Soren Ryherd – Mad Scientist of Paid Search SMX Advanced

Professor of Search Marketing

Andrew Goodman, Soren Ryherd, Andy Taylor

Working Planet CEO Soren Ryherd recently took the stage at SMX Advanced as one of the “Mad Scientists of Paid Search”. For the last nine years, SMX Advanced has showcased leaders in innovation in paid search on the Mad Scientists panel, one of the main stage events at a conference focused on advanced trends and tactics in digital marketing.

Soren spoke about the increasing need for Out-Of-Channel measurement due to high levels of Out-Of-Channel user engagement outside of Search as well as the increasingly common cross-device behavior seen in mobile search. He particularly focused on the detrimental effects on CPA-based bidding systems when Out-Of-Channel effects are ignored.

Soren’s presentation on “The Interruption Curve and Digital Optimization” can be seen here.

Moving Beyond Search

Data-driven marketing in the last decade has largely been thought of as a search marketing phenomenon. The growth of search fueled many of the tactics and tools adopted for digital since the launch of paid search in the early 2000’s. But now is the time for companies to step back and re-evaluate the digital landscape. If you’ve been heads-down in search marketing, you are in for a big surprise!

Paid digital advertising is both better and more varied than ever. Innovations in targeting, retargeting, ad formats, and measurement have broken open the dam, and advertisers should be embracing both new media formats in their digital campaigns as well as more advanced forms of measurement, evaluation, and modeling. Opportunities abound for companies willing to look beyond search, but to maximize these opportunities, some coveted metrics and tools will need to be cast by the wayside.

New Opportunities

If you have been heavily reliant on desktop-based search, then welcome to the party! From video to internet radio, to promoted tweets, pins, and posts, from pre-roll to rich-media display ads, the digital opportunities are almost endless for connecting to a targeted audience. Some favorites of ours at Working Planet include more sophisticated retargeting display ads, YouTube ads from text overlays to pre-roll video, Google Shopping product listings, and LinkedIn B2B paid advertising. All of these have proven to be remarkable areas of growth for clients willing to break out of the search box.

New Measurement Required

If you are moving out of search, be aware that your measurement and optimization program will need to mature as well. Many, if not most, non-search forms of paid digital media involve a more complex pattern of user behavior than the click- visit-buy approach that is common in desktop-based search advertising. Often, this will require looking holistically at your sales across channels, and looking for cause and effect in different channels. Be prepared for customers who engage without ever clicking on an ad, and don’t be locked into looking only at known channel behavior.

The good news is that there are sophisticated ways to assess and optimize multi-channel campaigns that take advantage of complex user behaviors. Attribution Modeling exlores the path of multiple visits across channels in the creation of value. Media Mix Modeling looks at the influence of marketing on cross-channel and cross-device behavior. Tools like these allow for the same kind of efficient optimization in non-search media, reducing risk and maximizing value.

We’re excited about the unceasing pace of innovation in digital media. Every new ad platform creates new opportunities. So look beyond search. Search is great, but there are so many other audiences to tap into.

To “Portfolio” or “Not Portfolio”?

Over the last few years there has been a lot of attention in the paid digital world over the “Portfolio” approach to paid search campaign management.  Some view this as way to maximize opportunity, while others try to draw analogies with stock portfolios as a way to manage risk.  Unfortunately, there is still a lot of confusion over what a portfolio approach is and whether it is actually good or bad.  And that is not surprising, as the definition of a portfolio approach changes depending on who you talk to.

Most portfolio approaches look to move above the keyword level of granularity in order to broaden audience exposure and to “pull out of the weeds” of keyword-level detail.  On the face of it, there is real value in doing this. It is common to have many keywords with very little engagement data. Assessing small data sets is tricky, so this broader view may make it easier to identify trends or performance numbers.  A broader view can also help in identifying performance issues in relatively short time periods, where, again, there may be little data at the keyword level.

But here is where it breaks down.

Some companies use Portfolio approach in a way where an average performance number of an aggregated number of audience segments is used instead of more granular data, even when the more granular data is actionable.  For us, the word “average performance number” is a huge red flag.  Audience segmentation is at the heart of gaining efficiency in digital campaign optimization, but this type of Portfolio approach goes in the opposite direction. This can lead to a very dangerous effect: subsidized performance.  Subsidized performance is when a poorly performing audience is masked by a strongly performing audience through the use of an average performance number.  Want to make your non-branded campaigns look good?  Fold their performance in with your branded campaigns.  Want to make PPC look good?  Fold in the organic performance (and sales) numbers.  Subsidized performance lurks everywhere, and it is important to be able to pick apart the average value to improve performance.

So, is Portfolio a bad approach?  Our take is that one should proceed with caution.  We work at the level of actionable data, which means that what we might call a Portfolio will change depending on how we are using the data, so we don’t tend to describe our approach as Portfolio. Since many Portfolio campaign structures (in bid management tools, for example) tend not to be picked apart for optimization purposes, and what constitutes a individual portfolio cam be very subjective, we’re wary of canned approaches described as Portfolio.  A more fluid approach that works at the level of actionable data will be far more useful in avoiding subsidized performance and finding true gains in profitability.

