Winning Results with Google AdWords Second Edition_2 doc

Chapter 1 How Big Is This Market? The Rapid Rise of Paid Search A dvertising annoys people. Advertising works. Many in the advertising business have long assumed that both of these statements are true. But the more annoying advertising gets as a whole, the harder it becomes for any particular advertiser to break through the clutter. Tellingly, a grassroots backlash has arisen against the most bothersome ways of interrupting people, to the point where legislation is now being enforced against telemarketing, junk faxing, and email spam. Ever get the feeling that some big advertisers don’t quite get it yet? Recently, I changed home phone providers, now that legislation has paved the way for Rogers (a large Canadian cable company) to offer a local and long distance phone service to compete with the leader, Bell. Evidently incensed at my decision but unable—due to legislation—to phone me to try to win the service back, Bell sent me a nice card in the mail, telling me that they weren’t allowed to contact me but assuring me that they’d be calling me when the 90-day legislated cooling-off period ended. Why didn’t they just hire kids to throw a rock through my window? I felt stalked. 1 Multiply that instinctive revulsion to heavy-handed marketing messages by millions of consumers, and you get a rapidly shifting pattern of media consumption. Add to that a new, hyper-pampered mindset. Never before has it been so easy to get precisely what you want. Want the most elusive version of an old live Neil Young recording? An underappreciated new release from Snow Patrol? An inspiring keynote speech from the leader of your trade industry association? Forget the question: if you cared enough, you’d already have it in your MP3 library; maybe it’s playing in your ear right now. Want wasabi peanuts or a washing machine part delivered overnight? 2 Click the mouse a few times, and you’re done. Writes recovering advertising executive Joseph Jaffe: “The rock group Queen once sang, ‘I want it now,’ and little did we suspect that Freddie Mercury was prophesying the next wave of consumer empowerment in which they would gain immediate access to information, education, and entertainment on demand on their terms.” 3 As rapidly as the consumer and media environments have changed over the past decade, search engine companies have solidified their role as gatekeepers of and facilitators for this robust market activity, for a fairly straightforward reason: if you think you want something, you need to search for it somehow. 4 Winning Results with Google AdWords Win&Mac-Tight / Winning Results with Google AdWords / Goodman / 656-4 / Chapter 1 Win&Mac-Tight / Winning Results with Google AdWords / Goodman / 656-4 / Chapter 1 In light of the fragmentation of media and the proliferation of products and pastimes, as a marketer, you’re dealing with a consumer whose attention has been not only divided, but sliced and diced many times over. Paradoxically, though, once slotted into micro-niches, customers, subscribers, and members of communities are as loyal as ever; perhaps more so. Marketers’ abuse of precious attention has led to negative reactions in many ways, but the growing legion of innovative companies that have sprung up to cater to the precise whims of niche markets has achieved unprecedented customer satisfaction on some fronts, leading to demands and expectations that are nearly impossible to fulfill for the mediocre or irrelevant vendor. The death of advertising? Maybe not. But a sea change is well underway. Web search hasn’t just been a passenger in this journey. It’s been a major catalyst for changing consumer expectations of media and advertising. Search is a special realm. Because web index search engines arose in a noncommercial phase of the World Wide Web, there is a lingering sense among web users that search is almost like a public utility; an information haven. Internet users have taken to the so-called User Revolution like a diverse population of multicolored, oddly shaped fish, happily swimming in knowledge and community, relatively unimpeded by unwanted commercial messages. 4 Now couple that revolutionary new medium with the opportunity to unobtrusively advertise on the same page as web search results—without annoying searchers. Those little ads are the answer to the $64 billion question: “What if you could come up with a way to advertise that doesn’t annoy people and achieves measurable results at the same time—a form of advertising that targets potentially interested customers, yet doesn’t bother people needlessly?” This is the underlying premise of Google AdWords and why you should be considering it as part of your ad campaign. (It doesn’t generate $64 billion in advertising revenue yet, but it’s not far off.) We know that advertising often interrupts us in the offline world, and, to varying degrees, we accept it. But if you’re like me, you’ve never quite gotten used to being interrupted in “sacred” areas such as your daily work routine on a computer. When I close the door of my office to supposedly get some peace and quiet, I’m still fending off little interruptions such as a pop-up reminder to install security software that I never plan to install. Or if I’m at my parents’ house, maybe that pesky animated paper clip is doing the limbo on my screen as I attempt to review a simple Word document. How much is too much? Targeted Advertising vs. Surplus Interruption Maybe it’s time to propose a distinction between reasonable forms of commercial targeting, on one hand, and intrusive marketing methods that consumers, if given the choice, would actively avoid. No one reasonable would say that all advertising is bad, or even that most of it is bad. 5 But the actions of a company like Google are striking in that they actively take steps to measure negative responses by users to forms of advertising; then they take steps to reduce the frequency of such advertising or eliminate it altogether. In this user-centric role, Google offers us a brilliant example of the distinction between user targeting and surplus interruption. 6 Surplus interruption, in the user’s life, is analogous to pollution in the environment. It might make a profit for some specific actor, but it lowers the quality of life for the citizenry as a whole. It’s significant that I say “user” (“searcher” might be another appropriate word), instead of “consumer.” It’s presumptuous to define all users of the Internet or web search as “consumers” Win&Mac-Tight / Winning Results with Google AdWords / Goodman / 656-4 / Chapter 1 CHAPTER 1: How Big Is This Market? The Rapid Rise of Paid Search 5 Win&Mac-Tight / Winning Results with Google AdWords / Goodman / 656-4 / Chapter 1 at any given point in time. Not knowing exact intent, referring to them as “users” reinforces the point that if the user doesn’t get the right degree of satisfaction out of the medium or from a given web service, she can switch to another medium, pastime, way of life, or service entirely. 7 It’s worth clarifying further that somewhere in between what I approvingly refer to as user targeting and disparagingly refer to as surplus interruption, diverse viewpoints abound about what counts as reasonable, as to where you’d draw the line or how you’d define the spectrum. We’d make some lousy assumptions about what people really “want,” or what’s most healthy for a commercial society, if we had a fixed idea about what’s really an “interruption.” In an ideal world, wouldn’t I see only messages about what I wanted, when I wanted it? Unfortunately, it doesn’t really work that way. I run into commercial messages all the time that do interrupt me to some degree, but which also heighten my enjoyment of the day, or possibly even help me make a buying decision. Recently, I actually picked up the phone for a telemarketer! My Call Display showed that it was Sears Clean Air, and we’d been meaning to get our ducts cleaned for ages. Imagine how shocked the telemarketer was when I said yes to the offer of a free estimate. The secret to that interaction: the targeting wasn’t too bad, and some of the reason it wasn’t bad was predictable. We live on a street with detached and semidetached homes. We’ve done business with Sears in the past, though not for duct cleaning. It was spring. The reversal came, however, when the Sears salesman oversold his company’s service when he arrived on-site, at one point raising the specter of us contracting Legionnaires’ disease. A few quick searches, including one that turned up an informative page from the Environmental Protection Agency that questioned “sweeping health claims” associated with duct cleaning services, put the salesman’s claims on shaky ground. Through word of mouth (family), combined with some online word of mouth (a consumer review site called HomeStars), we wound up choosing another vendor. Happy with that vendor, we considered posting a review online. 8 That same day, I saw two ads that particularly pleased me. One, a billboard for Milwaukee’s Best (inexpensive beer), gave me a chuckle as I drove out of Crosstown Auto (classy carwash). It was a joke at the expense of a Buffalo, NY suburb (“Milwaukee taste at Tonawanda prices”) and generally winked at the audience who would get the joke. Many wouldn’t, but the alternative— bare bricks—wouldn’t have been much better for someone who was, after all, simply exiting a carwash. Good targeting again: more than 80% of the users of Crosstown Auto’s carwash would be males of imbibing age, and probably not averse to saving a buck on some beer given the $10 they just paid for the deluxe wash. (Since then, the billboard has been replaced by one touting a video-on-phone partnership between Rogers, a large wireless phone provider, and YouTube, which happens to be owned by Google. Unfortunately, there isn’t any good way of measuring the impact of this ad. My gut tells me the ad is wasted on the guys I see coming out of the carwash.) Another ad seen that same day, a TV spot for Gatorade, was also a delight. Using well- known college football announcer Keith Jackson (doing his best impression of his own distinctly accented voice), it harkens back to the Florida Gators’ dehydration in a game long ago. The Gatorade inventor chimes in, in his own stilted voice, stating the baldly obvious and essentially repeating what Jackson said, in a fashion reminiscent of Jason Bateman’s superfluous color commentary on “ESPN 8—The Ocho” in the movie Dodgeball. For football fans, or merely Keith Jackson fans, the spot works. It also