Monday, October 02, 2006

SEM: Myths vs. Reality About PPC (Paid Search Advertising)

Given the prolific amount of opinions on Paid Search Advertising or PPC, I thought it would be helpful to share what we've learned about the field given our wide client base. Since there's a lot of business out there, we thought this would be helpful:

Myths/Reality

You will see results right away.

This is the greatest myth. Many think they will put in a budget, set a keyword price and then hope that it works right away. When it doesn't, they walk away. Others put in really high budgets and burn lots of cash quickly. Sometimes, budgets are not reached and they think there's not enough market for their area.

The reality is to do this in an optimal fashion, there's a disciplined process that can take 1-2 months to get up to speed. During this time, budgets should be set low (but not too low) to learn which keywords and ads pay off. You need to developing and tune landing pages (pages specific to your ad campaign). Many search engines reward successful groups of keywords and push up lower bid keywords to higher positions. Done well, this is a rigorous process that in many cases yields unexpected and surprisingly good results. Sometimes an obvious keyword or ad does not perform well or the "ugly" landing page performs much better than beautiful one.

This is an area that you should see as a long term process that unfolds. It can achieve tremendous results and give you better customer insight. You just need to approach it methodically.

Just use whatever keywords the search engines give you

It's a place to start, but there's a lot more to do. Search engines like Google, Yahoo and MSN have keyword creation tools that will help you turn a few words about your products and services into a wide range of keywords. While helpful, most campaigns suffer from too few keywords rather than too many. Most competitors bid up the most obvious. It is the "long tail" or the somewhat obscure keyword that can make you real revenue and profits. One thing to do is use keywords from one tool and push it into another. Another is to read magazines in your target market and drop those in. Use competitors to search for more or your own log files for how people find you. After you have a wide set of keywords - usually thousands, you have a place to start, group and then cull as part of your setup and optimization process.

It's really easy to run a campaign yourself

You would think that is true after looking at the search engine tools. At first, with a small firm, it may seem easy. However, over time as your campaigns grow, you will find that you spend a significant amount of time managing the campaign. This is especially true in a highly competitive field. Running a search engine marketing campaign involves your site and purchasing process. Skilled operators know advertising, copywriting, design, bid management, optimization statistics, process flows, and analytics. There are firms that will provide a small business version if budgets are modest. There are many firms that will work with you (including ours) if you monthly search ad budget is over $20k.

It's the least expensive form of marketing

It can be very expensive if you do not run your campaign in a methodical manner. There are folks like a kitchen equipment supplier that spent over $100,000 with no benefit. I know another firm that set a $5000 daily budget and blew it in a day with no impact on sales. It can be worse than going to Vegas if you are not careful. Many first timers do not have a landing page or an analytics system to track traffic.

A few years ago, it was different. There was less competition. In fact there was a Piper Jaffrey study that stated that search engine marketing was less expensive than all other forms of marketing: email, banner ads, direct mail. Now that search engines have gained greater prominance, competition has increased and with it, keyword bid costs. The days of penny or nickel bids are over. It is a consequence of greater demand for keywords.

My customer understands what I'm offering

As simplistic as it sounds, many think it is true. You build collateral based on what you believe customers think. You do focus groups. Your marketing team comes up with clever ways of stating your value proposition - redefine the market. The search environment is different. People search for certain sites with particular terms. A TV is a TV, not a next generation viewing sensation. Your message needs to be framed in terms of what people are looking for. The best way to learn about it is to conduct keyword research and then run a campaign where various combinations of keywords, ads and landing pages are tested. You may be surprised with what you discover.

Every search engine runs PPC the same way

This is absolutely false. Each search engine utilizes different algorithms. Some are closed bidding systems like Google and MSN. Some are open bidding like Yahoo. All use previous history to varying extents in their algorithm. Some turn on very quickly. Others take time to get your campaign fully operational.

There's a good reason for why the search engine rejected my ad

We run into this all the time. Some are very tight with trademarked words as keywords or in ads. Others are not. Policies can be inconsistent with the same search engine. This is especially an issue when companies have common words in the company names. One argued with us about using words like "lower, my, or bills." It's good to know someone on the inside.

4 comments:

sandeep said...

this is a cool article on SEM. I'm wondering if you can cite some specific examples for some of these myths. great insight though.

Rajiv Parikh said...

Great point. I'll add some.

steven said...

This is the greatest myth. Many think they will put in a budget, set a keyword price and then hope that it works right away. When it doesn't, they walk away. Others put in really high budgets and burn lots of cash quickly. Sometimes, budgets are not reached and they think there's not enough market for their area.
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Azimutz Quantum said...

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