Enhanced Campaigns Findings: Based on Extensive Testing & $6M in Spend

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2 In the words of Google Marketing in a multi- screen world presents a multitude of new opportunities for advertisers and some challenges as well. Google recently introduced AdWords Enhanced Campaigns to help advertisers more simply and smartly manage their ad campaigns in this multi- screen world. iprospect stands out as one of the industry leaders in adopting Enhanced Campaigns and helping their clients adopt Enhanced Campaigns and in educating the overall industry about the opportunities available with this product. The agency is taking a thoughtful approach to using bid adjustments in Enhanced Campaigns as a way to reach people based on their context - like location, time and device. Moreover, they are also helping clients take advantage of the new features, like enhanced sitelinks and individual sitelink reporting. Surojit Chatterjee Group Product Manager Google Background Enhanced Campaigns represent the largest change to Google s AdWords paid search marketing platform since its launch over ten years ago. When Enhanced Campaigns were announced in early February 2013, iprospect published an initial POV with an overview of the changes, projections, and the potential impact on advertisers. In this follow- up paper,» 2

3 iprospect reviews the changes Google has made since the initial announcement, actual impact on CPCs, and recommendations for getting the most out of Enhanced Campaigns. Google s Reason for Enhanced Campaigns Contrary to what some sources have insinuated, Google did not create Enhanced Campaigns merely as a way to artificially increase cost per click for ads on smartphones and tablets. Enhanced Campaigns were created in order to make it easier for advertisers to launch and manage campaigns across multiple devices, to further encourage brands to build a better cross- device website experience, and to provide advertisers with additional bidding features based on secondary signals beyond the user s search query. Prior to Enhanced Campaigns, most AdWords advertisers fell into one of two categories with regard to their cross- device strategy: 1. Many advertisers opted to not serve ads on smartphones and tablets, either because they didn t have the ability to manage complex accounts and saw devices as an easy element to eliminate or because their website didn t provide a good user experience on these devices. 2. More advanced advertisers targeted each device separately by creating cloned campaigns. This approach allowed for a detailed strategy but with the tradeoff of making their accounts much larger and more difficult to manage. While the second, more advanced option is the recommended best practice, Google recognized that the account complexity required to set up and manage this option was a barrier to entry for many AdWords advertisers. When Google initially offered device targeting to AdWords advertisers, there were only two primary devices in play: computers and smartphones. A few years later, tablets became a third» 3

4 major device with the success of Apple s ipad. With three devices, advertisers using the cloned campaigns best practice now had three times the number of campaigns in their accounts than before. Google didn t want advertisers to continue creating new cloned campaigns for each additional device that came along, making their accounts larger and larger. Enhanced Campaigns condenses the complexity of a granular device- specific strategy, while still allowing advertisers to manage specific campaign elements (ad copy, extensions, bids) separately for smartphone users. Google then took this philosophy of allowing advertisers to adjust strategy based on the searcher s device and applied it to other secondary signals: location and time of day. In Enhanced Campaigns, advertisers have access to a powerful new set of tools that allow them to strategically modify their keyword bids in real- time and at scale based on predetermined audience segments. While there s no way to predict what the next five years will bring, Google has built Enhanced Campaigns as a foundation that allows them to better scale AdWords for the future. Changes Since the Initial Announcement Google has made a few changes - one might even use the word concessions - since the initial announcement of Enhanced Campaigns. As of the release of this paper, Google has no other changes to Enhanced Campaigns planned prior to the July 22 migration deadline. AdGroup- Level Mobile Bid Adjustments The first major change was the addition of an AdGroup- level mobile bid adjustment. Initially, the only way advertisers could manage keyword bids for smartphone traffic in Enhanced» 4

