Search Engine Marketing
Friday, May 28, 2004
Marketers, long frustrated by not knowing which half of their ad spend is wasted, have found a new ally in pay-per-click advertising models. Search and contextual marketing are good examples of this, but often, marketers have to bid against each other for placement.
Performance-based marketing may be the next step in the evolution of pay-per-click advertising. Because of its direct response-oriented nature, many sponsored links providers--from Google with their new Smart Pricing plan to smaller sponsored players like Kanoodle--are also beginning to incorporate performance into their placement models.
ValueClick subsidiary Commission Junction unveiled a more Darwinian variation of the performance-based model at the Ad:Tech conference in San Francisco Monday. Called CJ Evolution, the new product will make placement entirely contingent upon performance, placing optimal importance for advertisers on creative.
The program uses optimization technology that grants more frequent exposure to ads that perform well while reducing the exposure of ads that perform poorly on certain publisher's Web sites. Currently, only text ads are supported by CJ Evolution, but Jeff Pullen, Commission Junction's general manager, says he sees an "opportunity to expand in the future. (CJ Evolution) is meant to be a complementary channel that is built on performance." He adds that the program is less an alternative advertising channel than an optimization tool. (The program) looks at conversions--"if it happens to be a contextually relevant place, great," Pullen says.
Pullen maintains that Commission Junction will continue to evolve into a primarily cost-per-acquisition (CPA) network, even though advertisers currently bring their offer to Commission Junction for participation in CJ Evolution.
Initially, Pullen says, the placement process for advertisers in the program is somewhat random, but as performance metrics are built, the program automatically optimizes the campaign for advertisers and publishers by placing ads on sites that perform well more frequently and by reducing placement on sites that perform poorly.
Pullen says that beta-test results from advertisers and publishers have been "very positive." Commission Junction declined to disclose the names of participating beta-test companies. For the publishers, the process for admission to CJ Evolution is selective. Publishers are pre-screened; the program is generally reserved for top-tier publishers.
As with most pay-for-performance models, direct response advertisers running concurrent search and affiliate marketing programs stand to benefit most from this type of program.
Advertiser participation requires no additional up-front fee, and advertisers can choose to set caps as well as increase or decrease their spend at no additional cost.
ATLANTA--(BUSINESS WIRE)--May 20, 2004-- U.S. Small Businesses Are Increasingly Dependent on Online Services as Both Business Channel and Business Resource
Interland (Nasdaq: INLD), a leading provider of Web hosting and online services for small and medium-sized businesses, is celebrating National Small Business Week by announcing the results of its Spring 2004 Business Barometer of Online Activities, a nationwide survey of online usage by small businesses with Web sites. The findings revealed a clear preference for online marketing tools over traditional marketing methods, and a strengthening of the use of online capabilities among small and medium businesses.
The group of small business owners surveyed was asked to select three marketing tools critical in driving business for their companies. Topping the list were Web sites (69 percent) followed by search engine keywords (36 percent) and then community relations (35 percent). Email marketing (24 percent) just beat out direct mail (22 percent) and the Yellow Pages, a long-time small business marketing tool, was seen as "critical in driving business" by only 12 percent of the respondents. At the bottom of the list were newspaper advertising (5 percent), outdoor advertising (4 percent) and print coupons (2 percent).
When asked how important to their business various online capabilities would be in the coming year an overwhelming majority of respondents indicated that online resources are critical for business success. In fact, of those responding:
-- 99.5 percent rated an online presence as very or somewhat important,
-- 67 percent said enabling online interactivity (i.e. web-based business forms, blogs, interactive maps and e-newsletters) is very or somewhat important,
-- 62 percent rated executing online promotions (i.e. search engine optimization, keyword advertising and email marketing) as very or somewhat important, and
-- 55 percent said conducting online transactions (i.e. e-commerce, online catalogs and coupons, and selling via third-party sites like Amazon or eBay) is very or somewhat important.
