Archive for the ‘Campaign Testing and Optimization’ Category

Amp Up Email Results with Honeymoon Segmentation

Tuesday, October 7th, 2008

Subscribers to your email list are most likely to open, click, forward to a friend, and buy in the first 30-60 days after joining the list.

This is the Honeymoon and you need to use it to boost your email results - especially in the 4th quarter holiday shopping season.

This chart from Marketing Sherpa shows the impact of recency on email results. This is a somewhat dated B2B chart, although I have no doubt whatsoever that the trend holds. If you have more recent data, please leave a comment below.

Creating a Honeymoon Segment

During the Honeymoon, subscribers are flush with excitement about your email program. Possibilities are boundless, as your whole messaging relationship lies in front of them, and surely that relationship will be filled with timely offers and insightful information.

While palms are sweaty, and giddiness abounds, you should create a specific and separate Honeymoon Segment for your email program. The Honeymoon segment is anyone who has joined your list in the past 30-60 days. Use 30 days if you plan to mail recipients 3+ times per month, and 60 days for 1-2 sends per month.

Treat Honeymooners entirely differently than you do your other subscribers. Mail more frequently, ask them to forward to a friend, use aggressive offers. Essentially, your objective is to maximize the value of the Honeymoon by capitalizing on the short-term excitement that new subscribers have about your program.

Because the Honeymoon will end. The excitement will fade in a flurry of email offers, and you’ll begin to quarrel about things that used to seem so trivial - like message frequency, bed making, and spending too much time on your fantasy football team.

Note that you can help stave off the end of the Honeymoon by moving as quickly as possible toward truly relevant, hyper-targeted messaging. This is the future of email, but it requires a real commitment to use segmentation to deliver timely and useful messages at all time.

Do This First

Two components of the Honeymoon strategy you absolutely must employ are thank you messages and testing. Send an immediate thank you message to all new subscribers. That thank you should include a meaningful offer (preferably with a time limit) and a request to forward to a friend. Your chances of generating revenue and viral behaviors from your subscribers diminishes with each email received, so try to make it happen in the first 5 minutes a subscriber joins your list.

Second, use rigorous testing to maximize the impact of the Honeymoon. The same way you’re engaged in constant testing of your main email program, you need to be testing your Honeymoon segment. From lines. Subject lines. Day of week. Time of day. Layouts. Offers.

Note that because your Honeymoon segment will of course be much smaller than your main program, it may take longer than usual to test. Watch your statistical validity, too.

Have you used the Honeymoon Segment? Do you think you can adopt it in time for the holidays?

Leave a comment with your ideas.

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Jason Baer

The Future of Email Marketing - Think Holistically, Send Individually

Wednesday, September 24th, 2008

The demise of email has been greatly exaggerated.

While Jupiter says that overall email volume has dropped from 41 messages per day per U.S. user to 24, the email marketing universe is very much alive and well. The Direct Marketing Association (DMA) projects that $600 million will be spent on email in 2008, driving an astonishing $27 billion in sales. That’s $45.65 in revenue for every dollar spent on email marketing, an ROI figure that’s nearly impossible to match outside of the bottled water and pharmaceutical industries.

But, the increasingly vigorous expectations and demands of email recipients are changing the game. An electrifying survey by Marketing Sherpa in August, 2008 showed that 41% of subscribers believe an email to be spam if it is not of interest - even if it’s email they requested. There’s a Saturday Night Live skit in there somewhere. You meet someone at a party and they end up being boring and irrelevant, so you can click a spam button and they disappear forever.

Targeted = Relevant = Wanted = Successful

Consumer demand for email that meets their specific needs mirrors the surging desire for authentic, 1:1 conversations with brands via social media outlets. Regardless of medium, today’s consumers want to be talked with, not talked at.

This is troublesome for many email marketers who continue to adhere to the longstanding practices of sending an email “blast” or “campaign” to a “list” and hoping that 5% of the recipients take action. This is the definition of surgery with a dull knife, and the patients are starting to revolt.

