ellipsis flag icon-blogicon-check icon-comments icon-email icon-error icon-facebook icon-follow-comment icon-googleicon-hamburger icon-imedia-blog icon-imediaicon-instagramicon-left-arrow icon-linked-in icon-linked icon-linkedin icon-multi-page-view icon-person icon-print icon-right-arrow icon-save icon-searchicon-share-arrow icon-single-page-view icon-tag icon-twitter icon-unfollow icon-upload icon-valid icon-video-play icon-views icon-website icon-youtubelogo-imedia-white logo-imedia logo-mediaWhite review-star thumbs_down thumbs_up

Maximizing Your Search Budget

Gary Angel
Maximizing Your Search Budget Gary Angel

The relationship between organic and pay-per-click (PPC) programs in building SEM programs has been given short shrift in the industry. Most SEM practitioners subscribe to the notion that they don't need to account for organic listing position when making PPC buys-- either because there is no relationship between the two, or because the relationship is one of simple, positive reinforcement. This belief -- which is, on its face, rather unlikely -- is eagerly supported by many in the industry with a strong self-interested motive in perpetuating an attitude conducive to maximum spending.

In a recent study with a Fortune 1000 client, which, for confidentiality purposes we're branding "Company X," we put this cozy assumption to the test-- and the results were startling. The results showed that this company's organic traffic was being significantly cannibalized by its paid program. In fact, we found cases where half or even more of the paid traffic would likely have arrived from organic listings if the paid ads were not present. That means that the true cost of many of the keywords being purchased was far higher than the buyer realized.

This suggests that contrary to popular belief, understanding the complex interaction between paid and organic search engine results should be high on the list of needs for every serious SEM Marketer. Questions like these are vitally important:

  • If I'm No. 1 with organic placement for a term, what effect will a PPC buy have? Will it drive lots of incremental volume, or will it just cannibalize free clicks?

  • How does the situation change if I'm No. 3 or No. 5 or even, God forbid, below the first page fold?

  • Is the relationship between paid and organic support the same for every engine?

  • How does a strong brand impact results, especially if the search is brand-specific?

Based on our experience, the right answers to these questions can make a huge difference to companies with a significant brand and good or excellent organic presence. These issues are mostly felt, of course, by large companies with a strong brand, good internet presence, and the combination of aggressive PPC campaigns alongside a strong natural search presence. If you fall in that category, then knowing how to allocate your buy and how much money to spend may depend critically on your view of how PPC and Organic programs relate.

We had long been frustrated by the lack of interest in these issues-- and the seemingly unlikely assumptions behind them. When one of our clients expressed a similar frustration and a willingness to investigate, we decided to conduct a formal test. Our test client, Fortune 1000 Company X, was in an excellent position to conduct such a study: it had high market-share, a strong brand, a long-standing internet presence and an aggressive ongoing PPC campaign. It had a multiplicity of listings that shared PPC and natural exposure.

In the summer of 2005, the Fortune 1000 Company X PPC program was generating tens of thousands of visits a month. At the same time, Fortune 1000 Company X was well represented in natural search-- particularly for brand names.

To perform the study, Fortune 1000 Company X went dark for a 10-day period following a sustained buying effort, then measured the paid and organic traffic for 10 days prior to the "dark" period and compared this -- engine by engine and keyword by keyword -- to the organic traffic during the "dark" period.

There were no significant changes to the website during these two contiguous periods and the "dark" period proceeding. In addition, there were no changes in exogenous factors like TV campaigns, product announcements or major company news. In addition, overall traffic to the site on other sources was tracked to make sure it stayed constant.

Here is a highly level summary of traffic:

  Light Period (PPC On) Dark Period
Search Engine Total SEM Visits Paid Visits Organic Visits Organic
Google 13,999 6,662 7,337 9,424
Yahoo 6,926 3,052 3,874 5,191
MSN 5,535 2,617 3,318 4,628
AOL Search 1,199 770 429 585

In the 10-day "Light" Period, Fortune 1000 Company X drew 28,000 visits-- of which just over 50 percent were from natural listings. This company tagged all PPC traffic with specific campaign values-- making it easy to identify the volume from each source. In the Dark period -- with other traffic very slightly down -- organic visits were up to nearly 20,000. Taken at the highest level, this means that their PPC program was providing significant incremental traffic (a 41 percent lift over organic traffic alone). However, it was also significantly cannibalizing organic traffic. Depending on engine, anywhere from 20 percent to as much as 50 percent (half!) of all PPC clicks would have been delivered organically.

Think of it this way-- if Fortune 1000 Company X is paying MSN $1 per click, it is actually paying $2 per incremental click because it would have gotten half of its PPC clicks for free through organic. This is a dramatic difference when it comes to evaluating PPC effectiveness and internal PPC optimization. This does not mean that buying cannibalized words is always a bad thing. If the initial cost was low enough, then the incremental cost may still be lower than comparative buys on other terms. The main point is that there is no way to accurately judge the true incremental cost of a word unless you've measured organic cannibalization!

