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Went Hot: February 18, 2008 - 2:47 pm
Posted By: planetc1 89 days ago
Topic Type: News Story (Jump to http://searchengineland.com)
Category: Online Marketing
"We never sat down and had meetings about moving budgets. Rather, our systems noticed that ever-so-slightly better clicks could be had on Google and so shifted spend there. "Better" in this context means "more likely to generate sales dollars or margin dollars for our clients".
7 Comments
Comments
Isn't this a Q&A with Alan Rimm-Kaufman? Alan wrote a great Paid Search column and deserves the credit for answering the excellent questions Danny asked.
Even better if Alan had answered Aaron Wall's sphunn blog post:
"SEO separates out real businesses from 95% of the people buying PPC ads. The guy stealing ad copy is too lazy to compete at that level. I'll enjoy the logarithmic growth in profits (which have been at least doubling every year) while he keeps stealing table-scraps from Google and other affiliates until his accounts get banned."
Rimm-Kaufman is one of the best blogger/thinkers in our industry and his SearchEngineLand posts are always well worth reading in depth. I don't understand why he doesn't get as much Sphinn attention as some of the whiny prima donnas around here who complain whenever someone throws a monkeywrench into their plans to sell links or do click arbitrage.
I wish Rimm-Kaufman hadn't said you can get quality clicks from second- and third-tier PPC engines. While this is no doubt true I suspect it gives comfort to click arbitragers who think they are doing advertisers a favor by buying from no-name places at $0.25/click and reselling through a major engine at $5.00/click. The arbitragers imagine the advertisers are ignorant of the no-name PPC engines and that they (the arbitragers) are doing a service by providing more $5 clicks. On the contrary, I think advertisers know full well about these third-tier PPC engines. Their experience with these engines shows very low click quality. Which is why the prices are lower their.
There is a reason cost per click is higher on MSN than Third-Tier PPC: it's click quality. I know Rimm-Kaufman understands this, but I think some would-be arbitragers assume all clicks are equal so they can profit from differential pricing. All clicks are not equal and if Yahoo and Google would stop accepting arbitraged traffic, the click prices on their systems would rise.
Kevin, I'm pretty sure that's the headline that Alan himself chose for his article. But Chris Sherman can chime in if he wants. I'm just thrilled he got back to me with my questions plus turned it into a superb column. Now just tell me it will make your SearchDay list of headlines from across the web :)
Yep, 'twas 100% my title, Kevin.
Thanks for your kind words.
Post finished up sort of late at night, so not a deeply considered title, save the idea that that Danny far more nameworthy and interesting than me!
Great post, thanks so much for this Alan and Danny.
We run similar graphs on a quarterly schedule, and dropped Yahoo about mid last year. We found that the CPC expense was at most times greater than that of Googles' yet the conversions came at 1/10th of Google. This was based on Clicks vs Clicks and not Dollar vs Dollar. My Clients are very well attuned to the fact, that their ad expenses are dependent on market demand, therefore daily expenses are not fixed but bloated to capture more leads/sales.
On Google, high season, we estimate a cost of 20,000 in two markets. Of the number of conversions we receive, we must close at the minimum 10% to pay for the expense, our closing ration is 70% - so we estimate a 60% profit margin with search ads, which for them is a great value.
On Yahoo, high season, one would assume an 80% decrease in expenses, due to the number of searches, unfortunately, that was not the case. We found that it cost us 60% of the Google Expenses (I can't use budget, as we do not budget Search Ads), the conversions were sparse, and we would have to close 70% of leads in order to break even. We deliberated on the brand identity factors that might be affected at dropping Yahoo but we ultimately decided to work ranking vs ad expense and call it a draw. We spend maybe, 5000 a year on Yahoo at this time.
On MSN, the costs were insignificant 3 leads were all that was necessary to pay for the campaign and retain a profit margin. MSN delivered a more qualified customer, however the costs are so low due to less traffic, that any attempt to increase our budget on MSN was futile, this left us with stipulating monthly budgets on MSN which we never reach.
If there's a market demand for our products, then our expenses should be higher, and if there is none, then it should be lower. We never alter our daily expense - currently set at 10k-100k on Google, we'll never reach that expense, and if we do - we're pretty sure it's going to generate a much greater number of leads and sales. We fluctuate anywhere from 5k to 30k per month on Google depending on demand, we jump around 150%-300% lead conversions during high season compared to low season.
Right now, my problem is having to keep my clients happy that they are seeing the numbers retain in 2008, and that they shouldn't expect such huge jumps in lead conversions unless demand for the product increases. I've now been given a budget to increase demand for the product - thanks - now where the heck do I start? And no - Digg just isn't the right demographic for us. :)
ARK,
It's interesting to read such a high quality presentation comparing search engines and strategies.
Are there strategy considerations you can describe regarding the differences between business to consumer PPC vs. business to business PPC? Perhaps this is a topic for another article, or maybe you've already written something about it?
Thanks.
Greg Moore
San Francisco
Hi Greg --
Sure, more on PPC for B2B.
Here's an ACCM session I did last year with Anne Vargo of CDW (a client)
http://www.rimmkaufman.com/rkgblog/2007/05/23/b2b-search/
and here's the PPT from that
http://www.rimmkaufman.com/content/accmrimmkaufmanvargob2bsearch.pdf
I'll try to write an article on our blog (http://www.rkgblog.com) on B2B PPC in March -- thanks for that great idea.
Cheers
Alan