explains (though not in particularly scientific terms) why you might actually need the product. Did the ad interrupt me? Well, I was eating dinner and watching 6 Winning Results with Google AdWords Win&Mac-Tight / Winning Results with Google AdWords / Goodman / 656-4 / Chapter 1 Win&Mac-Tight / Winning Results with Google AdWords / Goodman / 656-4 / Chapter 1 Seinfeld, and wondering what to write next in this book. In other words, it’s hard to say. Did the ad increase Gatorade sales? Or prevent them from losing market share? It’s very hard to say. Some entrepreneurs have proposed unique ways of compensating consumers for interruptions: carrots that go beyond simply offering free content or software. Startups such as Agloco and Attention Trust appear to be revolutionary in this sense, offering people money in exchange for information about themselves and their web surfing habits. 9 On close inspection, these “revolutionary” pay-you-for-your-attention services are often rehashes of the “pay-to-surf” schemes of 1998–2001 that managed to annoy users, bilk advertisers, and disappoint investors all at the same time. In practice, these schemes don’t even vaguely approach any kind of advance in the reduction of forms of interruption marketing. Strict Limits on Advertising? That’s for Authoritarian Regimes Only Depending on who’s doing the talking, then, we’re often dealing with either (1) a literal interpretation of the concept of reasonable user targeting, or (2) a broad or loose interpretation. Unless we give up on the idea of a society built around choice and pluralism, and decide to follow strict codes of conduct en masse, the broad or loose (or liberal) interpretation must be assumed. 10 I could TiVo Seinfeld. I could ignore the post-car-wash billboard. But even on the liberal interpretation, there has to be some way for reasonable people to agree on how I can opt out of major irritants so I can be at one with my own thoughts. No one but the most diabolical advertising executive would envision a system that would hijack my car’s sound system when I was inside that car wash, unable to escape, pumping a loud commercial message into my ears. Hope I didn’t just give someone an evil idea. Better targeting goes hand in hand with less intrusive marketing, in many cases (but not all). The dividing line between annoying intrusion and reasonable targeting actually isn’t a simple one based on the degree of targeting. If that were true, then Bell’s wheedling me to come back to their phone service days after switching providers would count as “reasonable,” because I am actually very highly targeted to their service—I’m using a direct competitor’s exact same service! They know so much about me! (I don’t think it is reasonable, perhaps precisely because they know everything about me.) But by and large, the degree of targeting is not only a pretty reliable guide to how socially responsible and nonintrusive your advertising is, but a rock-solid predictor of how much the advertising is worth to you, and its fair market value. That makes it worth mentioning, as an aside, that all advertisers are looking for bargains. If this book is titled Winning Results with Google AdWords, then the way to win by the largest margin is surely to pay less for these forms of new customer acquisition than (1) they’re worth to your business; (2) you’d pay in other media; (3) you’ll be likely to pay in a couple of years. So what are all the factors that distinguish reasonable targeting from surplus interruption? It would be difficult to state them all here, because so many reasonable people disagree with what these are. (Walk down a long street and record the percentage of homes that have signs that say “no flyers” or “no solicitors.” Would you put up that type of sign? So we have differing levels of dissent against intrusive marketing methods.) In practice, what we’ve seen is that advertisers will do just about anything they can get away with. At the very least, we can agree that many of these efforts are wasteful, hard to measure, and trigger overtly negative reactions among consumers. . . er, citizens, homeowners, users. . . people. And why should you care? Because Google cares. Why does Google care? Keep reading. Win&Mac-Tight / Winning Results with Google AdWords / Goodman / 656-4 / Chapter 1 CHAPTER 1: How Big Is This Market? The Rapid Rise of Paid Search 7 Win&Mac-Tight / Winning Results with Google AdWords / Goodman / 656-4 / Chapter 1 In the Beginning: Advertising on the Internet The idea of the Internet as a marketing medium was so energizing to a growing community of enlightened marketers not just because of its superior targeting and interactive potential, but because of the potential to annoy fewer people. Somewhere along the way (around 1998–2000, when they smelled money), online marketers forgot the promising principles of user targeting and plunged headlong into surplus interruption. Suddenly our favorite websites, search engines, and portals were crammed with intrusive, blinking banner ads. Part of the reason for this is that users hadn’t abandoned these sites. . . yet. And advertisers were paying high rates for this minimal, divided attention, because, by and large, they weren’t measuring performance. Those kinds of ads still “work” in the sense that they get noticed. But research now proves that the most intrusive forms of online advertising might also erode consumer loyalty and do serious damage to the brand image of advertisers and publishers alike. 