SEM Punch

As the folks on TechCrunch already mentioned, Salesforce is integrating AdWords into their product at $300/month. This is a natural step towards integrating CRM products with a growing and very measurable distribution channel such as search.

So far it seems that Salesforce integrates with AdWords mainly for reporting purposes, with some basic functionality such as deploying keywords and ad text. But the tool seems to lack actual management features. There is a lot more to search marketing than just looking at the metrics, although it is a very important part. My guess is that there is more to come in the features, but for now it is a first step to linking online traffic with offline sales resources that can pick customers up in parts of the conversion funnel where customers would usually be lost to a business.

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Ok, I have to admit, it’s been a while since my last post…I’ve been crunching some of the AOL data that was released and will try to throw some simple analysis tool up soon. But enough of this for now…

From personal experience and by talking to like-minded, geeky search marketers it appears that various details about the Google AdWords system remain puzzling at times. The adwords system is a rather blackbox system, intentionally kept this way. The information asymmetries between advertisers and Google help Google maximize revenue & profit.

In any case, what are some of the questions or issues that advertisers continuously stumble over?

1. I can easily change a keyword’s poor click through rate history by moving it to another adgroup
   Google stores the ctr for a keyword on the account level. That means moving your keyword from one adgroup to another within the same AdWords account will not have any impact on the keyword’s click through rate history. Even if you delete your keyword in adgroup A and submit it again into adgroup B, your keyword’s click through rate history will be contained. So moving your keywords around within one account will not reset your keyword’s ctr history. You could, however, just open a new account and move poor ctr keywords into that new account. But be aware that starting a new account can be somewhat difficult.
2. If I increase my ad text CTR, my rank will improve automatically
   A rank, or position, is not directly determined by the ad text that resides in a given adgroup. The rank is determined by the keyword’s CTR history, the max CPC and the black-box quality score. As such, getting a better CTR on a specific ad copy will induce more users to click and hence indirectly impact the underlying keyword’s click through rate. The ad text ctr is used to determine which copy in your adgroup to serve.
3. Keyword insertion increases the relevancy of my ad text
   I talked to an AdWords representative about this and specifically asked whether keyword insertion would increase the ad text’s relevancy. The answer was no. That was news to me at the time, but it makes sense. Imagine a copy such as:
   {KeyWord:SEM Punch Rocks}
   {KeyWord:SEM Punch Rocks}
   {KeyWord:SEM Punch Rocks}
   www.sempunch.com

   Would this be targeted, for a keyword such as “PPC marketing”? What matters is not how creatively an advertiser can use dynamic keyword insertion. Important is what other words, or tokens, are in the copy and how relevant they are to each keyword inserted in the ad text.

4. If I increase the bids on new keywords, they quickly accummulate good click through rate history and my min CPC drops
   Who hasn’t thought of this yet? Just bump up the bids when launching new keywords and they will get a high CTR - then lower the bids later on and you rank well because of your keywords’ great history. It doesn’t work. Google calculates a rank-adjusted CTR, i.e. Google normalizes click through rate data for each rank. This means, Google has specific expectations for click through rates at each position and benchmarks your actual CTR against those expectations. How are Google’s expactations calculated? I believe they calculate an average CTR in their network for each keyword at each position, but that is only my guess. If you perform better than that average value, you “perform better” relative to your competitors (by being able to maintain lower CPCs for a fixed amount of traffic).
5. In one adgroup, the copy with the highest CTR is the best
   If Google reports a higher click through rate for one copy versus another, it is tempting to believe that the high ctr copy is the best. However, this might not be case. Consider copy A with ctr= 2% and copy B with ctr =1.5%, both launched at the same time. I have seen instances where the serving rate was higher for copy B than copy A. In other words, even though the ctr for copy B was lower, Google choose to show it more often. When you do copy testing and you remove text ads from your adgroups, make sure that you take the serving rate for each text ad into account.
6. If i switch my keyword URL, my adgroup & keywords go under review
   If you have legacy keywords in your adwords account, it could be that you still receive some traffic for keywords that would not pass Google’s automated review process today. This is because over time Google has changed its guidelines for certain sets of words. Of course, I would be concerned about anything that would potentially make my keywords go under review again. But you can switch the keyword destination URL without triggering a ew review process.
7. I can just carelessly dump as many keywords into my account
   Each account has a limit of 1 million keywords. Not too many people reach this limit, but misspellings and canonical search terms can explode your keyword portfolio. Make sure you don’t reach this account limit because of junky keywords that will never even receive an impression.

