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138 Winning Results with Google AdWords Paid Search 1.0 At its peak, Overture maintained partnerships with AOL Search, Microsoft, and several other prominent search engines. Today, they’re wholly owned by Yahoo (and called Yahoo Search Marketing). They were ousted from the AOL partnership by Google in 2002. At the time of this writing, Yahoo has rebuffed a buyout offer from Microsoft, who subsequently took that offer off the table. Under Overture’s system, highest ad placement went to the highest bidder, and in the early days, bids were published right on the page. Today, that model is a thing of the past. What has remained intact is the “pay only for a click” model. Although Google and others are now experimenting with a variety of pricing models in their ad platforms, on the paid search side, pay-per-click remains dominant. The Overture model was keyword- or keyphrase-centric. Advertisers would associate a separate bid and an associated ad with every single keyword in the account, even if they had 10,000 keywords. This and other quirks spawned the rise of third-party bid management software. AdWords 1.0 and 2.0 In 2001, Google had quietly rolled out a relatively unsuccessful experiment in monetizing Google Search results pages. Called AdWords (I’ll call it AdWords 1.0), it was initially based on fixed CPM (cost per thousand impressions) rates, and only three ad slots were available on a page. The pricing wasn’t favorable and advertisers didn’t take to it. A year later, Google rolled out a more sophisticated offering. In some ways, it mimicked Overture’s auction (Google later paid Yahoo a hefty settlement for patent infringement). It was pay-per-click, and bids were one facet of how visibility on the page was determined. But this version—initially called AdWords Select, then back to AdWords again, so I’ll call it AdWords 2.0—incorporated relevancy in the formula for determining placement on the page. The higher your clickthrough rate on a given keyword, the better as far as ad positioning went. Google also introduced some new ways of interacting with the system. As we’ve seen, instead of one keyword, one bid, one ad, you had “ad groups”—multiple keywords in a group associated with a single ad and bid. You could also specify individual keyword bids. A level above the ad group was the campaign level, which offered a number of settings such as daily budgets, language, country or region, and more. The platform was far more flexible and intuitive than Overture’s, so Yahoo was continually playing catch-up by patching features on top of an old, clunky interface. AdWords 2.5 and 2.6 In 2005, Google introduced a new wrinkle: a so-called Quality-Based Bidding initiative (I’ll call this AdWords 2.5), adding other relevancy factors to the mix, including keyword relevancy. Later, landing page quality (AdWords 2.6) was incorporated into the formula for determining keyword status and ad rank. In late 2006, Yahoo finally completed development of the replacement for its outdated Overture platform, code-naming it Panama. CHAPTER 5: How Google Ranks Ads: Quality-Based Bidding In many ways, Panama closed the gap in terms of functionality differences between Yahoo’s and Google’s paid search programs. Although there are still significant differences between the two, the differences aren’t as great as they once were. Yahoo, like Google, now ranks ads using what it calls a Quality Index. To date, landing pages aren’t always factored into the formula, but it’s likely that they increasingly will be. The Googlification of Panama was nearly complete by March 2008, when Yahoo introduced “reserve bid prices” similar to Google’s minimum bids. AdWords 2.7 was added by surprise fairly close to press time, so see below for the Addendum section of this chapter, where I provide an updated take on the latest formula. AdWords 3.0 While the numbering systems describing phases in the program may be arbitrary (I don’t know if Google has used their own names for releases), it is the case that AdWords is working on a future upgrade to the system, and it’s also the case that some Googlers have informally called this future update “AdWords 3.0.” Although some elements of this system have crept into full view—a proto-version of the Account Snapshot; a new hierarchy of ad types that allows a more global classification system that can take account of various kinds of offline ad programs; and more—a great many other features are being tested and debated. Google solicits some stakeholder and user feedback on features through a newly formed AdWords Beta council. AdWords 3.0 is just a nickname for a future interface upgrade. It is unlikely that any major ranking formula changes are being saved for any given period of time. Changes to the Quality Score formula will be ongoing and shouldn’t necessarily be associated with any given version or era in interface design. How Ad Ranking Works: The Letter of the Law, and Beyond The current ad ranking system has a number of complexities to it that are fully covered in Google’s easily accessible help and FAQ files online. The following is intended to summarize and put that information into context. The Goal Hasn’t Changed The goal, as it has been since AdWords was born, is to get your ads into the most favorable possible positions on the page (which leads to higher click volume) for the lowest possible cost per click. We are finding that the same “winning results” generally come through practices honed to take proper advantage of AdWords 2.0—with a few wrinkles. You need to be more cautious with account buildout; more cautious of website and business issues; and more willing to accept tight targeting orthodoxy over more experimental, loose targeting. Ultimately, in many accounts, some of your testing efforts will come at a cost: that’s the “experimentation tax,” if you will, that is now transferred directly to Google’s bottom line in the form of increased profits. At the end of the day, building a relevant campaign helps save you money. But to be clear, on the “ad ranking formula,” a fairly straightforward shift has taken place: clickthrough rate (CTR) has been replaced by the more multifaceted Quality Score (QS), 139 140 Winning Results with Google AdWords which does include CTR. In fact, on mature accounts, Google has said that CTR is still the “predominant” factor in QS. Or they might have said “a predominant factor,” which, like many Googlisms, is hard to pin down. (Speaking of Googlisms, if you’re wondering how frequently Google updates the Quality Scores on your keywords, under AdWords 2.6, a Googler once said that Quality Score calculations were made in “relatively real time.” Today, these calculations are all done per query, fully in real time—an impressive feat of computing power.) First, let’s look at the ranking methodology with some examples. That involves your bid being multiplied by your QS to determine AdRank. After that, we’ll look at the Quality Score (yes, a second one) that determines keyword status—that is, your minimum bid that determines whether your keyword is active. Keyword Quality Score for Ad Ranking A recent version of Google’s FAQs stated: “Quality Score for ad position is determined by a keyword’s clickthrough rate (CTR) on Google, the relevance of the keyword and ad to the search term, your account’s historical performance, and other relevance factors.” CTR Densely written indeed, but the point is made. Google confirms that CTR is a key component of QS, and that historical data are used when they become available. “Other relevance factors” is a catch-all term to cover anything that falls outside of the official definition. This could include, for example, a whole class of keywords, such as trademarked terms or celebrity names, being deliberately given worse QS than other kinds of keywords. The connection of the keyword and ad is brought up, and is part of the concept of tight targeting. You’ll also notice the pithy phrase “on Google.” That means data from search partner sites is not taken into account. In other words, a low CTR on Google Search is bad; a low CTR on a partner site, such as a cobranded Verizon search result, won’t hurt you. To illustrate the fate of advertisers with high and low QS, the following examples might help. The cost savings associated with high QS, all else being equal, can be substantial. Note that these examples are fairly closely adapted from the previous edition of this book, which referred to CTR instead of QS. Where will your ad show up on a given search query? AdWords works on an auction system to determine how high on the page your ad will be shown, but it’s not a “pure” auction. Google combines your bid on a given keyword with the current QS associated with that keyword, to come up with your AdRank. Ad position on a given keyword or phrase = [your QS on that keyword or phrase] × [bid] In other words, your ad position is determined by your score relative to other advertisers based on a calculation of your QS and your bid. To be precise, Google no longer refers to any notion of “multiplying” the QS by your bid—preferring to use the word “and” in their descriptions of the formula. “And” could mean “multiplied by,” but it leaves them more definitional wiggle room, as usual. Let’s take an example. Let’s say your company is called Bunky’s Bikes, and your ad is showing up near search results whenever users type bicycle tires. Your maximum bid is $1.08. CHAPTER 5: How Google Ranks Ads: Quality-Based Bidding Your CTR on that phrase is 2.0%. There are some other elements going into that keyword’s Quality Score, but because we don’t know what those elements are and because I have never been shown what a typical Quality Score number might really look like in absolute numerical terms, let’s just say that Bunky’s has a QS of 2.0. For our purposes, this gives your ad an “AdRank” score of 1.08 × 2.0, or 2.16. Now let’s say one of your competitors, Mike’s Bikes, is bidding considerably higher than you, at $1.53, but only has a CTR of 1.4% (and thus, for this example, a QS of 1.4). Not bad, but still, their ad rank is only about 2.14, slightly less than yours. It’s very close, but in terms of positioning on the page, your ad would rank slightly higher than Mike’s in this particular case. Now let’s say a third advertiser, Dread’s Treads, is vying for placement on this same phrase. Dread’s comes in with a maximum bid of only 48 cents, but their ad is so effective, users click on it 4.7% of the time (we’ll say their QS is 4.7). This advertiser outranks you both, with an AdRank score of 2.26, which puts Dread’s above both yours and Mike’s ads. Finally, let’s consider the efforts of a fourth, novice advertiser in this space, Spunky Spokes. First of all, Spunky’s doesn’t sell retail bicycle tires at all. They are a spoke wholesaler that only sells to other