Tag Archives: ROAS

The Beta Debate

To beta or not to beta…that is the question. It is always tempting for search marketers to load up a text ad with the latest ad extensions offered by Google or Yahoo!/Bing to command more real estate on the search engine results page (SERP), but does it pay off in the form of increased ROAS? The answer is sometimes yes, but a lot of times, no. So before you jump on the beta bandwagon, carefully consider your vertical and the KPIs to which you are managing to ensure the beta will actually help you achieve your goals.

When evaluating whether or not a client should participate in a new beta, the media team at IgnitionOne takes into account the following considerations:

  • Vertical – While it makes sense for a travel or retail client to run Google’s new image ad extensions, the beta will not be as impactful for a telecomm or banking client. Google users will be interested in seeing images of a luxury hotel or fashion house’s latest line, but not as intrigued by a stock photo man on the phone or a pile of cash. Running banal stock images will not increase CTR or any other return metrics.
  • KPI (Key Performance Indicator) – To what metric are you optimizing your client’s account? If you are lucky and the answer is simply site-traffic or awareness, then the world is your oyster (the world of betas that is.) But, if your KPI is ROAS, as it is for most advertisers, then choose your betas carefully. For example, running Google’s communication extension may encourage users to sign up for a newsletter, but it also may discourage them from actually clicking through to the site and potentially making a purchase. Another recent example of a newish product that has the potential to decrease ROAS is Yahoo RAIS Video ads. Because the video does not link through to your site, you are essentially trading potential conversions for video views.
  • Tracking & Reporting Capabilities – If the results are not “trackable”, then they do not exist. While a beta may help drive incremental revenue, if you cannot track the performance and report on it, that revenue (and your effort in setting up the beta) is wasted. For example, enabling call extensions for Yahoo|Bing! campaigns may look great in the SERP and will drive traffic to your call centers, but if your campaigns are not integrated with a call tracking technology, those conversions will be lost. Most times, your technology platform will not have built in support for betas, so you may have to set up workarounds, like dummy tracking.
  • Budget Constraints – Any budget allocated towards testing engine betas should be incremental. Never rely on a beta product, like Google’s DSA (dynamic search ads) or Yahoo|Bing’s in-stream ads to spend your core budget or drive revenue towards your overall goal. Betas should always be tested with a small incremental budget before they are launched across an entire account and expected to boost performance.
  • Client’s Level of Risk Aversion – Now I am scared of many things, including heights, public speaking and tick borne illnesses, but engine betas are not among them. However, many clients prefer to stay with the tried and true and are hesitant to enable betas before they are a proven success. For example, clients with highly particular brand guidelines tend to stay away from betas that have any type of dynamically generated ad-copy, since the predictability of how the brand will appear is low during the beta period. Other clients are not satisfied unless they are on the cutting edge of something, even if the risky behavior costs them performance. Of course, the smartest advertisers fall somewhere in the middle, but always consider your client’s risk aversion when proposing that they test an engine beta.

The bottom line for betas is to proceed with caution. Marketers should carefully consider their vertical, KPI, tracking and reporting capabilities, budget constraints and risk aversion before opting into the latest and greatest engine offering.

Your Digital Media Is Integrated…Now What?

It’s not hard to imagine how larger advertisers can quickly find themselves caught standing still in a rapidly evolving digital marketplace today. As new tracking technology allows for greater integration between channels, advertisers should be thinking about how they can change their approach to increase efficiency. As advertisers become more sophisticated, the pressure grows to edge out competition and dominate the digital marketing space. Advertisers are finding themselves trapped between growing local online media, traditional companies investing in digital media, new e-commerce sites, OTA’s, review aggregators, blogs and social networking sites now earning margins on their revenue. Some advertisers are not sure if they should even view these new channels as friends or foes but regardless of channel, advertisers want their media budgets to earn/buy the most media possible, generating the most return.

Evolution is at the forefront of our industry. It has been a founding principle since Gutenberg fired the last town crier. As media has developed, the evolutionary curve has shortened. It is seen more recently with TV budgets overtaking radio ad space, DVR changing the pricing structure of the broadcast, and most recently with the Internet transforming print media and how businesses engage with customers.

Fact: It was 700 years from the invention of print to the invention of radio and nearly 70 years from the invention of the radio to the invention of the Internet.

Considering how rapidly online marketing evolves, advertisers can take advantage of this evolution instead of falling victim to it. Sometimes to their own detriment, advertisers can find themselves following the standard procedure and allocating media spend without considering the efficiencies of flexibility. Here are two ways advertisers can help their own organization evolve within the digital space. By strategically allocating budgets and making them flexible, marketers can earn/buy the most media with every dollar.

