With Yahoo!/ Bing (YaBing) releasing a beta for sitelinks, alongside the release of Rich Ads earlier this year, IgnitionOne investigated how to leverage the budgets of branded campaigns to increase efficiency to marketers’ YaBing account. The basic premise of leveraging the two products’ budgets to increase efficiency lies in the ability to predict brand click-through rate (CTR).
How Rich Ads Work
Rich Ads run only on exact and phrase match types, can only run on brand terms or extremely relevant non-brand terms and the ad position only shows at a rank of 1. This design of the Rich Ads, along with the fact that no competitors can set up a Rich Ad campaign running on another marketer’s brand terms, indicates that the algorithm which dictates cost-per-click (CPC) for this product is slightly different from the algorithm we see in the perfectly competitive open market (i.e., the non-Rich Ads campaigns’ algorithm). The algorithm in the “open market” determines rank and CPC by looking at Quality Score (QS), which is usually a 10 for branded terms, CTR, as a relevancy proxy, and the next in lines competitors’ bid in comparison to your bid. Due to the Rich Ads’ design we can take out QS as a major determining factor for the CPC you are charged, as well as the next-in-line competitors’ bids. We also know that the algorithm is only predicting CPC as the rank and never changes for Rich Ads. This leaves CTR determining CPC. As we all know, CTR is determined by clicks and impressions.
So how can marketers use this information in tandem with their branded sitelinks strategy?
Since the Rich Ads algorithm primarily gathers information from within its campaign and pulls relatively little information from the market, it has more of a lagged model than the “open market” algorithm. Essentially, it uses past data to predict what will happen to the CTR in the future. The shift between the lows and the highs of brand demand (i.e., impressions) is where this gets interesting.
The lag experienced in CPCs, essentially based on impressions, is about 1-2 weeks (note: this may vary based on the amount of impressions your brand receives). During the period in which your brand has reached the descent from the apex of a high demand period, you will be charged high CPCs for about two weeks into your descent of demand within the Rich Ads campaign without the justification in ROAS (i.e., conversions or AOV decreases). This is when IgnitionOne recommends decreasing your daily budget caps so that your rich ad campaign will, in fact, flight (see Figure 1.0). From here, marketers should reallocate extra budget into branded campaign that has sitelinks, to ensure that all exact, phrase and broad match terms come in a rank of 1 (See Figure 1.1). This is important as the “open market” algorithm will adjust more quickly due to your competitors pulling out of the market/lowering their bids during periods of low demand. The algorithm will adjust more quickly also due to your ability to change more keywords’ average ranks to a 1, thus bolstering CTR, which will in turn lower your CPC. Once you see the Rich Ads’ CPCs coming down to where they should be, your brand should increase the budget to where it will not flight further.
-Identify if your CTR follows this same pattern during extreme changes in brand demand.
-Watch your Rich Ads campaign to see how it performs during fluctuations in demand. You will need to understand your brand’s CPC lag time.
-Set keyword bids high in the Rich Ads campaigns. You will need to manage spend in your Rich Ads by daily budget rather than CPC, as there are no competitors bidding on these terms and no dispute for rank.
-Set the Rich Ad campaign serving setting to “accelerated.”
-Do not turn off your Rich Ads campaign during the period in which your CPCs will not justify the ROAS. You will need the Rich Ads algorithm to collect data in order to get CPCs where they should be.
-Ensure your branded campaign has enough daily budget to take over the Rich Ads campaigns’ daily spend when you switch over.
NOTE: How to predict changes in CTR
Impressions and clicks rise in periods of high demand for your product or brand. However, it is common that in periods of extremely high demand, clicks are able to maintain at the same rate as the demand (i.e., impressions). Due to this effect, brands typically can experience drops in CTR. Since CTR is the main dictator of our Rich Ads CPC, brands using this product can experience higher CPCs during high demand periods. This is not a huge detriment to the account as conversion rates tend to be fairly high in Rich Ads campaigns and also during times of high demand. Conversely, CTR increases as impressions decrease during a brand’s offseason causing CPCs to decrease in Rich Ads. It is during this time that IgnitionOne would recommend keeping Rich Ads budget caps high.