Tapping Hidden Opportunities in Your Paid Search Campaign Advanced Paid Search Advertising Tips from NetElixir A NetElixir Research Report February 2011
Introduction Search Marketing Professional Today s Search Engine Marketing (SEM) industry is undergoing an amazing transformation, and those that embrace and adapt to the changes will enjoy a distinct online marketing advantage over those that don t. You see, today s savvy web visitors are revolutionizing search marketing through their demand for good, relevant content, timely information, and the ability to choose from multiple sources. Consequently, SEM s multi-dimensional nature demands that as a professional search marketer, you must diversify your SEM strategies in order to stay competitive just as you would diversify your personal investments across several different low-yield and high-risk areas. NetElixir s expertise lies in devising and implementing those strategies and delivering measurable ROIfocused results for our clients. In this, our first Search Engine Marketing white paper for 2011, it is my pleasure to introduce you to some thought-provoking ideas and powerful yet practical SEM tips. The ideas are based on the findings from NetElixir s ongoing research on paid search advertising campaigns of 32 large US online retailers. Whether you re a mid-sized business or large retailer, I strongly urge you to study this paper and begin to assimilate the information presented into your online customer acquisition model. Once you do so, I have absolutely no doubt that your search advertising program will be ready to meet the challenges of 2011 and beyond. Of course, myself and the entire NetElixir team are ready to answer any questions you may have. Wishing you continued success... Udayan Bose Founder & CEO, NetElixir www.netelixir.com www.netelixir.com -1-
Increase in Conversion Latency is Forcing Retailers to Re-assess their Keyword Portfolio and Bidding Strategy Search Facts: Latency of conversions (time between the first click on your paid search ad and the purchase) has gone up by an average of 12% (Jan 2011 vs Jan 2009) for most retail categories. The average number of clicks on a paid search ad prior to a purchase has increased from 2.7 to 3.1. Post the first click, more than 52% (versus less than 30% in Jan 2009) of all searchers visited at least one more channel prior to making an online purchase. What it Means for the Retail Search Marketer: Online shoppers are doing more research. As a result there are more impressions and clicks on search ads. Conversion windows may need to be extended to capture the conversions and maintain the conversion rate. Being visible on right keywords at right times is critical for getting into the buyer s consideration set. The keyword portfolio needs to be re-assessed. Bidding strategy (as well as technology) needs to incorporate the latency effect. www.netelixir.com -2-
An Increasing Number of Retailers are Adopting a Focused Non-brand Keyword Optimization Strategy Search Facts: Brand keywords have driven sales growth, especially for big brand retailers, resulting in a definite absence of focused, non-brand campaign management. Diminished brand keyword growth opportunities force retailers to devise creative strategies to expand the non-brand keyword portfolio. Sophisticated search marketers are performing extensive click path analysis to understand the impact and validity of non-brand keywords. What it Means for the Retail Search Marketer: Focusing on extending the non-brand keyword list s power to increase conversions. Moving beyond the last click model for capturing non-brand sales. Developing a better understanding of the impact of non-brand keywords latency factor and ability to convert within the click stream. Building key performance metrics to measure progress of non-brand keyword performance. www.netelixir.com -3-
Using Multi-channel Performance Tracking Tools Help You Diversify Your Acquisition Program Beyond Google Search Facts: Cost per conversion for Google adwords has increased by more than 20% (Q1/2010 vs. Jan/2011) for most retail verticals, forcing marketers to explore opportunities beyond Google. Marketers are increasingly embracing technologies like NetElixir s LXRRetail that helps them compare performance of organic and paid search advertising, shopping engine advertising, social media advertising, all from a single integrated dashboard. What it Means for the Retail Search Marketer: Performance tracking on key metrics across multiple channels is crucial in identifying opportunities. Need to shift budgets seamlessly between channels to extract the maximum Return on Marketing Investment (ROMI). Ability to segment channel performance by geography and demography, and build an optimal channel mix. (NetElixir has gained substantial increases in ROMI by allocating the marketing budget based on geo-specific channel preferences) www.netelixir.com -4-
4 KPIs that Every Retail Search Marketer Should Use for Multi-channel Performance Comparison 4 KPIs that every retail search marketer should use for mul2 channel performance comparison Metric Per Channel Average Order Value What it Tests Customer Value/Channel % New Customers / All Customers Channel Effec2veness (Sales Cost of Adver2sing) / Click Value Per Channel Revenue (within 60 days amer first click on search ad) /Channel Investment Return on Ad Spend (amer incorpora2ng latency effect) www.netelixir.com -5-
Day Parting Tactics Linked to Search and Purchase Patterns Helps Drive Incremental Sales Day par<ng tac<cs linked to search and purchase paberns helps drive incremental sales Search Facts: Source: Average Search daily (hourly) query clicks and and orders conversion follow data for a dis2nct 32 large retailers (hourly) in January palern. 2011. NetElixir Retail Intelligence Unit Time bound search tac2cs can be applied to extract maximum value. LXRRetail s auto budget alloca2on feature helps in maximizing the return on spend Search Facts: through day part linked bidding strategies. Search query and orders follow a distinct (hourly) pattern. What Time-bound does this mean search for tactics the retail can search be applied marketer? to extract maximum value. Breaking down performance by the hour helps in extrac2ng substan2al ROI gains. Analyzing LXRRetail s and auto-budget understanding allocation when shoppers feature search helps and in maximizing when they buy the can return help on create partial-day, pin pointed linked SEM bidding tac2cs. strategies. What it Means for the Retail Search Marketer: Breaking down performance by the hour substantially increases aggregate ROMI. Analyzing and understanding when shoppers search and purchase helps to create precise and effective SEM strategies. www.netelixir.com -6-
Concluding Notes Search advertising methodologies need to reflect the changing times. The world economy has changed consumer behavior. Search advertising needs to reflect these new realties and be relevant for the new breed of online consumer. The search advertising industry in 2011 is hyper-competitive. Retailers need to adopt smart optimization techniques and intelligent SEM technology in order to compete with sophisticated advertisers. It is crucial to compare multi-channel campaign performance to understand channel-wise contributions and build a more efficient channel portfolio. A dedicated focus must be placed on non-brand keywords, which will increasingly account for a greater percentage of overall account growth. www.netelixir.com -7-
About NetElixir NetElixir, Inc., is an online customer acquisition management firm headquartered in Princeton, NJ, with global offices in London, UK; Hyderabad, India; Freiburg, Germany; and Copenhagen, Denmark. The company advises clients worldwide on online customer acquisition strategies and, using its proprietary technology - the LXR core platform, helps them achieve online advertising performance maximization. NetElixir s suite of services and products includes both an end-to-end campaign management service as well as optimization technology and service solutions for online retailers. For additional information, please visit www.netelixir.com or call us at Web Coordinates: Email: info@netelixir.com http://twitter.com/netelixir http://www.netelixir.typepad.com/ http://netelixir.wordpress.com/ www.netelixir.com -8-
Disclaimer This NetElixir report is intended for general information and is based on publicly available data available on the Internet at a particular point in time. NetElixir gives no guarantee regarding this information and accepts no liability for any inconvenience, or any direct or consequential loss, arising from reliance upon this information. No part of this report may be reproduced, stored in a retrieval system or transmitted in any form by any means, electronic, mechanical, photocopying or otherwise without the permission of NetElixir, Inc. 2011 NetElixir, Inc. All rights reserved. www.netelixir.com -9-