Re: Pay-per-click placings

From: Steve Harrison <merlin_at_paypermaster.com>
Date: Thu 09 Aug 2001 13:30:14 -0500

BRETT PITTAM <brett.pittam_at_btclick.com> WROTE:

>I would be interested in hearing from anyone who has an
>opinion on whether it is absolutely necessary to buy No.1
>position or whether No.s 2 & 3 have equal merits because
>of people's online behaviour...


Brett Pittam raises an important question regarding
bidded placement in PPC search engines:
  "...whether it is absolutely necessary to buy No.1
   position or whether No.s 2 & 3 have equal merits..."

Don't know about the merits being equal, Brett, but it
has been our experience to note several variables that
can pose a strong argument against the presumption
that #1 is always best.

First among those variables would be to consider how
much #1 is going to cost. As GoTo is the matriarch (the
muhtha) of all PPCs, and due to their minimum nickel bid
policy, the #1 slot in GoTo is going to be more
expensive than with nearly all the "junior" PPCs. Thus,
it'll require more careful calculation as to whether
your web site is turning a high enough CR (conversion
rate) to justify it.

Recommend calculating your site's "bid cap" to know
rather than to hip-shoot it. In most of the junior PPCs,
top 3 positioning can still be had for under GoTo's
minimum bid, so if your site's CR is decent (say, over
2%), and there's enough profit margin in what is being
sold there, then it might be a good advertising buy.
Recommend doing the math to see if #1, 2 or 3 would
deliver a good ROI, and to not succumb to the Siren's
Song allure of being Numbah Wun. Thy advertising budget
might be dashed upon the rocks.

Another "problem" (curel hoax?) with being #1 in GoTo
is that phenomenon known as "partnering." When GoTo
first announced that their top 3 listings would now be
appearing at the top of AOL Search, Netscape Search
(top 2), Alta Vista, Hot Bot, Lycos, and scads of meta
search engines, we noticed two almost immediate effects
on our top 3 listings.

The first thing we noticed was a grand surge of
click-thrus. GREAT! Now we're getting all sorts of
traffic via GoTo... but wait... they aren't buying.

In short, and especially regarding GoTo, those top 3
listings were now getting extraordinarily compounded
exposure in all these giant portal and search sites.
And therein lies the rub. The relatively "targeted"
traffic we had come to know and love from GoTo had
suddenly been considerably diluted by a much more
"general audience" traffic. The traffic count spiked
upward -- the CR dropped like a streamlined safe.

Typically, the click-thrus coming from within GoTo
itself are people (shoppers) who searched GoTo knowing
that it's mostly merchants and other commercial
ventures in there. Who else would pay to be listed,
and pay the most to be listed first? Not so with the
GoTo listing showing-up elsewhere, especially since
most of those partner sites deliver search returns
labeled "Partner" or "Sponsored" listings that don't
even show the bid amount. Quite apparently, the
potential for idle curiosity and other less profitable
clicks had enjoyed equal compounding. Our ROI returned
to more livable numbers (albeit at lower traffic
totals) when we backed our bids down to secure
position #4.

Then there's always the question of whether the one
you'd contemplate out-bidding for the #1 slot is even
a competitor. Let's say I'm selling bowling balls
(hypothetical). The #1 position is already held at
$2.00 by an advertiser who is selling bowling shirts,
#2 is at $1.99 and is selling only bowling pins, and
the #3 position is available for $0.05 (I've seen
larger bid gaps). Why spend $1.96 per click-thru more
than necessary to out-bid someone who isn't even in
your same bowling league? [groan]

Ideally, I only want to pay for visitors who are
looking for bowling balls, and those who are looking
for bowling balls will drill down past #1 and #2
until the description fits -- me -- at cheap little
ol' #3.

That's only the tip of the iceberg for what we've
learned about "the myth of being #1," Brett. And we'd
certainly agree that it's a question worth considering,
and calculating, and weighing those and other variables.

When it comes to reaping a good ROI,
   there's more to bidding than meets the eye.
  -- Edgar Allen PPC

Apologies for all the verbiage and bad poetry, but
that question is a truly complex and serious can of
worms. Good question -- partial answer/opinion.

Profitable PPCing, all;

Steve Harrison ~ Pay-Per Master
http://www.paypermaster.com
Home of the free Bid Cap Calculator
merlin_at_paypermaster.com



Received on Thu Aug 09 2001 - 13:30:14 CDT