manufacturers. This advertiser also unthinkingly sets their maximum bid at $8.00, which is probably irresponsibly high. Spunky proceeds to write an ineffective ad that only gets clicked on 0.3% of the time. In spite of the much higher bid, Spunky would come in with an AdRank score of only 2.4. That’s not the final score, though, because Spunky’s “loose targeting” and poor relevance, according to Google’s system predictions, invokes a downgrade of the QS in this case to only 2.15. This puts Spunky in third place, below you and Dread’s, but still high enough to be ahead of the fourth-place contender, Mike’s. To achieve that position, they had to bid $8, whereas you only bid $1.08. Table 5-1 summarizes the company standings. (I’ve added some also-rans, Spike’s and HandleBarz, for added realism.) Your Account’s Historical Performance Google’s documentation notes that “your account’s historical performance” is used in QS. This is not the same as individual keyword performance. In addition to the performance of an individual keyword, an entire account can establish a good or bad history across the board. Consider this another layer of the formula that comes to affect initial Quality Scores across the account. In short, a strong account history can help “green light” newly added keywords so that they begin Max Bid QS Ad Rank Score Downgraded for Poor Relevance? Rank on Page Dread’s 0.48 4.7 2.26 No 1 Bunky’s 1.08 2.0 2.16 No 2 Spunky 4.30 0.3 2.15 Yes 3 Mike’s 1.53 1.4 2.14 No 4 Spike’s 0.74 0.5 0.28 Yes 5 HandleBarz 0.20 1.4 0.15 Yes 6 Advertiser TABLE 5-1 Rankings Based on the Google Formula 141 142 Winning Results with Google AdWords life with a high QS—a nice bonus to have. As the new keywords develop their own history, their own performance will factor more heavily into the determination of QS. Note that historical performance doesn’t include money spent or the age of the account. Google has stated that those would create “perverse incentives” and thus has not included these as factors. Keyword Status As I’ll explain in the final section of this chapter, “Addendum: AdWords 2.7—The Latest Development in Quality-Based Bidding,” Google has quite recently eliminated the notion of “minimum bids” applied to keywords. Formerly, under what I am calling AdWords 2.5 and 2.6, any keyword could be rendered “inactive for search” if your bid was lower than the required minimum. This minimum bid was calculated based on Quality Score (but confusingly, a separate Quality Score from the one used to determine rank). Now, the Quality Score affects ad rank, period, and does not generate any minimum bids. What this means is that there is technically no such thing as an inactive keyword in your account. All keywords are theoretically eligible to have ads shown against them. There are several other nuances to this update that I will cover in the final section of this chapter. Landing Page and Website Quality Expanding from modest editorial initiatives that banned things like pop-ups, Google has taken an aggressive stance towards so-called landing page and website quality. Indicators of a poor user experience on your site will lead to a poor landing page Quality Score. Again, look to Google’s official documentation for the full list of guidelines.2 I’ll highlight the keys here. For positive advice on landing pages and website design generally, see Chapter 11. Annoying User Experiences Annoying user experiences include things like pop-up ads and other intrusive elements. They also include frequent site outages, and, recently announced, slow page load times that can result from anything from a technical malfunction to an elaborate multimedia Flash-animated welcome. These things will result in lower Quality Scores. Poor Relevance Whether it’s done to be deliberately misleading or through negligence, pages that are completely irrelevant to the ad shown are, not unexpectedly, likely to result in lower Quality Scores. Deceptive Business Practices; Lack of Disclosure “Data collection” is a category of business model that Google takes very seriously. Most major online businesses are in the business of collecting consumer information; Google certainly is. But you must uphold high disclosure standards and privacy policies in any situation where you’re asking for users’ private information. Google spokespersons like to give the example of CHAPTER 5: How Google Ranks Ads: Quality-Based Bidding the “come-on” ads that promise a free iPod that only comes after disclosing reams of personal data, inviting five friends, and entering a draw. Such offers are intrusive, deceptive, and annoying. And they rub off on Google. Google doesn’t want to show ads like this. Similarly, to a lesser extent, “email squeeze pages” that promote some sort of digital offer without fully disclosing the use of your private information, or the quality of the offer, are on the outs. For those selling digital information, Google provides specific guidelines, such as a recommendation to offer a sample issue for free, so buyers understand the type of information they’re getting. Google is certainly wading deep into judgmental territory here, in spite of their sometime claim that the system is “all automated” based on “what users want.” Perhaps users do react in certain ways to certain user experiences online, but there are whiffs of affect and caprice in the guidelines that refer to business models that typically run afoul of the Quality Score algorithm, including “get rich quick schemes,” “travel aggregators,” and “comparison shopping sites.”3 Types of sites that are unequivocally banned are: (certain types of) data collection sites, malware sites, and “arbitrage sites that are designed for the sole purpose of showing ads.” Given that Google adds qualifications to nearly every definition, the “banning” isn’t nearly as unequivocal as it seems. I’ll explore this more in the case studies. Content Is Separate from Search Quality Score tallies are maintained separately for the content network. That means poor quality on content won’t hurt your search campaigns. If you see low CTRs on your content clicks, do not worry too much. This also means that it might make some sense to run separate campaigns for content, in spite of the convenience of content bidding in today’s system that partially mitigates the need for separate campaigns. Different ads, different bidding strategies, and even different landing pages might perform differently on content than they do on search. Case Studies I could probably regale you with hundreds of case studies of long-running accounts that have carried on pretty much as normal under AdWords 2.5, 2.6, and soon, 2.7. They had established CTR histories, no major website problems, and no major relevancy problems. Such case studies can’t help new advertisers and exceptional advertisers work through the rough patches, though. So the first case study below will walk you through the minefield of trying to manage a challenging campaign in a “gray area” business model that Google is holding up to greater scrutiny than normal. The second case study will look (quite optimistically) at approaches and tactics we used to achieve high initial Quality Scores, some cases in new campaigns set up within accounts that had lain dormant for some time due to low Quality Scores or company reorganizations. 143 144 Winning Results with Google AdWords Getting in tune with the rhythm of how you can successfully go from having initially poor Quality Scores to OK and Great Quality Scores may be instructive. How some hard cases look in real life doesn’t often resemble what life looks like in official Google documentation. Big Hair and Mistaken Identity: Is Google Thin-Slicing You into the Doghouse? First, at a high level, let’s explore the experience faced by a sizeable minority of unlucky advertisers in a realm of “heightened security” intended to catch “bad guys.” The high-level issue we are dealing with in the case of many advertising campaigns is that you might have a sensitive business model that is vulnerable to Google’s Quality Score policy whims. On one extreme, there are so-called “pure click arbitrage” sites that are sending AdWords clicks to pages of limited value whose sole purpose is to list more advertising links. Google dislikes the arbitrage model because users don’t like the extra clicking. So they’ve actively tried to slap “poor landing page quality” scores on such sites. Did I just say slap? Yes, some in the affiliate marketing community call this the Google Slap. That’s a tad melodramatic, even for me. Somewhere in the middle, you have what I call high-class arbitrage. The reality is, many businesses make money from the difference between the costs of advertising on one medium and ad revenues that they make from the resulting visitors. Ever heard a local radio ad for a local publication that sells advertising? Well, that’s ad arbitrage, isn’t it? We’re advertising to you, the potential business owner, with a pitch to advertise in our publication. The radio station takes the ad, because they’re not fussy about the business model, as long as the advertiser pays. Many online media sites are buying other online media. Just because this sounds somewhat circular in the abstract doesn’t mean it’s necessarily wrong. We live in an attention economy, and media companies are often buyers of ad inventory from other media companies. To the other extreme, you have content-rich, popular sites that may already do well in organic listings, and that Google would be pleased to allow full rein in the paid search program as well. The only reason this might not be called “arbitrage” is that the content-rich site chooses to monetize less with advertising. Or it’s just such a lovable, content-rich, branded site that we and Google are less likely to question their motives for putting up an AdWords ad. The situation is far from black and white. And many cases, like it or not, fall into that muddy middle ground. The problem is, Google is using a combination of human assessments and algorithmic checks to screen for the most undesirable types of pages in their overall world view. The assessments can vary, but given the strength of the mandate from higher-ups at Google to weed out the “bad guys,” it seems quite possible that low-level quality raters and higher-level editorial staff might get overzealous in their assessments of a given site, to the point of tunnel-vision prejudice when those biases are baked into an algorithm. Hey, snap-judgment stereotyping happens to the police—is Google immune? In Blink: The Power of Thinking Without Thinking, Malcolm Gladwell provides a graphic case study of an innocent man gunned down by New York police, largely based on assumptions coupled with rapid “thin-slicing” observation as opposed to deeper observation.4 Gladwell fans also know that he provides further background of a personal