SEM in the Age of Uncertainty

You’re used to a certain amount of uncertainty as a search engine marketer. No one knows what tomorrow’s bids will be, how many people will search on your keywords, or if your ad will be chosen by searchers as the most relevant. However, those of you who’ve been engaged in SEM (define) since the days of GoTo.com (which became Overture and is now Yahoo Search) may have developed some bad habits based on the way the industry evolved.

Back in the old days, all keyword bidding occurred in simple, straightforward paid-placement auctions. To this day, you can look up your bids in relation to all your competitors in Yahoo This, of course, allows you to predict for a brief moment what your position will be for a specific bid. Based on comments made by Yahoo management during investor calls, rumors continue that Yahoo will move to a hybrid auction in the near future.

The other major search engines have already moved beyond straight, open, visible auctions to hybrid auctions that factor in predicted relevance (predicted CTR or, as Google calls it, “Quality Score”). With hybrid auctions, in which all match types are mixed together and evaluated by a formula for potential display at the instant a search occurs, the ability to predict position has been sharply curtailed. Google reports average position, but as advertisers we don’t know exactly when during a particular period we maintained a particular position.

Recently, Google added more factors to its Quality Score calculations, including taking the landing page fit into account. Previously, landing page relevance didn’t influence AdRank or position. Now, it’s another factor powering Google’s black box.

Position control and the ability to predict position for a given search is moving from difficult to impossible. With loss in position, searchers are getting more relevance. Often, marketers get better targeting control. The following are some instances where the position you actually have may not be what you think it is if you check it yourself or use automated position checkers:

• Contextual listings. Contextual listings don’t operate the same way pure search listings do. In most search engines, contextual matches are made at a very broad level; for two pages with nearly identical content, your ad may be considered either highly relevant or slightly less relevant. In addition, many contextual-placement ad formats are horizontal, thus eliminating the concept of placement.
• Geotargeted listings. Either you or your competition may run geotargeted search listings. If you run national ads, you may not show up nearly as high in certain geographies because your competition’s there with a relevant ad and a high-enough bid to display above you.
• Budget settings. If you or your competitors have a daily budget cap in place that’s lower than your current position can support (given estimates made by the engine on search volume and CTR (define), given a bid of x), the bid landscape could change dramatically on a search-by-search basis.
• Dayparting. Some of your competitors may have chosen a strategy that relies on dayparting (changing bid strategies by time of day). This often results in that competitor falling off the radar during less-desired time periods. The great thing for searchers is they don’t see listings for marketer who determined their specific offering isn’t a good fit for that daypart.
• Day-of-week targeting. As with dayparting, some marketers have chosen different bid strategies based on the days of the week. This holds particularly true for business-to-business (B2B) marketers.
• Demographic targeting. Like geotargeting, you or your competition may have chosen (at least in MSN) to opt out of certain demographic segments or bid-boost against a segment. MSN allows advertisers to identify and bid-boost against particular age and gender selects, which, as advertisers take advantage of the feature, will eventually result in very different bid landscapes for searchers who registered their profiles.

The best way to deal with ever-increasing uncertainty regarding the bid landscapes in PPC (define) search is to manage based on profit, return marketing fit, and scale. By taking actions within the marketplace based on what delivers the highest profit, long-term return, and scale, you can see position for what it is: a means to an end. Top positions are required for maximum scale and volume, of course. Yet position and scale come at a price: a higher bid.

You must therefore apply what you already know about your best customers to your search campaign strategy and attempt to learn more about what could work. Your objective is nearly identical to the search engine’s objective: you only want your PPC search listings displayed for the searchers for whom they’re most relevant. Searchers who find your ads relevant are more likely to click, and to buy, at some point in the future.

Your search campaigns are probably fairly straightforward in structure at present. With the loss of direct position control and transparency comes an era of better targeting. By planning for the improved targeting now, you’ll be set for the time when the black boxes at the engines get blacker while delivering more targeting control to advertisers.

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