Further, in many circumstances email may not even be the optimal message delivery mechanism. Text messages, voice mails, good old direct mail, Twitter, and other outlets can be more appropriate and more engaging for consumers at times.

The promise of a hyper-targeted and relevant message, delivered at the right time, to the right person, using the right medium is holy grail marketing, and its the new focus of ExactTarget, the leading email service provider that’s morphed into a robust, centralized messaging system.

(disclosure: I’m an ExactTarget customer and was a speaker at their Connections user conference this week in Indianapolis)

ExactTarget is trumpeting this new era of multi-modal, targeted messaging under the mantra “Subscribers Rule.” Essentially, it’s an umbrella position for “give people what they want, even if it’s a text message in Portuguese at 3 a.m. featuring coupon codes for mittens.”

This notion of 1:1 marketing has of course been the rallying cry for digital marketing since its inception. Historically, the problem has been gathering enough information and insight about your customer base to be able to fashion customized, truly relevant messaging. In the past, you’d have to mine e-commerce data or implement a sweeping audience segmentation study to do it right, and then you’d build an e-mail campaign around it.

Now however, ExactTarget and its burgeoning network of partners are enabling email itself to be used as a segmentation tool. Advanced link tracking, integrations with Web analytics software like Omniture, and a new user-controlled engagement score feature (whereby you assign a numerical weight to subscriber activities like email opens, clicks, purchases) allow the sophisticated marketer to learn a tremendous amount about their audience based on their email-driven behavior, and then use that feedback loop to create and send ever more relevant and timely messages.

Additionally, a thorough program of triggered messages (sent individually based on Web site behavior) can provide tremendous information about a subscriber while simultaneously delivering hyper-relevant and timely information.

I Get Sign Ups With a Little Help From My Friends

A second very interesting opportunity presented by the centralized messaging platform concept is the cross pollination of message delivery vehicles. The most buzz-worthy example is “email opt-in via text” whereby consumers can use short code text messaging to sign up for highly targeted offers and other communication from a brand at point of sale. This could render the physical email opt-in form moot at retailers and restaurants, and would make opt-in immediate (enabling instant couponing, etc.).

Imagine you’re in a check out line at Petsmart and you see a prominent sign that says “for $5 off Iams dog food, text “Iamsdog” to 23907. For $5 off Iams cat food, text “Iamscat” to 23907.” Instantly, the brand knows whether you have a dog, cat or both, has added you to its database, and you get a valuable and relevant coupon immediately. Slick - and not terribly difficult to execute.

Lions vs. Lambs

As this multi-modal, 1:1 marketing gets more prevalent, the software needed to run it and the expertise needed to strategize and manage it are becoming commensurately larger and more complex. Interesting then that ExactTarget is rolling out a formalized partner program (similar to Microsoft, Oracle and other enterprise software companies) that will features specific partner tiers, certifications and other “badges” to distinguish among specific expertise. This should assist clients in selecting the most appropriate agency partner for their 1:1 marketing efforts, and agencies will have a codified program for reselling the software and providing services to augment it.

 

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Jason Baer

Digital Agency Toolkit - Use CrazyEgg to Test Web Layouts

Monday, September 22nd, 2008

Do you need to know whether people on a Web page are clicking on the navigation, the logo, photos, or links in the text? Of course you do. And ideally, you should be tweaking your pages and testing often to maximize results. (that’s why we’re on version 3.2 of the Convince & Convert Web site copy in 9 weeks). 

For specific areas of digital inquiry like this, it can be easier and more useful to utilize specialized software rather than navigate through the massive array of features contained in an enterprise application.

If you need to figure out which elements of a Web page are getting clicks, and measure versions against one another, CrazyEgg is the answer. This simple software program only does a couple things, but it does them exceedingly well in an ultra easy to use fashion that puts it in the same “why isn’t all software this good” category with Basecamp, iphone, and Conceptshare. It’s Web-based (nothing to install), works in just about any browser, and handles analysis quickly.

