Paid Placement

By now, you have gotten a taste for the difficulty of revamping your site to garner organic search traffic. Although it pays off handsomely, organic search success takes skill, effort, and time. Paid search seems far easier. Select a keyword, plunk down your credit card, and overnight you have the #1 search position! It can work that wayif you know what you are doing. Let's explore paid placement, the fast (and sometimes easier) method of paying your way to the top.

Paid placement is where the action is, generating nearly $3 billion of ad revenue for search engines just in the United States. Google makes 95 percent of its revenue from paid advertising.

Paid placement has been described as a cross between day trading and direct marketing. Most paid placement requires bidding against other search marketers to win the top spot for your site. Bidding can be intense, changing every second as companies jockey for position. Every word in your listing mattersmaking the difference between an ad that gets clicked and one that does not.

Every search engine displays paid placement results differently, but most search engines distinguish paid placement ads from the organic results (usually calling them sponsored listings) and display them above and to the right of the organic results. Figure 3-5 shows a typical approach to paid placement taken by Yahoo! for a search for "ski equipment."

Figure 3-5. Paid placement results. Yahoo! Search presents paid placement results at the top and right of its results page.

Reproduced with permission of Yahoo! Inc. © 2005 by Yahoo! Inc. YAHOO! and the YAHOO! logo are trademarks of Yahoo! Inc.

Nearly every search engine displays paid placement results, but search marketers only need to place ads with two of themYahoo! and Google. These two companies carry 97 percent of paid placement ads. (As we write this, MSN Search uses Yahoo! paid placement, but it has announced plans to become a third major paid placement vendor, probably by 2006 at the latest.) Table 3-2 shows the full list of paid placement competitors. Each one has different fees and restrictions on the content it accepts, and each one has different search engines that display its results.

Table 3-2. Paid Placement Programs. Google and Yahoo! are the leaders, but there are also other choices for paid placement.

Search Engine	Program	URL	Activation Fee	Content Restrictions	Syndication
Google	AdWords	adwords.google.com	$5	Adult and gambling	Google AOL Ask Jeeves Netscape
Yahoo!	Precision Match	www.overture.com	$50	Adult and gambling	Yahoo! MSN SearchAlta Vista
Espotting Network	Espotting	www.espotting.com	£50	Objectionable and illegal terms	Lycos Europe Dogpile
Kanoodle	Keyword Target	www.kanoodle.com	$50	Objectionable and illegal terms	WebCrawler CNET Search
FindWhat	FindWhat Network	www.findwhat.com	$50	Objectionable and illegal terms	WebCrawler Dogpile

As mentioned, Google and Yahoo! have by far the greatest traffic for paid placement, but other competitors are not giving up. FindWhat and Espotting merged in 2003, with Espotting focusing on Europe and FindWhat on the United States. Espotting, however, remains a distant third to Google and Yahoo! in Europe. Except for the impending arrival of MSN paid placement, there is no real competition to Google and Yahoo! in the Asian paid placement market.

Google and Yahoo! also offer a variant of paid placement known as contextual advertising, where you bid to place ads on the pages of Web sites that have articles about subjects related to your ads. For example, if your company runs a hotel in Philadelphia, you might want to display an ad on a travel site's pages about Philadelphia tourist attractions. Contextual advertising, although appropriate for some search marketers, is not the first place for you to start, so we reserve that discussion until Chapter 14, "Optimize Your Paid Search Program," when we review advanced techniques in paid placement.

By far, the most money is spent on paid placement based on bidding, which is what we concentrate on here. Sophisticated search marketers also use a technique known as fixed placement, where you negotiate for a particular place on a page for a given search query, usually paying for impressions (the number of times your ad is shown), rather than for clicks. Specialty search engines are more likely to offer fixed placement than worldwide search engines. Fixed placement is not the way a rookie search marketer should break inyou need to know what you are doing before you negotiate a long-term, hard-to-change commitment. As you grow in your search marketing experience, however, you might find that some fixed-placement opportunities make sense as part of your overall search marketing plan.

What It Costs

One of the best things about paid placement is that you can control the costs. You can buy as many or as few keywords as you want, and you decide how much you are willing to pay for each click. And you can adjust anything at a moment's notice, so you can control your budget.