Not only were there profound (and consistent) differences by engine, but there were significant differences by keyword. And the single most important variable in understanding the degree of cannibalization turned out to be -- no surprise -- organic position. The higher the organic position, the more likely cannibalization was to occur. It was difficult to study the impact of paid position, because Fortune 1000 Company X was almost always in the top two slots.

Here are some sample results showing cannibalization by organic position:

Search Keywords Organic Position Cannibalization
Term 1 2 18.20$
Term 2 1 37.20%
Term 3 1 22.20%
Term 4 8 3.60%

Because cannibalization varies by engine (with organic position held constant) and by position, the study suggests that a one-engine fits all strategy simply won't work. Not only is organic strength quite different by engine-- but the layout and habits of engines clearly influenced the degree to which PPC and organic listings interacted. In many cases, this appeared to have a substantial impact on organic cannibalization.

Bottom line, if your SEM provider isn't accounting for organic cannibalization and you have a significant natural presence, then chances are they are seriously mis-optimizing your campaign. Indeed, it seems likely that the worst possible scenario would be to use an automated PPC management tool that isn't taking account of organic cannibalization. Such a system would be particularly efficient at steering dollars into terms whose apparent (but not real) incremental cost is artificially lowered by organic cannibalization.

However, there is no reason to slight human buyers-- if you're judging and rewarding your SEM program and buyer by cost per click or conversion, without taking into account organic cannibalization, then there is no reason to expect that a human buyer won't do nearly as well mis-managing your campaign.

There are always plenty of people willing to give you the wholly self-interested "industry" point of view. But the best direct marketers know that there is no substitute for the relentless pursuit of measurement and incremental improvement. So while companies -- with different brands, different costs to buying brand words, different organic strengths and different product names (less prone to misspellings for instance) -- will ultimately perform differently, the Fortune 1000 Company X experience suggests that any company with a strong brand and significant organic placement ignores organic cannibalization at its own peril. How is your program impacted? Have you taken the time and trouble to find out? You'll never know unless -- like Fortune 1000 Company X -- you are willing to test, measure and live by the results.

About Gary Angel, President and Chief Technology Officer

Bringing over 20 years of experience in decision support, CRM, and software development, Angel co-founded SEMphonic and is president and chief technology officer. He's responsible for leading the development of web analytics and SEM decision making tools to market and support customers.

Before SEMphonic, Angel created and implemented multi-million dollar CRM systems whose customer-driven use of Web analytics increased profitability and customer loyalty for Fortune 500 companies including VISA, Bank of America, and American Express. His pioneering work in web behavioral profiling, neural-network web analysis, web-content success correlation, and point-to-point process analysis also has enabled major brands such as American Express, Charles Schwab, Intuit, CyberTrader, and AOL dramatically improve customer acquisition and satisfaction, shopping-cart conversion, and result in consecutive multi-million dollar bottom-line improvements.

Angel has published articles including: "Using Card Transaction Data, American Demographics," "Using Daytime Data for Direct Mail Targeting, Business Geographics" and "Worker's Compensation Providers Networks, Business Insurance."

He graduated, with honors, from Duke University and lives in San Francisco with his wife and two young girls.

Gesture recognition
Long the stuff of science fiction, gesture recognition computing suddenly landed with the resounding thunk of 8 million families leaping up and down in front of their televisions, as Microsoft's Xbox Kinect plug-in debuted in late 2010. Marketers, sensing a ripe opportunity to transform their interactions with consumers into something immersive and fun...

Oh, hell, who am I kidding? We've done next to nothing with gesture recognition, as a recent article in Ad Age laments. The one small step for consumers onto the bizarre coin-catching rubber raft turns out to be a giant leap for marketers. And that's understandable: To succeed in a space where consumers are themselves still getting their sea legs, marketers not only have to figure out how to make gesture inputs seamless and smooth, but also how to create experiences so compelling that consumers will put in the extra work to interact.

Most marketers could reason that 8 million Kinect users constitutes a niche market that we can afford to neglect in the still-austere year of 2011, but new Kinect developments might be game-changers. In addition to the promise of faster evolution driven by the kind of experiments showcased on the Kinect Hacks blog, Microsoft has hinted that a more accessible software development kit might accompany the launch of a PC-compatible Kinect in 2011. So that touch-optimized web interface you're developing might need to be gesture-optimized sooner than you think.

While no one has yet been able to explain to me why we needed to coin the word "geolocation" when we already have a perfectly good word that means location -- namely, "location" -- it's clear that both the term and the technologies are here to stay. Yes, I speak of the much-heralded growth of check-in apps like Foursquare and Gowalla and the attendant opportunities for marketers, but that's not where most location-specific brand interactions will take place. On tablets and browsers, geolocation is a potential factor in every browser and app-based interaction with consumers, not just on dedicated geolocation apps. Even on good old-fashioned desktops and laptops, location is increasingly important as search engines begin to put more juice behind local results, ad networks push location-based targeting, and HTML5 location-sniffing gains ground with each new browser release.