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Google has launched its wireless broadband service in Mountain View, CA. Supposedly reasons for launching the 1 million dollar network are:

Google says it sees a spike in usage of its search and advertising services wherever broadband usage spreads. By offering wireless access inside homes, offices, schools and around town, Google expects further economic benefits.

Hmm…why would Google offer free wireless service in Silicon Valley? C’mon, do we really need free broadband access to see & click more of Google’s ads? Hardly. I don’t know many people in the Bay Area who have a connection slower than DSL. I think testing a wireless broadband infrastructure is of much greater strategic importance than just driving additional users to Google - it might be vital for the survival of the company. Big telecoms who have laid the pipes into consumers homes are already complaining about Google just piggy backing on their infrastructure. Should the telecom companies be successful at charging companies such as Google for bandwith the cost would make quite a dent into Google’s margin curve. Google is just securing its cheap access to consumers.

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Althoguh the updated AdWords API terms and conditions have been out for quite a while, I have only today gotten around to actually taking a look at them. Clealy, with its explicit call not to provide third parties with access to API tokens Google is gunning at search marketing service providers the like of eFrontier, SearchRev or Omniture.

Account Data. The AdWords API Client must neither enable nor allow any party to access or use any data obtained through Google Scraping. The AdWords API Client must neither enable nor allow any party to access or use the account, passwords, AdWords API Data or any other account information of a party other than the then-current end-user (which includes parties acting on an end-user’s behalf and authorized by that end-user to do so).

At first thought this appears to be a pretty stupid move. After all, agencies & search marketing service providers provide Google with a solid base of advertiers that would otherwise not advertise at all. Small advertisers either don’t have the knowledge of managing their search campaigns or simply don’t have the time & resources to do it full-time. This is where agencies & technology providers add value - expertise and tech resources.

At second thought, however, I think these new TOCs are a sign of and natural response to the maturing search marketing space. For a while Google allowed an API token to be shared, more or less, enabling advertisers to allocate some of their free quota units to agencies. By accessing clients’ accounts and streamlining the management process, agencies helped Google maintain its stellar financial growth without committing extra resources & educating a market. Google had peons to do the dirty work.

Along with the new terms and conditions the Adwords API will emerge out of beta…i know, hard to believe a Google product makes it out of beta ever. What that means is essentially that the API will be supported to a larger degree probably by speeding up transaction time & adding some customer support. Along with blocked access for agencies, middle-tier advertisers suddenly have a pretty strong incentive to start cranking out their own code, desperate for some way to manage their 100,000+ keywords. This gives Google an important advantage it it didn’t have so far: direct access to users’ wallets on top of click charges creative application usage & a direct channel of communication with mid-tier spender’s engineers. These are valuable information sources to drive future development of the AdWords API.

What about the very small spenders though? Nope, Google is not leavin’ them out in the cold…it released a pretty nifty tool that let’s them manage their AdWords campaigns without logging into their account.

But wait a minute - now you have the mid-tier spenders who build their own traffic application and the small spenders using the AdWords Editor. Perfect conditions for educating a market! Just add a feature to the desktop tool and thousands of little advertisers will become more sophisticated marketers over night. I can already see a little window popping up when changing bids that says “Are you sure you don’t want to bid $1.21 more to get into first position? You would get more volume…we promise!” Or imagine an API function called ProfitMaximizeStupidDoNotRevenueMaximize (that will not respond when you call it) - suddenly thousands of product managers & engineers wonder about the magical string “stupid” in that function’s name.

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