Keyword Banners: More Effective and More Complicated

In the early days of online advertising, buying banners triggered by an advertiser’s chosen search terms was a simple matter of sending the search engine of choice a list of keywords and specifying your flight dates. Then, you waited for the impressions to be delivered.

Things have gotten a more complex, mainly because keyword banners are such a desirable ad format. It was bound to happen. Anyone can see if an Internet user is actively searching for information on a specific product or service, there’s a pretty good chance he’s interested in it. There’s no better time to show him a banner promoting just what he’s looking for. The problem with this format’s newfound fame is it affects the ability of both advertisers and online marketers to effectively buy media.

As more companies recognize the value of this form of online marketing, we face increased competition securing prime search-term inventory. It’s a simple case of supply and demand. When demand for great exposure and targeted marketing results is high, space and opportunity are bound to be in short supply.

As any advertiser who’s tried this method of advertising will tell you, this elicits a host of quandaries.

Search engine keywords are generally sold in one of two ways: on a CPM basis or for a monthly flat rate. Pricing is determined by the popularity of the search term among advertisers as well as the frequency with which the term is searched by Internet users each month. When a strong advertiser demands a particular search term, search engine properties are likely to sell it at a moderate CPM rate. Keywords that don’t generate as many impressions are usually sold for a flat fee of around $100 per month.

Both scenarios have advantages and disadvantages. If an advertiser’s desired keywords are sold on a CPM basis, they’re available to any number of other advertisers. That means your banner could be in direct competition with your rivals’ ads for those valuable consumer eyeballs. Impressions generated by popular search terms are likely to sell out quickly, leaving anxious advertisers out of luck.

On the bright side, this pricing model does ensure advertisers are guaranteed a certain number of impressions. When it comes to predicting results, nothing is left to chance.

This is not the case with flat-rate search terms. Because advertisers have little interest in obtaining these words (it’s likely they have never even been sold before), search engines don’t know exactly how many impressions they’ll generate and cannot guarantee results. The advantage of this method of keyword advertising is an advertiser can prevent competitors from acquiring her keywords and entering her ad space. Purchasing advertising for a flat rate is largely a game of chance. If the advertiser’s chosen search terms end up being more popular than the search engine anticipated, then the advertiser won. But the terms could just as easily generate very few impressions. When purchasing a lengthy list of keywords, this outcome could make for a very costly campaign.

Some search engines demand an even bigger gamble on the part of advertisers by only selling keywords for a flat rate once, then switching to CPM pricing. Although this allows search engines to protect themselves should the terms in question end up producing an unexpectedly hefty number of impressions (they wouldn’t want the advertiser to get a cheap ride), it also requires advertisers who wish to keep their flat-fee rates to commit to a lengthy campaign. Again, this could work in their favor or could mean investing thousands of dollars in a measly handful of banner impressions for months without an exit clause.

When every campaign is as unique as the search terms it employs and additional issues (seasonal and cyclical search terms; having to scrounge for impressions to meet a search engine’s minimum spend) have to be taken into account, planning a keyword banner campaign becomes a complicated exercise.

For most, it’s a game of trial and error. When the payoff finally comes, the hassle is suddenly all worthwhile.