As you embark on a paid placement program, here are the kinds of costs to keep your eye on:

• Creative costs. Whether you do it in-house or you hire a consultant or ad agency to do it for you, it costs money to create the titles and descriptions that display onscreen. Remember, the number of searchers who click through to your site depends completely on the killer title and description you write, so this is no place to skimp on the budget. Agencies can usually do three or four new ads an hour, charging anywhere from $50 to $200 an hour to do so.

• Management costs. Tracking and adjusting your bids can be a lot of work, but it is the key to maximizing the return on your paid placement investmentthese campaigns do not run well on autopilot. You also need to keep track of your creative changes and deadlines, reconcile your bills, and verify your clickthroughs. You can hire an ad agency or search consultant to manage your paid placement campaign for you. Conversely, if you manage it in-house, budget at least one full-time person to manage a large campaign consisting of more than a thousand keywords. In addition, you should invest in bid management software or services to automate a lot of manual work.

• Per-impression fee. Usually referred to as CPM (cost per thousandM is the Roman numeral for 1,000), you pay each time your ad displays onscreen, whether a searcher clicks or not. Typically, CPM pricing is used only for fixed-placement advertising, not bid-based advertising, and it varies from $10 to $30 per thousand impressions (or about 1¢ to 3¢ per single impression).

• Per-click fee. Often called CPC (cost per click), it just means that each time a searcher clicks your advertisement, the search engine charges you a fee. Typically, you open an account for a set amount and start bidding for placement. Whenever a searcher clicks your ad, the current bid (per-click) fee is deducted from your account, with your ad disappearing if your account reaches zero. CPC prices range from about 10¢ (usually the lowest bid allowed) to $30 or sometimes more, with the average around $1.

• Per-action fee. Also known as CPA (cost per action), you pay only when the searcher takes "action"typically a purchase of your product. In practice, CPA pricing is used mainly for fixed placement or shopping searches, not bid-based advertising, and runs anywhere from $5 to $50.

CPM, CPC, and CPA fees are usually mutually exclusiveyou pay only one of them on any particular deal. Table 3-3 shows what a paid search campaign might cost when priced according to each method. Some advertisers prefer one method over another, but there is no surefire way to pay less on a consistent basisit all depends on how many searches, clickthroughs, and purchases there are.

Table 3-3. Comparing Pricing Formulas (What you pay depends on the activity multiplied by the rate, but no magical method will always save money.)

Method	Searches	Clicks	Actions	Rate	Total Cost
CPM	1,000,000			1¢ per impression	$10,000
CPC		50,000		20¢ per click	$10,000
CPA			1,000	$10 per action	$10,000

Every pricing method has advantages and disadvantages. Chapter 14 reviews paid search strategies in more detail, and provides examples to help you choose the best option for your objectives.

MANAGING YOUR BIDS WITHOUT GOING CRAZY

As easy as it can seem to get started with paid placement, you will find that it takes some work to manage the bids in multiple search engines for hundreds (sometimes thousands) of keywords. If you do not carefully monitor your campaign, you will find that you are being outbid (and losing traffic) or that you are paying more than you need to. Unfortunately, monitoring your bids can be labor-intensive, especially in hyperactive markets where others are constantly monitoring and adjusting their bids.

If you are willing to pay 45¢ per click, but you see that the high bidder is paying just 20¢ each, you can bid 21¢ and snag the top spot. Now you have the top spot, and you are paying well under your budgeted maximum. It is critically important that you continue to monitor, however, because your competitor (or someone else) could bid 22¢ and you will lose the top spot. If you are monitoring, you can keep raising your bid to stay #1 until you hit your limit of 45¢.

You might be able to remain at #1 without monitoring for quite a while if you just bid 45¢ right off the bat. But if the next bid is 20¢, you are wasting 24¢ on each click, because you would get the same #1 position for 21¢. That 24¢ is known as a bid gap. You want to eliminate bid gaps as soon as they appearmost paid placement engines do this for you automatically.

You need to monitor your bids frequently to make sure that you maintain your position, do not exceed your limit, and eliminate bid gaps as soon as they appear. Otherwise, you could use bid management software.

Every paid placement program provides a way to automate your bidding. You can set "caps" for your bids (45¢ in our example), set intervals for how frequently your position is assessed, choose the rules for how bids are modifiedall without having to personally check constantly. If you use only one paid placement program, you can use the free bid management tool that is part of the program. (Figure 3-6 shows Yahoo!'s.) If you use multiple programs, you might be better off paying for a bid management tool that can manage your campaigns across all of your paid placement programs. We examine some of the more popular bid management tools in Chapter 14.

