweater”. Sizes of the sweaters serious business. Without meeting these can also be used, if they can fit in the title. requirements, your ads may stop showing This type of feed customization might on Google Shopping. be difficult for customers managing their product feed in-house, because of limita- Tip #3: Combine Data to Improve tions from the set up of their database feed. Title Relevancy If you are using an agency, they should have The title of the product is the first thing that the technology to accomplish this level a customer sees when they find your prod- of customization and test the different uct on a CSE, which is why it is important permutations. to put as much information as you can in the title. Each engine has character limits Tip #4: Categorization, Categorization, for the title, so you should maximize that Categorization potential accordingly. Use as many of the Every engine has their own taxonomy for characters as you can. categorizing products. Making sure your Let’s take an apparel company as an products are categorized correctly for each example. The product offered is a cardigan of the engines is very important to the suc- sweater that they manufacture and the title cess of your program. Most of the time, just is simply “Cardigan Sweater”. In the feed, providing the higher level category data is

the Rimm-Kaufman Group More Effective on CSE’s 21

too general to find the right category in the determine the quality of your products and engine’s taxonomy. You should try to include your account. If you do not have the tracking the subcategory level data and if you have implemented, it could hurt your rankings, a lower level of categorization from there, even though you may have a higher bid for include that as well. the product. For RKG clients, we are able to take the The data also gives your account represen- categories given to us and map them to the tative a chance to find ways to help optimize Google taxonomy. Our system then formats your account. For most of the sites, the the data to match the taxonomies of the addition of the tracking is a straightforward other engines, so we are only categorizing augmentation of javascript code. On some the products once. To make this process of the engines, the option to provide more work, we use the lowest level category data detailed information is available requiring that has values for all of the products. The further customization. initial process of categorizing the products is The next addition that can help with time intensive, but it is definitely worth it to your performance on a site is adding an make our clients’ programs yield clear and engine’s customer reviews to your site. While meaningful results. the reviews of a product are important to somebody that is comparison shopping, the Tip #5: Add Each Engine’s Conversion reviews of the seller are also important. Hav- Tracking and Reviews ing the review available to your customers will Most clients have a reporting system to help you build a reputation on the engine and track where traffic comes from and how it will help you gain the trust of the customers coverts. Many RKG clients are beginning to as they shop around. As with the conversion use the RKG Multichannel Attribution system, tracking, many CSEs use the review data to and others continue with other off-the-shelf determine who their highest quality sellers services or in-house solutions. Engines are and show the more established sellers use the conversion tracking information to more prominently in the results.

LEARN MORE TODAY. CONTACT Todd Bowman, Product Manager Shopping Engines & Feeds [email protected] (434) 970-1010 www.rimmkaufman.com

www.rimmkaufman.com 22 Title Facebook Advertising 101: Key Strategies and Metrics

With over 600 million users and growing, chase, while the Facebook user who simply Facebook is neck-and-neck with Google as Likes “Nike shoes” has far more ambiguous the most frequented site on the web. The intentions. audience is beyond broad and composed of a Taking this into account, we at RKG are highly engaged user base, representing a vast seeing great success by employing a three- amount of advertising potential. By now, the step process with Facebook advertising. question online advertisers are facing with Step 1: Advertise your brand with a Facebook regard to Facebook advertising is not “why?” ad that directs users to your Fan Page. but “how?” Step 2: Induce users to Like your Fan Page. The answer to that question depends on the goal of your advertising efforts. Are Step 3: Once the user has become a Fan, you trying to grow your fan base by recruit- market to him or her with Fan-only Facebook ing loyal users who will interact with your ads that direct the user to your external web- brand and promote your message to their site in an effort to drive conversions. friends? Are you aiming to directly monetize It is precisely because of the uncertainty incoming traffic to your e-commerce website about a user’s intent to purchase that we’ve from Facebook? Or, are you interested in a been focusing on the Fan Page. A user on mixture of the two? Facebook may or may not want to buy from Whatever your goals may be, it is important you now, but he or she will definitely want to become familiar with the differences be- to socialize. They log on to Facebook to see tween the more established forms of online what’s going on with their friends, families, advertising and Facebook advertising. It’s a celebrities and others. new game on Facebook, so playing by the old With Facebook Ads connected to your Fan rules is a surefire way to see your advertising Page, you can take a proactive approach to efforts fall flat. building a base of engaged users. By utilizing A key advantage of paid search advertising Facebook Insights, you will gain a critical un- is being able to target specific search queries derstanding of the specifics of your customer – this allows you to ensure that the user has a demographic. Even if you have a pretty good strong intent to make a purchase or convert idea of who your average customers are, through some other means. Display advertis- Facebook might slice and dice the info in a ing holds the advantage of casting a wide net way that you haven’t seen before. across the internet and it can help bring some Facebook has several unique metrics which of the low-hanging fruit back to your website. are important to scrutinize just as thoroughly Facebook advertising truly is a hybrid of these as more established Paid Search metrics like two: targeted interests gives you the notion cost per click and click through rate. of intent, while a vast user base provides the If a Facebook ad is linked to your Fan Page, broad reach typical of display. users have the option to Like the Fan Page on An important distinction between paid the ad itself. This in-line Like is called an Ac- search and Facebook ads is the level of user tion. If the user sees or clicks through an ad intent that is apparent to the advertiser. A and subsequently clicks Like on the Fan Page Google user searching for “buy Nike shoes” itself, that is called a Conversion. Conversions has demonstrated a strong intent to pur- are counted up to 28 days after seeing/click-