nature on his blog. Gladwell, CHAPTER 5: How Google Ranks Ads: Quality-Based Bidding a light-skinned African-American, describes his experience with police prejudice based on his physical appearance: it began happening after he grew out his hair. As he strode along 14th Street in Manhattan, police mistook him for a rapist who was in fact “much taller, and much heavier, and about fifteen years younger,” continuing the interrogation for twenty minutes.5 Snap judgments based on limited data are common. Using heuristic formulas to cut diagnosis times in life-or-death medical scenarios, for example, has been shown to save lives. Even without prearranged formulas, experienced human brains seem to have a tendency to make snap decisions based on limited cues. Gladwell calls this process “thin-slicing.” In police work, the debate may rage on about the need for thin-slicing in certain situations, because police are often put in life-and-death decision-making situations chasing suspects in the dark. In broad daylight on a crowded street, the case is much weaker. And in non-life-threatening cases where we’re deciding whether a web page is “evil,” surely we owe it to business owners to ensure that the punishment for “looking like the bad guys,” if any is warranted at all, fits the crime. On the whole, Blink is about encouraging decision-makers to distinguish their good rapid cognition (it exists) from bad rapid cognition. Now that Google has so much to say about ad quality and website quality, it has created a similar challenge for itself. There are plenty of potentially perverse effects of botching the thin-slicing process. For example, what if the majority of new AdWords accounts are started up by amateurs or large-scale system abusers? If Google is looking at past user response data largely based on the fumbling efforts of marketers who don’t yet understand how to generate quality user experiences, they might be inclined to disrespect savvier marketers’ efforts, pulling them aside and interrogating them for something as trivial as the proverbial Gladwellian big hair. Case Study 1: Media Company, Slow “Quality Score Digout” Process To protect client anonymity, I’ll refer in a “composite sketch” to a couple of companies we worked for who wound up with similar trajectories in their Quality Score patterns. Both were media companies attempting to drive traffic to local search or news content sites. So, for example, they might have information on local night spots, and wanted to drive traffic to their local entertainment listings and reviews section. In other cases they might simply have classified listings and a few reviews, for a business category like accounting. To alert users to the quality of their listings, they might still buy accounting-related words in AdWords. For the sake of this case study, let’s assume the media company buying AdWords lies somewhere in between a “pure click arbitrage” model and a “beloved content site” model. In other words, they would probably qualify as “high-class arbitrage.” As such, either Google’s algorithms or human raters, or both, may lean towards a suspicious take on the quality of the landing page. This leads to low initial Quality Scores. Phase 1: Very Poor Quality Scores In this phase, we found that many keywords were in Poor Quality Score territory. Only a few keywords were working well. We continued building out the account. 145 146 Winning Results with Google AdWords Phase 2: Following Google Advice I assumed that Google (again, either algorithmically or in human terms) had something against the site because the site was showing a fair number of ads and didn’t yet have much content. Without knowing the company’s intentions to build more content and user interaction, Google’s assessment might stay poor. I conveyed the full story to a Google rep, explaining that the company had a number of plans to build rich local content. To some extent, this was sticking my neck out for the client, because what if they never followed through on that claim? Had I attempted to make this case for a company like TrueLocal, for example (one of the most notorious “evils” in Google’s anti-arbitrage sweep), I would have been seen walking around with a Pinocchio nose for years to come. Our Google rep stayed pretty close to boilerplate “increase your relevancy” advice. For example, I was told to take some of the specific ad groups and make them even more granular. To improve on an ad group about Greek restaurants (selecting this group was perhaps an in-joke, as the Googler’s family happens to own a Greek restaurant), I was instructed to add keywords about souvlaki or subtypes of Greek food. Clearly, this is ridiculous. No one needs to build a campaign that granularly. But to their credit, Google’s frontline reps don’t fully know how to manipulate that Quality Score algorithm much better than you or I do—all they can do is cautiously give stock advice. Another thing they, or higher-ups, can do, though, is to manually tweak site and landing page Quality Scores. You are never told that this is happening. In this case, I instructed my client to show as much goodwill as possible, and to improve the user experience of their site by removing some of the ad units and working to improve page load times. I believe this had the dual effect of showing Google’s algorithms that the user experience was improving on this site, and showing both the algorithm and human raters that this site was not just all about the worst type of click arbitrage. I made a few of Google’s recommended changes—adding new ad experiments, more granular phrases, and so on. But I’m not at all convinced that in this case my changes had any major independent impact. What happened, I believe, is that someone at Google reviewed the account and made enough of an adjustment to the landing page Quality Scores that we would have the opportunity to get more of our ads live, so we could begin seeing some results. Within three or four days, Quality Scores improved; many were still poor, but the account was moving in the right direction. A week after that, they moved again. Here, I believe some combination of initially positive CTR and user behavior data (which would have been impossible to collect had someone at Google not manually tweaked the QS enough for us to at least show our ads some of the time), and some Invisible Hand pulling some Quality Score levers at Google’s end, allowed this account to crawl out of the Very Poor Quality black hole. Phase 3: Data + Adjustments + Manual Help = Great Quality? Still, our average CPC remained high for another 3–4 weeks. But as the account’s momentum built, as we tested and adjusted our campaigns, and as positive CTR and user behavior data were gathered, account-wide and campaign-specific data were positive enough that another significant move happened to the Quality Scores on this account. Eventually, we tended towards “Great” CHAPTER 5: How Google Ranks Ads: Quality-Based Bidding Quality Scores on the majority of keywords in the account, allowing us to bid low enough to get the average CPC below 30 cents, in decent ad positions. This pattern isn’t the only one you’ll see, but it’s one we’ve seen repeated on these types of accounts. Along with lobbying and best practices, time must elapse to allow Google’s algorithms to give you credit for building a strong account history. We’ve seen enough of this pattern to realize that we can risk only so much of our political capital as an agency in going to bat for a client who lies in that murky middle ground of highclass arbitrage. What if we tell one story about a client’s intentions, and it turns out to be untrue? So I’m not inclined to just pass along a new client’s version of events to Google—I’m also going to do my own investigating, unfortunately, much the way legal counsel interrogates his client before defending him. We’ll support those who have strong brands and those who are telling the truth, but we have to be extra cautious about being “used” by bad guys who just want us to talk Google into taking them seriously. To an unknown extent, the judgment of website and landing page quality is driven by mysterious human assessments (assisted by automation). As marketers, we’d rather be focusing on doing a better job of writing copy, targeting customers, and improving the user experience on websites, than dancing around, trading euphemisms with Google account reps. But if the shoe fits. The next mini-case-study is intended to make the case for meticulous account setup, and to show that paying attention to relevancy and campaign organization details in the setup phase does, indeed, matter to initial Quality Scores. Case Study 2: HomeStars, Tighter Targeting and Speculation on Website Quality Issues Keep in mind the informational value of the fact that you can see your keyword quality status instantly upon setting up ad groups (all you have to do is Customize Columns when viewing under the Keywords tab at the ad group level). Chalk another one up for the paid search laboratory. When the scores come back “Great,” especially for an unusual, newer, nonretail type site, I figure there must be something positive to learn. This case study is about HomeStars.com, a website that features consumer reviews of home improvement companies. (Disclosure: I began as an advisor to the company and remain a shareholder.) I finally got budget clearance to resume building AdWords traffic for HomeStars. Because I own a piece of the company, I have some incentive to get in there and build it myself. I’ve seen so many initially Poor Quality Scores for a variety of accounts in the past few months, I decided to be as careful as possible and execute the type of advice I so blithely give to others but all too rarely have the chance to execute for myself. Step one was to have a superior landing page strategy. The HomeStars site lends itself to very targeted pages in a coherent information architecture. There is meaty content on these pages and they are well labeled. The key would be to send visitors to highly granular landing pages only. For example, an ad for “Boston Architects” for searchers looking for Boston Architects would send users to a page containing actual consumer reviews of Boston architects—a fixed category on the site with a fixed, keyword-rich URL. 147 148 Winning Results with Google AdWords Step two was to hand-build the ads, including granular topical keywords in title and body copy, as well as some geo-specific cues that matched up with the custom metropolitan-area geotargeting I’d set up with the campaign. Step three was key: start with highly targeted, commercially relevant keywords. If there’s one thing I know, it’s that setting up really broad words, or tossing in all the keywords suggested by a keyword tool, is a great way to develop low quality in a hurry, even if you don’t get slapped with it at first. Why