Similarities between financial marketplaces and pay-per-click (PPC) auction markets increased with the recent release of Google’s AdWords API. Just as not all investors require access to day-trading systems or programmed trading tools, not all search engine marketers require direct access to the search engines.
With Google’s API (define), all major engines with PPC programs now have XML/formatted data methods for bid and campaign management. These data feeds are used by tool vendors and technology providers, as well as by clients who feel the need to interact directly with the engines. Google’s API is technically still in beta, though selected firms worked with earlier versions and shaped the features and functions in the current beta. As with most Google products, the API is likely to evolve based on user feedback.
Google isn’t the only firm with an active API. Overture has had an API as part of its Advertiser Web Services for quite some time. It recently broadened access to the Advertiser Web Services/DTC-XML interface to agencies.
How do these APIs affect you? If you’re a mega marketer, you might want to explore direct access to the feeds. Building, managing, and maintaining multiple XML feeds for the search engines is no small task, based on my personal experience. When evaluating direct connections to the engines, don’t ask, “Do I want to manage bids?” Ask instead, “What would I do differently with full access, if I had it?” Third-party bid management and campaign management services may have the ability to provide what you need while amortizing the costs associated with maintaining automated connections with the engines across many clients.
As an interesting aside, the introduction and expansion of automated systems may result in higher volatility in the marketplaces (primarily in an upward direction). Programmed trading was blamed for the October 1987 stock market crash. The marketplace’s volatility was exacerbated by automation. We’ll see if the API makes Google as volatile as Overture or if the unpredictability of one’s AdRank acts to dampen volatility.
Before looking at a build-versus-buy decision, consider the following:
- Your business rules set. Having access to the back end of Google or Overture is useless if you don’t know what your goals and objectives are nor how those objectives can be coded into a flexible system that uses feedback to make adjustments and changes in the engines.
- Campaign size. The more keywords a campaign contains, the more likely you’ll need some kind of automated management, whether direct or through campaign management technology.
- Spend level. Human resource and technology costs essentially add to marketing costs, just as an external solution would. Don’t ignore internal costs.
- Keyword listing volatility. Regardless of whether you build or buy, volatility must be accounted for in your algorithm.
- Pareto distribution of keyword listings. How are your keywords distributed based on a Pareto analysis (the 80/20 rule)? Do you treat all keywords with the same rule set?
- In-house vs. outsourced capabilities. Compare existing campaign management solutions with the costs of building your own system. Don’t only consider costs, however. You’re in a real-time marketplace; if an existing system will help you make better decisions or can make them faster, an inferior in-house solution may cost thousands of dollars per day.
- Quotas. For Google, will your quota be enough, or should you be in a third-party system where quotas are pooled? By pooling quotas across many clients, services can level out the spikes and troughs in any one client and keep transactions flowing.
- Evolving marketplace. Will your team stay in the know? The search engine marketing (SEM) landscape changes all the time. New strategies and tactics are tested and proven. Will your team be able to adapt your system to reflect this ever-changing marketplace?
- Risk of employee defection. This risk is real whenever you have too much process and expertise in-house. Marketers are dramatically affected by the loss of key SEM team members. With a current supply-demand skew (more jobs than SEM experts and coders), this is a serious risk. You may find yourself hiring two heads for every position to hedge your bets.
- Core competency. Is the development of an automated campaign management system your core competency? Companies rarely build their own inventory management systems, accounting packages, or CRM (define) platforms. Internal systems in the cases above are often created to interoperate and data-share with external platforms. Consider that option.
It’s great the engines recognize that when billions of dollars a year flow through an auction marketplace, automated control APIs are a necessity, as they are on Wall Street. But like Wall Street, technology alone won’t make you a millionaire. The right strategy, information, calculations, timing, and knowledge combine with technology to create winners.
Consider your SEM campaign as a system with many parts, both technological and human. When all the parts work together optimally, you have a killer campaign; when they don’t, the campaign can fail. In SEM, being in the wrong position with the wrong title and description on the wrong landing page can be disastrous, particularly when the competition’s overall campaign is humming smoothly.
Meet Kevin at Search Engine Strategies in New York City, February 28-March 3.
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