Figure 3-6. Sample bid management tool. Yahoo!'s bid management tool offers many options for managing your paid placement bids

Reproduced with permission of Yahoo! Inc. © 2005 by Yahoo! Inc. YAHOO! and the YAHOO! logo are trademarks of Yahoo! Inc.

The Benefits and Challenges

Paid placement offers a proven way to attract visitors to your Web site, but put that credit card away for a minute. For all of the benefits of paid placement, you can quickly burn through your budget, getting few sales, if you are not careful. Managed well, paid placement is an indispensable part of a search marketing plan for lots of reasonsif you know what you are doing.

Highly Qualified Visitors Will Come to Your Site

Just as with organic search, paid placement attracts visitors who are already interested in what your site does. If they weren't, they would not have been searching in the first place. So it makes sense that searchers who click paid placement listings are more likely to buy than visitors arriving at your site from clicking a banner ad or directory listing, for example. But paid placement listings get lower clickthrough than organic search, and searchers say that they trust them less, so organic search might still have the edge in converting searchers into buyers.

Paid placement provides near-total control over what your listing says, allowing you to further qualify searchers so that only the "right" ones click through. In organic search, although you can pick your page's title, the snippet that appears below the title is chosen by the search engine from the words that appear on your page. Paid placement allows you to choose the exact words that appearyou can tune them again and again until you maximize clickthrough and sales.

Remember, however, that the search engines are only paid for clicks, so if you have a great ad that relatively few people click (but you are pleased with your sales), the search engines might not be happy. If your listings are not getting enough clicks, you will get a notice that they will be dropped for poor performance. At that point, you must make changes to your ad to try to increase the clicks.

CASE STUDY: THE RIGHT TITLES AND DESCRIPTIONS QUALIFY YOUR CUSTOMERS

A large insurance company launched a paid placement program to boost sales for discounted auto insurance that it marketed through a senior citizens organization. The campaign started simply enough, as they bought the typical keywords you would expect, such as auto insurance and low-cost car insurance.

As they analyzed the performance of the campaign, they found they were getting high clickthrough (yea!) and low sales (boo!)the worst possible situation. They paid for every click but got next-to-no revenue in return. They wondered whether their experiment with paid placement would end in failure.

But just then, someone noticed what everyone else had overlooked. The auto insurance they were selling required customers to be 55 or older to apply. Quickly, they changed their ad copy to say, "Over 55? Looking for auto insurance? Apply now!"

The turnaround was immediate. The clickthrough rate dropped dramatically, but that was okay because nearly all of those clicking now were older than 55 and thus eligible to apply. And apply they did. Now that the right people were clicking, they were far more likely to apply.

The campaign that was almost cancelled went on to score a huge success, all because the changed ad copy drew clicks from only the most qualified customers.

You See Immediate Results

The biggest difference between paid placement advertising and organic search is that paid placements offer near instantaneous traffic to your site. You can launch a campaign immediately by paying your money, writing your ads, and bidding your way to the top of the paid resultsall without changing a line of code on your Web site. And you can constantly fine-tune your ad copy and keyword purchases to further improve your clickthrough rate and sales. Organic search, in contrast, takes much longer to kick in, and much longer to fine-tune, because spiders take a while to revisit your site each time you make a change.

It Is Inexpensive to Get Started

Getting started in paid placement usually costs less than most other forms of search marketing. You do not have to make expensive changes to your site nor do you have to negotiate long-term deals with search engines. For as little as $50 and a credit card, you can open a paid placement account.

But you need to get near the top of paid placement listings for popular queries to get heavy traffic. Only the top few ads are syndicated to the other partnersso top paid results in Google are shown in Ask Jeeves, too, but lower-ranking ads are not. Typically, the top four ads are shown on the first results page, followed by the next set of four on each subsequent page until all the ads have been displayed. So every searcher sees the top ads, but only the few searchers that page forward see the others.

And, as you will see in Chapter 11, popular queries have a lot of competition. Although some keywords generate high traffic with low per-click fees, most high-traffic keywords require high-priced bids. You can easily burn through your budget if you are not careful. Blindly raising your bids to stay #1 can end up costing you more than the traffic is worth.