11 Until I began my career as an Internet entrepreneur in 1999, I’d never given such issues much thought. Then I discovered a writer who put a new spin on the history of the advertising business: Seth Godin. He changed the world of advertising forever when he wrote Permission Marketing. Godin’s narrative relegated so-called interruption marketing to the dustbin of history (at least in his enlightened fantasies). Godin’s premise was that email marketing would change the way companies developed relationships with prospects by offering a means to contact prospects who had “raised their hands for” (opted into) marketing messages that were “anticipated, personal, and relevant.” 12 The skeptical reader might wonder, though, how that permission was going to be gained in the first place. Wouldn’t some kind of unsolicited message be needed at some point to initiate the process? And how do you get off the permission train? Can you really opt out of the relationship, or will the largest database-driven marketers take whatever liberties they can get away with? What if I exited a commercial relationship but still got a “friendly” card in the mail promising to start phoning me again just as soon as legislation allowed. Didn’t “no” mean no? I was already beginning to sense the unraveling of the promise of “permission” as I looked with dismay at the clutter building up in my own email inbox. 13 The game of permission marketing seemed to be over before it had truly gained traction, in part due to spam, in part because corporate marketers bent the rules and abused the concept of permission. Everyone wanted in your face, now that your face was stuck in your email box. With no theoretical limit on the number of emails that might pile up, we all wound up receiving too many. People began unsubscribing from opt-in publications, switching email addresses, ignoring and filtering their email. What started out looking like a magic bullet became more like a rapid-fire hailstorm of ammo opening gaping holes in our daily work routines. The recipients of the daily volley of “anticipated” messages ran for cover. Nonetheless, Godin’s theories stuck in my mind because he was evidently working on a broader analysis of the rapidly changing context for marketing and advertising. And he kept publishing these timely ideas. In Purple Cow, he explored more deeply how irrelevant big ad campaign methods had become, as they were more suitable for a time (in the 1950s and 1960s) when consumers needed to be trained to adopt leading brands in product categories that had never existed before. Now, with product proliferation, the old “virtuous circle” of the 8 Winning Results with Google AdWords Win&Mac-Tight / Winning Results with Google AdWords / Goodman / 656-4 / Chapter 1 Win&Mac-Tight / Winning Results with Google AdWords / Goodman / 656-4 / Chapter 1 “TV-industrial complex” (advertise product, take massive profits, and reinvest in yet more advertising) wouldn’t work, especially not to introduce new products in old categories. 14 What does work in this new era? Getting the details exactly right. Understanding your customers’ wishes. Word of mouth. Online word of mouth. “Think small,” argues Godin. “One vestige of the TV-industrial complex is the need to think mass. . . . No longer. Think of the smallest conceivable market and describe a product that overwhelms it with its remarkability. Go from there.” 15 Want an example? How about the PowerBar (now owned by Nestlé), which spread by word of mouth from humble beginnings among a few cycling enthusiasts. 16 Although the energy- bar category eventually became crowded, there was plenty of room for a few more independent growth stories in this same market. The highly successful Clif Bar, the next-generation winner, is worth a mention, as is the more recent LARABAR. 17 But the array of nutrient-packed, low-carb, low-glycemic-index (you get the picture) bars now lined up at the checkout even of ordinary convenience stores just proves the point that product proliferation and rapid iteration work against even relatively fresh brands, even while the power of large distributors to control shelf space lingers. I’m sure someone still eats Wonder Bread, but that’s another book. Mass Marketing Inertia: Why Do the Old Ways Persist? Food examples serve well as a metaphor for the growing appetite for novelty in the marketplace, and the loyalty that accrues to specialists willing to cater to odd whims. Since the 1980s, American dining tastes have exploded in every direction; along with them, thousands of niche suppliers of unusual vegetables, organic products, and wine and beer (to wash it down with) have sprung up. 18 The online world has simultaneously erupted with a well-organized, searchable outpouring of chatter from foodies and lifestyle junkies at sites like Chowhound.com and Yelp.com. Sometimes you only realize how specific your tastes have become when something is taken away. My local liquor stores appear to no longer stock Anchor Steam, a popular San Francisco– based microbrew. I’m steamed. Another book would