To take advantage, marketers need to think conceptually about geolocation rather than chasing after the app of the day. You need to start with big questions like, "What could I offer my prospects that would be different if I already knew their locations?" The answer to that question not only influences mobile strategy but also search engine optimization, paid search and display ads, and web development. Which reminds me...

The death of the website
OK, I admit, your website is not going to die, but it makes for a more provocative subhead than "the increasing de-centering of the website," which is actually what's taking place. The corporate website is losing its centrality as the means by which consumers interact with brands online, and it's not coming back.

The website will, for the foreseeable future, continue to be the primary means of transacting with consumers online, but that's only one small part of marketer-consumer interaction, way down at the bottom of the funnel. Further up the funnel, where consumers compare brands, read reviews, listen to friends, and talk to brands directly, you're far better off meeting up with consumers in the places they like to hang out, like Facebook, YouTube, and Twitter, as well as blogs, forums, communities, etc.

This requires a tectonic shift in the classic marketer mindset. Even marketers that have fully embraced the idea that their content needs to live in lots of different places still get twitchy at the notion that a promo can live solely on Facebook or Twitter without needing to herd everybody over to the corporate site. That's understandable; digital marketers live and die by the numbers, and site traffic is a number. Marketers won't truly make the leap until social analytics mature, but that's a topic for another day.

Content aggregation
Faced with the constant deluge of digital content produced by consumers, competitors, and peers, the marketer's last tether to sanity is content aggregation, which allows us wrangle the content flood into a manageable, consumable stream. I am, as I write this, using a content aggregator to monitor content about content aggregation, proving that 1) every day, in every way, things are getting meta and meta, and 2) my own frayed tether to sanity has finally snapped.

Simple aggregators like Google Reader and Flipboard can work behind the scenes to mainline relevant content into our marketing veins, but consumers also suffer from content overload and need our help. (Or, at least, they're sometimes willing to accept our help.) Many marketers have embraced content curation as part of their content marketing strategy. Using handy curation tools like Scoop.It, they pluck relevant content out of the ether, slather on a coat of their own content varnish, and package it up for content-addled consumers. Mint.com's much-vaunted MintLife blog is a prime example, but every topic has content worth curating. Marketers who fret about how to sustain content production for their blogs should be first in line for this: The ability to pinpoint good content is often far more valuable than adding new content to the flood.

Woody Allen once described an existentialist philosopher as someone who hated reality but found it was the only place he could get a good steak. Augmented reality (AR) bears the promise of making it easier for consumers to find a good steak and even to visualize what a good steak might look like.

AR has become a catch-all term for any application that visually layers digital reality on top of analog reality. Across devices -- PC, tablet, and smartphone -- the camera is usually the bridge between realities. Browser-based AR often takes the form of a printable AR marker that, when held up to a webcam, displays some sort of 3-D model that can even include motion, sound, and video. Mobile-based AR, which tends to get more of the buzz, usually consists of location-based (sorry, geolocation-based) visual information imposed on whatever you're looking at through the phone's camera.

AR is still mostly in the sparkly object phase of its development -- perfectly suited to the launch of the new Gorillaz album, for instance. But it's going to gain ground quickly as marketers seize on its potential for better merchandising; consider, for instance, an application that would allow you to model the style and finish of new door hardware simply by scanning your door through your smartphone's camera.

I encourage my fellow marketers to start dabbling in AR right away. It's relatively cheap, easy, and fun, with great potential to create more immersive experiences that delight consumers. Any able-bodied Flash developer can create browser-based AR, and any marketers with location information worth touting can create their own branded AR layers and make them available for free through the AR application Layar. Then when AR glasses finally bust out a mere 20 years from now, you'll be ahead of the game.

Yes, mobile. I know -- mobile was last year's big tech trend, and the year before that, and the year before that. This time, we mean it. For the first time in 2011, sales of smartphones will surpass the combined sales of PC desktops and laptops. So it seems that mobile has become kind of a big deal.

I risk stating the obvious because marketers have thus far failed to embrace the obvious when it comes to mobile, and we face a rude awakening. DotMobi reports that only 29.7 percent of the web's top 10,000 sites are optimized for mobile. That's a full-blown usability crisis in the making.

How did we end up in this spot? App fetish is partly to blame. Settling on a mobile app strategy and getting an app built is a much longer road than simply optimizing your site for mobile browsing, but marketers have a tendency to focus on the big payoffs. As any analyst will tell you, ignoring your site's poor mobile performance in favor of an app strategy is deeply misguided. Different user types favor apps vs. browsing, but all mobile users will demand better browsing experiences from brand sites. Expect to see studies emerge in 2011 documenting the brand switching and loss of brand equity that occurs as a result of poor mobile experiences; you can then bake that data into your business case for the new mobile site.

That's the view of 2011 from two months into it. What did I miss? Let me know!

Eric Anderson is VP of marketing at White Horse. Check out his blogs on iMedia Connection and the White Horse website.

On Twitter? Follow iMedia Connection at @iMediaTweet.


to leave comments.