CrazyEgg also lets you filter out internal usage (for more accurate reporting) by clicking a link in your dashboard or by sending an email to users you don’t want to appear in your reports. 

Web analytics and click stream data at your fingertips

Here’s how CrazyEgg works.

1. Sign up for an account. Fees range from $9 per month to $99 per month for deluxe version, based on how many different Web pages you want to track, and the number of combined monthly visits to those pages.

2. Add tracking code. Paste one simple line of javascript into the HTML of the Web pages you want to track. This should take approximately one minute, and if your Web developer or IT department says differently, they are being difficult and you should immediately bribe them with Red Bull or an XBox game. 

3. Wait for traffic to come. Once you have visits to your Web pages, you’ll be able to access your CrazyEgg reports online instantly. (alerts and other information can also be sent to you via email or RSS).  Reporting is where this system really shines. They offer multiple, highly visual ways to view click stream information that is far more compelling than a spreadsheet. For instance:

OVERLAY

- Clicking [+] for each links shows how many times that link has been clicked, and the more+ link shows you from where each clicker came (and their search term if they come from search). I can see that 16% of the 44 people that clicked “Digital Marketing Blog” from my home page came from Google. It also tracks outbound links, so I can see what other blogs in my “Links We Like” section get clicked.


 

 

 

 

 

 

 

CONFETTI

- Shows colored dots representing clicks on each link. Every color represents a different referring Web site. This is very useful for visually determining click pattern differences between visitors coming from Google and typing in www.convinceandconvert.com directly, for example. (Orange and Red, respectively)

 

 

 

 

 

 

 

 

HEAT MAP

- Perhaps the easiest to grasp and the most awe-inspiring report, the heat map shows frequency of clicks through color variations. Brighter colors = more clicks, so I can tell in one second that the “Digital Marketing Blog” link on the home page gets significantly more clicks than anywhere else on the page. 

 

 

 

 

 

 

 

If I wanted to see whether I should rename “Digital Marketing Blog” and change it to “Internet Marketing Blog”, I could make that change and then start a new CrazyEgg test. Comparing the before and after results reports is incredibly simple, and telling.

No Excuse for Not Running A/B Web Site Layout Tests

Many agencies and client marketers I speak with believe that methodically testing landing pages (see blog post about landing page testing), shopping carts, and other key Web pages is a huge hassle. It’s not, and CrazyEgg can help you get into a habit of testing.

For agencies, the perceived value of CrazyEgg’s heat maps, etc. is very high for clients and its a system that for $9-$99 per month, I recommend universally.

Have you used CrazyEgg? Something similar? Are you ready to start testing? Leave a comment.

 

 

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Jason Baer

5 Memorable Lessons from my Sarah Palin PPC Campaign

Monday, September 8th, 2008

Thanks to everyone for participating in my “Are you man enough to write a PPC ad about a woman VP” contest. Many excellent entries (see original post). Here are the results:


McCain is 72 years old 
Avg US life expectancy is 78 years 
Is Palin qualified? Read This 
DailyKos.com   1.31% Click-through rate      

 

Sarah Palin’s Secrets 
What the GOP doesn’t want you to 
know about McCain’s running mate 
sify.com 

2.66% CTR

 

Sarah Palin Revealed 
What makes her so special and 
why the Democrats should worry 
johnmccain.com 

3.62% CTR

 

Who is Sarah Palin? 
Exclusive stories, photos and more 
on the Vice Presidential candidate 
newsminer.com 

4.89% CTR!!!

 

Congratulations to Russ Hollmann (@hollmann) for winning the PPC Contest. He gets $200 from yours truly. 

Thoughts on the Outcome

I’ve been looking at the results and thinking about why Russ won and what we can learn from this contest. I’ve learned 5 lessons from this experience.