1. Break Down the Walls – Clients must learn that departmental divisions and internal competition for budget isn’t healthy. In many circumstances, advertisers compete internally for the same advertising budget and are incentivized based on growing media spend, not efficiently spending it. Factors such as product quantity or historically offline performing categories may cause advertisers to unfairly distribute budget from the top down instead of the bottom up. In an ideal scenario, budgets should be increased departmentally based on efficiency and departments should not be constrained to budgets set in a prior year. Advertisers must look holistically at their business and work together interdepartmentally to not compete against each other, but to ensure the internal divisions/departments with the greatest ROAS are fully funded.

2. Allow for Flexible Budgets – As consumer behavior continues to advance, media spend will change . Advertisers should prepare to shift budgets between search engines, display networks, mobile networks, etc. This budget shift doesn’t stop at the publisher level, but should be considered internally as well. Advertisers can find themselves pressured internally to ‘’support’’ new efforts instead of allocating media funds to proven and more efficient channels. Some ways to evaluate your media budget are to compare the shift in ROAS by date, channel, search engine, SEO provider, etc. and overlay this against your business cycle/seasonality. Next, determine how accurate your digital tracked revenue is by channel and the actual ROAS for each channel; you will then be well on your way to providing flexible budgeting and growing your internal revenue with the same media spend.

Ways to analyze media spend
i. month to month
ii. channel to channel
iii. engine to engine
iv. network to network
v. division to division
vi. seasonally/cyclically

At this point you might be thinking, “The big guys upstairs don’t like new ideas,” but I’ve discovered that the big guys upstairs always like ideas that are practical and generate revenue. Once advertisers make budgets more flexible and reallocate by performance, you will maximize your media dollars and increase your ROAS. It’s certainly easier said than done, however those who can will gain a competitive advantage over those who won’t.

POV: What Google Enhanced Campaigns Changes Mean for Sophisticated Marketers

(a version of this appears in MediaPost, today)

Wednesday’s announcement from Google greatly affects sophisticated advertisers. While the change will clearly drive adoption of mobile search advertising it is unfortunately at the expense of advanced marketers, such as our clients.

Being able to schedule different extensions based on time of day (for example, using phone extensions only when your call center is open) can be valuable and the concept of “smarter” ads – mobile-preferred ads, sitelinks, etc. – is nice. However, many marketers already manage this type of targeting through separate campaigns.

The notion of separate campaigns (or accounts) by device type, of course, is part of what Google is trying to cut down on. Google hopes to make it “easier” and require fewer assets to manage with one campaign for all devices and a handful of modifiers as opposed to duplicating or triplicating campaigns. It will certainly make it easier to spend more across device types – something that I’m sure Google is aiming for.

For smaller accounts and/or those with limited resources to manage paid search across devices, this has the potential to make things easier, though not necessarily as efficient from an ROAS perspective. But for larger marketing teams with the bandwidth and knowledge to manage their accounts more granularly, these changes will inhibit the control they’re used to.

These sophisticated marketers take advantage of a device type structure to easily control spend by device type or target specific transactions or returns. That will no longer be possible. Instead, marketers will need to adjust the mobile bid multiplier for each campaign. And, even then, that won’t impact spend on desktops, just on mobile. Even more troubling is that marketers won’t be able to advertise just on mobile. They’ll essentially be required to advertise on desktops even for mobile app downloads, for example, with a bid at least 1/3 of their mobile bid. We feel there will be a lot of pushback on this and Google will likely need to reexamine.

The other big change is doing away with tablets as a targetable device type. Google makes an argument for the blurring of the lines between laptops and tablets, and while we agree there’s some truth to the notion that users are finding laptops and tablets more interchangeable, there’s still quite a difference. There’s a lot of value in being able to target, bid and design for different screens. As our Q3 report showed, tablet users spent 30% more time on-site and had 20% higher Engagement Scores than PC users. This is a significant difference in behavior.

These changes will require some significant reworking of accounts, particularly for more sophisticated marketers with larger, more granular structures. The good news is none of it has to happen overnight. Google is announcing this now to make sure everyone has time to be comfortable with the new structure by Q4. Advertisers should pay very close attention to these changes and take the time to make sure they completely understand them before transitioning. That said, it’s imperative they migrate before Google does it for them. The auto-updating of legacy accounts this summer is not likely to be in anyone’s best interest.

IgnitionOne will be working with our clients over the next two months to minimize the impact and migrate to the enhanced campaign structure. We will also continue to work with Google as they roll this out and take into account the needs of their most sophisticated marketers.

Leveraging Rich Ads and Branded Sitelinks in Yahoo!/ Bing

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?

The 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.

Best Practices:

-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.

Figure 1

Figure 2