also be needed to cover the concept of authenticity. Some mass brands got that way because, like the PowerBar or Under Armour apparel (originally designed to be worn under athletic uniforms such as football pads), they were seen as the cultish province of experts or elites. Under Armour did just as Godin suggests: it went after a seemingly small niche in performance athletic clothing (particularly underwear) and overwhelmed it with its remarkability. The hunger for authenticity as an antidote to bland homogeneity; the need for “my” personalized choice in a world of seemingly endless choice; and a desire for connectedness to stave off an excess of digital anonymity; all of this is hard to exaggerate. In the coming years, these trends will strongly affect marketers’ ability to tell their stories and sell their products and services online. Between you and me—as interested as we may be in AdWords’ role in the front row, 50-yard line of online marketing today—it’s OK if we accept that larger trends and mass advertising will sometimes continue to drown out our little $30 billion industry. Under Armour is a cool brand; an analysis of why it took off would stretch the abilities of nearly any social scientist, but it would start with young athletes’ widespread identification with professional heroes, and mass marketing through major sports leagues and TV. Moisture-wicking undergarments, once the purview of efficient, low-paid, gorp-gobbling Nordic skiers, has reached mass appeal presumably due to the Win&Mac-Tight / Winning Results with Google AdWords / Goodman / 656-4 / Chapter 1 CHAPTER 1: How Big Is This Market? The Rapid Rise of Paid Search 9 Win&Mac-Tight / Winning Results with Google AdWords / Goodman / 656-4 / Chapter 1 sexier role models who have adopted tougher-looking new brands. The fact that Under Armour celebrated (and maybe perpetuated) their success with a Super Bowl ad in 2008 doesn’t make me respect them less. With the advent of “generous” sizing for their various clothing lines, this cult brand now has the potential to literally reach a “mass” market much as Nike and others have done by appealing to semi- and non-athletes. Surely Under Armour is too successful to nitpick. I’m not even running to Google to cook up a scorecard on their use of search advertising. Well, OK, maybe I am. But I’ll bury my thoughts in a footnote. 19 Google’s Unassuming, Yet Butt-Kicking, Beginnings Quietly, and seemingly unrelated to all of this background learning about marketing and advertising, I was writing about emerging search engine technologies. In October 1999, shortly after launching my site Traffick.com (at the time, subtitled “The Guide to Portals”), I reviewed two new entries, Google and Ask Jeeves, that were facing off against powerful incumbents like AltaVista, AllTheWeb, and Inktomi. Google got a positive rating. I concluded the review: “Best of all, the Google site is devoid of advertising. Enjoy it while it lasts.” 20 At that time, the one-year-old startup, led by Stanford computer science doctoral candidates Larry Page and Sergey Brin, had few ideas about how the company would make money. Unlike portal companies such as Yahoo, they didn’t scheme about how to “lock users in” or how to “make their site sticky.” They didn’t spend days in investing seminars spreading hype about how they would “monetize the eyeballs.” They basically stuck to improving their web search technology. Based on initially favorable reviews from journalists, researchers, librarians, and enthusiasts like myself (in short, the technorati), word spread rapidly about the quality of search results on Google’s site, the lack of clutter on the page, and the speed with which results were served. Google’s index passed its challengers in terms of index size at 500 million documents in June 2000 and never looked back. 21 Many observers assumed Google would make its money by licensing the technology as an enterprise search solution (Google now does this, but earns little from the effort) or by distributing its results through a major portal that required a search index. (Google got its biggest push forward by inking just such a deal with Yahoo, which ended the relationship when Google became a competitive threat.) Today, Google Search is a leading online destination in every country in the world. It may come as a surprise to some readers to learn that 99% of Google’s $21-billion-and-growing in annual revenues are currently derived from advertising. Google alone dominates both the online advertising industry and even the advertising industry as a whole in many countries. According to the Internet Advertising Bureau, of a total £2.016 billion spent in the UK on online ads in 2006, Google’s share was a whopping 43%. 22 Other recent UK reports show that Google recently moved into second place as the top ad revenue earner overall (online or offline), behind only television station ITV, and ahead of third-place earner Channel 4. 23 Albeit with a number of modifications, the experience of using Google Search today is not so different from the way it was when there was no advertising. Google wisely realized that their biggest asset was a large population of search engine users, so they released their ad program cautiously, making sure that the ads were in a nonintrusive format. New search services, such as Google News, Google Maps, Google Local, Google Desktop, and Google Earth, and products like Gmail and Google Calendar are released cautiously and without much if any ad clutter. 