1. Mindset of searchers. Interestingly, Google took 3+ days to approve the ads. A call to tech support couldn’t even resolve it. Amazingly, they began running immediately after Palin finished her convention speech (insert conspiracy theory here).

Consequently, once the ads finally went live, I suspect there were more pro-Palin searchers than anti-Palin searchers, hurting the CTR of the lefty-slanted ad candidates.

On a similar conspiracy-scented note, the ads were set to run evenly for testing purposes. However, Google served 175% more of the pro-Palin or neutral ads than they did the negative ones. Hmmm.

2. URLs matter. I forgot that I had to put “real” URLs on the ads - not like the old days when you could do whatever you wanted. Thus, instead of having the same URL for each ad, I had to have the actual URL of the news story to which I linked. See above. For some, DailyKos is Kryptonite. The JohnMcCain.com URL may have been interpreted as less than objective (shocking, I know). The sify.com URL seems mysterious. Newsminer.com sounds objective and “newsie”. That may have helped Russ’ entry.

3. Don’t minimize your audience. Of all the finalists, the winner was the most even-handed. The other ads were clearly more appealing to one side or the other, which may have truncated their appeal commensurately. If you’re running a PPC campaign and are looking to maximize clicks, it may not work as well to take a strong stand in the ad itself - wait for the landing page.

4. Specific promises. In comparison to the other finalists, Russ’ entry promised stories, photos and more. I have seen through 15 years of Internet marketing experience that when you tell people exactly what they will get when they click, they are more likely to take you up on that offer.

5. Use of impact words. While all of the finalists used turns of phrase to make their ads interesting and engaging, Russ’ inclusion of “exclusive” may have helped win the contest. Given that by the time these ads launched, pretty much everyone not in prison knew at least something about Sarah Palin, the appeal of “exclusive” information may have been extremely intriguing.

How do you interpret these results? Add a comment

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Jason Baer

The Official Toothpaste of Social Media

Friday, September 5th, 2008

Will the Crest Weekly Toothpaste Launch Work?

Minty Fresh Blogger MouthsIn a sign that the guys who control ad budgets are getting the value of interactive advertising faster than the agencies that place it, P&G announced recently that they are introducing their new Crest Weekly toothpaste almost entirely through the blogosphere.

Samples of Crest Weekly were sent to prominent bloggers (as well as 600,000 Moms) in an effort to trigger an underground viral effect. P&G marketing honchos say that Crest Weekly is an unconventional product. You use it weekly to augment your regular brushing - it has more grit in it to give you that “just back from the dentist, but not numbed or broke” feeling. Thus, it is difficult to explain on TV.

While that makes sense, I suspect the famous data hounds at P&G are also cooking up a little test to see if social media can really carry the water for a launch.

It appears - at least for now - that it cannot, but results are inconclusive.

Ironic Lack of Word of Mouth for Oral Care Product

My search for blog posts, Tweets and other signposts indicating that bloggers indeed used Crest Weekly and wrote about it turned up fairly low volume - although Ariana Huffington’s smile looks a little brighter these days.

I found 10 separate blog posts, on well-targeted sites (beauty, women’s, shopping). I also found just one Tweet (from one of the bloggers promoting her post).
Crest in Show
My favorite among them was Tia Williams’ “Crest In Show” post that artfully wove in her background as the daughter of a dentist. Nice!

P&G has not said how many bloggers were given samples, but they did disclose that they began arriving in early August. The product launches in stores next week (mid-September).

The Cavities in the Crest Weekly Launch

There are two fundamental problems with the Crest Weekly approach.

1. They actually sent the product out too early. Blogging is a NOW thing, not a “we’re working on the December issue in August” thing. Sending out samples 6 weeks before the product launches when one use of the product will clearly communicate the benefits to the blogger is too long of a lead time.

It will be very interesting to see if blog posts about Crest Weekly intensify next week when the product launches. I suspect some bloggers are holding their posts until closer to launch. If you find some new ones on Google Blog Search or Technorati, please let me know.

