SMX Advanced – Inside The Auction Black Box
Comments are paraphrased.
Moderator: Jeffrey K. Rohrs, VP of Agency & Search Marketing, ExactTarget
Speakers:
Joshua Stylman, Managing Partners, Reprise Media
Jonah Stein, Alchemist Media
Dan Sundgren, Director of Sales, Efficient Frontier
Jeffrey – Today’s panelist are going to talk about what they believe is going on behind the scenes with the ad auction.
Dan
- My goal is to tell you what I know about quality score
- Quality Score = (keyword’s CTR, ad text relevance, keyword relevance, landing page relevance)
- Within a year, Google will actually show fewer ads
- As opposed to site stickiness, Google’s goal is to get users away from their site as fast as possible.
- Click Through Rate is the cornerstone of Quality Score, and the biggest piece. Unfortunately, ads with high CTR are often not the best performer.
- With Google Analytics and the DoubleClick acquisition, Google is looking well beyond CTR.
- AdRank is the formula Google uses to figure out where an ad should be placed on a page.
- Gave overview of Google’s ad discounter, the system that allows one to pay only one penny more than the next lowest advertiser.
- Proper approach is to ignore all the math and put on your marketer hat.
Joshua
- Looking at the “other” quality-based engines, Microsoft AdCenter and Yahoo Panama
- The markets are becoming more opaque over time.
- Google takes “guilty until proven innocent” model. Until you prove yourself on Google, you pay a premium, or even have your ads deactivated.
- Yahoo and MSN may charge a slight premium, but it’s not nearly as high as for Google. They also may lower your rank, but won’t deactive the listing.
- MSN was the first to offer day parting and demographic targeting. This is both speaking to marketers in their language, and a justification to increase CPC.
- Problems with quality score on MSN and Yahoo tend to hit before ad launch, because their QA is more dependant upon humans.
Jonah
- Going to talk about Cost Per Acquisition.
- Asked for hands of advertisers using CPA. A few went up. Asked for hands of publishers using CPA. No hands went up.
- Google as Super Affiliate
- Currently only available as part of content network.
- Takes out the risk. Traffic doesn’t convert, you don’t pay.
- Theoretically click fraud proof.
- Sharing the value of a customer with Google
- Distorts the web – everyone is a marketing site.
- Potentially increases cost
- Turns Adsense publishers into affiliate channels.
- Turns Google into eveyone’s silent partner
- Google’s Invisible Hand – do we want to share even more information with Google. May be a distinction without a difference, as Google has lots of ways to get info already.
- PPA is here to stay. The model makes too much sense for the engines to abandon.
- It’s too soon to know whether the ROI will be better or worse.
- Biggest threat is to affiliate players.
Question – How do they address misspellings and synonyms within quality score?
Joshua – It depends upon how you structure your campaigns, but the engines know savvy marketers will use them, so they’re not necessarily going to penalize you for them.
Dan – The “did you mean” at Google addresses much of this. To Josh’s point, most large advertisers don’t structure their campaigns correctly, using thematic ad groups. The quality score system partially came about because so many advertisers were simply taking users to the homepage.
Question for Jonah – What do you do if you exist in an industry where CPA is just another way people will send the cost through the roof?
Jonah – You need to really understand the lifetime value of your customers, and really understand your analytics. Then, stick to your guns and look for opportunities. Don’t let others in your space effect your strategy. Let them burn themselves out.
Question – I’ve noticed that for some of my campaigns, I’ll have a great quality score in Google and a low score in Yahoo. Have you seen this?
Joshua – Right now, Yahoo is not crawling your landing page.
Question – We’re a search marketing agency, and we can’t take on customers in the same space, because of the conflict of interest. Do you see Google’s PPA as a conflict of interest?
Dan – Do you have a small shop? If you silo whose working on the accounts, the conflict of interest goes away.
Jonah – I’m not sure I’d label it a conflict of interest. By nature of how large they’ve gotten, they’ve run across this sort of thing already. It does muddy the water a bit more. Are they a search engine, an ad platform, or a super affiliate?
Joshua – Or are they the central nervous system of all advertising? I do see it as a conflict of interest. The boundaries of traditional silos in advertising are breaking down.
Dan – Google is going to come under a lot of scrutiny as they control all the world’s info.
Jeffrey – For years in click fraud discussions, people asked Google why they didn’t have a CPA option. Be careful what you ask for.
Jeffrey – If there were a legitimate competitor to Google, how many would vote with their feet due to the black boxing?
About 15%-20% of the audience raised their hands.
Joshua – We don’t need to know the actual algorithm, but we do need to know the business drivers behind this. It’s incumbent upon marketers to speak up.
Dan – I’ve been fascinated by how easy it is to turn off Google. I don’t think TV execs are thinking about things like CPA.
Jonah – Increases in per click costs do enrage you, but in most cases you don’t walk way. As long as the advertising performs at the metrics you need to drive your business, you’re just going to want more of it. That’s what makes PPA so addictive.
Comment – One thing that people should be aware of is if you’re upfront with Google, show them your numbers, they’ll show you what’s in the black box. If they went to conferences and said, “This is how it works”, most people at these conferences would use it for evil.
Jeffrey – How many are unsatisfied with the support they’re receiving from Google?
Not many raised their hand. The commenter turned out to be “Google’s largest advertiser in Asia”. Jeffrey suggested they may get more attention from Google than most people.
Joshua – Maybe that’s how it works in Asia.
Comment – It’s fair that support be tied to the amount of money being spent by an advertiser.
Joshua – Consolidated buying doesn’t really work in search. The way such value will reveal is through support.
Dan – There are Fortune 500 companies who don’t spend much with Google that get tons of love from Google. Google has built all their systems to not talk to people.
Jonah – We’ve gotten great support from Microsoft’s team.
Jonah – Overture used to show all the bid prices. How many would like to get that transparency back? I think it’s the most honest system.
Jeffrey – As Google’s marketshare has grown, the focus has more and more on Google. Please don’t mistake the pot-stirring as an anti-Google bias.
