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Michael Schoen is the Vice President and General Manager, Advertising Platforms for LookSmart, a role he assumed in 2004. In this capacity, Michael is responsible for the product strategy and implementation of LookSmart's Paid Listings products, serving both advertisers and publisher licensees. Michael joined LookSmart as Director, Technology in October 2000 in connection with the Company's acquisition of Zeal.com where he was responsible for Zeal's community-contributed Internet directory. Prior to LookSmart, Schoen served as Director, Technology for Warner / Elektra / Atlantic Corp, the music distribution arm of Warner Music Group.

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Mapping Out the Non-Proprietary Search Space: Part II

Written on
Dec 10, 2009 
Author
Michael Schoen  |
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Mapping Out the Non-Proprietary Search Space: Part II

map_small.jpgADOTAS – This is the second in a three-part series on the non-proprietary search space. Read the first article here.

In my first article on the non-proprietary search market, I hoped to shed some light and definition on this often confusing sector of the online search advertising industry. In the second part of the series, we are going to take an in-depth look at some of the challenges of the non-proprietary search market — that is, the 8.7% of the search market where the non-proprietary players operate — which monetizes traffic from queries that don’t directly originate from the engines of the search giants.

No matter what your role in the advertising industry or size of your business, you can benefit from knowing the basics of navigating this landscape to better maximize your ad campaign spend.

My advice? Equip yourself with knowledge of the non-proprietary search market’s biggest perception challenges and how to overcome them: namely coming to terms with the lack of transparency and understanding which success metrics the non-proprietary space can help you achieve. By doing so, you will find it easier to maximize your existing search ad campaign strategy.

Challenge #1: Transparency

When advertising on Google, it’s fairly easy to understand where your traffic is coming from — you can see in campaign reports that it’s coming from a search on Google.com. With networks, things sometimes aren’t so clear.

The truth of that matter is, most networks are essentially blind, or masked, meaning you can’t see exactly what the referrers/traffic sources are. This can be a little unsettling, and many advertisers new to the non-proprietary space have a tendency to get off track by trying to understand exactly where their traffic is originating.

It’s imperative that advertisers not get mired down in the details or try to “solve” the blind network. Instead, advertisers should focus on working with the networks to achieve their specific goals and not worry about exactly what traffic is helping them accomplish this.

Challenge #2: Figuring Out Your Metrics

Another challenge advertisers sometimes face when expanding campaigns into the non-proprietary search space is that the metrics they are used to looking at on the big search engines may not be relevant to their ad network buys.

It’s critical for advertisers to focus on the performance metric that really matters to them. Let’s take a look at a few examples that may help clarify what I’m talking about.

Scenario# 1: Conversions

Let’s use the example of “Company A,” a comparison shopping site that is used to seeing a 5% conversion rate on Google. They happen to test on a network and don’t see that same conversion rate and are displeased. However, what they are ultimately going after is not conversion rate.

What they really want is to pay $10 or less for a conversion on their site, which in their case is a purchase. If they look at their campaign buys from this perspective, and work with the network to solve for this metric, they may be successful.

Conversion Scenario 1: Pay 50 cents for traffic on Google and see a 5% conversion rate –- so for every 1,000 clicks (which costs them $500 total), they get 50 conversions. Each conversion costs them $10.

Conversion Scenario 2: Pay 20 cents for traffic on an ad network and see a 2% conversion rate –- so for every 1,000 clicks (which costs them $200 total), they get 20 conversions. Each conversion costs them $10 –- just like on Google.

These scenarios demonstrate that even with a lower conversion rate, if you are paying less for the traffic, you can still achieve your CPA goal. Instead of only looking at the metric that translates to success for them on Google (conversion rate), this advertiser needed to approach their network buy from a different perspective and solve for the metric that would bring them overall ROI success (CPA Goal).

Scenario #2: Traffic

In this example, “Company B” is an agency which, on Google, is used to driving 80% unique visitors to their clients’ sites. For every 1,000 clicks they purchase, they expect to drive 800 unique visitors. When they test on a network, they don’t see that same 80% — it’s far lower and they are displeased.

But what they are ultimately going after is not the percentage, but the actual number of unique visitors. So, if they can work with the network toward that metric goal, they can run successful campaigns for their clients.

Traffic Scenario 1: The company pays 10 cents per click on Google — 1,000 clicks (that drives 80% unique visitors) costs them $100 and from that $100 they drive 800 unique visitors.

Traffic Scenario 2: The company pays 2 cents on a network — 1,000 clicks (that drives, say 30% unique visitors) costs them $20. From these 1,000 clicks they would only get 300 unique visitors.

Now, on first look, for those 1,000 clicks they are not driving the same percentage or actual number of visitors. However, Company B has only spent $20 vs. the $100 they spent on Google.

If they continue running their campaign and spend $100 on the network, driving 30% unique visitors will drive 1,500 unique visitors, which is more than double the number they got from Google.

While this is a fictional scenario, the math is essentially the same when it comes to evaluating non-proprietary networks with some of the more dominant players in the search market.

Advertising on a network is different than advertising on the larger engines. If you don’t understand that going in, you may be confused or frustrated with the results of your non-proprietary campaigns.

However, if you can adjust your perceptions and expectations and focus on what you are trying to acquire with your ad spend, you will see that your campaigns may be just as profitable in the non-proprietary search space as they are on the large engines.

Be on the lookout soon for the final part of this series on the non-proprietary search space, where we will look some of the players in the non-proprietary search market and some of trends we’re seeing in 2010.





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