Opportunity clicks. Why PPC is the right move in a bad economy.

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Our guest writer this week is David Mink

Want to ruin the mood at a party? Mention the economy. It might not win you host of the year award, but a down economy is the perfect time to talk about why increasing the complexity, scale, and spend of most advertisers’ PPC campaigns makes more sense than ever.

I recently interviewed two of the industry’s top experts: Rachel Charlton and Shu-Yao Chien from Webtrends‘ Ad Director team. Ad Director is Webtrends’ “truly intelligent, automated” paid search optimization technology that automatically and continuously gathers data from thousands of PPC trials to produce ideal keyword, ad position, bid, and landing page combinations for PPC managers trying to squeeze every penny out of their paid search campaigns. Rachel and Shu-Yao understand paid search from top to bottom, and they explained why companies are pouring more and more money into paid search, though overall marketing budgets may be going down.

How has PPC changed over the past couple of years?

Rachel: In the last three years or so, there is a lot more competition and people have to be much more savvy. Rather than PPC being an ancillary part of the marketing campaign, it leads a company’s marketing campaign. It’s a line item on the budget. Most people have someone in-house or they are using an agency. Companies are providing specific goals regarding ad spend or cost per acquisition.

Shu-Yao: People are utilizing more metrics, measuring conversion, and better understanding market dynamics in order to set more meaningful goals and get a more accurate measure of success.

What are the biggest changes you see coming down the road in the next five years?

Rachel: People will want one solution to integrate all aspects of their marketing campaign; paid search, social marketing, display advertising, and content.

People will also be using social media more as an acquisition tool, as well as more international campaigns. International will be a lot larger.

Shu-Yao: There will be an expansion of different channels of social network but still within the PPC model: cross-channel marketing, integration of different campaigns and platforms. Video ads also have potential as a new type of media as well as mobile ads on a pay per click model. Mobile ads will likely be within browsers more than within apps. People view ads within apps as more of an annoyance.

Despite the down economy, SEMPO (Search Engine Marketing Professionals Organization) reported a $14 billion increase in SEM spending in 2009 and predicts even stronger growth this year. Why do you think SEM is booming despite the bad economy?

Rachel: There are two reasons. First, it’s measurable. In a bad economy, companies love to be able to show a cause and effect. On a pay per click model, you can see what you got for a return as opposed to trying to measure the success of an ad in a magazine. They love to be able to say “I used my $100,000 budget on paid search and brought in $700,000 in business.” Second, paid search is simply a very effective way to advertise. It’s not the same gamble it was several years ago. People have come to realize that paid search is an amazing acquisition tool.

Shu-Yao: This economy is the perfect time for paid search. Advertisers are looking for performance. Companies are looking for conversion right now rather than brand awareness; something display ads cannot give them, and social media is even worse. When people use paid search, they have much stronger contact of conversion than other avenues. Now people are talking about performance display, or market awareness. Top tier advertisers are more knowledgeable about what search is about and they have more leverage with how they market. Not just the largest advertisers but mid to small size and even local advertisers.

How has the current economy affected PPC? Has the Ad Director team had to deal with any new client challenges or industry trends because of the economy?

Rachel: People are more conservative with their budget. They are tighter on their goals and metrics. It’s a mistake, but people have stopped bidding on the branding campaigns trying to save money.

Shu-Yao: From the product perspective, clients are asking for more control over their search marketing campaigns. They want to know what we have been doing for them and they want to see the data.

What opportunities do you see out there for Internet marketers that they are currently missing in the PPC area?

Rachel: There is an opportunity to take advantage of advertising programs the engines, Google in particular, are offering. The engines offer site links, Google extension, and remarketing through content. Many companies are not taking advantage of these offerings and they are missing a chance to get ahead. If marketers are on top of the different engine offerings, they can probably gain an advantage on their competitors.

Shu-Yao: Advertisers need to look at the bigger picture. How does PPC interact with the other channels? How can we optimize among the different channels? That is where the marketer should focus in the coming years. People are comfortable with PPC the way it is now, but they should focus on the integration of these platforms as the market evolves.

Everybody in your industry claims that their product is an optimization tool or a bid optimization tool. What makes AD different?

Shu-Yao: One thing is technology, another is service. Technology is important because it really handles the scale of the PPC marketplace. Think of the complexity that you have to manage. Keywords, match type, landing page, and add to that that the marketplace keeps changing. Ad Director finds the optimal combination of these factors to maximize the clients goal. But technology is not enough. That’s where our PPC talent, our co-management team is able to really observe the market and use their expertise in this realm to adjust the strategy dynamically. These are the two components that we think are critical for success in a business campaign.

What was the idea behind the development of Ad Director?

Shu-Yao: Data was critical. Data is a gold mine. We wanted to figure out how to use all of the millions of pieces of data to find the optimal bid. We realized the complexity, or the scale, that the marketer is going to face; hundreds of terms, not only head but long tail terms. That is not a skill that a human can handle. Also, the challenge of optimization itself is not trivial. If you want to optimize at the portfolio level, you can’t just optimize on keyword level, you have to manage all of them. When we considered the scale and complexity of PPC campaigns, we knew the solution was to develop the right algorithm.

How has Ad Director evolved since its inception?

Shu-Yao: From a product perspective, we do evolve, but evolution is in the quality of our algorithm. We have two versions of the algorithm, the second was introduced only a few months ago. We have added some customization based on the clients’ business needs. Our business co-managers have more need for information. Our algorithm allows our team of experts to coordinate our internal data so that our business co-manager can export and share data more freely with the client.

Rachel: From a service perspective, we have changed the way we service clients moving toward more of a client agency feel. We provide more than just technical support, but strategic business support and partnership as well.

Have you seen more success among a certain type of client with Ad Director than another?

Rachel: No. Definitely not. So long as the client has sufficient traffic and conversion, we can be successful. Ad Director needs data in order to do its job. As long as the client has sufficient data, we can be successful, whether it’s a travel client, lead gen client, or a retail client.

Shu-Yao: We optimize towards performance. We make sure the performance metric accurately describes the customer’s business need. As long as that is the case, the technology optimizes to their metric. That is also why this industry is growing in this economy. People are looking for performance, and we can do that across industries and across different measures of business success.

Which concerns do you encounter most often from people who are considering an expanded PPC campaign or PPC optimization?

Rachel: People cut branding campaigns first. We get that often. That is a mistake for many reasons. Competitors can bid on your branded terms. If you’re not there, your competitors will be. Studies say that about 28% of traffic will click on paid search, so if you’re not bidding on branding terms, you’re missing 28% of traffic. You have to have branded terms in order to capitalize on Google site links. If you’re not bidding on branded terms, you can’t take advantage of site links.

Shu-Yao: Companies need to set different goals and expectations for branding campaigns than conversion campaigns. Just because you think people know your brand, doesn’t mean there is not an opportunity to capitalize on that traffic.

David Mink is one of the co-founders of Dream Systems Media. David received his Bachelor’s degree from Brigham Young University in Marketing. He then went on to receive his Juris Doctorate at the University of Alabama.

  • Rachel, thank you for defending branding campaigns. I’ve had to explain that to so many people.