"We were not surprised to see small business owners rank nearly every online marketing tool asked about as more critical in driving business than the Yellow Pages and other traditional media," said Joel Kocher, chairman and CEO of Interland. "Clearly, more small businesses are starting to embrace the changing marketing algorithms that favor the results generated by online marketing tactics above those offline tools once used to market small businesses."
Of those surveyed, 34 percent said they sold products or services online. Among that group, 71 percent sold through both online and offline methods (retail stores, catalogs, telephone sales, etc.). In fact, 57 percent of respondents said shoppers who purchased online - either solely or in combination with offline purchases - were seen to generate more revenue than offline only shoppers.
As part of the survey, respondents were also asked about online sales during the 2003 holiday shopping season. An overwhelming majority (77 percent) said online sales over the holiday season met or exceeded their expectations.
The group was also polled on media consumption habits. When asked to compare the amount of time spent collecting "industry and business information" using different media sources during 2003 versus 2002, online outlets won hands down. Of those responding, 45 percent said they spent more time in 2003 gathering information through e-mails/e-newsletters and 36 percent through industry/business Web sites. Industry trade publications only saw an 8 percent up tick in usage last year, but fared better than the remaining media sources. Daily local newspapers and magazines saw the largest drop in usage, both 18 percent, between 2002 and 2003.
Daily national newspapers seem to be of little interest to the group as sources for industry/business news, 40 percent said they don't use them. Radio and TV fared only slightly better with 39 percent and 38 percent respectively saying they don't turn to these media outlets either.
"As small business usage of the Internet for finding relevant business information climbs so too does the group's understanding of how the Net can help them grow their business," said small business expert Kim T. Gordon, president of National Marketing Federation Inc. "From using complex e-commerce Web sites to ongoing e-mail communications with customers and partners, use of the Internet is vital to small business success."
Other interesting data points show that 88 percent of small and medium-sized businesses who have a Web site, include their Web address on business materials (i.e. business cards and letterhead), 70 percent include it on their business collateral (i.e. brochures), 54 percent feature their URL on receipts or invoices, and 53 percent include it in offline advertising. When asked about e-mail usage in daily business activities, 85 percent said they use e-mail to communicate with customers, 80 percent said they communicate with partners and business associates via e-mail, and 67 percent e-mail potential buyers. Of the respondents, 34 percent say they've never heard of the recently introduced CAN-SPAM Act and 28 percent say they have heard of it but don't know if it applies to them.
Thursday, May 20, 2004
Yahoo Results Getting More Similar to Google
According to results gathered from Thumbshots.com and their new ranking tool, Yahoo search results are getting better and more relevant.
Thumbshots Ranking is a new tool designed to visually study ranking algorithms of various search engines such as Google, Yahoo, Altavista, Alltheweb, MSN, Teoma and Wisenut.
Thumbshots Ranking researchers have been tracking overlaps for popular queries for several months and found a general increase in overlapping search results between Yahoo and Google. There is about 40% overlap in the top 20 results for popular queries taken from Google Zeigeist. The overlap study focuses on the top 20 results because most users do not go beyond the second search results page. Ben Elgin of BusinessWeek acknowledges Yahoo?s improvement. “Today, that lead has narrowed, with Yahoo?s new search engine almost as good as Google".
Google currently brings in over 50% of the search traffic while Yahoo brings in about 30%. With Yahoo having comparable results as Google, Yahoo is naturally a fierce contender in the search engine world.
The ranking tool displays small thumbnail pictures taken from the free Thumbshots.org, the leading provider of web previews, to help visualize search results. The ranking tool is also useful to analyze the search algorithms employed by various search engines.
In one observation, plurality in search keywords within Google yields very different links. For example, comparing results for “business” and “businesses” shows very little correlation. Users can search deeper by trying variations of the same keyword.
