Search and Display: Capitalizing on the Retargeting Opportunity

A Search Marketing Now E-Book

Search and Display:Capitalizing on theRetargeting Opportunity

© 2011 Third Door Media, Inc. http://searchmarketingnow.com • Email: [email protected] • (203) 664-13502

Search and Display:Capitalizing on the Retargeting Opportunity

IntroductionWith PPC marketing standing front and center in online marketing plans and budgets, display advertising fell out of favor over the past few years. The transition of display creative from glossy, full-color magazine ads to the web was awkward, at best. Add to that the inefficiency of using CPM pricing parameters and the absence of standard formats and sizes, and the future for online display advertising looked bleak.

But much has changed in the past twelve months. Investments in new technologies, new ad formats and improved buying and selling processes are growing both the luster of online display advertising and its share of marketing budgets. A majority of ad agency executives – 62% – surveyed by Acquisio said they are expanding display capabilities to all of their customers. The emergence of real-time bidding auctions through display advertising exchanges, as well as demand and buy-side platforms now enables advertisers to buy display like search, using sophisticated rules and algorithms to formulate the most efficient bids.

As a result, search marketers are moving into display (or back into display) with ease, already owning the tools and skills needed for these new ways of buying media. In particular, search retargeting, a display advertising technique that engages searchers or website visitors based on a very specific online action they have taken in the past, is jumpstarting display budgets and ROI impact. According to a recent eMarketer survey, targeting is one of the primary reasons advertisers are funneling more dollars to their display budgets, with 52.8% of those surveyed saying increased ad budgets were directly impacted by increased targeting options.

This ebook discusses the current state of online display advertising, including its growth, its synergies and relationship with PPC, and the new retargeting opportunities. Acquisio and Search Marketing Now would like to thank the following SearchEngineland and SMX East contributors for their assistance in developing this report: Frost Prioleau, CEO and Co-founder, Simpli.fi; Jeff Green, CEO, The Trade Desk; Dax Hamman, Chief Revenue Officer, Chango; Cameron Jonsson, Co-Founder and Managing Director, Inventiv Focus; and Kevin Lee, CEO, DidIt. Thanks also to Karen Burka for researching and preparing this E-Book. n



Display Advertising Growth Outpaces SearchAlthough search marketing still represents the largest piece of the online advertising pie, display advertising is now growing at a faster pace. According to the Internet Advertising Bureau (IAB), PPC revenue hit $12 billion in 2010, for a 46% market share. But while PPC revenue grew in 2010, its share of the online advertising market decreased slightly from 2009. Display advertising – including digital video commercials, sponsorships, ad banners and display ads – reached $9.9 billion in 2010 to grow from 35% to 38% of the online ad revenue market.

Forrester Research forecasts similar growth trends for PPC and online display advertising. From 2011 through 2016, Forrester predicts a 20% compound annual growth rate (CAGR) for display advertising compared to 12% for search.

Several factors are driving the growth in online display advertising, including:•New pricing structures •Increased market efficiency in buying and selling ads•Synergies between PPC and display advertising•Retargeting

Buying online display advertising used to be extremely inefficient: it was based on the print world’s CPM paradigm that required large minimum spends on high-volume, untargeted audiences and metrics such as reach and frequency. This model ignored the inherent targeting capabilities that came with the online channel, as well as the emerging opportunities to pay for performance.

According to the Internet Advertising Bureau (IAB), PPC

revenue hit $12 billion in 2010, for a 46% market share. But while PPC

revenue grew in 2010, its share of the online advertising market

decreased slightly from 2009.

Ad Format

Search

Classifieds & Directories

Lead Generation

Email

Display*

2009 Revenues

$10,698

$2,254

$1,451

$292

$7,965

2010 Revenues

$12,004

$2,597

$1,339

$195

$9,906

Online Ad Revenues, 2009 vs. 2010 (in $ millions)

Display advertising includes digital video commercials, ad banners/display ads, sponsorships and rich media. Source: Internet Advertising Bureau

Source: Internet Advertising Bureau



Today, online display advertising is increasingly being bought and sold in real time and through bidding auctions that enable advertisers and publishers to make and receive highly efficient bids. The real-time bidding (RTB) process uses a chain of intermediaries, including demand-side platform (DSPs) providers and ad exchanges/supply-side platform (SSPs) providers, to connect advertisers and publishers in a bidding exchange that occurs in less than one-tenth of a second and utilizes business rules and bidding algorithms set by advertisers and their agencies.

Synergies between Search and DisplayThere are strong synergies between online display advertising and search marketing, which can jointly be used to leverage targeted keyword advertising alongside branded display campaigns to achieve greater lift, as well as maximize clickthrough rates, conversion and engagement metrics. Industry studies have found that exposing search users to display media from the same advertiser can result in double-digit increases over using search alone. Using search and display together allows advertisers to reuse valuable search data, drive more search conversions by widening the sales funnel and lower CPC costs.

