This week’s column is a bit of a news and opinion mashup as it’s been a busy two weeks in search marketing.
Here it is again: earnings season. In the past two weeks, Google and Yahoo each reported earnings. Google got back into the groove by beating the street’s estimates, which were based to a great extent on comScore data that showed a deceleration in paid click growth in the United States. The numbers in question at comScore were that “Google’s U.S. paid clicks in Q1 were up 2% vs. year ago, and down 9% vs. Q4 ’07.”
What most analysts didn’t take into account (resulting in a climate that almost had me buying Google option calls last week — I wish I had) is that the click reductions were largely driven by Quality Score changes. Those changes — at least among our clients — were more noticeable among advertisers with weaker brands and Quality Scores that were already less than optimal. So, if click prices were rising due to new Quality Score-driven CPC (define) minimums causing advertisers’ Quality Scores to be adjusted, the loss of a few of the lowest bidders was immaterial to overall revenue. In effect, Google clearly has plenty of room to simultaneously increase the revenue it earns from its core asset and focus on user experience.
Can Marketers Bear Higher CPC Prices?
SEMPO’s “Annual State of the Market Survey” data would lead us to believe that we all have a bit of reserve price left in our pockets, perhaps not on every keyword, but enough to tolerate further click inflation. Remarkably, survey respondents reported answers very similar to those reported last year, despite some overall click price increases. Also, two-thirds of respondents indicated they planned to spend more in 2008 than 2007. So, things look good for the industry. The bad news is that if you don’t plan on spending more this year, you may find yourself outbid.
As Google advertisers, we must continuously put ourselves in Google’s shoes and make sure that the user experience our sites deliver post-click is optimal for both conversion and Quality Score. After all, increased conversion rates provide you with bid leverage just in case you need it.
Whither Performics and Avenue A?
In other related Google news, it will be interesting to see who decides to snap up the search engine marketing side of Performics, which Google announcedit would split in two, dividing affiliate marketing and search functions. Ironically, Performics often sold “one-stop shopping” for search and affiliate marketing under the same roof. Many in the industry aren’t sure how one would surgically extricate Performics’ search management from its affiliate division on either a technology or staffing basis. But the agile minds at Google are clearly at work structuring a deal sheet for any interested buyers. Microsoft, on the other hand, has a similar conflict of interest with Avenue A, but has indicated to the industry that Avenue A will operate at arm’s length as an independent entity.
The Clock is Ticking on Yahoo/Microsoft Deal
Speaking of Microsoft, April 26 is the deadline for Yahoo to accept the MSFT offer. Of course no one knows what will happen if the Redmond giant rescinds the offer. But one can expect a drop in Yahoo share price, perhaps not to pre-offer levels but to a level that won’t be pretty.
In its earnings call this week, Yahoo beat the street’s estimates only by a bit on revenue from operations for the quarter ended March 31. But it made over $400 million from its stake in Alibaba.com. In the meantime, the rumor mills continue running at full tilt about Google and Yahoo running a joint search feed test. Currently, only a tiny slice of Yahoo traffic is serving Google ads, and it’s impossible to put an exact number on the monetization gap caused by Panama’s shortcomings, given Yahoo’s smaller PPC (define) advertiser base. Analysts have long speculated that deficiencies in Panama account for the dramatic differences in revenue per search (RPS) at Yahoo vs. Google. Reality is, that advertiser base, audience differences, and a dramatically different SERP (define) may also have a material impact.
Notes From Ad:tech
The next several weeks will be particularly interesting in the world of online portals. In the meantime, ad:tech San Francisco last week was a mob scene. I was there with my team and was struck by a few key points. First, ad:tech seems to be getting a split personality. The conference itself had lots of discussions by well-known personalities, agencies, and brands, and the topics were generally balanced with discussions on video, mobile, and various other digital media from both a branding and direct-response perspective. Search was discussed but didn’t have the prominence it deserves given its central role in online marketing. Conversely, the trade show floor was primarily about performance marketing, direct response, lead gen, and a host of brand new ad networks. It was fascinating that the two halves of the show had such a different focus. Perhaps ad:tech needs to consider whether its “big tent” approach really serves the needs of online marketers seeking specific solutions to complex business problems.
“You cannot succeed in analytics and marketing unless they are central to business operations and are helping business answer the questions that will drive dollars to the top or bottom line,” says Kerem Tomak, Sears Chief Digital Marketing & Analytics Officer.
Google sparked a small firestorm last week as reports surfaced that its intelligent assistant device Google Home delivered an unsolicited advertisement to unsuspecting owners.
On February 28, 2017, ClickZ presented the webinar 'Still using .com? Here’s why 50% of all Fortune 500 companies are about to use .brand' in association with Neustar.
In part one a few weeks ago, we discussed what brand TLDs (top level domains) are, which brands are applying for them and why they might be important. Today, we’ll take an in-depth look at the potential benefits for brands, and explore the challenges brand TLDs could help solve.