not tighten down and just try to cherry-pick visitors who are going to be the most targeted ones for these landing pages? Among other things, this would raise conversion rates to desired actions and annoy fewer people. What’s interesting here is that these are the visitors who might click and use your site in such a way as to build up strong Quality Scores for you over time; but somehow Google is getting better at predicting just this even when there is no data. In this case, I might have used a very short list of keywords like architects or architectural firms. I might have bid on boston architects as well, though it wouldn’t have been strictly necessary, as I was targeting the Boston area with this campaign. These may seem like obvious points. Putting account history aside (this one was so-so from past efforts), why did I see “Great” for so many keywords and for a brand-new campaign, when so many similar campaigns start out in the high end of OK, trending towards Poor? There must be a few things about the website that AdsBot likes. AdsBot? As you set up ad groups, a jaunty set of multicolored balls dances across your screen as you’re informed, “We want to be sure your website is functional when a user clicks your ad. We’re also making sure your ad text complies with our Editorial Guidelines. This can take several seconds. You’ll be taken to the next page when we’re done.” Making sure the site is up? Checking the ad text for violations? Twelve seconds? What else is AdsBot doing, do you suppose? In terms of landing page and website quality guidelines, the bot could be doing anything from checking to see if there are specific signals of evil on the landing page, to checking for evidence of broader evil being done by your company or website(s). AdsBot doesn’t say. Like Googlebot, the organic search spider, AdsBot reserves the right to return to your site frequently. One thing AdsBot now assesses, according to Google’s documentation, is landing page load times. Slow-loading pages or pages with various redirects and intrusive advertising formats provide a poor user experience, so Google is now considering this in landing page QS. In this example, Google gave my keywords mostly Great initial quality assessments. Here are a few theories as to why. Google may have data about the website as a whole that indicates real user satisfaction, or some kind of vibrant community. That could include things like bounce rates or time spent on the site. HomeStars has strong stats, particularly in terms of the average number of pages viewed per user. AdsBot, or Google in general, might also find the semantic meaning of our Boston Architects landing page understandable in the context of a good site architecture: more than just body copy, the site drills down nicely to the landing page in question, with good quality headings, title tags, well-formed keyword-rich URLs, and breadcrumb navigation.6 In other words: common sense dictates that taking a reasonable approach to creating your site layout and landing pages CHAPTER 5: How Google Ranks Ads: Quality-Based Bidding is all you have to do; some attention to logical hierarchies and keyword-based labeling cues is definitely worth it from a user experience and conversion rate standpoint regardless of the search ranking algorithm du jour. I go into user experience issues in more depth in Chapter 11. No red flags were found to derail this happy picture AdsBot initially saw. For example, there aren’t tons of text link ads on the site, so the goal isn’t pure arbitrage. We haven’t registered a bunch of domains, hoping to map out some kind of ill-conceived “cookie-cutter campaign” strategy, and our company information is verifiable in our domain record. We aren’t part of any kind of “link farm.” (That’s just the initial “cut” at quality. The data that builds up from there, such as low CTR, or editorial interventions, could sink your Quality Score like a stone.) Five Key Takeaways There are at least five takeaways from this case study. First, landing page and website quality are increasingly important. Second, related to the first point, there is increasing evidence that Google engineers think about similar relevance issues in paid search as they do on the organic side. One example in this case study was the strong effort we put into information architecture (which included keywordrich page titles, headings, and well-formed URLs) for the HomeStars site. This effort seems partly responsible for the high initial QS. Third, the principles of tight targeting and granular campaign organization are borne out by this success story. Fourth, the little extras in terms of segmentation and granularity—in this case, targeting particular local areas with campaigns that mention the city in the ad copy and on the landing page—seem to be advantageous. Finally, all of the above points to the value of a cautious, two-stage account buildout process. Building loosely at first and then tightening up later is bound to give you poor account history that will reflect on your whole effort going forward. A strong, tightly relevant campaign will, by contrast, give you the firm foundation that will allow you to gradually search for ways to expand your ad distribution without incurring a whole lot of extra cost. Unfortunately, as more and more complexity is added all the time (as you’ll see from the next section, the eleventh-hour “Addendum”), I feel less confident in boldly offering a universal strategy. Now more than ever, every account is different. Google’s concern with tight targeting and CTR just won’t leave us alone, it seems, so I worry that the final phase of broadening an account’s reach risks creating a “backslide” effect, removing the positive benefit of a strong established account-wide quality. If we are to take Google at their word, accounts that attempt to boost total profit by expanding into broader keyword areas and tangentially targeted keywords will potentially pay a premium across the entire account, not just on the broad areas. In light of this, it’s disingenuous for Google to claim they are not raising prices by constantly coming up with new ways to penalize loose targeting. By forcing narrower targeting on us, Google appears to be limiting our remaining options for volume expansion; certainly, an obvious avenue must include increasing bids. That said, I’ll try to explore the non-bid-related expansion options in Chapter 9. Then again, given the opacity of the latest version of the AdWords Quality Score system, it is potentially the case that established accounts that attempt to “get broader” will not find poor quality evaluations bleeding unduly into the robustly performing parts of the account. This would 149 150 Winning Results with Google AdWords be the ideal scenario: a system that determined Quality Scores and auction placement in real time, with precise reference to recent performance, and the specifics of the exact query and ad in question, without weighting unrelated account-wide performance too heavily. That way, parts of an account that are built meticulously can coincide with more experimental parts of an account, so that efforts to test, experiment, and expand do not trash the Quality Scores of the established parts. It’s my hope that the new version of Quality Score does attempt to reach this ideal, but it’s not entirely clear at this stage. I describe this latest version in the following, final section. Addendum: AdWords 2.7—The Latest Development in Quality-Based Bidding In late August 2008, Google announced more sweeping changes to the Quality Score system. The addition of landing page and site quality to the mix had been enough to prompt a new informal “version number” in my count—2.6. I’ll call the latest formula, which eliminates fixed minimum bids in favor of a new way of calculating and reporting on Quality Score, AdWords 2.7. It’s a significant change, but perhaps not a fundamental one. Some of it is cosmetic, and some of it actually improves transparency. But because of the added power of the dynamic, realtime calculations, most lay observers are saying it feels like the system is even more opaque now, because it is so hard to describe in a few words.7 By my reckoning, there are four main elements of this new approach: ■ ■ ■ ■ Fixed minimum bids are gone Keywords are never, technically, inactive “First-page bid” is offered as a data point Quality Score detail remains intact I’ll discuss each of these elements in turn next, and then give you my thoughts about the overall effect of this new approach. Fixed Minimum Bids Are Gone, Because Quality Score Is Now Calculated in Real Time per Query The nub of the change—and probably its main motivating factor—is to make Quality Score calculations more precise. When you think about it, a broad-matched keyword can accumulate a global Quality Score based on all the past data relating to it, but should that same fixed evaluation apply to your ad’s placement on a variety of different search queries that might trigger your ad, in a variety of geographic locales, in different situations? Not necessarily. For example, if you run the broad match for the keyword medical jobs, but your ad and landing page are mostly for parttime medical jobs, some specific queries triggered by that broad match (say, an expanded broad match that shows your ad against the query casual hospital work) might warrant a particularly high “real time” Quality Score for your keyword. And other queries would be less closely related CHAPTER 5: How Google Ranks Ads: Quality-Based Bidding to your offer or ad, and Google would be warranted in assigning a lower score and showing your ad farther down the page. It’s difficult to speculate whether there were many serious problems with inaccurate Quality Scores in specific instances in the past, or whether this is just Google pursuing a level of precision that would elude most comparable companies. In any case, once again, Quality Scores are now calculated in real time per query, so Google has had to eliminate any notion of a static, global minimum bid applying to the keyword. This potentially creates a cascade of issues and strategic implications. First, it puts additional, nearly chaotic, pressure on vendors of third-party bid management solutions. It will require increasingly sophisticated paid search bid management software to bid accurately in each real-time auction, aiming at the maximum efficiency these vendors purport to achieve in exchange for a significant management fee. Few will be up to it. Solutions of middling sophistication may be hardest hit, because they will not be able to invest the resources to adapt to Google’s subtle formula, yet their fee cuts significantly into the advertiser’s profit margins and makes it less cost-effective to hire qualified human analysts. In the meantime, the strategic benefit of using a less-invasive, alert-based