Category : Ad Marketing

Yahoo has announced its new pay-per-click product: Yahoo Search Marketing (SM). This product was formerly known as Overture, but you may also recognize it as Goto.com, the name it went under prior to 2001. In our experience, advertising with Google AdWords has resulted in higher conversion rates than with Yahoo Search Marketing (SM). However, both programs have advantages and disadvantages. How does Yahoo SM compare with Google’s AdWords? Let’s start by looking at how they differ (all amounts are in USD).

Bidding

Yahoo SM

• Yahoo places your bid at 1 penny over your next lowest competitor. Thus, if you bid $3.00 per click, and the next highest bid is $1.95 per click, you will only pay $1.96 per click.
• Yahoo allows you to see who you are bidding against and what they are bidding, so you know exactly where you will rank, and how much you will pay.
• Yahoo’s maximum bid is $999.99
• Yahoo’s minimum bid is $0.10

Google AdWords

• Google doesn’t tell you how much you will pay per click. Thus, if you bid $3.00 per click, you will pay anywhere from $0.05 to $3.00 per click.
• Google does not allow you to know how much your competitors are bidding per click.
• An advantage with Google is that you will rank higher if your click-through rate (CT rate) is better (a CT rate is the ratio of clicks on your ad to the number of times your ad is shown). Thus, you may have a better rank than your competitor, even if he or she bids more than you (because of your CT rate).
• Google’s maximum bid is $100.00
• Google’s minimum bid is $0.05

Low CT rate dropping

Yahoo SM

• Yahoo will drop your keyphrase if the CT rate is ranked very low for a significant period of time. In actuality, this rarely happens. Your keyphrase has to perform quite dismally for it to get dropped.

Google AdWords

• Google drops keyphrases with POTENTIALLY low CT rates. If Google deems that your keyphrase has done poorly for other customers, then your keyphrase won’t even get the chance to make a single (first!) impression. This can be very frustrating when your keyphrases are very relevant, but Google won’t even let them see the light of day. The flip side, of course, is that if your keyphrase’s CT rate is good, you will get a higher ranking (even if you bid lower than your competition).

Showing ads by country and language

Google AdWords

• Google allows you to choose your country and language by selecting them in a dropdown box. Very simple, very efficient, and very effective.
• The language is based on the language setting of the visitor’s computer. For example, if you are targeting Spanish Americans, than you will want to target the Spanish AND English languages because many Spanish Americans use English computers. Just make sure that you choose Spanish-only keyphrases.

Yahoo SM

• Yahoo’s system for countries and languages is downright miserable. You have to re-register for every country (and only twenty countries are available).
• Worse, you have to re-submit all your keyphrases and reset all your bids.
• What’s more, each country has different criteria for submission. This means you have to rebuild your campaign for the USA, UK, and Australia. Canada is there, but you are not allowed to submit English keyphrases (?!?), only French (FYI: Canada’s workforce is 73% English, 22% French). In Switzerland, you can submit in Italian, German and French; there is no language differentiation.
• Notable missing countries: Mexico, China, English Canada (which is grouped with the USA), South Korea, India, Russia…

Reports

Yahoo SM

• Yahoo offers many useful reports. And while you can find just about everything you might need, it’s left up to you to figure out which report contains the information you were looking for.

Google AdWords

• Google offers customizable reports. You can ask for anything you want, and you will get it.
• They also offer to email you your customized report on a regular basis.

Keyphrase comparison

I have bid on some keyphrases from February 1st to April 30th, and held them in similar positions during that time. These numbers are for search related impressions only. These campaigns were not involved in content advertising.

“Okeeffe print(s)” #3 position
Yahoo: 1 click 8 impressions 12.5% CT rate $0.10 cost per click	Google: 63 clicks 1642 impressions 3.8% CT rate $0.13 cost per click
“Ansel Adams photo(s)” #5-6 position
Yahoo: 20 clicks 2401 impressions 0.8% CT rate $0.05 cost per click	Google: 25 clicks 2529 impressions 1.0% CT rate $0.06 cost per click

Conversions

Our client February Point counted emails + contact forms as conversions. Here is a comparison from February 1st to April 30th.

“Real estate Bahamas” #3 position
Yahoo: 1037 clicks 19 879 impressions 5.2% CT rate $0.34 cost per click 3 conversions 0.30% conversion rate	Google: 1557 clicks 35 348 impressions 4.4% CT rate $0.45 cost per click 13 conversions 0.84% conversion rate

Clearly then, Google AdWords is a better choice if you are interested in clicks, impressions, and conversions. If you want the lower cost per click for the same position, it would seem that Yahoo is the better choice (though conversions are lower).

