The Internet Advertising Bureau have just released the latest half yearly figures on Internet advertising expenditure in the UK for 2007. Once again, online advertising spend shows amazing growth, up over 41% on the first half year results for 2006, to a value of £1,334.3m.
In the ever more creative and ambitious world of the email scammer, a new email targeting Google AdWords accounts has recently come to light which advertisers need to be aware of, plus a new version of Microsoft’s software updates email is also being circulated with a link to a virus.
Last month we looked at a number of new reports that have recently been added to the Google AdWords reports centre. This month we review two additional reports that are now available which can help provide more detailed analysis of your PPC campaigns.
Last month Yahoo! announced the launch of their new ‘Smart Ads’ programme, which enables advertisers to fine tune the delivery of banner adverts to a particular audience, based on their known interests and preferences.
Google has recently been adding new options within the reporting function on the AdWords PPC system that can help advertisers achieve different insights into the way their campaigns are performing.
Search engine marketing may be considered by some to just be about search engine rankings and search referral traffic. However, any true search engine marketing campaign is ultimately about increasing business enquiries from search, which means that the conversion rate from a website or business process also plays a key role, as does the impact of competitor websites.
Pay-per-click advertising (PPC) has become a marketing phenomenon with exceptional growth in spend being reported over the last 4 years. Many web businesses are now using this method of search marketing as a primary source of business, but with increasing competition within many market sectors, what are the implications for the future?
PPC advertising was first developed at the end of the 1990’s as GoTo, having a limited circulation and no shortage of criticism as being too commercial within the field of Internet search. This early PPC model rebranded as Overture in 2001, by which time Google had also launched its AdWords product and it has been this tool that has driven the growth in this market (and Google’s revenues) over recent years.
PPC has been so successful because it has focused the power of search engine traffic into a controlled advertising model. We’ve compared the strengths and weaknesses of PPC v SEO, but a key advantage of PPC is that companies can easily achieve visibility on search engines, whatever their site design or optimisation may be like, and it can create highly relevant and cost-effective traffic for them within 24 hours. The ‘pull’ method of advertising means that people will find a company or product when they are actively looking for them, rather than the traditional offline advertising that ‘pushes’ a message out to a broad market using TV, press or radio.
This use of search can be so cost-effective and measurable that companies are now falling over (or, perhaps more correctly, out bidding) each other to get rankings through sponsored results. Consequently the average cost per click has been increasing over the last few years due to the increasing competitiveness of many market sectors, so that the huge success of PPC advertising is also now beginning to create barriers for many.
The entry costs for a PPC campaign are now becoming higher and many larger companies are now entering the PPC market to dominate rankings with higher bid levels, both to drive traffic and develop their brand, as well as to push competitors down the rankings. This process will begin to shut out those companies with smaller budgets, although there are still many ways to make this form of advertising successful.
Eventually PPC advertising will achieve a natural economic balance and advertisers will need to ensure that their websites convert visitors at a better rate to continue to achieve the best ROI (return on investment). There are some signs of a move back to search engine optimisation as a strong alternative to PPC costs, although we recommend a balance of both techniques to achieve the best opportunities for search traffic.
To find out more about the highly cost-effective business opportunities that still exist for many companies using PPC advertising, contact us for details.
With the average cost of PPC advertising continuing to rise in many markets as new campaigns are added by companies that also recognise the advantages of this activity, then conversion costs can also rise and so reduce your return on investment. This means that every visit has to count and sales conversion rates need to improve.
We reported last August about the introduction of a Quality Score measure by Google AdWords, which was designed to make advertisers gain from the relevancy of their adverts. Google has now taken another step forward by displaying the Quality Score within the AdWords control panel.
What do we see happening this year? Here are our 5 predictions for 2007.
1) A growing emphasis on site conversion: since search engine marketing has now gained a level of popularity that is making it much more competitive, both in terms of achieving ‘natural’ rankings and the average cost per click from pay-per-click advertising rising, there will be greater importance placed on converting visitors to a site into an enquiry or sale, so that the ROI (return on investment) for business websites can be maintained or improved. This will encompass many elements, from the site’s usability, to the effectiveness of copy and images, the checkout process for e-commerce sites, plus the response time and quality once contact is made.
2) Search marketing becomes a core discipline: the other main aspect from the growth of search marketing as a significant area of advertising spend is that it is no longer a niche sector but a significant consideration for inclusion in any website marketing plan. This will be reflected in new jobs and departments being established in mainstream agencies and large companies who want to develop this area, but will also be reflected in a growing skills shortage, leading to more training courses and demand for skilled staff who have a broad experience in this market.
3) Local search gains prominence: the advances in local search opportunities by Google, Yahoo! and MSN will offer small businesses the chance to use search marketing effectively to reach their specific catchment areas. It will create an alternative to more traditional forms of local advertising as more people also use local search on the web to find businesses or other suppliers for their immediate needs. The technology for targeting local search traffic will improve and give smaller companies better alternatives to reach their audience.
4) The question of click fraud is tackled: one of the biggest issues for the pay-per-click providers and advertisers is the question of click fraud, whereby advertisers are maliciously targeted to increase their spend levels from irrelevant click activity. There will be increasing clamour to resolve this issue and although it can’t be stamped out entirely, the main players like Google and Yahoo! will introduce tighter controls to identify and combat this practice, despite remaining secretive about their methods.
5) Social networks become a new marketing challenge: the dramatic growth in social networks like MySpace and Bebo in 2006 was a significant new trend, with MySpace reportedly becoming the most visited US website by the end of the year, overtaking Yahoo!’s long-established top position. Other ‘virtual world’ sites like Second Life indicate the trend towards the web being used as a social interactive tool and one that marketers will begin to target more aggressively. However, the nature of these sites mean that marketing techniques will need to be more creative to reach these target audiences as the wrong strategy can quickly turn into negative publicity.
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