10 Winning Results with Google AdWords Win&Mac-Tight / Winning Results with Google AdWords / Goodman / 656-4 / Chapter 1 Win&Mac-Tight / Winning Results with Google AdWords / Goodman / 656-4 / Chapter 1 Thanks in large part to Google’s efforts, search engine advertising is now the leading engine of growth in online advertising. Few would argue that, to this point, it’s been a genuine success story in marrying the ideal of less-intrusive marketing methods with the ability to build a business by reaching out to interested prospects. In the remainder of this chapter, I’ll present additional evidence to prove to you how big a deal search advertising has become. Google is now overwhelmingly the category leader, which means that most online advertisers need to consider Google AdWords as their top priority in any paid search campaign. If you’re already aware of these figures, skip ahead to The Growth of Search Marketing. Search Marketing Facts and Figures Although my specialty is paid search, and in particular, AdWords, I consider my own consulting shop to be a search marketing firm. (Because we offer a variety of services, one day I might make the leap to calling it “online marketing”—but I’m under no illusion that people currently contact us for anything other than our reputation in paid search.) Many of my colleagues are self-described search marketers. Only recently have we been able to gather reliable statistical information about this market. Understanding the size and dimensions of the search advertising market is important because it helps put things in perspective. You don’t want to underestimate the power of your search marketing efforts, but you don’t want to have unrealistic expectations of the medium, either. It will grow, but for now, it’s dwarfed by the advertising industry as a whole. Size of the Advertising Market How much do companies spend on advertising in general? As you’ll see, this is a huge sector. The spending shift towards the relatively small search marketing arena is well underway, and far from complete. As of this writing, the constantly evolving annual revenue total for Google, nearly all derived from advertising, is projected to be $21 billion for 2008. When this hits $50 billion, no doubt the pace of the shift will begin to slow. What Large Companies Spend on Ad Campaigns The size of the advertising market as a whole is enormous, but in the coming decade, much of the fat will be trimmed, and advertisers will look for new ways to spend the remaining funds. Ad agency veterans view the overall shift broadly in terms of a move from “traditional” media spends to “nontraditional.” Overheard in conversation: worried ad agency executives admitting to new media publishers that nontraditional media spends will soon surpass 40% from their current levels. Major conglomerates have recently been devoting fully 20% of their massive ad budgets to nontraditional media exposure; they are also waking up to the fact that their massive media buying power, as leveraged through traditional channels and existing agency relationships, is not leading to expected efficiencies. 24 Other huge shifts in ad buying behavior are benefiting online media buying models. Today, a growing number of corporate advertisers are spurning “upfront” television ad spend commitments, which means they aim to plan more meticulously, in order to trim fat in their ad Win&Mac-Tight / Winning Results with Google AdWords / Goodman / 656-4 / Chapter 1 CHAPTER 1: How Big Is This Market? The Rapid Rise of Paid Search 11 Win&Mac-Tight / Winning Results with Google AdWords / Goodman / 656-4 / Chapter 1 budgets and to buy only the media they want, when they want it. They’ll also be investigating more performance-based (or at least measurable) advertising strategies. The TV-industrial complex has some life in it yet, but the days of mass brand campaigns and even mass media are on the wane. Funnily, comparing today’s most-watched TV shows with run- of-the-mill episodes of Carter Country and Night Rider, former Google ad sales strategist Patrick Keane has been among those reminding us that today’s top-rated TV shows wouldn’t have cracked the top 25 in Nielsen ratings in the 1980s. 25 This analysis, by the way, can be overdone. Today’s top-rated shows, and even middle-tier cable television favorites, still attract audiences in the millions and tens of millions. This must be why Keane recently left Google for CBS: there’s life in the old girl yet. Search isn’t the only nontraditional form of advertising that is gaining traction. But it’s probably the best-known and most reliable, in the sense that, already, hundreds of thousands of advertisers have search marketing accounts and already track their spending and understand roughly what impact that spend has on business outcomes. Large companies spend a ton on advertising, generally speaking. In a typical year, the global media buy for just the top four advertisers in the world (of late, that has been General Motors, Procter & Gamble, Unilever, and Johnson & Johnson) reaches as much as $15 billion. 