Competition

– FindWhat is possibly the third biggest pay-per-click (PPC) search engine, although there are a few that might be its equal: Kanoodle, GoClick, 7Search, Search123.
– E-spotting is very big in the UK, and competes heavily with Google and Yahoo in the PPC marketplace.
– MSN is getting ready to launch its own PPC engine to compete with Google and Yahoo (MSN currently uses Yahoo SM on its site). No date yet, but watch out for it.

Overall

To sum up, you will definitely have more control over your money with Yahoo’s system. It is more open and honest, and you will pay less per click than with Google’s system. Google does not tell you why you are paying what you are paying, but it does have the added bonus of rewarding you with rank for a better converting ad.

Of course, Google does get more traffic and it converts better than Yahoo, and in the end, isn’t that what we’re all looking for? Thus, Google should be the winning choice for anyone that is looking to convert clickers into buyers. Because after all, who doesn’t want to increase their sales?

Shawn Campbell

Shawn Campbell is the co-founder and Chief Search Engine Optimizer at Red Carpet Web Promotion, Inc.
www.redcarpetweb.com

As you may know, Overture was recently bought by Yahoo! Due to the publicity generated by the deal, now is a good time to review some tips for bidding in pay-per-click (PPC) campaigns on Overture and Google AdWords.

How does a pay-per-click search engine work?

With a PPC search engine, you bid a certain amount for your chosen keyphrase. Whenever someone searches for that keyphrase, and clicks on your website’s link under it in the search result, you pay the bid amount (or less, depending on your competition). Generally, the higher you bid, the higher your placement is in the search results.

Overture

Overture was the biggest PPC search engine before Google AdWords came along. Now they are both fighting for the top spot, leaving the rest of the pack in their wake. Overture works on a strict auction model: the higher you bid, the higher your position is. Overture’s results are included in the sponsored results at the top of Yahoo!, MSN, Lycos, HotBot, and others. They claim to reach over 80% of all Internet users.

Google AdWords

Google’s AdWords program started in February 2002, and quickly became Overture’s only serious competitor. Google’s system is different from Overture’s in that the bidding is only one part of the ranking equation. The other part is the click-through rate (how often people click on your ad). Google AdWords are found on AOL, Netscape, Ask Jeeves, Teoma, Earthlink, and, of course, Google. Google states that their AdWords appear 200 million times a day. I figure that they also reach about 70% of all Internet users.

Other PPC search engines:

There are hundreds of PPC search engines out there, but you really only need to advertise with the top two. If you want to see some lists, you can go to www.PayPerClickSearchEngines.com

Pay-per-click tips

Here are some tips for running a PPC campaign:

1. The #1 rank is not always the best. In fact, you can usually get a better return on investment (ROI) by being the second or third result in a search. The reason is that people will often click on the first result without thinking. They then realize that the site does not offer what they want, and they will come back and think (and read the description) before clicking on the second or third results. I mention only the second and third results because usually, only the top three results get published (Yahoo, MSN, and many more). Often the second and third results are much less expensive than the number one spot.
2. Bid on as many relevant, highly specific, low cost keyphrases as you can afford. A keyphrase with only one or two keywords will usually cost much more than one with three or four words. Longer keyphrases also tend to be more targeted (for example, shiny blue widgets, instead of just plain old widgets). Thus, with longer keyphrases, you get lower costs and a higher return on investment. If you bid on enough of these targeted keyphrases, you can usually generate enough traffic to match what you would receive for a single-word keyphrase. To summarize, bidding on shiny blue widgets, pre-owned utility widgets, and zebra-stripped widgets, will cumulatively generate the same amount traffic as just bidding on widgets, but with a higher ROI because they cost less per click.
3. Include your keyphrases in your title and descriptions. Think hard about your description because generally, the best description gets the most traffic (not always the highest ranking result).
4. Use objective, not subjective language in your descriptions. Subjective descriptions will state how great the website is. Objective descriptions are ones that list the benefits of a website, or mention what the surfer can expect to find. Try to point out what is unique about your website.
5. Create highly relevant landing pages for your PPC campaign. These landing pages (where the PPC link goes) are what will convert a surfer into a buyer. You have already paid for the surfer to see this page, so use your resources to make it into a good conversion page. Also, keep separate, track of buyers that arrive via your PPC campaign, and buyers that arrive via other means. That way, you can track your ROI, and figure out how much you should spend on the PPC engines.