Ironically, one of the primary reasons that search and display are so complementary is the differences in their market dynamics. The PPC market is dominated by three large publishers: Google, Yahoo! and Microsoft; though in the US and Canada, Microsoft and Yahoo have joined forces and marketers can access all of their joint search inventory through adCenter. PPC marketing is based on keyword targeting that pulls users to the brand or product when they have already formed intent to purchase or shown a need for more information.

The display advertising market is characterized by thousands of online publishers, many of which are not even accessible through Google Display Network (GDN), one of several large display ad exchanges. The others include Right Media (owned by Yahoo!), which controls nine billion impressions daily, ContextWeb, Pubmatic, OpenX, Rubicon, Admeld, and AppNexus/Ad ECN. Display campaigns that only utilize GDN may not be reaching the premium publishers that aren’t available through Google. For example, all of Yahoo!’s content sites (including Yahoo! Finance, Autos, Local Maps and Mail), MSN, eBay, CNBC, Billboard and eHarmony.

Moving into display is proving relatively easy for search marketers, who already have many of the tools and skills needed for buying and optimizing auction-based media. One simple way to get started is to set up a display campaign using existing PPC ad groups and optimize at the keyword level – just as with PPC, each keyword carries a different message of intent and naturally has to be treated uniquely. Secondly, create new groups of keywords that lack a proper presence in your search program, such as competitor brand names or broad head terms. Once the campaign is live, data will start to flow back showing the sites and keywords that are driving the best results – go back to your PPC program and use this information to your benefit.

Search Display

Pull marketing Push marketing

Bottom of funnel Top of funnel

Scarcity of supply Abundance of supply

Hosted auction Real-time auction

Google is often the publisher

Keyword targeting

Google is rarely the publisher

User-based targeting

Source: The Trade Desk



Although Google is forecast to have 77% of search marketing revenues in 2012, it will only account for 12.3% of display revenues for the year, according to eMarketer. As a result, display advertisers that rely on Google Display Network (47% according to a survey by The Trade Desk) are missing a huge part of the market.

The Retargeting OpportunityPerhaps the biggest reason online marketers have jumped back into display advertising is the emergence of search retargeting (also called remarketing), a display advertising technique that engages search engine users or website visitors based on a specific online action they have taken in the past. Numerous research studies have found that the majority of online shoppers never complete the sale. According to Digital River: Fireclick Index 2011, 77% of consumers that fill a shopping cart ultimately abandon it. The same study found that 97% of search clicks do not end in conversion.

The familiar search metrics of CTR, CPA and CPC have helped make retargeting a starting point for many search marketers. Search retargeting combines the precision and efficiency of search marketing with the reach and branding power of display, allowing marketers to marry existing keyword lists with relevant banner ads to target consumers who have demonstrated interest in a particular offering and continue the conversation with prospective customers beyond the search engines.

Search retargeting campaigns help to convert, retain and upsell existing web users that have either searched on a relevant product or brand term or visited the website. The data can be gleaned from first-party or third-party cookies and target either on-site or off-site actions.

By using search retargeting as a form of display targeting, advertisers bring the two largest segments of their online advertising budget together to work as one.

There are two types of search retargeting:

1) Retargeting search users that visit the advertiser’s website (also called site retargeting).

2) Retargeting search engine users searching on relevant keywords.

Both types of retargeting are effective strategies for brand and search advertisers. Search retargeting overall enables advertisers to target users at the top of the purchase funnel, instantly build custom audience segments based on user intent and continuously fine tune segments during a campaign, providing insight into which types of users respond to what creative sets.

Site Retargeting

This is the most straightforward type of retargeting – show a display ad to someone who has previously visited an advertiser’s website from one of that advertiser’s search ads. This gives the advertiser an opportunity to retarget any such visitor with a display ad urging the visitor to come back for more. Visitors are retargeted using first-party cookies, which provide data including keyword searched, time of day, reverse DNS of IP address, preferred search engine, preferred browser, and what the user did or looked at on the advertiser’s site.

The advantage of site retargeting is that advertisers can further segment visitors into individuals that did or did not convert. This differentiation then makes the display advertising much more effective, taking the individuals’ actions into account.



For an individual that converted, an advertiser may show them an ad asking how they liked their purchase and recommend similar products. Individuals that didn’t convert could see an ad inviting them back for a second chance, maybe with a new and more compelling promotion.

The challenge with site retargeting is that it may drive a low amount of impressions since it requires individuals to actually visit the advertiser’s website; the number of visitors getting cookied may be low depending on the advertiser’s search engine marketing budget.