26 Spending on Classified Advertising and Direct Marketing Patterns of newspaper ad spending over the past 50 years or so are interesting to examine as part of the whole advertising picture. As a proportion of the entire newspaper ad spend and in absolute terms, classified ads grew rapidly, reaching a peak of $19.6 billion in 2000 before leveling off to their current $14.2 billion of the $42.2 billion total newspaper print ad spend (for 2007). The biggest spenders are in the automotive, real estate, and employment sectors. 27 No media spending shift has been so abrupt as the shift from offline to online classifieds. The effect on traditional newspapers has been significant, but the dire consequences facing traditional offline publishing models will no doubt be played out over a longer time frame than some doomsayers predict. Many new players in local search and classifieds have sprung up in the past five years, increasingly fueled by venture capital interest. But traditional offline classifieds companies are not necessarily left behind. Many are simply shifting their resources to online properties. An important example is Canada’s Trader Corporation, established in 1975. Today, Trader Corporation owns rights to brands like Auto Trader, publishing in a variety of offline and online classifieds verticals throughout the world, sometimes in partnership with other shareholders. The company is now a wholly owned subsidiary of Canada’s Yellow Pages Group. It’s difficult to speculate, but in spending in the neighborhood of $1 billion to acquire Trader Corp., we can assume that Yellow Pages Group saw a classified advertising business that was well positioned to make a smooth transition to an online model. Depending on whom you talk to, direct-response advertising (of which direct mail is a subset) is another mammoth category. It’s also commonly one of the media compared directly with Google AdWords. According to the Direct Marketing Association, total U.S. spending on direct-response advertising was $203 billion in 2003, which represented a 5% increase over the previous year. Total direct marketing–driven sales reached $1.7 trillion in 2003, and this was 12 Winning Results with Google AdWords Win&Mac-Tight / Winning Results with Google AdWords / Goodman / 656-4 / Chapter 1 Win&Mac-Tight / Winning Results with Google AdWords / Goodman / 656-4 / Chapter 1 composed of $904 billion in lead-generation efforts, $635 billion in direct-order sales, and $212 billion in traffic generation. Since Google AdWords combines elements of a variety of traditional forms of print advertising, it can be useful to stack them up against one another. No matter how you measure it, the size of the online advertising business is no longer considered small. From 2003–2005, online advertising was widely seen as being in recovery mode from a downturn. Today, it’s widely acknowledged to be flourishing. By the end of fiscal 2008, Google alone will have generated significantly more annual ad revenue than most observers had predicted for the entire search ads sector just three or four years ago, and more than some had predicted for all of online advertising. Size of the Online Advertising Market As the numbers presented in the previous section clearly show, offline advertising still eclipses online advertising by a wide margin. But online advertising is no longer in its infancy. Most of the studies cited in recent years, including those in the first edition of this book, underestimated the growth in online ad spend. The online ads sector came to maturity while prognosticators and media planners were standing around speculating when that would happen. A recent analysis by research firm IDC has global online advertising spending hitting $65.2 billion in 2008; they project $106 billion by 2011. 28 On the face of it, these figures are confusing. Doesn’t this mean Google accounts for a whopping one-third of the global advertising spend (on all types of online ads)? In a word, yes. (The accounting may have some complications, as Google reports revenues without subtracting partner referral shares, referred to as “traffic acquisition costs,” which makes their revenues from partnerships appear higher than they really are.) The distinction between online and offline advertising will blur as media converge and as more of the world becomes digital. Microsoft CEO Steve Ballmer stated in a speech in March 2004 that in ten years, all media dollars will wind up online because the separation between televisions, mobile devices, and PCs won’t exist. 29 And what’s to say a newspaper company won’t offer an automated online auction system to sell part of its advertising inventory? (Or perhaps they’d begin with selling print classifieds through an online interface.) As this begins to happen, advertisers will become more accustomed to online control panels (similar to Google AdWords, perhaps) to manage both online and offline ad campaigns. As early as 2005, one newspaper, The Boston Globe, tried a pilot project of this type. A popular half-page ad space that normally sells for $50,000 was auctioned online with a starting bid of $20,000. Stay tuned: we’ll be seeing lots more of this. Ad networks and exchanges, some newspaper-owned, are being launched with increasing regularity. Second-tier paid search advertising provider Marchex (the company is something of a holding company with a variety of specialties, including a concentration on domain name inventory) has recently launched Adhere, a “national local advertising network.” Down the road, given the value of the underlying converged online-offline advertising inventory among print publishers and content owners, Google will likely make itself the leading contender to become the platform to run efficient advertising auctions. There is much incentive for other companies—Microsoft, Yahoo, and the content owners themselves—to throw their hats into this ring as well. [...]