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June 2, 2015

SMX Liveblog: Mad Scientists of Paid Search

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This is a near-real-time report from SMX Advanced 2015. Please feel free to ask any questions you may have in the comments and we will reach out to the speakers for clarification.

2015’s “The Mad Scientists of Paid Search” panel features PPC pros at the top of their game: Soren RyherdAndrew Goodman and Andy Taylor. Learn why current tools aren’t ideal for the multi-channel landscape, hear what influences a conversion, and get other deep thoughts for paid search professionals to think about.

paid-search-scientists-smx-advanced-2015

Left to right: Andrew Goodman, Soren Ryherd and Andy Taylor

Soren Ryherd: The Problem with Tools Today

Soren Ryherd is president and co-founder of Working Planet. His presentation is Don’t Murder the Prophet – aka Don’t Murder Profit. Ryherd warns the audience that tools that report on single-channel performance or aim to optimize a single channel (i.e., search) don’t cut it. Why? Most of the available analytics tools are based on search, but user behavior is dramatically different on search compared to other media.

Bid management, channel assessment and programmatic buying break down when viewed independently, because they are based solely on in-channel performance – but users don’t behave that way. Uses don’t care about your channels.

The user’s path of engagement is determined by the type of media. Search behavior is highly influenced by behavior taking place in other channels. However, the same is not true of how users may be influenced when interacting with other media. For example, when a user is interrupted during something like viewing a video or reading an article, they’re much less likely to interact with your ad.

Out-of-channel robs value from in-channel. Our job as optimizers is to support value on things that are likely to break – and the further you get away from search, the more likely channels are to break.

We need to move away from the constraints and assumptions of current tools. Tools and tracking were built for device as proxy for person and a click as the only path of engagement. Both of these are wrong.

Remember, brand traffic is not a channel. Brand traffic is the end of a conversation you created some other way. It should only be looked at in combination with other channels/activity/data.

Channel optimization can lead to inefficient results.

Baseline for out-of-channel behavior cannot be zero.

Ad structure should reflect user behavior.

Work backwards from sales:

  • Revenues are real
  • Models cannot predict more sales than actually occur
  • Feeding real financial data into optimization is critical

Out-of-channel behavior shows up in the unknown bucket of brand and direct.

Understand what drives the unknown bucket lets you better optimize campaigns.

Be smart: complexity of user behavior offers opportunity – but only if we embrace out-of-channel behavior. Don’t murder profit.

Andrew Goodman: Getting Real about ‘Enhanced CPC’

Andrew Goodman is the president of Page Zero Media. An article published by Google tells us that “Enhanced CPC could be described as an ROI turbocharge setting for your existing Max CPC campaigns.”

Even though it says this, it’s very hard for advertisers to know whether Enhanced CPC is better or not.

Here’s a recent experiment Goodman performed with Enhanced CPC:

  • Turned enhanced CPC off
  • Turned it back on a short time later
  • Did the test on five small-to-midsized campaigns
  • Also tested on one very large campaign (that included hundreds of brands)
  • Result: Although performance didn’t conclusively improve, enhanced campaigns show up in a higher CPC neighborhood. If Google can go from advertiser to advertiser and increases their bid, it might work for a while, but not ultimately.

How to Best Look at Data

We need to take greater stock in long-term data. ­­­

Ignoring numbers leads to worse results. But over-interpreting every number would be managing shadows.

Many foreign orders in travel and tourism may be large group orders. For years, we may have been missing out on international opportunities, bidding too low overall. Use the right KPIs.

In sports, streakiness is a non-phenomenon that is generally reduced to pure randomness in bunching. Take a coin flip experiment – sometimes you’ll have six heads in a row, but it doesn’t mean anything.

Looking for any anomaly is less valid when you look for it after it’s happened.

What influences a conversion? It’s not just “the words you wrote.” It’s also:

  • Ad position
  • Ad extensions
  • Top or side
  • Long headline or short
  • Mobile or computer
  • Time of day
  • Season
  • Initial vs. lifetime value
  • Universal or product specific appeal
  • Best landing page
  • Filtering function

Andy Taylor: A Look at the Paid Search Landscape

Andy Taylor, Senior Research Analyst at Merkle | RKG, will present an overview of paid search — what matters in an AdWords auction plus trends and forecasts for search advertising on Google and Bing.

What goes into the AdWords auction?

  • Bid
  • Quality
  • Format impact

All this leads to AdRank and cost.

“Only ads with sufficiently high rank appear at all,” said Hal Varian, Google’s chief economist, in a Google webinar that’s a must-watch for paid search pros: “Insights into AdWords Auctions.”

Greater importance is placed on the bid rather than the CPC.” — 2007 AdWords update

Google Year-over-Year Growth

  • CPC growth is accelerating.
  • In mid-2014 Google.com impressions began to decline.
  • First Page minimums have been on the rise since 2014 Q2
  • Paid search landscape is becoming more competitive everyday
  • Google is reducing their propensity to show ads:
  • Users are shown fewer ads to choose from – this could be good or bad but Google has a lot of data to determine which users want ads and which don’t.
  • Google revenue is still going up.

Reassess goals budgets and expectations. Past performance may not provide a good benchmark for future growth. Also, note that Bings ad clicks are becoming less expensive.

Organic search has picked up over the past three years. SEO is not dead.

The auction is Google’s game. There’s nothing inherently wrong with Google changing the rules, but it does impact us as advertisers so it’s important for scientists to dig in and find out when the rules of that games have changed and adjust accordingly.

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