5 Campaigns was via a mobile bid multiplier set at the Campaign level. This multiplier (which can be set to any value between minus 90% to plus 300%) is applied to the keyword bid, and the resulting adjusted bid is utilized when the keyword triggers an ad on a smartphone. Since this setting was initially available only at the campaign level, many advertisers planned to restructure their accounts based on each keyword s ideal mobile bid multiplier. If two keywords were in the same campaign but had completely different performance on smartphones, they would be placed into separate campaigns for more granular smartphone bid management. Campaign restructures based on mobile bid strategy are no longer necessary with the addition of AdGroup- level bid adjustments (now available in the AdWords UI and AdWords Editor for all advertisers who have upgraded to Enhanced Campaigns). AdGroup- level adjustments provide the granularity needed by advertisers with a more advanced smartphone strategy. Smartphone- Specific Landing Pages Another new feature provides advertisers the ability to set specific landing pages for ads shown to users on smartphones. When first announced, Google took the stance that it was the responsibility of the website to provide proper redirects or responsive design for smartphone users. Google still believes in this philosophy but recognizes that many advertisers will not have such a solution in place by the time Enhanced Campaigns becomes mandatory. Google has created two new URL ValueTrack Parameters, {ifmobile} and {ifnotmobile}, which can be used to set different landing pages or custom tracking code for smartphone users versus tablet/computer users. This was the first update to Enhanced Campaigns, and was released just a few weeks after the initial Enhanced Campaigns announcement. Note that tablet users are still grouped with computer users in this solution.» 5

6 Upcoming: Cross- Device Reporting Information about cross- device reporting (showing a single user s interaction with an advertiser s ads across multiple devices) has been conspicuously absent since it was announced in February as an upcoming feature in Enhanced Campaigns. We expect to see more information about this new AdWords reporting sometime soon. Advertisers should note that this report will require AdWords conversion tracking to be enabled, and should make plans to add the AdWords tracking pixel if they aren t already leveraging this feature. Changes & Concerns iprospect was one of the first to begin testing Enhanced Campaigns (one month prior to Google s initial public announcement in February) and has continued to test, initially using a base of 10 clients and then expanding to more accounts. In the first two weeks of May 2013 alone, iprospect managed over one million dollars in spend on Enhanced Campaigns. The biggest concern voiced about Enhanced Campaigns is the potential for increases in CPC. Most sources are predicting dramatic CPC increases as all advertisers start serving ads on tablets and more advertisers begin serving ads on smartphones. This is a valid concern and we recommend AdWords advertisers closely monitor their CPCs throughout the next few months. However, the primary thing to keep in mind is that Google AdWords is an auction- based system. Enhanced Campaigns do not fundamentally change how the auction works, or how quality score functions. Other concerns include the following:» 6

7 Tablet: In Enhanced Campaigns, keywords serve ads on tablets and desktop with no option to opt out or set separate bids. Historically, many marketers have seen tablet CPCs lower than desktop due to less competition. This benefit will disappear in Enhanced Campaigns when all marketers must automatically opt- in to paid search auctions on Tablets. Smartphone: Enhanced Campaigns make it easier for advertisers to opt in to smartphone advertising, but the mobile bid adjustment can be confusing to analyze and optimize. Smartphones show fewer ads per page, and competition will likely increase for the coveted top two ad placements. Over- Bidding & CPC Increases: While the various bid adjustments offered by Enhanced Campaigns provide savvy advertisers with powerful new bidding options, the way these adjustments stack together could lead some advertisers to overbid, increasing their CPC and causing competitors, in turn, to increase bids to compete (more on this in tip #7 below). Trends Based on Extensive Testing To date, iprospect has seen the following trends: For almost all iprospect advertisers that migrated prior to mid- April, simply migrating to Enhanced Campaigns did not cause an immediate increase in CPC. The only times iprospect accounts saw a CPC increase was when the advertiser launched a significant account restructure at the same time as the Enhanced Campaigns migration. The CPC increase was on par with what we typically see when launching a new account structure.» 7

8 Between the initial announcement in February and mid- April, iprospect did not see significant changes in CPC by device for both migrated campaigns and those we waited to migrate. CPCs on desktop and tablet traffic stayed flat, while mobile CPCs climbed by 4 cents in late February only to return to previous levels at the end of the March. If an advertiser was not previously running ads on tablets, they saw an increase in impressions, clicks, and cost from tablet traffic. In this case, tablet CPCs typically start out slightly higher than or even with historic CPCs, and within 3 weeks, will settle in to be even with or slightly below computer CPCs. Beginning in mid- April, iprospect started to see a change in device- level CPC across all campaigns Enhanced and Legacy. Tablet CPCs increased week- over- week and by mid- May were 12% higher than the baseline of the previous months. During the same timeframe desktop CPCs increased by a slightly larger amount (14%) and smartphone CPCs increased (9%). Enhanced Campaigns primarily changes the amount of competitive participation (for example, opting all advertisers into tablets) and the method of bidding on a portion of traffic (smartphone adjustments). Quality score is still maintained separately by device for each keyword, and CPC increases are less related to individual migrations and more related to when an advertiser s competitive set as a whole migrates. This is reflected in the device- level CPC trends that iprospect has seen over the past few months.» 8