Keyword-Based Retargeting

To increase share, search retargeting can also be used to monitor the keywords that individuals are searching without visiting the advertiser’s actual website. This is accomplished by dropping a cookie on the individual’s system from a partner site and then dynamically monitoring the type of keywords they are searching for on the search engines. If one of the keywords being “targeted” is searched for, that individual is retargeted with the advertiser’s display ads.Third party search data providers, such as BlueKai or AlmondNet, as well as Yahoo!’s Right Media or Google Display Network, will also append user cookies with enhanced data such as demographics (age and gender) and interests. To protect user privacy, most display ad exchanges require advertisers to only use personally identifiable information with express consent.

Using both of these targeting options together is ideal, and experience is proving that site retargeting will almost always beat the keyword-driven search retargeting when a conflict occurs. Initially, a good rule of thumb is to spend 25% of current search marketing budget amounts on new retargeting or display campaigns. For example, one high-tech B2B marketer spending $85,000/month on its search efforts added retargeting to its marketing plan (spending 15-20% on the additional campaigns). The result was a 33% increase in website forms and 25% lift in software sales.

Creating Effective Retargeting Campaigns Making the most of retargeting opportunities requires sound search marketing strategy and execution. Challenges to effective retargeting include creative

1. Reach intenders. Search retargeting allows advertisers to combine the brand impact of static or flash banners with the targeting capability and precision of search.

2. Create custom segments for each campaign. In search retargeting, behavioral segments are defined by the search terms on which users have searched. Additionally, advertisers can see exactly how each keyword is performing in its campaign, whether on a CTR, CPC or CPA metric. The targeting that works for one set of creative may be very different from the targeting that works for another set of creative for the exact same product. Different calls to action and graphic elements impact response rates of different types of targeted users.

3. Eliminate the wait to build cookie pools. In many cases, custom behavioral segments require weeks for a cookie pool to be built up in order for a campaign to be delivering at full strength. With keyword-level search retargeting, this wait is eliminated as data is stored in memory for instant access. This “instant-on” feature provides flexibility in creating and launching multiple campaigns that test and improve performance.

4. Fine tune segments during campaigns. Because the keyword lists that drive search retargeting can be instantaneously adjusted at any time during a campaign, audience segments in search retargeting are typically fine tuned for optimum performance during campaigns. As initial campaign data begins to show which keywords are performing well and which are not, segments can be fine tuned by eliminating poorly performing keywords and adding keywords similar to those performing well. In addition, bids on individual keywords can be raised or lowered to achieve the desired KPIs.

5. Gain valuable insights into target audiences. With keyword-level search retargeting, advertisers see exactly how users respond, broken down by the keyword searched. Advertisers can see the spend, number of impressions, clicks, conversions, CPM, CTR, CPC, and CPA for each keyword in the campaign. Using this insight, advertisers can design more effective campaigns going forward based on the most effective keywords.

Five Reasons to Use Search Retargeting



formats, ad placement and frequency, and accurate attribution, to name a few.

The following section highlights four best practices to maximize retargeting results.

#1: Utilize Segmentation

Effective segmentation is a key driver of retargeting success – particularly for retargeting website visitors. Just as a generic piece of ad copy and a link to the homepage won’t work in PPC, neither will dropping the same cookie on all of a site’s pages and serving one display ad for the media campaign.

By using multiple pixels, advertisers can divide the site into actions, or areas of intent, such as homepage (browsing), product page (researching), shopping cart (buying) and conversion page (customer). The result is that instead of one generic audience the advertiser has four distinct audiences to target and can mimic PPC strategies more easily. For example, a “researcher” may need encouragement about the brand’s benefits or a financial incentive, whereas a “customer” can be targeted with upsell opportunities.

#2: Avoid Overlapping Results

One question that arises when adding display to a search marketing program is whether or it is actually driving incremental revenue or just creating two

payments to convert the same user. The solution is to have a unique transaction code that shows up in both the PPC and display reports, and compare these codes in each of the channel’s reports. E-commerce sites, for example, can utilize the already existing order ID. Otherwise, a single javascript command can be used to generate a sequential number each time someone hits the confirmation page.

This code should be passed into the PPC and display tracking software as a hidden variable. For PPC this might be the bid management platform’s conversion pixel or the Google Analytics tag. DART users can create a simple custom variable. When pulling the regular PPC and display reports, be sure to include these unique ID numbers and look for the quantity of IDs that are unique and the number that are the same. If the percentage of IDs that is the same is less than 10% then the display advertising is driving incremental revenue over the search investment. If the overlap is a higher percentage, determine how to divide the revenue between the two channels. Most search marketers attribute 50% to each channel for the conversions that overlapped.