... listings near search results, and even so-called contextual listings served around the Web by companies like Google and Yahoo As mentioned earlier, the addition of new ad formats to Google s menu of offerings will make it even more difficult to follow these trends, but for us AdWords junkies, we’re still primarily looking at Google s core offering 19 20 Winning Results with Google AdWords What Is an... isn’t completely dependent on advertisers If Google is wise, it will begin to diversify its revenue base as well For the time being, Google has a diversified product offering (Gmail, Calendar, Talk, Docs and Spreadsheets, Google Earth), but it’s all used to build Google s general dominance rather than a diversified revenue base 21 22 Winning Results with Google AdWords Why Pay for Search Traffic? Isn’t... typed into Google Search in 2005, Google actually placed two results from Google News above the first web index listing (which is indeed for the Coca-Cola home page) Today, I’m seeing Coke’s site as the first organic listing, but two of my own stored files are listed above that, because Google integrates my own Google Desktop Search results with regular search results Farther down the search results page,... sending Google a “bribe.” Guess what: Google doesn’t need the money Their long-term currency, now as always, is editorial integrity What Is a Googleplex? For all of its “virtualness,” Google is a company with a strong sense of place Googleplex is the nickname for Google s headquarters in Mountain View, California, which opened in 1999 Google completed a move to a new, larger facility in early 2004 Along with. .. search remain unrelated, but as a Google director of ads quality, Nick Fox, put it, Google s 23 24 Winning Results with Google AdWords thinking about relevancy and quality in the organic listings and in the paid search rankings are far from siloed.”40 Website owners should participate in the AdWords program because it’s a good opportunity for prime exposure on search results pages, not because they... lunch with a Google staffer in one of two massive Google cafeterias bursting with themed offerings from a variety of international cuisines At the Google Dance the same week, I came across an odd sign in the rest room: a cryptic reminder to coders called “Testing on the Toilet.” The previous spring I caught a glimpse of the Google New York office, smaller in scale, with a smaller lunch buffet, but with. .. technologies that combine customization and wide reach so that ad buyers can make efficient buys without running all over the place 15 16 Winning Results with Google AdWords The Growth of Search Marketing Two things we know for sure are that email is the most popular online activity and that search is second But how does this translate into time spent viewing advertisers’ messages? What levels of ad... and to discuss best practices The effort has had mixed results 17 18 Winning Results with Google AdWords I myself discovered that it was easy enough to get a high rating (in the first edition of the SEO Buyer’s Guide) as an SEO practitioner You can get lucky! One of my clients achieved a very high ranking on a commercially lucrative search phrase, with my help Of course the client’s success story proved... search results from the sponsored listings, numerous observers have been critical of paid inclusion programs.38 There is no way to guarantee or pay for placement in Google s regular, “organic” index listings In other words, they remain free With its newly designed Microsoft Live Search, Microsoft has gone a similar route As with Yahoo Search, Live Search’s search results pages look similar to Google s, with. .. directly draw on the meta description tag you’ve placed in the HTML header of your document In short, the page the engine decides to index might not be a carefully tailored offer page, and the initial messaging (the visible description) might not be favorable to your sales process 25 26 Winning Results with Google AdWords With paid search, you decide on the ad title and ad copy You tell the system which . in 20 03, and this was 12 Winning Results with Google AdWords Win&Mac-Tight / Winning Results with Google AdWords / Goodman / 656-4 / Chapter 1 Win&Mac-Tight / Winning Results with Google. watching 6 Winning Results with Google AdWords Win&Mac-Tight / Winning Results with Google AdWords / Goodman / 656-4 / Chapter 1 Win&Mac-Tight / Winning Results with Google AdWords /. somehow. 4 Winning Results with Google AdWords Win&Mac-Tight / Winning Results with Google AdWords / Goodman / 656-4 / Chapter 1 Win&Mac-Tight / Winning Results with Google AdWords /