approach to bid management that makes less-frequent bid changes and gives the human analyst more control remains intact as ever under the new system. Seasoned human analysts will also do fine under the new system. Google, in a sense, is taking some of those bidding decisions out of your hands—and out of the hands of third-party systems not privy to the opaque real-time Quality Score calculations. You’ll need to know a general level that is appropriate to your keyword, but your ad positions could be even more volatile than before from query to query. A bid management tool wouldn’t know whether to bump that bid up, down, or tie itself in a knot and take a leap off a cliff at Big Sur. Like a human analyst, it might know enough to bid generally in the right area, keeping the campaign more or less on track to a target cost per action. As a corollary to this first change (as I’ll explain in the next section), keywords can never be marked inactive for search. Keywords Are Never, Technically, Inactive Since no fixed minimum bid level is reported for keywords now, even keywords with low Quality Scores won’t be marked inactive for search. You might conclude from this that Google is content to give your keyword very low ad positions if your keyword is very low quality—thus giving you a fighting chance to at least get some traffic. To some extent, yes, but it’s also the case that Google retains a “bid requirement” that will be in force in real-time calculations. Come in below the bid requirement, and you don’t show up—in any ad position. In other words, you can be inactive for search instantly at the time of the query—just not across the board for that keyword. In some penal systems, the parole board maintains a “faint hope clause,” allowing any criminal, no matter how heinous, to apply (and be rejected for) parole. For very low-quality keywords, this system is a little like that. In part, it probably means that Google now has enough computing capacity to once again allow certain rogue advertisers to clog the system with inane experiments. Rather than definitively deactivating them, Google lets them hang around and be inactive for nearly every actual query. For the hair-raising explanation, check out “Is there a bid requirement to enter the ad auction?” in the AdWords Help Center. 151 152 Winning Results with Google AdWords “First-Page Bid” Offered as a Data Point This one is actually less significant than it seems. The information supplied by the minimum bids—especially the very low ones like 2 cents, 5 cents, etc.—was pretty minimal. If most advertisers were over the threshold, that piece of data told you generally that your quality was high, but gave you no inkling of what bid amount would be required to get on the first page of search results, typically. So, Google now provides first page bid information. It is only an estimate but may be helpful for advertisers wishing to gauge the real impact of the combination of their own Quality Scores and the competitiveness and bid levels in the auction. Quality Score Detail Intact The notations of Poor, OK, and Great will not only be kept, but Google will provide additional information in the form of a scale of 1 to 10. You’ll need to customize columns or run reports, as outlined in the AdWords Help Center, to look at this information. As I’ve discussed, Quality Score for the keyword in a particular context is calculated at the time of the query. So the reported scores are aggregates. Glass-Half-Full Reaction: New Opportunities Although the new system undoubtedly poses unforeseen challenges, it’s possible that old blind alleys may be illuminated once more. Google has indicated in the past that certain classes of keywords were considered less relevant, and would likely clock in with poor Quality Scores, especially in new accounts. Such keywords included trademark and brand terms, famous people’s names, and unusual or emergent keywords that Google has little data on. It’s quite possible that you may now show up on such keywords situationally, given the new real-time calculations that replace the old “fixed minimum bid” regime. In addition, and perhaps even more significantly, you won’t be knocked out of the auction entirely if you have a low-CTR broad match (especially one-word broad match) such as jobs in your account. Instead of being forced into inactive for search status by a high minimum bid (of, say, $5.00), you might show up from time to time, where you’re deemed relevant. This might also take the pressure off you to create long lists of negative keywords, but this is pure speculation at this point. What Hasn’t Changed: Strategy You can breathe a huge sigh of relief that, at least, the strategic lessons outlined in the earlier section “Five Key Takeaways” have not changed. Although often shaken by Google’s experimentation and secrecy, for us as marketers with bottom-line concerns, the foundations of our understanding of targeting and testing for success have not crumbled. But there are storm clouds and distant thunderclaps on the horizon: a background rumbling noise that Google feels that it would be better than you at managing your campaign. Increasingly, in help files and elsewhere, Google recommends that you “work on improving your Quality Score through account optimization.” Account optimization means any number of things: it might mean a few guidelines in a help file; it might mean taking principles and applying them on your own initiative, with your own testing protocols; CHAPTER 5: How Google Ranks Ads: Quality-Based Bidding or it could come to mean a kind of orthodox hand-holding provided in rote fashion by a Googler who has been trained to believe he knows what’s best for you. Let’s hope it isn’t the latter. I firmly believe that it is our job—your job, as a company owner or professional, or my job, as a professional in an agency that represents the best interests of clients—to take needed steps to optimize an account. The Quality Score formula itself sends subtle messages that we are not up to that task; its complexity and opacity all but ensure that only a minority of us will be able to get the most out of the system. Clearly, there is a significant role for Google’s expertise in helping guide advertiser strategy and in helping befuddled advertisers overcome roadblocks. But how much is too much? Now, more than ever, you need a strong in-house professional or third-party agency to take a firm hold of your account, and to work diplomatically but firmly with Google. Weak account management may lead to a sort of humiliating exercise in going cap in hand to Google, practically begging them to meddle in your advertising and business strategy. Even the strongest and best of us sometimes find ourselves overly dependent on Google for explanations for peaks and valleys in performance and volume. Good luck—and hire well. Endnotes 1. This chapter contains considerable technical advice and technical detail. Some, to be sure, is conjecture, but quite a bit of it is based on hard-won consensus among search marketers trading information and campaign data. In particular, I’d like to thank Nick Fox, Google’s Director of Product Development for Ads Quality. Nick has been accessible for many briefings and follow-up interviews and has publicly responded to many detailed advertiser questions at search marketing industry conferences. Not least, Nick made himself available for 11th-hour detailed Q&A about the AdWords 2.7 changes, on August 26, 2008. Other Google spokespersons such as Frederick Vallaeys have also provided useful insight. I’ve followed Quality-Based Bidding closely since inception. Any mistakes of analysis remain mine. 2. Google AdWords Help Center, Landing Page and Site Quality Guidelines, https:// adwords.google.com/support/bin/answer.py?answer=46675&hl=en. 3. On the official AdWords blog, Google provides insight into business models that have often run afoul of the Quality Score algorithm. See “Websites that May Merit a Low Landing Page Quality Score,” Inside AdWords, September 18, 2007, archived at http://adwords .blogspot.com/2007/09/websites-that-may-merit-low-landing.html. For my discussion, see “AdWords Quality Score: Can Your Business Model Be Banned?” Search Engine Land, September 25, 2007, archived at http://searchengineland.com/070925-140955.php. 4. Malcolm Gladwell, Blink: The Power of Thinking Without Thinking (Little, Brown and Company, 2005). 5. See www.gladwell.com/blink/. 153 154 Winning Results with Google AdWords 6. Breadcrumb navigation is a visual layout format that helps users recognize where they are in a site hierarchy. A designer will use text cues to point to category levels. An example of breadcrumb navigation would look like this: Home > Cities > Cleveland, OH > Architects. This subtly informs users they could navigate up to the general Cleveland page to discover other categories for the city, and that they are currently “three levels in” from the home page in the (arbitrary) logical category hierarchy of the website. 7. See Trevor Claiborne, “Quality Score Improvements,” Inside AdWords blog, August 23, 2008. Archived at http://adwords.blogspot.com/2008/08/quality-score-improvements. html. See also the detailed Frequently Asked Questions file referenced in that post, for a sense of just how much detail Google has felt it necessary to share to explain this change. Chapter 6 Big-Picture Planning and Making the Case to the Boss B efore you launch your online marketing campaign, you’ll need to make a number of strategic decisions. In earlier chapters I covered the pragmatic aspects of launching a campaign, since that’s what most marketers are most interested in. However, if your job is as much political as it is operational, or if you’re an executive trying to weigh the AdWords initiative among competing priorities, you’ll want to pay particular attention to this chapter. How Valuable Is Search Engine Marketing to Your Business? First, you’ll want to satisfy yourself that search engine marketing (SEM) in general, of which Google AdWords advertising is a subset, is a smart investment of your marketing dollars. I’ve attempted to set the stage for such decision making in Chapters 1 and 2. You might also find useful supporting materials at the website of an industry group called SEMPO (Search Engine Marketing Professional Organization)—www.sempo.org. Studies by the Interactive Advertising Bureau (IAB) point to the effectiveness of search engine marketing. For example, an IAB-commissioned study performed by Nielsen/NetRatings in 2004 showed strong brand recall for companies who attained listings at or near the top of a search results page.1 An IAB-commissioned study performed in 2006 by comScore Networks showed strong performance for local search listings and online classifieds for blue-chip advertisers like CareerBuilder, Ford, and others. Ford Rental Car realized a 7.8 ROI (measured as the ratio of generated revenue to advertising expense) on local search ads, with about 40% of those conversions taking place offline and 60% taking place online.2 Recently, Yahoo released a study about the role of Internet research in consumers’ “road to purchase”—this is often nicknamed the “Long and Winding Road Study.”3 No one customer 156 Winning Results with Google AdWords profile makes sense, but several typical scenarios have strong empirical support. In particular, Yahoo believes that sustained exposure in search results, both paid and unpaid, builds brand equity and recall. Thinking through apparent counter-examples in my own buying habits, ironically, ultimately strengthens my conviction that gaining mindshare through search presence is an underrated activity. As a business-to-business buyer of computer equipment (obviously, an extremely popular monthly activity for many business owners), I rely on a small number of vendors with whom I’ve developed a trusting relationship. One of these is Tiger Direct (in Canada, TigerDirect.ca). When they don’t have an item in stock (it happens), there are a couple of others I use as backups. In the case of Tiger Direct, I might easily conclude that since I have so much loyalty to them, and directly navigate to their site of my own accord or based on reminders from their weekly special emails, search plays no role in my decision-making. But the real answer is quite the opposite! In the longer period of time that it took my vendor preference to congeal, a continual presence in search listings was part of what influenced me to give Tiger Direct a try. And because I developed that long-term business relationship with them, the lifetime value of running those search ads is probably a lot higher than even the most optimistic forecasts would project, if an analyst were forecasting too conservatively based only on measurable direct-marketing results. Even if you stick to measurable direct marketing results, top management should have plenty of reasons today to test AdWords. Check out what Seth Godin, author of Free Prize Inside!: The Next Big Marketing Idea (Portfolio, 2004),4 had to say back on July 1, 2004 on his blog. He noted that the South Beach Diet spends “more than $1 million per year on online promotion (keywords, etc.).” Godin calls this “marketing that pays for itself... no magic, no superstition. Just planning and measurement and hard work.” (That was part of Godin’s critique of unscrupulous search engine optimization firms who want you to believe that success is easy if you can only luck into a #1 search ranking on Google.5 Don’t let it be about luck.) In July 2004, MarketingSherpa wrote a case study of Edmunds.com, the automotive information site. After having some success with optimizing the site for free referral traffic, but reaching the limits of that strategy, Edmunds now spends nearly $500,000 per month on keyword advertising with Google and Yahoo Search Marketing, employing full-time in-house staff to manage the campaigns. This initiative made a multimillion-dollar impact on Edmunds’ business, providing the catalyst for recent rapid growth. Once you’re satisfied that SEM is right for you, and Google is your preferred venue, the next step is to determine what percentage of your search engine marketing budget should be dedicated to AdWords. Obviously, this proportion may vary depending on the opportunities you can discover in other forms of paid search, such as Yahoo Search Marketing, Microsoft adCenter, Ask.com, Business.com, and Miva. Because opportunities for keyword-based advertising are often fairly scarce, I’ve found that allocating 70% or more of your search marketing budget to AdWords is quite realistic. Google maintains over 65% search market share in many markets, remember, and their ad program is the most developed. Many advertisers devote upwards of 80% of their paid search budget to AdWords. Strange as it sounds, you may find it difficult to spend heavily on AdWords in the early going. Unlike the expensive TV and print ads that many advertisers are accustomed to buying, CHAPTER 6: Big-Picture Planning and Making the Case to the Boss large chunks of AdWords exposure can’t be bought in advance for a predetermined price. Those large media buys are the reason many larger companies have bloated advertising budgets. They know advertising works, and they know that it’s more likely to work (at least from a top-line, market-share-maintaining perspective) if they throw more money at the problem. Putting together a media buy in such scenarios (either by outsourcing the job to an agency or negotiating a few large buys themselves) does a terrific job of “spending the budget.” This entrenched mindset is so strong in the agency world that Google has had to develop a feature in AdWords called Budget Optimizer. At the risk of putting words in Google’s mouth, my take on this feature is that if you have a high monthly budget, this tool will do things like raise bids, seek out more content-targeting inventory, and broaden your broad matches, to “help” you spend more on less-targeted ads. Here’s an excerpt from a recent version of Google’s help from the AdWords Help Center, on the Budget Optimizer feature. After explaining roughly what the tool does, Google warns: “Please note that we don’t recommend the Budget Optimizer for advertisers focused on measuring conversions or values of ad clicks.” Yikes! The big media buy is a no-surprises method that may keep everyone in a company happy because there are few internal planning questions left unanswered, except for the most important one, of course: “How can we measure and improve on the profitability of our ad campaigns?” The rest of this chapter will serve as a reminder that the planning process for a Google AdWords campaign is different from what many companies are accustomed to. But the risk of missing your “targets” is worth taking because the material risk is so minimal, and the potential upside is attractive: you may discover a new, high-ROI channel. Many companies today need little convincing to embark on the uncertain path of experimenting with AdWords. The fact that their competitors are already highly visible in that space is enough to spur them to action. If anything, I’m finding that marketing managers who are asked to consider an AdWords campaign may handcuff themselves unnecessarily because they overestimate the career risk of dramatically “underspending” the budget at first. No, the process won’t be predictable, and at first you may not be able to give your boss those simple answers she might seem to want. But consider that many companies today are more entrepreneurial than ever before, and senior management might actually reward those who take chances, make mistakes, and champion unorthodox paths to growth. Strategies for Small vs. Large Companies: How Different Are They? There needn’t be a radical difference in the way an AdWords campaign is developed just because a business is particularly small or particularly large. Campaigns tend to run on a basic premise that calls for gaining one customer at a time, one search at a time. Campaigns will vary quite a bit in terms of breadth and ad spend, but I see more similarities than differences in the general approaches taken. Large companies will want to consider budgeting for more sophisticated web analytics software, consulting help from an outside agency, additional staff time or full-time hires, bid management software where appropriate, and of course, more money for clicks. 157 158 Winning Results with Google AdWords Furthermore, additional time can be spent on usability testing, site development, ad testing, landing page tests, and so on. But the remarkable thing is that companies of all shapes and sizes are doing all of these things in much the same way, albeit at different budget levels. Given that a typical AdWords sales process takes the user from a brief text listing to a tailored landing page (reminiscent of the ultrasimplistic “Pachinko machine” described by Seth Godin,6 which imagines the Web as the ultimate, super-simplified direct marketing channel), there is no reason why a smaller company can’t make a big impact with limited dollars. Indeed, one reason that larger companies sometimes agonize so long over the decision to move forward with a pay-per-click campaign is that it can be so inexpensive and accessible as to seem insignificant. Surely there must be more to it than this! It’s simple in some ways, but deceptively complex in its number of moving parts. But nope, there isn’t “more to it” in the sense of a need for massive overheads and massive amounts of wasted spend that you need to justify after the fact with vague “lift” metrics. One thing large companies will need to do is sort out who is responsible for what. Multiple stakeholders and long meetings are the norm in large companies, but this should be avoided wherever possible. Turnaround time is paramount. Somebody must be given the flexibility and authority to test and tweak as steadily as possible. This perhaps explains why more large companies are willing to pay substantial salaries to senior search marketing experts to manage affairs in-house rather than hiring junior trainees whose decisions must be second-guessed. Failing that, outsourcing the job to an integrated, multitalented marketing agency that can implement and understand various elements of the campaign strategy (business analysis, copywriting, keyword discovery, tracking, landing page design, and so on) will help to avoid slowdowns that inevitably crop up in situations where responsibility for project results is made too diffuse. You’re not going to hand over your whole company to a third party, of course, but giving that third party more discretion and more freedom to achieve results is one way of signaling that the AdWords campaign is a high priority. Increasing the budget is another way. Large companies with centralized IT systems or laborious processes of gaining approval for the release of website stats will also need to consider streamlining their procedures. In some cases, it’s easier to set up a separate website for the AdWords campaign to allow direct supervision of the project by those who understand the need for quick response and hands-on control of landing page copy, tracking codes, and so forth. One of my clients, an international bank that offers an international debit card, runs the AdWords campaign through a separate site called TheirCompanyDemo.com (fictitious name, obviously). This makes it easier to deal with shifting priorities in marketing the product without undue involvement from globally dispersed managers. At the same time, the CEO can remain quite hands-on in his oversight of the campaign results as implemented by the marketing managers and the outside agency. Another difference with large companies is that