the Rimm-Kaufman Group ing the ad. Additionally, Conversions contain Facebook users who have seen your ad. If 23 Actions, so Conversions represent the total you divide Reach by Impressions, you will see amount of Likes generated by your ads. the average number of times each user sees Once you’ve started accruing Likes, your your ad. ads can start appearing with what Facebook While this specific demographic targeting calls “social context.” Social context is when allows for better segmentation, it also means a Facebook user sees an ad for a Fan Page that companies must keep ad copy and ad that his or her friend has Liked. When this ad images fresh. One can’t bombard women on is displayed with social context, a little blurb the East coast between 18-23 who are cur- accompanies the Like button, saying “John rently in college and list “cross country run- Smith likes this.”  ning” in their interests with the same image and ad copy of Nike shoes. Those potential Example customers are not going to keep clicking on Ad without the same stale ad. Varying messaging and Social images helps maximize CTR and prevent tired Context  ads from taking up dead space on the page. Example Ad In looking at sample data in aggregate from with Social our clients, the above notion clearly holds Context true – while Reach comprises around 33% of total impressions, Unique Clicks comprise Any time your ad is shown with this blurb, about 98% of total clicks. All the more rea- Facebook calls it a Social Impression. Any son to make sure your (whether time that ad is clicked, that’s called a Social on your Fan Page or your external web site) Click. The Social Percentage shows you how is an appealing one – you may only have one often your ad is shown with social context. shot with that user! Dividing social clicks by social impressions By adjusting your Connections targeting yields Social CTR, which typically should be options and viewing Facebook’s Estimated higher than your standard CTR. After all, your Reach figures, you can get a read on the friends Like it – so should you! number of users who are “Fans” vs. users who Because you’ve used Facebook’s targeting are “Connected” to your brand. If a user is options to narrow the scope of your ads in Connected, he or she is either a Fan or has a each campaign, you’re only going to be friend who is a Fan. By targeting ads to Con- displaying ads to a small percentage of users nected users that are not fans, you can see on Facebook. Since those Facebook users how many users are just one degree removed are on the site quite often, they will see your from being a fan. This is a potentially valuable ad multiple times. To help track these highly segment of the Facebook audience and one targeted ads, Facebook includes metrics for that you may choose to target aggressively. Reach (formerly Unique Impressions), Unique Indeed, in a social space where Likes are Clicks, and Unique CTR. While Impressions the new currency, finding new and inventive measure every time your ad is displayed, ways to grow your Fan Base and gain new Reach actually lets you know the number of friends is key to successful advertising efforts.

LEARN MORE TODAY. CONTACT Daniel Brandao, Product Manager, facebook [email protected] (434) 970-1010 www.rimmkaufman.com

www.rimmkaufman.com 24

Is the SEM agency model dead?