Other helpful resources:

• Overture now boast 95,000 advertisers, just shy of Google’s reported 100,000 – InternetNews – July 23, 2003
• Overture unveils new ad features – Net Imperative – August 15, 2003
• Overture Advertiser center – on the Overture website
• Google Advertising – on the Google website

Shawn Campbell

Shawn Campbell is the co-founder and Chief Search Engine Optimizer at Red Carpet Web Promotion, Inc.
www.redcarpetweb.com

You may have noticed the animation on www.overture.com that says, “Overture delivers ROI daily.” Notice that they do not specify whether they are delivering a positive ROI (return on investment) or a negative ROI! Unfortunately, you will have to make those calculations yourself.

Knowing how much you can afford to spend on each visitor, will help you to use your marketing dollars more effectively. First however, let’s focus on the nuts and bolts of the marketing plan to sell your products and services online.

CPC
CPC stands for Cost per Click-through. Many marketing options involve paying a fee for each visitor who is brought to your site. Overture is a perfect example. (See our past article on Overture).

Overture sets a minimum bid of $0.05 per click-through, so to use this service, you should at least be able to spend this amount per visitor to your site, and still make a profit. Since your competitors also want a higher position in results for the same keyphrase as you, the bids escalate, and in some cases, companies end up paying over $10 per click-through! Many companies are getting caught up in the challenge of keeping the top positions, and may even be losing money on these bids in order to be the market leaders. In these cases Overture is the only winner.

Another factor in the bidding wars is that search engines such as Yahoo, MSN, and AltaVista display the top three Overture results, therefore making these positions even more sought after. Paying click-through fees that are above your estimated profit margin is a dangerous practice because your competitors may be able to keep beating you until you run out of money! Is it worth it playing chicken with a company that may have much deeper pockets than you do? It is a good idea to figure out how much you are willing to spend per sale, and then to figure out your sales-per-visitor ratio. This will help you to find out how much you should spend per visitor. Avoid spending any more than that amount.

SEO
SEO stands for Search Engine Optimization. It is often a better investment to pay for search engine optimization and submissions, than to pay click-through fees. As CPC bids escalate, the long-term benefit of SEO becomes more evident. An SEO campaign increases your position in the search engines to generate more traffic. Although you will have to pay to optimize your site, you will not have to pay a forever increasing click-through fee. Rather than paying by the visitor, you are investing in a long-term strategy to bring in a steady stream of customers. You may find after some experimentation that a combination of both CPC and SEO services works best for your needs.

Sales per visitor
The sales-per-visitor ratio is a crucial number to monitor and improve for a higher ROI. For example, if you make one sale on your site out of 100 unique visitors to your site, then you have 1% sales-per-visitor ratio (depending on your industry this could be average). A higher sales-per-visitor ratio is more desirable because you will make more sales for the same amount of visitors. This may allow you to increase your marketing budget and to achieve an even higher volume of sales. Even if you do not raise your marketing budget, an increase in your sales-per-visitor ratio will leave you with a higher ROI.

Steps to increase your sales-per-visitor ratio

1. Improve the quality of your traffic
2. Improve your site’s usability to keep visitors on the site
3. Improve your perceived credibility to increase customer confidence
4. Improve or simplify your ordering process to reduce shopping cart abandonment

Increased marketing budget to get more volume
If you pay for visitors by the click, and after working on these steps your sales-per-visitor ratio increases from 1% to 3%, then you will be able to increase your bids because you will be making more sales. For example, if you pay $0.10 per visitor (CPC) and make $15 per sale (after other expenses), then with a 1% sales ratio you end up with a $50 profit for 1000 visitors (see breakdown below).

Sales-per-visitor ratio of 1%

1% of 1000 visitors 10 sales $15 time 10 sales $150 profit before CPC – $100.00 CPC cost: ($0.10 X 1000) $50 total profit

If you increase your ratio to 3% your profits go from $50 to $250 for the same amount of visitors! At this point you may consider raising your bid to $0.15, which may in fact raise your volume enough to increase your overall profit.

Sales-per-visitor ratio of 3%

3% of 1000 visitors 30 sales $15 time 30 sales $450 profit before CPC – $200.00 CPC cost ($0.10 X 1000) $250 total profit

Key to success
Depending on your goals, you may choose to increase your profit per unit or your volume, in order to make more money. Either way, you must first understand the relationships between CPC, sales-per-visitor, and profit. An increased sales-per-visitor ratio is the best way to take advantage of increased visitors because it will turn more of those visitors into buyers.

Jason Campbell

Jason Campbell is the co-founder and President at Red Carpet Web Promotion, Inc.