9 *includes all iprospect US AdWords accounts including both Migrated and Legacy Specific Results One client that migrated in mid- February saw overall CPC increase by 7% for one week before settling back down to pre- migration levels, while at the same time their overall CTR and traffic nearly doubled. In this instance, the client was only running a few keywords on tablets - expanding to tablets drove a large boost to traffic with minimal effect on overall CPC. Another client transitioned on May 1 and saw overall CPC increase by about 9% - on par with overall CPC increases during this timeframe. This was offset by a 10% increase in traffic and an 18% increase in revenue. While some of this jump is due to seasonality, this is a much larger increase during this timeframe than seen in years past.» 9

10 Projections & Timing Historically, it s not uncommon to see a slight CPC increase across certain advertisers for this timeframe, depending on their seasonal trends. However, the fact that this increase is consistent across the majority of iprospect s accounts points to the conclusion that as more AdWords advertisers migrate to Enhanced Campaigns, we should anticipate CPC increases. The increase in CPCs is partially due to increased competition on auctions for tablet and smartphone traffic. It should be noted that the majority of iprospect clients were already running ads on all devices. Advertisers who have not previously participated in the tablet and/or mobile space should expect more volatility - similar to the CPC volatility seen when launching new keywords. iprospect anticipates that tablet CPCs will continue to rise throughout the coming months as the auction for paid advertising on tablets becomes more crowded and competitive. We project that tablet CPCs will level out either equal to or just below desktop CPCs, depending on the advertiser s history of participating in the tablet space (remember, quality score for each keyword is calculated separately by device). iprospect also predicts that smartphone CPCs will rise as well but not as drastically as tablets since many advertisers are electing to opt out of showing ads on smartphones in Enhanced Campaigns. This CPC change will culminate during the two weeks following the July 22 deadline, and advertisers should anticipate a tumultuous August in the paid search space as all AdWords marketers adjust to Enhanced Campaigns. However, advertisers who have already migrated or will migrate soon will likely see less CPC volatility and will be better equipped for Fall due to both account history in the Enhanced Campaigns format and the results of having a head start on testing and optimization.» 10

11 Migration to Enhanced Campaigns While the process of migrating to Enhanced Campaigns initially appears to be a rather daunting process, Google has provided several resources and guides to help advertisers migrate their campaigns into the new format. In addition to these guides and automated tools, clients or agencies with dedicated Google client services representatives should leverage those resources. Google reps have access to several internal tools that can help expedite migration, and iprospect s Google reps have built several custom reports and processes that have been extremely helpful in our migrations. When Enhanced Campaigns were initially publically announced four months ago, iprospect initially held off from mass account migration for three reasons: 1. To give the paid search management platforms that iprospect leverages the time to make an initial round of updates. 2. To give Google time to fine- tune Enhanced Campaigns (as described above, in Changes Since the Initial Enhanced Campaigns Announcement. ) 3. So we could use selected accounts to track results, test opportunities, and document best practices. After 2 months of testing with a group of 10 clients, iprospect rolled out a company- wide migration plan. The majority of iprospect paid search accounts will be migrated to Enhanced Campaigns by May 31, with the rest migrated by mid- June. Despite concern from many digital marketers, iprospect has found migration to be much easier than initially expected. Kendra Newton, Search Marketing Lead, iprospect» 11