they can afford to “lose money” (or at least to bid so high as to seem to be losing money) on a campaign. By locking down exposure in a key channel, you can keep competitors out of that channel. Bidding high enough to be #1 or #2 on the page for popular search queries might be a high priority for a large company, whereas it could be suicide for a small company. Expedia isn’t just selling “flights to Jamaica,” they’re also selling “not the competition.” When McDonald’s puts a franchise in a key location next to the CHAPTER 6: Big-Picture Planning and Making the Case to the Boss service station on the turnpike, they’re not only selling burgers, they’re making sure the other guys aren’t selling them. And Expedia is (or should be) taking up valuable screen real estate that it can afford to buy, and that keeps them in the forefront of the consumer’s mind. Pursuing the Expedia example of a query for cheap Jamaica flights, actually, I see several smaller competitors outbidding Expedia. That could mean that specialists in cheap Caribbean vacations are actually able to justify bidding higher because of their specialized focus. Alternatively, though, it could signal a complacency on Expedia’s part; underbidding relative to the hidden value that might lie in pushing upstarts down the page. Or it might mean the smaller companies are engaged in kamikaze bidding in an attempt to gain a toehold in a lucrative space, and will soon fall out of sight. If your company is particularly small, in spite of the increasing cost of keywords, AdWords is going to be a relatively comfortable environment for you because you can pause it anytime you don’t like the way it’s performing. You can monitor results on a daily or even hourly basis, if you want. I offer a couple of key pieces of advice to small companies. First, understand your limitations. You won’t have the resources to hire staff to monitor and adjust everything constantly. And while you might already be in the habit of saying, “I’ll do it myself,” you won’t be able to keep up that pace forever. So if you plan to do it yourself, be kind to yourself, and plan to do less. A simpler approach to campaign management and tracking is better than a convoluted one. Simpler does not just mean abdicating the role of campaign manager to some automated software. To those special small business owners who really do have the energy and curiosity to spend hours every week poring over every detail of their campaign, I advise them to use those admirable energy levels to better advantage by not allowing themselves to become full-time AdWords junkies. Eventually, you’ll burn out. Even if you don’t, a fanatical obsession with squeezing every last ounce of productivity out of your campaign could be a symptom that you have more important work to do in other, more fundamental areas. It could mean you’re in a dying industry, or need to change your overall marketing strategy. In terms of the amount of time you budget to spend working with AdWords for your small business, then, be realistic from the start. Work on your business, for heaven’s sake, not just your AdWords campaign. If you want to play, crack out a nice game of online chess or fire up some tunes and Return to Castle Wolfenstein on your computer. Really, AdWords can be fun, but it isn’t a game! Don’t use AdWords obsession as an excuse not to visit your mother or water your plants. End of lecture. What about Affiliate Marketing? At the small end of the small-business spectrum is the aspiring affiliate marketer. This is someone who joins a parent company’s affiliate program, receives custom linking codes that are used to credit them with sales, and then goes out and finds customers for the parent company. I’ve no doubt that for a clever minority, the math can work—attract targeted clicks by placing AdWords ads and hope enough of them convert to a sale to make you a profit. Just don’t ask me for tips. If I could tell you how to turn a passive profit in your home in your spare time, then why wouldn’t I set up all those affiliate codes and keywords myself, shut down my computer, and take a nap?7 Certainly, if you already have a following on your website or newsletter, affiliate sales can be a nice bit of residual income. Think about how many folks attach affiliate codes when they 159 160 Winning Results with Google AdWords recommend a book that’s available for sale on Amazon.com, for example, as part of the Amazon Associates Program. I happen to love various software programs and online services, such as Basecamp from 37signals, and if I love them enough, I’ll recommend them and take a little percentage of the action by joining their affiliate program (too bad I can’t stick that code in this sentence). Why not? I’m not down on affiliate income in general, but I don’t think much of the idea of individuals with limited business experience trying to turn an easy profit by playing affiliate roulette with no website at all by buying AdWords clicks and sending them directly to the parent company’s site. Some such “marketers” have complained to me that my writings aren’t “advanced” enough for them—they’re looking for the latest get-rich-quick mumbo-jumbo, I guess. This confirms for me that many “top dogs” in the multilevel marketing area want you to believe that black is white and up is down. B2B, Retail, Independent Professional, or Informational—What Is Your Business Model? Campaigns are often run very differently depending on whether they’re niche-focused business-tobusiness (B2B) or retail-focused business-to-consumer (B2C). A third category is the independent professional firm, which may fall on either side of the B2B/B2C divide, but which most often conducts its campaign and customer acquisition effort as if it were B2B. A fourth category is information publishing. There are many business models and they all have their quirks. The following discussion is an overview of a few things to watch for. Business-to-Business Business-to-business campaigns are some of the most profitable types of Google AdWords campaigns. The targeting is so tight, you won’t often waste a lot of clicks. A key hurdle, both real and psychological, is the limited feedback you receive as compared with a B2C campaign. With “lumpy” sales patterns often based on high-ticket, long-sales-cycle purchases, testing periods take longer and more-arbitrary decisions need to be made. You’ll simply have less data to go on. In planning such a campaign, be bullish about potential profitability but take heed that an apparent challenge—if you correctly micro-target your keyword list instead of reaching too broadly into generic search queries by the masses—will be to spend enough. If you’re just targeting a few purchasing managers and C-level execs, you have to wait for them to type relevant terms into a search engine, and that may take months or years. You might generate very few clicks, but the value of those clicks could be high. Don’t be alarmed, then, when you see costs per click in the stratosphere for niche terms in your industry, especially not if a successful lead could be worth half a million dollars to your company! Costs per click of $5, $10, and $20 are not uncommon in some areas. You can lower the average by experimenting with the techniques offered in this book, of course. A very effective model for a B2B campaign is often to request that interested parties fill out a contact form in exchange for receiving a valuable white paper or some other professional incentive. This is a lead-generation model and will help you operate the campaign based on a cost-per-lead metric.8 CHAPTER 6: Big-Picture Planning and Making the Case to the Boss Business-to-Consumer Online retail seems to occupy the most real estate when it comes to pay per click. Campaigns can vary from a single product (acne medication), to a product line (contact lenses), to a diversified storefront from a major retailer carrying 10,000 or 1,000,000 items. As the scale grows, my earlier advice about meticulous campaign organization becomes all the more important. In forecasting, begin with a test of one product or category before expanding the campaign, to get a feel for cost and performance. Online retailers face special challenges. Margins are often slim and competition fierce. As a result, careful bid management, possibly even dayparting, is a must. Meticulous attention to tracking URLs and landing pages is time consuming. Depending on the size of the campaign, you will need to write dozens, hundreds, or even thousands of different ads. To manage this task properly, large-scale retailers need to look carefully at available software and services to make the task more manageable, and some will need to hire full-time staff or a third party to handle it. One thing worth mentioning about conventional retail models as they intersect with Google’s priorities is: Google loves you. No, I don’t mean you personally. But the very literal and unambiguous facts of your business model are helping you sync well with Google’s objectives—a searcher types in bag of hockey pucks, and you sell hockey pucks. No one’s being deceived, no one is confused. The ad is relevant and gets lots of clicks, and those users are satisfied with what they find on the site. As a result, conventional retail campaigns tend to garner high Quality Scores across the board. In the above example, when I try the query bag of hockey pucks, actually, some of the ads are for retailers selling hockey bags. Not perfect, as is so often the case when matching options are being used. But hockey pucks sometimes go in hockey bags, don’t they? Compared with B2B and localized professional services, you’re probably spending quite a bit, too, and are quite serious about your business (not playing games with Google’s system as some affiliates do, for example). For that reason, Google likes you just fine. Expect solid account support and don’t hesitate to ask for help from Google reps if something seems off with your Quality Scores, or if there is any other hiccup in performance. You’re Google’s bread and butter, and they know it. Professional Services Individual doctors, insurance brokers, accountants, realtors, lawyers, electricians, and the like, often have trouble with online marketing. The problem lies partly with economics and partly in these types of professionals being poorly suited to make decisions about outsourcing things like web design and marketing. It’s one thing to hire a receptionist or purchase supplies—professions have long histories in this area. It’s quite another to delve into new media, user interfaces, and response rates. Many professions were also historically banned from advertising, or simply didn’t consider it “ethical,” but that’s a long story. In other cases, say regulated professions or home improvement contractors in hot markets, service providers have grown accustomed to working