To hear some people talk you’d think the days of SEM agencies were numbered. They aren’t, but the kind of agency that succeeds over the next 5 years may be very different indeed.

Threats to the SEM Agency age their program in-house and that the Model: only barrier has been technology. • Wide-spread incompetence. We have We don’t see this as a likely scenario. long argued that the biggest threat to Certainly decent software will allow those the SEM agencies is the SEM agencies inclined in that direction to proceed, themselves. Companies that have had but marketing services firms and ad bad experiences with more than one agencies have existed for generations for well-known and well-rated agency are good reasons. very likely to believe that taking search First, licensing third party software is not in-house is the only viable solution. cheap, and it is not equivalent to having a We believe that as consumers of agency flexible, customizable platform tuned to an services become more sophisticated, the advertiser’s specific needs. There remains quality agencies will thrive and those a significant technology gap between the that survive on sales-patter alone will most advanced systems and those avail- either collapse or reform. This process able for license, and smart advertisers has taken longer than we anticipated, but won’t willingly sacrifice that advantage. remains inevitable. Second, technology is only half – arguably less – of the equation. High performance • The in-source movement. Some have paid search management requires argued that the proliferation of paid powerful, flexible technology and superb search software solutions will lead to the analysis, acumen, and execution. There death of SEM firms. These folks contend are many more experienced paid search that every company would prefer to man- analysts than there are quality paid

the Rimm-Kaufman Group Is the SEM agency model dead? 25

search analysts and hiring, training and • Agencies-of-Record weighing in. managing top talent is an art in and Traditional agencies providing other of itself. Not every advertiser has the advertising services will simply add these expertise in-house to manage a complex services leaving the SEM firms in the dirt. paid search program. There’s no question that AORs are begin- • Push-button paid search. We’ve heard ning to offer these services. There is also it said that Google’s Conversion Opti- no question that this industry doesn’t mizer and Keyword-less ads will obviate fit well with their core competencies. the need for paid search management. Traditional agencies are creative shops. As John Shea’s decision to join RKG dem- They’re extraordinarily good at what onstrates, even Googlers don’t believe they do in that space, but paid search is this. Google will never be able to track engineering and execution, it simply isn’t complex success metrics that encompass in their DNA. margin, phone spillover, post-conversion The Future of SEMs actions like order cancellations and There is significant pressure on SEM agencies lead valuations, new-to-file, customer- to continue to evolve. In 2011 it is no longer type and other data that a powerful, sufficient to be excellent at paid search. adaptable system can handle. Moreover, Agencies must also develop expertise in At- smart humans are the keepers of the tribution Management, Display Advertising, kind of business intelligence that drives Facebook, and more as the inter-relationship anticipatory action. Even if companies between these activities becomes more trusted Google with all their proprietary important. We’ve investedheavily in these data, algorithms alone will never beat areas to build out world class offerings and algorithms + smart people. partnered with like-minded experts in other • Crowd-sourcing. Trada generated a disciplines who do business the right way. good bit of buzz early by launching a Top SEM firms are uniquely well-positioned crowd-sourcing platform to allow inde- to become even more central to marketing pendent paid search experts to work on efforts in the long run. Data-driven market- Trada client accounts. ing is the future, and the firms steeped in This is a really interesting idea, but will data analysis, engineering and execution never gain currency with the major paid of complex media campaigns will ultimately search advertisers. The contractors have run circles around those firms rooted in the no tools available to them, can’t com- past. There are plenty of barriers to over- municate efficiently with the advertiser come related to tracking customer behavior and won’t be able to fold in the kind of across platforms and between brick and complex information discussed previ- mortar buildings and websites. Measuring ously. Moreover, as I’ve discussed on the impact of offline media on online behav- RKG Blog, pay-for-performance models ior and vice-versa, and complex questions of guarantee that advertisers won’t get the marketing mix analysis are still evolving, but results they want. expect firms like RKG to be at the forefront of marketing for the foreseeable future.

LEARN MORE TODAY. CONTACT George Michie, Co-Founder and CEO [email protected] (434) 970-1010 www.rimmkaufman.com

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For more information contact RKG Today Cady Condyles, Director of Marketing [email protected] (434) 220-5209 Rimm-Kaufman Group www.rimmkaufman.com