Are Keywords Still Key?

It was 1996. Bill Peck and Roderick Alemania from Infoseek, one of the venerable early search engines that had been inhaled by Disney, were sitting in a conference room in an old renovated Victorian on what constitutes the remainder of San Francisco’s Rincon Hill.

They were there to talk about this great way one could buy online advertising. It was something unique to search engines, as they were the only properties carrying robust web-search capabilities. The idea was that Infoseek could target a particular piece of creative from a particular advertiser when a visitor entered and searched for a specific keyword.

“Are you kidding me?” I asked.

But they weren’t. They were actually proposing that an advertisement could be offered up to someone based on an individual’s actual state of mind.

This was more exciting to me than when Peter Gilbert came in from Hotmail talking about how Hotmail could target ads based on registration information from people signing up for email accounts. This was something more special, more sublime. It appeared that advertisers would actually have a way to talk to potential consumers about their products or services at a time and in a space where it had been demonstrated that a potential consumer was thinking about a particular product or service.

It was better than editorial relevance, something we had assumed in print media for years. This was actually tapping some form of latency. You type in the word “book,” I can serve up an ad. It makes perfect sense, since the assumption can be made that you are thinking about books, and what better time to talk to someone about books than when he or she is thinking about books?

Thus was born unto the world a child, and its name was “Keyword Buy.”

The keyword’s ascendancy in the hierarchy of online advertising was easy to predict for the very reason mentioned above. It was THE ultimate targeted advertising. So, of course, the inventory came at a premium. CPMs were set high for keyword inventory, and the market was willing to pay. CPMs of $35, $45, and $60 were, and still are, the norm. The enthusiasm for this inventory wasn’t senseless, mind you. There was proof that this kind of device worked. At a time when click-through rates were a usual two to three percent, keywords were doing twice that or better.

But now, in a world of ever-decreasing response rates, do keywords still hold the key to a successful online buy?

As reporting in AdKnowledge’s Q2 2000 Online Advertising Report, the current average CTR for normal placements is approximately 0.51 percent. It’s been my experience these last few months that this is about right over a period of time where some form of optimization has taken place. The same report claims that keywords on portals/search engines have a one percent CTR. Again, this is more or less on par with what I’ve seen with some of our own clients here at Mediasmith.

But does this level of performance justify the rates being commanded for keyword inventory? And are keywords still essential for committing a successful online advertising campaign?

To answer those questions, we must consider the following:

  1. People just don’t search like they used to. It is true that keyword inventory is DOWN all over the place on search engines. It seems like almost every keyword buy we’ve done out of Mediasmith goes underdelivered, sometimes by as much as half of the contracted guaranteed amount. Certainly, keyword inventory is not a true, fixed quantity. What it is that people search on can be a function of fad, season, current events, or some other extenuating circumstances. But there are indications that people are doing fewer and fewer searches on the web using search engines compared to the way they have in the past.

  2. It’s the conversions, stupid. Click-through rates don’t really matter. It is what someone does on the other side of your creative that really has an impact. If the CTR is low, so what? If I’m converting to sales (or pageviews generated or registrations or whatever) at a reasonable clip, it doesn’t matter.
  3. Are keywords relevant? Is my value proposition, product, and/or web site something that can be described by or associated with very specific terms? If I’m selling dust-mite-killing air filters, the keyword “air” might be a bit too general to use for a campaign. If a well-focused list of words and phrases can be thought of, keywords might still be an option for you. However, it is quite possible that keywords simply aren’t the right thing for what an advertiser has to say, and you don’t need them at all.
  4. Is the objective direct response or branding/brand awareness? This is a question you must have answered before you started the planning process in general, so it doesn’t take any additional work to apply it to keywords.

If you are going DR, then the list of words you might consider will be different than if branding/brand awareness has primacy. If it is brand awareness you are after, the keyword list, in my opinion, can be short, consisting of the advertiser’s name, product name, and even competitor’s names (as long as they don’t ask for them from the portal you are doing business with). Also, as the inventory is still more expensive and your goal is not response, per se, there are other places to go for inventory that are less expensive but will have just as much impact.

So, really, yes, keywords are still a great tool, specifically for direct-response-motivated efforts. I’ve seen some of our clients get 10 percent response rates and another 10 percent conversion behind that. Depending on the metric, these are extraordinary results that can justify the cost.

But for more general awareness building and branding, which the web can and will be used for some day, keywords just don’t retain their value. As we learn more and more about “latent” transactions, or what I call “soft conversions” (that is, transactions that occur on a site by someone who was exposed to an advertiser’s message, didn’t click, but went to the site anyway), regular content sites are going to be able to again make a push for CPM integrity and perhaps hold the value that keywords currently do.

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