with a full slate of customers—in “backlog” mode—with limited marketing effort. When competition heats up, that type of assumption must give way to an active online lead-generation effort. Sending out calendars isn’t going to cut it. 161 162 Winning Results with Google AdWords When you’re uncomfortable with hiring help in an emerging area, it’s easy to make a mistake. One variant of this mistake is placing too much trust and allocating too much budget towards a web design firm that can only get you part of the way towards your goals. Some interactive services firms are sectorally focused—they build, for example, medically oriented websites. Beware of “cookie-cutter” web development processes that treat a whole bunch of clients in your sector “equally” and don’t figure to help you battle your way to the top of the heap. Another variant of the “uncomfortable with finding web marketing talent” syndrome is for the professional (the doctor, the electrician) to try to do too much themselves. Without hiring a trusted web-savvy associate (even if that’s just a consultant), copy doesn’t get written, decisions don’t get made, and projects get stalled. Of course, the answer is not to just farm out this all-important building block of your business to a receptionist or technician in your professional services company. They may be junior colleagues with available time, but often they have zero expertise other than their own hunches and what their cousin told them at a wedding last month. You get what you pay for. Small-scale professional offices will find it difficult to afford online marketing, but that’s partly because they’ll often waste too much on unprofitable activities before finally getting it right. A prosperous real estate broker, dental office, or plastic surgeon, on the other hand, can even afford to make a mistake or two, as they’re multimillion-dollar operations. Most companies of this size should be investing seriously in online marketing. It becomes cost-effective with persistence, though it’s unfamiliar territory at first. Think Locally if You’re Local A huge hurdle here is the sheer number of “me-too” practitioners. In a mobile society, patients aren’t even restricted geographically when it comes to things like plastic surgery or experimental noninvasive cancer treatments. The cost of a flight is built into the overall (expensive, but worth it) cost of the services. But the dentist or ophthalmologist who doesn’t offer much differentiation from a hundred other practitioners in a given city may be best off with a simplified web strategy, including working with Google Local Business Center listings and the like. Detailed local search marketing strategies are somewhat beyond the scope of this book, but it’s worth pointing out that some local listings, through integration with services like Google Maps, can actually be free. Other variants will cost you on a per-click basis because they’re integrated with a standard Google AdWords campaign. Local review sites, such as Yelp, CitySearch, OurFaves (focusing on bars, restaurants, salons, bookshops, and other trendy “local hotspots”), and HomeStars (focusing on home improvement contractors) are often good places for professional services providers to build an online reputation. Encouraging customers to write reviews in these places is one way to tilt the balance of opinion in your favor. You can also buy “enhanced” listings on the review sites. Typically, these don’t buy you a better image directly, but allow you to gain additional visibility and to provide more information. Some companies might even find these enhanced listings nearly as useful as having a standalone website. Sometimes, when people lack savvy in a specialized area like web marketing, they make the mistake of overspending as opposed to underspending. Savvy online marketers understand CHAPTER 6: Big-Picture Planning and Making the Case to the Boss that they need to avoid overpaying on any given component of a web project so that they can budget for everything that is needed. “Getting the Web,” then, doesn’t mean paying an exorbitant amount for a one-off site design, but rather, understanding the nature of the sales process. A simple yet effective site can be designed (without sacrificing an arm and a leg in sunk costs) to capture leads. That way, sufficient funds can be kept in reserve for the marketing effort, which might include testing multiple landing pages, ads, and so on, as well as monitoring ROI in detail. The minority of professionals who “get the Web” can clean up. To do so, they must recognize that online marketing is an ongoing process, not a single event. It is not a matter of “how much” is spent, but “how” your budget is spent. If you get it right, there is enormous opportunity to succeed online in a professional niche. Information Publishing Selling subscriptions or e-books, or driving traffic to an informative website that sells advertising in its own right, are natural online businesses, since, after all, “search” is inherently informational in nature. Hundreds of interesting examples of how information changes hands for a fee come to mind. For example, when I was looking for models of self-publishing how-to information, I was stunned to see how much money even a modest self-publishing company like Self-Counsel Press was able to make. The founder, Diana Douglas, started selling divorce how-to kits in the 1970s, and her company took off from there. When I spoke to Ms. Douglas about the evolution of her business, she stressed that nearly all of Self-Counsel’s revenues continue to come from print, not online, information sales. This is due in part to distribution agreements with the bookstores that carry Self-Counsel’s titles. Although Self-Counsel doesn’t currently disclose its annual revenues, and the founder is quite modest about the accomplishment, they deserve credit for growing from a single handbook title into a publishing business with hundreds of titles that has remained a going concern for 30 years. While Self-Counsel didn’t reap its success online, the model is the same. Online publishers, indeed, may have more flexibility. Whether or not she’ll admit to being a great success, the growth of Diana Douglas’s Self-Counsel Press was an inspiration to me when I decided to distribute niche information online. The voracious readers in niche information markets, coupled with low overhead costs, make it an attractive risk for an online venture. MarketingSherpa (which recently merged with another online publisher called MarketingExperiments.com) has built a business around selling specialized information that includes marketing reports, buyer’s guides, email marketing data, and more. On a grander scale, media giants like Bloomberg and Thomson are all about packaging and selling information. Thomson has divested itself of some high-profile mass-media assets, focusing on acquisitions of niche information providers you’ve never heard of in fields like medicine and accounting. Thomson is worth billions. For one example of a powerhouse B2B information publishing division of Thomson, visit TechStreet.com, which sells things like technical specifications and drawings. “Rules for Construction of Nuclear Power Plant Components” will run you $3,940. One of my clients, a business journal published by a major university, focuses on selling subscriptions. But an interesting additional revenue stream is one-off articles from their 163 164 Winning Results with Google AdWords content library. They use Google AdWords in a limited way to promote both subscriptions and article sales. A side benefit is keeping the brand name out in the forefront. Selling a $5 article for $6 worth of clicks, in the right circumstances, is an inexpensive way to spread a trusted name in business research, not even counting potential repeat business for articles. You’re limited only by your imagination when it comes to putting together an information product, particularly in consumer areas where much disparate information is available that has not yet been aggregated into a coherent package. Not only those who have proprietary information and big budgets can succeed, but so can those like Diana Douglas, who put together her first product, the do-it-yourself divorce kit, on the strength of personal experiences and research. The positives of information publishing as an online business model include low overhead, the ability to find highly specific keywords for low cost, ease of delivery of the product (digital), and plenty of examples online of companies that have created compelling landing pages for selling an information product. To do more background research on what has come to be called the content business, check out Anne Holland’s ContentBiz.com and subscribe to the newsletter. The leading guru in the economics of online content in its broadest sense, however, is likely Rafat Ali, publisher of paidContent.org. It should go without saying that if you are in the “content business” (are an online publisher of any sort) and have the money, you can also try buying AdWords ads to draw attention to your Keyword Arbitrage: Scam or Rational Business Strategy? A current practice among online publishers that have high advertising rates is to buy inexpensive keywords to drive more traffic to their sites. This is frequently due to the fact that their advertisers are willing to pay for more impressions than the publication can currently generate from name recognition, bookmarks, and free search referrals. One name-brand business magazine contacted me to discuss the tactic in connection with a growth plan for their website division. Some take a dim view of this “keyword arbitrage” and feel that only scammers are involved in buying ads low online and selling them high. Not necessarily. It’s a perfectly rational strategy for a major business publication to remind people of their expertise in an area in order to build a long-term subscriber base, and failing that, to generate 20 cents in advertising revenues out of a 10-cent keyword buy. The fact that they can do it with 5- and 10-cent AdWords clicks is downright clever. If you’re going to break even on a marketing initiative, I can’t think of a better way to do so than to generate more mindshare for your magazine. Longer term, that’s going to do better than break even. When keywords were as cheap as a penny on Overture’s predecessor, GoTo, I sometimes used to buy them up for popular keyword searches like Yahoo just to drive traffic to my site so people would read my articles. Talk about vanity! Talk about a money-losing proposition! But I think that showed foresight, and it paid off in the long run. A practice that seemed crazy back then would be adopted by just about any writer or blogger today, because you can pay a heck of a lot more than a few pennies to introduce new readers to your unique content these days.