ADOTAS – For many companies, Google’s new AdWords Enhanced Campaigns is making paid search more expensive. At the same time, Real Time Bidding (RTB) display advertising systems give you the ability to “peek into” who you’re buying. The result is that display advertising can be bought and measured as a performance-based business model much like search.
AdWords Enhanced Campaigns is Google’s response to the huge shift of search queries to mobile devices. Google has now decided to treat searches from computers (desktop/laptop) and tablets the same. In practice, this means that if your conversion rate for tablets is less than that for computers, you’re essentially paying more. Adobe performed an analysis of nearly 100 U.S. advertisers and reported a 6% increase in cost per click due to Enhanced Search.
The addiction to search advertising comes from a belief that you reach consumers in a specific context (such as their search query or keywords) at a moment in their buying process (such as their research, shopping, purchase) that is made apparent by the search term. What you can’t do is add more intelligence by using data and profiles you have to add efficiency to the purchase.
Using RTB for online display advertising, you can look at cookies plus your data and profiles before you decide to buy an impression. This is an incredible way to access data such as purchase history, loyalty program status, prior ads served, previous site visit history, and infinite numbers of testing regimes to determine the real value of the impression to you. Knowing about a customer before deciding to show them an ad can have a dramatic impact on ROI. The arithmetic is clear and compelling.
What is the average cost per click you’re paying? It’s probably around the average of $2 for many travel key words. For $2, you can generally buy 400 display banner exposures (based on a $5 CPM).
Assuming you’re a hotel, which strategy would yield more bookings? Is the best strategy to purchase a single click from a consumer who typed “cheap Denver hotel” into Google, or would you rather show ten display ads each to forty consumers who have all just purchased airline tickets to Denver? Perhaps half of that group even visited your hotel site in the past 48 hours but didn’t convert. Which of these works best for your campaign?
There are no easy answers, but there are ways to get to better outcomes. In Advertising Analytics 2.0 (Harvard Business Review, March 2013), Wes Nichols suggests “attribution, optimization and allocation” as a framework for understanding how to execute your online advertising. He discusses that attribution modeling is needed to analyze your data across all online channels and help you figure out what’s really driving business. If you do not yet have an attribution partner, Adometry and Visual IQ are the current leaders in the space. An attribution model based on your own data will give you insight into how to balance channels. You need to be sure that the inputs into your attribution model give you actionable ways to execute the findings. With search, you should perform the analysis by keyword segments and by brand terms versus non-brand terms. For display, you must understand the impact of retargeting your site visitors and optimize your investments accordingly.
As you understand what drives your business, you should apply real world pressure against it. Nichols calls this optimization “war gaming.” What’s important is to test strategies and document the results so that you understand how channels interact with each other. For example, if you put an exclusive offer into the OTA channel, how does that affect booking on your own web site?
Once you have visibility into what is driving business (attribution) and how to pull levers to manage the results (optimization), allocate your budget accordingly. Make monitoring your model part of your normal business process and adjust your attribution regularly to account for seasonality, changes in the market and changes in technology.
You need to hold channels accountable, while understanding their relationships. An attribution model will only be as good as the data it sees. Include actual closed revenue, rather than just the revenue captured during the initial web transaction, in your analysis to ensure you don’t favor sources that over-promise and under-deliver.
By not putting all your apples into the same basket, there is significant opportunity to drive revenue more effectively and make your marketing more transparent. Many travel companies over allocate budget to paid search because they think it is more effective than display banners. That’s just not the case anymore.