12 The most difficult part of migration is the initial planning stage: reviewing cloned campaigns targeting different devices, ensuring there are no keyword gaps, checking account settings for parity, and choosing which version of the campaign to migrate and which copies to pause and delete. While many advertisers initially expressed valid reasons to wait until the July 22 deadline to migrate their accounts, updates from Google have rendered most of these reasons to wait moot: Mobile Bid Strategy: For advertisers who were concerned about losing their detailed mobile bid strategy and thus considered restructuring their accounts to better leverage the campaign- level bid adjustments, Google has added AdGroup- level mobile bid adjustments. Flash on Landing Pages: Most advertisers with Flash- heavy landing pages wanted to retain the ability to opt out of tablets (which often don t support Flash) as long as possible. However, Google has announced if a keyword or ad has a landing page that won t display properly on mobile/tablet browsers (such as a Flash- heavy page), those ads will NOT appear on mobile devices or tablets. Device- Level Conversion Tracking: While all metrics tracked by AdWords can still be segmented by device in Google provided reports, many third party tracking solutions did not provide device- specific conversion information. The previous best practice of segmenting campaigns by device was often used to provide device- specific conversion and tracking data. Google has provided new URL ValueTrack Parameters ({device}, {ifmobile}, {ifnotmobile}), which allow non- Google tracking solutions to segment data by device. By mid- June, most leading solutions will have device- level reporting in place.» 12

13 At this point there are just a few remaining reasons advertisers should wait to migrate their campaigns. These reasons are: If advertisers are close to launching responsive design or improved device- level redirects for their site, they should wait until these elements are in place. If advertisers run flighted campaigns with a scheduled end date before the July 22 deadline, they may choose to wait until the next round of campaigns launch, and then launch these campaigns in the Enhanced format rather then migrating existing campaigns. Recommendation: CPC changes from Enhanced Campaigns are affecting all advertisers - those that have migrated and those that have not. It is iprospect s recommendation that advertisers should migrate sooner rather than later in order to begin testing and learning how to get the most out of Enhanced Campaigns. The Missing Piece Google has yet to provide Enhanced Campaigns reporting that provides enough data for advertisers to effectively and efficiently review and optimize bid adjustment strategies. Basic reporting shows only the initial bid and resulting CPC, but will not indicate what percentage of traffic shown was adjusted by one or more modifiers. In order to get the true picture of performance, advertisers are forced to segment keyword data by location, time of day, and device in a single report and then go back and manually enter their current bid adjustment. The data set in such a report is very complex, and the majority of AdWords users aren t prepared to execute this level of manual analysis. Google has made it very easy to set up these modifiers - but it s very difficult for advertisers to review performance and identify» 13

14 opportunities for optimization. Bid adjustments are a powerful new feature, but advertisers should take care when implementing them. In Summary: iprospect s Top 7 Recommendations for Getting the Most Out of Enhanced Campaigns 1. Don t wait to migrate. Now that most of the reasons to wait have been negated, savvy advertisers won t wait until the deadline to migrate their campaigns. For advertisers and agencies with access to Google reps, these resources will have less and less availability to offer assistance as the deadline draws closer. Enhanced Campaigns are the future of Google paid search, and advertisers who migrate now and begin testing and learning how to best utilize the new features of Enhanced Campaigns will have an advantage over those who wait until July Take advantage of mobile. The barrier to entry has been lowered for mobile paid search, and advertisers should test and leverage this traffic source by setting mobile bid adjustments and creating mobile- preferred ads and extensions. If you ve never tested mobile, this is a great opportunity to quickly and easily test running paid search ads for this traffic and determine value. Remember, smartphone bid adjustments should be treated as an ongoing part of bid management, not a set and forget campaign element. Allocate time to review smartphone performance and update bid adjustments on a regular basis.» 14

15 3. Plan for CPC increases. As mentioned above, CPCs will be quite volatile for the next several months. Anticipate tablet CPCs reaching parity with desktop CPCs by August: if you re not currently targeting tablets make sure you factor in that increased traffic and spend. Mobile CPCs will likely increase as well, but not as drastically since advertisers can still opt out of appearing on smartphones. Depending on adoption of other bid adjustments, overall CPCs across devices could also spike during September and August, as advertisers test and determine holiday strategy. Allocate budget for testing, and plan for late summer/early fall to be much more competitive than in years past. It s too early to say whether CPC increases will be a permanent problem or a temporary spike - but by planning for them, advertisers will be prepared to ride out the volatility. 4. Take advantage of enhanced extensions especially Sitelinks! Currently, four of Google s ad extensions are available in an Enhanced format: Call Extensions, App Extensions, Offer Extensions, and Sitelink Extensions. All other extensions remain available in Enhanced Campaigns, and advertisers must upgrade to the new version of these four extensions manually as an additional step in their migration process. All offer new functionality, but Enhanced Sitelinks are especially useful. Advertisers can now see performance metrics for each individual sitelink, rather than just for the group of sitelinks, and can also set sitelinks at the AdGroup level, which allows for much more granular strategy. Google has also added sitelink scheduling, which allows advertisers to launch and pause sitelinks at designated times - a very useful option for promotions, events, or even countdown messaging in sitelinks.» 15