2. The tactic overwhelmed the strategy. The notion that a major consumer goods manufacturer would launch a product via social media is so novel (for now) that the buzz around it became about the marketing approach rather than about the toothpaste. In fact, there are actually more blog posts (including one more once I click Publish) about the social media launch then about Crest Weekly and its magical teeth scouring properties.

Hopefully, P&G won’t interpret this to-date tepid response from the blogosphere as a sign that social media won’t work, and will instead adjust its tactical plan next time around for greater success.

In a related story, Kellogg announced today that the ROI on their digital marketing for Special K cereal (blogs, ads, microsite) is superior to the ROI for traditional advertising. While this isn’t shocking to yours truly - a well-targeted and well-executed digital program will almost always beat traditional in a pure ROI fight - for a company like Kellogg to put that information in print (Ad Week) is a quite the watershed.

Have you launched a product or brand using heavy social media? Did P&G do the Crest Weekly program right, or wrong? Please tell us your story in the comments.

 

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Jason Baer

Ad Networks Are a House of Cards - But a Great Deal

Tuesday, August 12th, 2008

A groundbreaking study by the Interactive Advertising Bureau (IAB) and Bain & Company shows that ad networks’ share of display ad sales soared from 5% to 30% from 2006-2007. (Read the excellent full report here)

It seems the rise in Internet advertising (~20% per year, according to eMarketer) is creating a flurry of new sites, and a scenario where established sites keep adding more content, and thus more ad inventory.

For agencies, the opportunity is tremendous because ad networks charge $2-$3 per one thousand ad impressions, while buying ads direct from a site can run $20 or more. Certainly, sites often hold back premier ad placements for direct sales, giving ad networks less attractive, run of site inventory. However, if one ad buy is at a $2 CPM, and the other ad buy is at a $20 CPM, it is extremely unlikely that the premium inventory will perform 10 TIMES better than the non-premium placements.

There are literally dozens of ad networks now, each willing to place ads for your clients on Web sites, including highly targeted behavioral and retargeting opportunities. (Decent list of reputable ad networks here) Given that you can buy solid inventory at a fraction of the cost, why wouldn’t you use ad networks almost exclusively, especially for test campaigns when you’re trying to optimize creative and call to action? (my blog post on how to optimize online ads)

From 2006 to 2007, sell out rate (the percentage of overall ad inventory sold) by premium publishers covered in the IAB study actually went UP from 55% to 72%, but that was due almost entirely to the huge increase in ad network placements. Thus, sites are turning more and more of their ad inventory over to networks that are paying them a pittance for it, figuring “some dollars are better than no dollars.” This of course is true in the short-term, but eventually this house of cards will fall.

Sites cannot continue to sell an increasing share of their ads at a couple bucks per thousand, unless their content creation overhead is extremely low. And even ad networks that are booming at present with a 600% annual growth rate, cannot sustain it. As more ad networks come online, downward price pressure will only increase, making it difficult for ad networks to make much margin on their arbitrage. Failures and consolidation will occur quickly.

Advice for Agencies

Consequently, my advice for agencies is to use ad networks as much as possible for your online media purchases, especially in the testing phase. However, use first-tier networks at all times, and use multiple networks.

Realize that your preferred network may not be around very long, and when the consolidation begins, it will happen FAST, so make sure your in-house team (either media or account executives) legitimately know enough to be dangerous about Internet advertising placement to keep you in the game if the precarious ad network situation blows up in your face.

 

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Jason Baer

Agencies Need to be Testing Landing Pages

Monday, July 21st, 2008

Average length of stay on a Web site is approximately 2 minutes and 30 seconds overall. Approximate length of stay by visitors coming from search is about 10 seconds. Why the difference? Search users are less likely to know your company and its attributes in advance, and they know there are several other options available to them simply by clicking “back”. In short, search engine users have the attention span of a 4 year-old after three s’mores and a cup of grape Kool-Aid. 