#3: Implement a Frequency Cap

Display advertising offers the ability to set a frequency cap, a control mechanism that essentially stops targeting a user cookie after “x” number of impressions. This is an important control and prevents

Case StudyA B2B technology marketer with high-value customers began retargeting prospects who had requested a software demo. Using three different retargeting campaigns during August 2011, the additional display ads generated 3.5 times more leads over PPC campaigns alone, while the CPA increased only 4%.

Search

Sample Campaign Results: PPC vs. Retargeting

Cost Leads CPA

PPC $6,854 34 $202

Search Retargeting $965 13 $74

Site Retargeting $12,654 66 $192

Creative Retargeting* $4,356 5 $871

Overall $24,829 118 $210

*Defined as retargeting users that previously viewed the display ad. Source: Third Door Media



users from feeling “stalked.” Begin by looking at your own site, product or service and analyzing the buying cycle in order to calculate how long a cookie should be retargeted. In nearly all cases it will be less than 7 days, providing a good metric with which to program the length of any retargeting program. In addition, cap the number of impressions to be served each day to avoid saturating the user’s browsing experience.

Tools like The Trade Desk provide reports that show CTR at each impression frequency, offering a clear indication of what the setting should be. It’s helpful to set some padding into the program – the minimum time in between each ad impression to one cookie – to avoid serving all the impressions in just a few seconds or minutes.

#4: Attribute Credit Properly

Accurate view-thru credit – i.e., when a user is exposed to an ad, does not click on it, but goes on to convert in another action – is difficult for most search marketers. The solution is a study to benchmark the right view-thru percentage for the display investment.

Using a Public Service Announcement (PSA) targets two groups of the audience and exposes one to the advertiser’s display ads and the other to a PSA announcement. Clearly, the advertiser’s ads can influence the buying behavior of the audience, whereas the PSA ads cannot as it contains no brand messaging.To calculate the percentage of appropriate view-thru credit look at the delta between the two sets of results. For example:

• PSA ad group – 1 million ad impressions – $10,000 in view-thru revenue

• Advertiser ad group – 1 million ad impressions – $100,000 in view-thru revenue

This shows that the audience was going to spend $10,000 whether or not they were exposed to the display ads, but that when exposed to the ads they spent 10 times more as a group. The percentage of revenue that should be counted from view-thru is therefore 90%.

Currently, best practices are to run a PSA twice a year for each type of display campaign since each audience group will have its own benchmark.

When advertisers know the right credit to give to a conversion, they also can address the question of the quality of the traffic being generated by the retargeting program or campaign. Using the unique order ID being used to gauge media overlap, compare the value of the IDs against the existing customer or CRM database. Are retargeted customers spending the same, more or less per transaction than existing customers? Are they shopping as frequently? What is their estimated Lifetime Value (LTV)? An effective retargeting program should show similar behaviors and numbers, but this is an excellent exercise to see where campaign tweaking might be necessary.

ConclusionThanks to investments in new technologies, new ad formats and improved buying and selling processes, online display is enjoying a resurgence among both search and brand marketers. The emergence of real-time bidding auctions through display advertising exchanges, as well as demand and buy-side platforms now enables a broad range of advertisers to buy display like search, utilizing sophisticated rules and algorithms to formulate the most efficient bids.

With both PPC and display advertising extremely important and efficient forms of online advertising in their own right, using them together through retargeting is proving to be even more beneficial for advertisers seeking strong bottom-line results and ROI. Search retargeting combines the precision and efficiency of search marketing with the reach and branding power of display, allowing marketers to marry existing keyword lists with relevant banner ads to target consumers who have demonstrated interest in a particular offering and continuing the conversation with prospective customers beyond the search engines.

In addition, as advertisers gain more experience with retargeting they will look at all the places it makes sense to drop cookies – on syndicated content, shared videos or email programs – to add to the cookie pool for retargeting with their own messages. Ultimately, the most effective retargeting programs will combine marketing prowess, smart budgeting and an awareness of consumer privacy concerns to provide relevant, compelling campaigns to interested users. n



The world’s leading Performance Media Platform, Acquisio helps marketers buy, track, manage, optimize, and report on media across all channels. The platform was designed for search marketing, and it has evolved to include Facebook ads and all major RTB display networks. Acquisio provides the industry-leading technology for marketers buying ads on any online channel, allowing them to handle all tasks associated with performance advertising, from ad purchase through conversion tracking and beyond, within a single integrated platform. With more than $500MM in ad spend under its management, Acquisio is the multi-channel advertising solution preferred by advertising and marketing agencies around the world. For more information, visit www.acquisio.com.

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Search and Display: Capitalizing on the Retargeting Opportunity

Documents

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display advertisingtechnique

display likesearch

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jumpstarting display

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online ad revenue market