Ranking also varies with reversal in keywords. For example, searching for “dedicated hosting” and “hosting dedicated” within Yahoo will return very different rankings.
Furthermore, search ranking varies significantly with the addition of a single related keyword. For example, searching for “freeware” and “freeware software” within Google will yield 25% overlap only.
Thursday, May 06, 2004
Click Fraud: The Google Killer
Google listed click fraud as one of the potential "worries" that would-be investors should consider. In fact, they admitted to regularly paying refunds because of click fraud and stated that they may have to make retroactive payments.
Michael Bradley recently tried to pressure Google into paying $100,000 for his click fraud software, and though he was arrested by the FBI, his attempted extortion points to the weakness of pay per click advertising.
Click fraud remains a major topic among forums, and I imagine it will become a more mainstream topic in more mainstream media as people begin to inspect what's affecting Google's revenue.
The SEORoundTable blog linked to a recent thread in the IHelpYou forums called "fraudulent clicks today." Barry named his post "Click Fraud: Pros and Cons" so I clicked through, wondering what the possible pros of click fraud could be from the marketers perspective (from any perspective, really - fraud hurts the ppc vendors in the long term).
AndyJ, a member of the IHelpYou forum, pointed out that "clicking on your ad boosts the click through rate. A higher CTR equals a higher position for less cost in many cases."
I was surprised to read the number of people who consider fraud just a cost of buying PPC advertising - it seemed that many some who posted were resigned to paying more money for fewer real clicks.
AndyJ said, "Any of us that use AdWords or any other PPC has to pay for a certain percentage of fraudulent clicks. I factor it in as a cost of doing business."
How long will ad buyers be willing to pay the extra cost? As long, apparently, as ppc still delivers value. The issue as I see it though is that buyers still don't receive what they paid for.
The thread, later joined by a second tier ppc vendor who bashes Google ppc, decends into mild though interesting bickering as members rise to defend Google, but some members do voice some interesting points.
Junior Harris alluded to click fraud software in his post, and included a dishearteningreminder: "there are some pretty creative hacks out there auto generating everything from UA, referrals, and possibly IP addresses as well. The key to remember is not to spend more than you can afford to give away."
WebmasterT pointed out that "itemized clicks would provide transparent and easy detection of fraud." He then asked why, if Google can provide this information to AdSense partners why can't they provide that same transparency to people who are paying for ads.
Regarding Google refunds from verified instances of click fraud, AndyJ said, "I have had 2 occasions in the past to report a gross fraud such as yours. After supplying the AdWords team with the required information, they did in fact resolve the problem and issue a refund within about 4 weeks."
There's a click fraud thread at JimWorld, however, that tells a slightly different story. One webmaster lost thousands through alleged AdWords click fraud and it took months of continued effort to get a refund. The thread runs from 9-29-03 through 11-15-03 (when he finally got his refund) but he alleges the fraud occurred three months before his first post.
Another click fraud thread at WebMasterWorld mentions fraudulent clicks coming from proxy servers in India.
Pierre Zarokian, President of SubmitExpress.com, offers the following advice for pay per click advertisers:
· Repetition of IP Addresses
· An irregular or large number of clicks coming from the same geographic region or country.
· IP addresses belonging to cloaking software companies
· Keywords that normally do not get any traffic are now getting an unusually high number of clicks.
· Your click throughs have doubled or tripled without having had any bid changes or rank changes
His entire article, Click Fraud: Is It Happening to You?, is an excellent resource for anyone who suspects click fraud.
Thanks to Pierre for the tips on how AdWords users can watch out for click fraud - but what can Google do? Can click fraud be wiped out forever? And how valuable is stock in a company whose primary source of income is the target of such diligent and resourceful fraudsters?
If anything kills Google's growth it will be click fraud - the decomposition of AdWords value. About the Author:
Garrett French is the editor of iEntry's eBusiness channel. You can talk to him directly at WebProWorld, the eBusiness Community Forum.