Most marketers engaged in even semi-serious pay per click programs have determined that creating specific “landing pages” to sync with particular search terms can help combat the flighty nature of search users. If a user searches for “mustard” on Google and clicks on your ad, you don’t take them to your home page, you take them to a page that’s all about mustard. You don’t even mention ketchup. Why confuse the user with information that doesn’t specifically address their needs?

This ability to determine the specific interests of the consumer (via their search phrase) and give them marketing messages that match is perhaps the most powerful capability of the Web as a whole. It’s as if consumers are walking around with thought bubbles over their heads describing what they want to buy. 

Not to be ignored is the important fact that Google (and I presume Yahoo!) are now including the content (and download speed) of landing pages as components in the “quality score” that determines where your PPC ad appears in search results. Meaning, if the page that lies behind your Google ad is not uber-relevant to the query, your ad will be penalized for it. This makes creating great landing pages a necessity, not a luxury. 

For agencies, the creation of landing pages is a critically important service that is not often being offered to clients with the appropriate voracity. If the client is thinking about a Web site redesign, but isn’t ready or doesn’t have the budget, creating a series of outstanding landing pages can help the agency prove its Web design mettle. Further, if a variety of messaging and/or design approaches are being considered for the new Web site, testing the efficacy of those approaches on landing pages is a smart move. 

Because they lie directly in the consumers’ research and purchase funnel, landing pages provide extraordinarily useful data that can be extrapolated for use in other online and offline marketing programs. Offer testing, photo testing, price point testing. All of these can be accomplished with landing pages with relative ease.

In fact, a rigorous and ongoing program that tests new landing page components (including multi-variate testing) can have tremendous bottom-line impact for clients, and makes the agency a hero. A multi-variate test that we conducted at Mighty Interactive for a student loan company generated a 40%+ increase in leads - resulting in a financial gain of hundreds of thousands of dollars for the client. 

When testing landing pages (and really any digital marketing element), remember that small changes can make a big difference. Background colors, font, spacing, photos, headlines and more can all impact whether a consumer will buy now or buy never. Don’t overlook button labels, either. Your action button is the last thing the consumer reads before determining whether to take action. Labeling it “submit” or something equally uninspired is missing a tremendous opportunity to set the hook at a critical time. 

If you have a landing page testing success story, let’s hear about it. 

 

 

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Jason Baer

Google to Show Search Volume - Another Blow to Agencies

Tuesday, July 15th, 2008

In a LOOOOONG overdue move that provides some much-needed transparency to the PPC business, Google has added search volume data to their keyword research tool

This means that when you use Google to research potential search terms for your clients’ pay-per-click campaign, Google will actually give you an idea of how many people actually search for that term each month. Useful data when you determine that only 2 people per month search for “heirloom cucumbers kansas” so perhaps that phrase shouldn’t be the cornerstone of your search marketing efforts.

If you’re not involved with PPC on a daily basis, you may be thinking “well of course they would tell you how many people search for each phrase, how else could you even figure out which phrases to bid on?” Welcome to Planet Google, where information is doled out in maddeningly small and disconnected doses like plot points on Lost.

It is of course ridiculous that this data was not provided historically, especially since GoTo/Overture/Yahoo showed search volume from the beginning, and they pioneered PPC, not Google. But, Google’s moxy to hide a critical piece of marketing information has been a boon for search agencies and consultants, who use third party tools like WordTracker (a nice little company that is probably stocking smelling salts in the cafeteria after this announcement) to find this data for clients. 

While this announcement may seem out of left field, I see it as another move in a series designed to disintermediate agencies and move small and medium sized advertisers into the hands of Google directly. Google Analytics makes having a Web analytics consultant less necessary for some. Google’s Ad Planner makes an online media consultant less necessary for some. Google’s TV Ads and Radio Ads services make a traditional media consultant less necessary for some. 

