PPC Search: Disclosure vs. Free-for-All

PPC Search:

Disclosure vs. Free-for-AllKevin Lee, Chairman and CEO, Didit

What Does Didit Do?Didit transforms clients’ businesses

through the application of technology & strategy. We do PPC search better.

Didit’s highly regarded proprietary Maestro search campaign technology delivers unparalleled results and client growth. This earned Didit recognition not only among marketers but also as part of the 2007 Inc 500 (#137) & a #12 position on Deloitte’s Fast 500.

Extra Screen Real Estate HelpsBut at what cost are you driving

incremental revenue by controlling and expanding the PPC SERP?

Objective of Today’s Discussion

What is the best way to maximize profitability of existing and incremental SERP visibility?Every test we conducted proves that there is

marginal incremental gain through having additional paid search listings, particularly if the ad (creative execution) is different.

How many additional placements?Who should control the primary and incremental

visibility?

Affiliates & “Performance” Players

Supplement your in house or SEM agency’s PPC search efforts or have all search marketing done by affiliates?Outsource PPC search entirely on a

“performance” basisEliminate risk for PPC search campaigns and

cede control of volumeCapture additional PPC search SERP real

estate and orders with minimal bid interference and affiliate-driven CPC escalation

Contrast the three options

In house PPC SEMOutsourced Agency PPC SEM (fee-

based)Outsourced “performance-based SEM

agencyControlled Chaos through empowering

affiliates to bid on keywordsTotal free-for-all with affiliate bidding

Lock in primary PPC campaign first

Until you are sure you’ve made the optimal decision on the team and technology to mange your primary PPC listings, you can’t even begin to analyze how best to tackle incremental listings

Perhaps you should review your campaign holistically, starting from the primary campaign and moving outward.

Let’s Do the Math for the Primary

Question, given $100,000, deliver maximum profit. Evaluate optimal way to buy initial PPC positions for all keywords.In house PPC search buying has full

transparency, costs are internal (marketing and IT staff, perhaps a technology licensing fee).

An external agency or group must be able to deliver better TOTAL results including their fees (and factoring in your in-house costs). SEM agencies % of spend are transparent, performance shops generally are not.

How to Decide for the Primary?

PPC Search Auctions magnify strengths & weaknesses, particularly non-brand terms.A more efficient team and technology spends

money more efficiently though.Better account structuresBetter creativeSmarter biddingSegmentation modeling that cherry-picks the most

valuable clicks by knowing the marginal net-search-profit of every click before bidding.

Let’s Do the Math ROAS Differences

$100,000 to spend, optimize for profit. Ever get a boost in campaign perf?In a % fee environment,

change in ROAS due to technology, expertise or more staffing can make a greater impact on profit than the fee increase.

What If You Pay…

A Low Fee for Low Performance

A High Fee for High Performance

Media spend, gross $100,000 $100,000 Agency fee 5% 15%Agency fee per $20 spent $5,000 $15,000 Media spend, net $95,000 $85,000 Better technology, strategies and more resources lift ROAS by 20%. ROAS base = 5 5 6

Results: A better firm brings better results, even with less media to spend (given ROAS advantage) $475,000 $510,000

Your net search profit @ 40% margin all-in $ 189,980 $ 203,980

Example of data that creates a conversion segmentation model.

Primary Placement Bid Optimization

What are you optimizing to?

What are your success metrics as a merchant (single or blended)?ROI (profit per dollar spent)ROAS (Return on Ad Spend / Revenue)CPO (Cost-Per-Order)CPA (Cost Per Action, or scored lead)Do you allow for any of the following as buffers? Lagged orders Cookie loss Brand impact

Optimize your success metric(s)

Optimize your success metrics across other segments too, not just time-of-day and day-of-week. Geography (geo-segmentation) Engines Position Advanced segmentation (age or gender in

MSFT)

Primary Optimized Going for Seconds

You and your agency learned a lot in the optimization process for the primary ads. If you have an open relationship with a vendor that information isn’t lost. Empower the second player (or affiliate) with

the knowledge Regardless of whether they are transparent with

you or not, empower them to bid more when it matters if they so choose.

If you are paying on a “performance basis” how is an agency making a bid decision?

The Bid Escalation ScenarioBid escalation between you and affiliates

is challenging enough when you have a primary campaign that is being managed simply.

Evolve to a hyper-segmented real-time campaign on the primary and simple rules no longer make sense for the secondary or tertiary players

Your primary campaign may have thousands of segments, automated.

The Bid Escalation Scenario

If your affiliates / technology managing your affiliates doesn’t know what’s going on in the primary campaign they can cause bid escalation inadvertently.

Set arbitrary bid caps and you don’t get full advantage of the data-driven segments.

What if a secondary copy and landing page experience has greater conversion than the primary?

The Opaque Arbitrage Scenario

If you can’t see what an affiliate is earning you don’t know how aggressively they are bidding.

Bidding aggressiveness is directly correlated with conversion volume

Many performance-driven shops are not as aggressive as you might want.

The Opaque Arbitrage Scenario

Bidding aggressiveness = profit margin for arbitrageurs (performance-based power search affiliates).

Small changes in bids result in large positional changes.

bid Predicted normalized CTR (AdRank) Predicted eCPM True Rank

$ 0.82 1.2 0.984 1

$ 0.98 0.9 0.882 4

$ 0.84 1.07 0.8988 2

$ 0.88 0.88 0.7744 5

$ 0.78 1.15 0.897 3

Who is learning from your conversion data? If you have a “performance deal,” who is

learning from your conversion data?Could you be using additional data to

generate more powerful segments for your primary campaign?

If conversion of secondary pages or microsites is better than primary positions should be able to flip.

You double-paying for conversions?

If you have a “performance deal,” and your “partner” is using their own conversion pizxels yoou may be double paying.

You must use a central reporting system or de-dupe by:Order #Timestamp/revenue binary pair

The Full Transparency Scenario

Google + engines don’t share exact quality score, but with a transparent system or vendor you’ll have an opportunity to test the elasticity of the marketplace.

Elasticity: small changes in bid result in a permanent or temporary change in position.

Decide whether to fight a bit to gain position in full transparency.

Conclusion

Stay Educated on best practices.Pick the right partners for technology and

strategy developmentEvaluate transparent vs opaque optionsNever stop testing / segmenting.

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