16 The only drawback is that Enhanced Sitelinks can only be managed in the AdWords API for now, although AdWords Editor support is expected in mid- July. 5. Expand your geo- targeting strategy with geo- bid adjustments. Segmenting AdWords traffic by geographic location is a strategy that iprospect has seen great success with over the past seven years. Historically, this strategy has involved allocating budget and providing location- specific creative for an advertiser s top markets via cloned campaigns. While very effective there are limits to the scalability and there is a point of diminishing return where improved performance is counterbalanced by account bloat and complexity from all the cloned campaigns. Geo- bid adjustments provide the opportunity to scale beyond this point by allowing advertisers to set bid adjustments without the necessity of cloning campaigns. They don t replace the previous strategy since they don t allow budget allocation by location or location- specific ad copy, but they provide a fantastic next step. So if you re currently seeing success with geographic segmentation via cloned campaigns, don t abandon this strategy - instead, look for additional opportunities in other locations via geo- bid adjustments. Advertisers who haven t experimented with geo segmentation in the past now have an easy- to- implement feature that allows them to test adjusting keyword bids across different markets. 6. Experiment with time of day bid adjustments carefully. Time of day bid adjustments allow advertisers to adjust bids automatically throughout the day or week, but there are two things to keep in mind.» 16

17 First, the time zone used for bid adjustments is not the Google user s time zone - it s the time zone in which the account was set up. Google requires advertisers to choose a time zone and a currency when creating their account, and except in very special circumstances these values can t be changed once the account is created. So if you re setting bid adjustments for a campaign that targets California and your AdWords account is set to the Eastern time zone, make sure to account for the three- hour difference. Second, when a time of day bid adjustment is added without further action, overall traffic will be limited to only the hours with the bid adjustment. Once you create a time bid adjustment you must also be sure to create a separate schedule for all other times with a 0% adjustment, otherwise your ads will go offline for these other times. Google is working on improving the UI for this feature to make it more intuitive. 7. Know how bid adjustments combine and use them carefully. Bid adjustments are a powerful new feature, but when a Google user triggers more than one modifier, advertisers may be surprised at how much they wind up paying for that click. Two bid adjustments of the same type will never be used. For example, if an advertiser has a +50% geo modifier for Texas and a +75% geo modifier for Dallas, a user in Dallas triggers only the Dallas geo modifier. However, if a searcher fits the criteria for multiple different modifiers, those modifiers stack - and each successive modifier is applied to the modified bid, not the base bid. Others have compared this stacking as being similar to compound interest, and that s a great explanation of how the math works. As an example of how easy it is to overbid, imagine a keyword with a $1.00 bid. After analyzing the data, your paid search team sets a device modifier to increase your bid for smartphone searchers by 100 percent, a geographic modifier to increase bids for searchers in New York by» 17

18 100 percent, and a time of day modifier to increase bids between 4:00 p.m. and 10:00 p.m. (Eastern Time) by 100 percent. Now imagine a searcher on her phone in New York at 8:00 p.m. performs a search that triggers your ad, and clicks on it. Because of the way the modifiers combine, you just bid $8.00 for that click. Original bid: $1.00 X location modifier of 100 percent: $2.00 X time of day modifier of 100 percent: $4.00 X device modifier of 100 percent: $8.00 Of course, good quality score for that keyword/ad/landing page/device combination will likely mean the click cost you less than $8.00, but we anticipate many advertisers being surprised when their actual CPC winds up being higher than their keyword bid due to multiple bid adjustments. iprospect will continue to closely test, monitor and report our recommendations for advertisers to make the most of Enhanced Campaigns.» 18