Trouble for Agencies, but an Opportunity

Ultimately, it appears Google’s desired end game is for all small and medium sized advertisers to conduct all marketing transactions directly with Google, leaving agencies to deal with the big clients. For advertising agencies, this is both troubling, and an opportunity. If Google makes the marketing and advertising business as transparent as travel planning and stock purchases, the only agencies that will be able to survive are those that can add real value in messaging, creative, and integrating data into actionable tactics.

The transactional components of the advertising agency model like media placement, and the other services like Web analytics that are based on access to data will evaporate. Agencies must commit to being thinkers, rather than doers to succeed in this environment. Setting up a PPC campaign won’t cut it much longer. Managing a PPC campaign with rigorous testing that incorporates insights from offline tactics will be the level of expertise required for an agency to charge for search marketing - and that day will be here quickly.

 

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Jason Baer

91% of Top Digital Agencies Not Buying Their Own Brands on PPC

Tuesday, July 1st, 2008

In a shocking (and embarassing) revelation today, AdWeek uncovered that of the 56 world-class digital marketing agencies featured in their Annual Report Card, just 5 are purchasing their own brand names in PPC.

In fairness to the firms, most of them appear at or near the top of organic search results for their own brand names, but several studies have shown that click through rates (and conversion rates) typically increase when your brand is at the top of BOTH organic and paid search results. Incidentally, this is why the notion of dropping your paid search when you achieve organic search success is a bit of fallacy.

Also of note are smaller firms that are purchasing competitors’ brand names in PPC and showing up in paid search results. A crafty tactic, to be sure. Note that current case law says that you can in fact purchase competitors’ names and trademarks as a search term, but you cannot use those trademarks in your actual PPC ad copy.

If you’re an agency, why would you NOT cover as many bases as possible with your organic and paid search marketing efforts? The costs are minuscule and the results can be significant. In fact, at Off Madison Ave and Mighty Interactive (where I handle strategy and ideas), search marketing has long been a primary driver of serious new business leads.

If even the big digital shops aren’t buying their own brands in paid search, how many traditional agencies are doing so? If you’re not playing in this sandbox, get on it. You could literally have a campaign up by the end of the day.

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Jason Baer

Google’s Popularity is Costing You Money

Monday, June 30th, 2008

Paid search management vendor Covario said today that PPC spending was up 52% in Q1 2008 versus 2007.

52% is a big leap for an already red-hot digital marketing tactic.

But perhaps more interesting was the finding that Google took in 85% of the paid search spend in the first quarter. (No wonder Yahoo! rushed into their arms after Microsoft blew them off). This points to a big inefficiency in PPC in general. If Google has 71% of the search market based on total number of searches, but 85% of the PPC budget, then substantially more people are spending substantially more dollars in Google than necessary.

Google’s Popularity Means You’re Overpaying

It’s not a mystery why paid search is up 52% and Google has 14% more spend share than eyeball share. In a down economy, marketers want to minimize waste, and Google PPC is the closest thing to a sure bet that’s easily available. (see previous post on digital marketing’s prominence in a recession). Marketers figure that if they have to retrench and focus on results and ROI, Google’s the place to go. But, if everyone is thinking that (and it appears they are), then the price for a click on Google PPC will continue to rise quickly to the point that profitability and ROI are impacted.

I suggest monitoring your average cost per click carefully to see if this trend is impacting you or your clients.

Don’t Dismiss Yahoo!

On a related note, this 85% Google share very much undervalues the importance of Yahoo! to many successful PPC programs. In many cases while working on client projects with Mighty Interactive, we saw Yahoo actually outperform Google. This is especially true for certain brands, as Yahoo’s users skew more female and less technical than do Google’s (and MSN’s users are even more female than Yahoo).

So, if the Google gold rush is pricing you out of the market, swim upstream and put some dollars in Yahoo and MSN where the clicks are cheap and your competition has fled.

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Jason Baer