Soren Ryherd to Speak at SMX West 2015 – Conversion Tactics for SEM

Working Plant Co-Founder, Soren Ryherd, will be speaking at SMX West in San Diego on March 4th! As part of an exciting panel on Conversion Tactics for SEM, Soren will be focused on how embracing the complexity of user behavior can help in your conversion improvement tests. Soren will be introducing the concept of the “Interruption Curve” and what that means for the proper analysis and testing of your digital campaigns.

Soren will be joined on the panel by conversion guru, Tim Ash, as well as by Luke Alley and Matt Van Wagner. Catch up with him after the panel to chat and ask questions!

Bidding on Your Brand

Bidding on brand terms in search campaigns is hotly debated.  In one camp are those who argue that these are cheap conversions, so of course you should bid on them.  In the other corner are those who say you will get those conversions anyway through organic, so it is simply a waste of money.

They are both wrong.

You should bid on your own brand terms in order to raise conversions.

Brand terms are the end of a conversation that began somewhere else.  No customer wakes up suddenly aware of your brand, ready to search for you. Some education has happened, somewhere, at some point in the past.  If you are using multi-touchpoint tracking, you might have some insight into the attribution chain leading to that brand search, but often that will fail to provide any insight (if, for example, someone did research at home and searched at work).

At this point, you may not know anything about this prospect other than that they have heard of you and have some interest in your company and products.

What are you going to say to them?

Most companies have multiple messages that speak to their value proposition.  Some will be feature-based, most will speak to benefits.  How sure are you that your organic listing includes ALL the important messages for every audience that might lock in the sale?

Bidding on your paid brand terms gives you the chance to say something different.  You can alternate your message, say something new, provide an offer, or reinforce an ad campaign that might be driving brand activity, such as display, video, or traditional media.

But the important thing is to look at conversions.  If you are investing dollars, you need to get additional value out of it to justify the cost. For brand advertising, this should be measured in increased conversion rates, viewed holistically, with an eye to what is driving the brand conversation in the first place.

As always, it is not about clicks, CPCs, or competition.  It is about profit.

Troubleshooting Google Countdown Ads

Yeah, Google, for adding a feature that is wonderfully useful to the advertiser!  If you haven’t seen these, Google has implemented an automatic countdown feature in their ads, just in time for the holidays.  More details can be found on their website here.  You may, however, have run into issues trying to implement them and need help that Google is yet to be able to provide themselves.   We’re happy to share solutions to the problems that we have run into that may help save you some time.

1) The exact column order in the submission is critical:

Ad state
Ad
Description line 1
Description line 2
Display URL
Destination URL
Campaign
Ad group
Status

2) Avoid using special characters in your ads (trademark or copyright symbols) otherwise the ad will be mistaken as multi-byte and will be rejected because of length issues.   If you ads are incorrectly being geo-targeted only to Asian countries, this may be the reason.

3) Do not use slanted double quotes around the date in the countdown function.  Only use the double quotes that appear to the left of your ENTER key on your keyboard.

Hope these solutions help!

ROI and other Dangerous Metrics

Recently, I answered this question on Quora: “If the cost of PPC is £10, what is the ROI?”

A simple question, right?  But assessing ROI for PPC campaigns has hidden dangers, so I used the opportunity to not just answer the ROI definition question, but to point out some common misconceptions in optimizing to a pure ROI metric.  Here’s how that went:

ROI (Return on Investment) has a specific definition, but is often used fairly loosely to mean the profitability of a company or program.

Technically,

ROI = (Revenues – Costs) / Costs

So, If you made £20 from your £10 investment in PPC, your ROI would be:

(20 – 10) / 10 = 1, or 100% ROI

This differs a bit from Return On Ad Spend (ROAS) which is a commonly used metric:

ROAS = Revenues / Ad Spend

For the same example: ROAS = 20/10 = 2

ROI is usually expressed as a percentage, and ROAS as a number. Note that an ROAS under 1 is unprofitable, while any positive ROI number indicates profitability.

Now, since you asked about PPC specifically, let me point out the DANGER in both of these calculations. So here is a question:

“Which is better, 100% ROI or 200% ROI? What about an ROAS of 2 or an ROAS of 4?”

Like most people, you are probably going to say “Well, Soren, that’s a dumb question, of course the higher number is better in both cases”.

And you would be right, as long as the cost number is equal in both cases.

The big danger with ROAS and ROI is that they are often used to compare situations that are not apples-to-apples with regard to cost. Volume is completely missing in these equations.

In PPC, optimizing to ROI as a percentage can put you out of business. Don’t believe me?

Here’s another question. “Do you want profit of $1,000,000.00 at 100% ROI or profit of $100.00 at 400% ROI?” No brainer. I want the $1M profit regardless of ROI.

The real goal is the total amount of profit, not ROI.

Unfortunately, this important point is lost on many CEOs, CMOs, and, surprisingly, CFOs when speaking to their marketing teams or partners. ROI can be a good measure of efficiency when used appropriately, but it is not the goal.

