ADOTAS – As we prepare for the upcoming Q2 2012 earnings call from Google, now is an interesting time to examine recent pay-per-click (PPC) reports that highlight some search engine marketing (SEM) trends that have recently emerged. In particular, many search marketers are successfully reducing cost per click (CPCs) and boosting click-through rates (CTRs).
Although increased search clicks from tablet and mobile and growing international spend have reduced average CPCs, recent figures also signal increasing adoption of Exact and Phrase Match strategies. Abandoning broad match and serving better-focused ads with a more extensive keyword portfolio not only benefits searchers — it also rewards marketers with improved efficiencies, and those still using the Broad Match crutch will be happy to know that new and easier methods to embrace exact match have emerged.
Dissecting the Shift
The Interactive Advertising Bureau’s (IAB) “2011 Internet Advertising Revenue Report,” released in April of this year, reported that paid search revenues grew almost 27 percent year over year, and the channel increased its share of total online spend to 46.5 percent. Paid search now accounts for more than double the revenues of the second largest channel, display banner ads (21.5 percent of total online ad spend). Although there has recently been renewed interest in display, growth in search spend illustrates that marketers continue to find tremendous value in paid search, particularly in light of falling CPCs.
As we anxiously await the new data from Google, we know that according to a Marin Software report, in Q1 of this year the search giant accounted for 82 percent of paid clicks and 81 percent of spend in the U.S. search market. Google also stated on its Q1 call that average CPC decreased 12 percent compared to Q1 2011, while aggregate clicks increased 39 percent year over year. Patrick Pichette, Google’s CFO, highlighted a couple of the numerous causes for these shifts, namely increased mobile spend, a shift in spend to less expensive emerging markets and an increase in ad quality. Pichette also acknowledged the nebulous nature of the trend, stating the change was caused by a “complex set of dynamics with multiple variables at play.”
One of the variables appears to be marketers themselves, who are increasingly abandoning the wasteful ease of Broad Match and adopting more restrictive and effective Exact and Phrase match types. Matt Lawson, vice president of marketing at Marin Software, commented, “Refining match types from Broad to Phrase or Exact increases relevance and click-through rates for keywords, thus improving quality scores and lowering costs.”
Lawson cited data to elucidate the point: “In the past year, search marketers have increased their use of Exact Match, growing their click-share by 4 percent while increasing share of ad spend by 1 percent.” Based on quantifiable success, marketers are shifting away from Broad Match to less competitive and more relevant match types.
Further confirmation of the benefits of employing Exact Match was offered by Michael McMeekin, director of search strategy at Yahoo!. In a presentation at SES New York in March, McMeekin stated that Exact Match consistently achieves better ranking and pricing performance then other match types — up to 34 percent less expensive for the same rank and 17 percent less expensive for higher rank.
How to Quickly Kick the Broad Match Habit
To leverage opportunities for lower CPCs and higher CTRs, marketers should increase their search budgets and scale their campaigns. This can be achieved, while avoiding broad match, through extensive and careful keyword expansion. The traditional method of keyword discovery is to comb through search query reports from broad match campaigns, identify high performance queries, switch those queries to exact and phrase match, and add poor performers as negative keywords. This process is highly inefficient and can hemorrhage money due to irrelevant clicks, not to mention the time it takes to identify the high performing relevant searches.
Consider the keyword “truck.” In the database managed by my company, Zenya, this keyword is associated with more than 1 million broad match keywords, but when these results are filtered down to only cover the vehicles vertical, the results drop to approximately 685,0000. The other 315,000 truck keywords come from categories that include towing, racing, jobs, insurance, batteries, inspection, loans and toys, to name a few, illustrating the inefficiencies of broad match and the enormity of the task to create comprehensive, yet never completed, negative lists.
Marketers are becoming better and more disciplined at campaign optimization and transitioning campaigns to Exact and Phrase Match. The aim now is to scale this success with effective campaign expansion. It’s time to efficiently build out targeted keyword lists, forget about negatives, and start improving ROI.