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Measurement Tools Play Important Role in Search Engine Advertising

Elizabeth Harvey
Harvey Marketing Group

April 2, 2004

Last month's Search Engine Strategies Conference in New York was buzzing with terms like Cost per click, Click thru rate, Conversion rate, and Cost per conversion * finally addressing the question advertisers have been wrestling with for decades, "But how do we measure ROI?"

In the last few years search engines introduced a new search model called pay per click advertising (PPC). The two key players, Google and Overture, realized (not without some serious prodding from search engine marketers) that if they were going to require companies to "pay to play", they needed to provide measurement tools to track the success of those ads.

What they came up with has helped tame anxious ad execs and their bulging wallets. Not only can companies track the cost per click (CPC) of each ad, but they can also track click through rates (CTR), conversion rates, and cost per conversion. Loaded with this data, advertisers are finding that search engines are, in fact driving real customers to their web sites and they are finally able to see actual ROI (return on investment) numbers to show their VP's.

While CPC and CTR figures are included in all reporting provided by Google and Overture, conversion rate is a bit more tricky, but once in place very easy to manage. In order to track conversion rates, a company must first have an 'actionable' page on its web site, that is, a place where a user has to take action: fill out a contact form, place an order, sign up for a newsletter. Companies simply paste a small javascript code on the subsequent 'actionable' page ­ this page typically says something like "Thank for you filling out our contact form". Once this javascript is in place, advertisers can track how many people clicked on their ad and subsequently went on to take action on their site.

This kind of tracking is very difficult (if not impossible) to do in traditional advertising media, and has propelled the search engines into a new age of trackability that advertisers have only dreamt possible.

Additionally, search engines have extended their pay per click programs to include new offerings like contextual ads and regional ads. Contextual ads are ads that Google and Overture place on their partner sites across the Web. So instead of being seen on a handful of search engines, the ads reach extends to hundreds of other, non-search engine sites. As always, there are pros and cons to this model. The pro is that you are now casting a much wider net for more exposure. On the flip side, there have been questions as to whether the person who clicks on an ad from a partner site is as qualified as someone specifically going to a search engine and typing in keywords - the searcher versus the person who stumbled upon your site while surfing the Web.

Studies show that it is important to make the copy on your contextual ads clear that you want to "sell" them something. While search engines typically make it very clear which listings are paid and which are free, allowing the user to determine which ads to click on, this is not the case on partner sites where your ad might look like just a link for additional 'contextual' information. If you're trying to sell them something and they click over to your site for information alone (e.g.; a 7th grader doing a book report on the subject), you may find yourself wasting your money in the contextual ad space. Google has solved this problem by separating out its own PPC ad from its Contextual ads allowing companies to create different ad campaigns depending on where their ads will appear. Overture doesn't offer separate contextual ad campaigns yet, but says they plan to in the future.

Regional ads (offered by Google) are perfect for advertisers who want to target a specific geographic region, but who still want to compete for the popular keywords. An example might be an accountant whose clients are all in Maine. He can buy the word "accountants" and then select his region (Maine), his ads will only appear when someone from Maine does a search for "accountants". Additionally, he can select a Google option called Broad Match and his ad will appear on any and all searches (done in Maine) with the word "accountants" in the search.

Search engines also recommend tweaking each ad within your campaign with different wording and incentives to determine the ad with the best click thru rate. To help manage this Google added a new function called ad optimization allowing companies who want to test different ad copy. With this optimization tool, advertisers can write multiple creatives and Google will show the particular ad that is performing best.

A search engine's ROI tool isn' t your only option either. "More ROI tools are finally tracking a variety of Internet marketing campaigns, including pay-per-click," said Catherine Seda, president of Internet marketing firm Seda Communication. "Advertisers can determine which type and individual program is most cost-effective for their business." In her new book Search Engine Advertising, Seda explains how Web analytics programs such as WebTrends and HitBox track paid listings. Even better, she identifies several bid management programs that optimize bids across multiple search engines based on your cost-per-acquisition goals.

Once thought upon as a leftover to the dot-com boom, search engines are now gaining a reputation as a viable advertising medium. The new measurement tools finally provide advertisers with real numbers to track the success of their campaigns - and from what I can tell they are thrilled about it.

*For definitions of these terms, visit:

Elizabeth Harvey is Managing Partner ofHarvey Marketing Group, a Portsmouth, NH based Internet Marketing Consulting company helping businesses in New England and New York increase their web traffic, visibility, and sales.

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