Creating Success in a Complex World

Marketing is about creating success. Why, then, are marketers so often reacting to the numbers, rather than using the numbers to create success? Here are some of the current challenges in numbers-based digital marketing, with an eye to solutions.

Low-Cost Eyeballs vs. High-Value Actions

Historically, media was sold by the eyeball. In a business model based on “reach”, there was little opportunity to optimize on the fly, so traditional media was negotiated only to achieve the lowest cost. This was smart. Giving limited opportunities to improve, you had the best chance of success in being profitable if your media cost was low.

Digital auctions changed all that. Today, going after low-cost media online simply means that you cede an audience to other advertisers who are willing to pay. In AdWords, the advertiser with the best ability to monetize will win. In order to compete, marketers have to highly value actions tightly related to sales and profits, and nothing else. Only then can marketers and advertisers can make intelligent decisions related to value creation, which is the point of marketing.

Action-Centric Advertising is Breaking

While smart marketers moved from eyeballs to actions, fundamental shifts in user behavior were simultaneously breaking the ability to measure actions with total certainty. Cookie-based tracking is falling short in a world of multiple devices per person. Better tracking of multi-touchpoint data and more sophisticated measurement of “influence” is revealing that strict action-based tracking is not wrong, but may be very limited.

The impact on advertisers is immense. Companies that thought they were smartly valuing only conversions are now finding themselves increasing uncompetitive and left to fight it out in the ever-smaller world of desktop-based search.

What Next, Then?

More sophisticated tools are opening the doors to opportunity, while creating new challenges in execution::

1) Holistic measurement. The days of isolated channel behavior, assessment, and budgeting are gone. Cross-channel and cross-device behavior mandates a different view of performance, but one still rooted in value creation. Get used to Venn Diagrams and flow charts. Yes, it is more complex, but it yields better results.

2) Proactive Optimization. Too many companies use their numbers for reporting up, rather than as action points for improvement. Smart companies will isolate key points of the customer story, and will focus on improving them. They will view things that don’t work as opportunities, while recognizing that moving the needle on the things that are working will be faster and take less time.

3) A Segmented View. Marketers need to recognize that behind every average value are the good and bad segments of that audience that can be addressed individually. Sweeping “black and white” decisions based on average performance should be challenged, so as not to throw out the part of that campaign that is working.

The Future

Marketing is evolving and becoming more complex. Media diversity, multi-channel measurement, multi-device behavior, and data overload all contribute to difficulty in crafting a strategy and executing it efficiently. But as difficult as tactical execution is, the core challenge is still in how advertising is viewed. Companies that view every day as a new test and every metric, page, and ad as improvable, and who root everything in the reality of sales and profit, will excel.

Google on Board with Profit-Driven Marketing!

Google recently published a “think with Google” article on Profit-Driven Marketing. They describe it as a “new” trend driving successful campaigns.

We’re thrilled that Google is on board, as we’ve been pushing the envelope with Profit-Driven Marketing for the last eleven years! But why is Google on board now after all this time, and what’s different that led them to publish this article?

Cross-channel interactions. This is at the heart of their article. In the past, Google has often split channel performance based on their own product lines. Search, YouTube, Remarketing, and all the various programs they offer advertisers have been measured independently in the past. But Google, and advertisers, are recognizing that users don’t behave in channel-independent ways, and that cross-channel behavior is getting worse. Specifically, three significant trends are driving channel confusion:

1) Multi-Device Behavior. We don’t live in a one-screen world any more, but most of our tracking tools still assume “device” means “person”. With device hopping and second screens becoming ubiquitous, single-channel attribution is increasingly wrong.

2) Migration of Search to Mobile. Over 50% of search queries have migrated to mobile devices, which are eroding the nice linear performance of Search -> Ad -> Click -> Engage that dominated desktop-based search and led to large performance gains using fairly simple tracking. With mobile search growing while desktop search shrinks, single-channel attribution is breaking.

3) Channel Complexity. Google has been at the forefront of launching many new and innovative advertising programs, but is now realizing that the success of these programs have contributed to confusion in tracking and attribution.

What is the solution? Google believes that stepping away from hard conversion metrics to look at the entire landscape, from brand building to engagement, is the path to success. We agree…sort of. We think that the quantitative assessment of all these channels, in combination and over time, leads to a more detailed and effective view of customer engagement, retention, and value. We strongly believe that customer acquisition targets based on Lifetime Value (LTV) have their proper place as the underpinning of campaigns, but we won’t be “channel-blind” about how we get to that cost-effective engagement.

AdWords for Video Tip

The deadline for transitioning AdWords for Video campaigns to enhanced campaigns was August 8, so all AdWords for Video campaigns should now be enhanced. Campaign and device settings for AdWords for Video campaigns are similar to search and display campaigns, which means that you no longer have the ability to show video ads exclusively to users on mobile phones or tablets. If you want to restrict your video ads from showing on mobile phones, though, you can do so by setting the campaign mobile bid adjustment to -100%.