KEYWORD BATTLES: HOW TO BLOW YOUR BUDGET IN ONE EASY LESSON

Because paid placement has increased in popularity among search marketers, it is rare to find a popular keyword phrase without any bidders. It is also increasingly likely that bidders are using bid management software to control constant changes to their bids to maintain their place as #1, for example.

When two or more sites decide to be #1 for a particular keyword, a keyword battle ensues. Each time one site raises its bid, another increases its bid to leapfrog the original site. Unless one side eventually reaches their bid limit, the bidding can escalate dramatically. That's good for the search engines, but not for search marketers.

Sometimes these battles are fought intentionally, with each side consciously raising its bids, but all too often the battle is a mistake. The typical keyword battle arises between two sites with bid management software instructed to always be #1 for that keyword. As you might expect, neither site's software can succeed at being #1 for longjust the length of time in between bids. In this situation, the dueling software keeps bidding higher until one side exhausts its budget, usually within a couple of days.

It does not have to be that way. When you set up your bid management software, you can still request that it be #1, but also set a limit of the highest bid you are willing to pay. That way, your bid management system stops escalating its bid when it reaches the limit you set, defusing the battle, and saving your budget for opportunities with higher return on your investment.

You Pay Only for Visits to Your Site

Many advertisers prefer paid placement's fee structureyou pay only when searchers click your ad, not when they view your ad. With banner ads and other types of paid advertising, you are charged for impressionsyou pay every time your ad is shown.

But you must be on the alert for click fraudsomeone clicking your link expressly to charge your account, but having no intention to buy. Although search engines have sophisticated tools to detect click fraud, unscrupulous competitors of yours could engage in this unethical activity.

Pay attention to any suspicious click patterns, such as clicks increasing dramatically for just a couple of queries, with no commensurate increase in sales. Monitor discussion boards to see whether competitors are encouraging readers to click your listing without any real interest. If you suspect click fraud on your account, contact the search engine immediatelythey will provide free clicks to you to make up for it.

You Can Target Your Audience

Because paid placement offers tight control over the keywords you buy and the exact wording of your listing, you can create highly targeted ads that cannot be duplicated in organic search campaigns. In organic search, the same page might be found for many different queries and might not be optimized for each kind of searcherwith paid placement, each ad can be chosen especially for searchers entering an exact query.

Paid placement also helps you reach large audiences, because ads are syndicated across many different search engines. However, sometimes this can be a problem. You might be happy with the policies of Yahoo! and Google, but you might be embarrassed over what content is on the same page as your listing on one of their syndication partner sitesthey might have much looser policies on controversial content. You cannot control which partner sites might show your ads, except to opt out of syndication to all partners, which can cut your traffic substantially. (Many image-conscious companies do opt out, despite the loss of traffic.)

The newest way to target more granular audiences is through a technique called local searchdisplaying your ad to visitors from a particular city or region. Prior to the advent of local search, businesses with natural geographic boundaries had no way to effectively use paid placement. Small businesses, such as plumbers, would be throwing money away to buy a keyword such as stopped drain because anyone in the world could be searching. But medium-to-large businesses suffered, too. A retail chain that dominates several states had no way of using paid search because it was not cost-efficient to pay for searchers throughout the United States.

Local search has changed all that. Slowly growing at about 15 percent a year, local search appeals to the same kinds of advertisers that currently buy printed Yellow Pages ads: doctors, lawyers, retailers, travel agents, contractors, and many others.

The major search engines (Google, Yahoo! Search, and Ask Jeeves) and some traditional Yellow Pages publishers (Verizon and SBC) offer local search. Each local search engine has different capabilities, with most based on Zip codes, cities, or other geographic information in queries. Yahoo! integrates its Yellow Pages and White Pages content into its mapping data to offer local results, and Ask Jeeves partners with CitySearch (www.citysearch.com) for similar function. Some paid placement engines even analyze the location of a searcher's computer on the Internet (its IP address) to guess where the searcher is physically located, to provide geographic targeting when searchers do not even tell the search engine their physical location.

Yahoo! (local.yahoo.com and yp.yahoo.com) and Verizon's SuperPages (www.superpages.com) are the current leaders in local search, with Verizon drawing 16 million visitors per month and Yahoo! attracting several times that. Verizon claims that more than 80 percent of its searchers contact an advertiser, and half say they are likely to make a purchase. We take a closer look at local search engines in Chapter 14.

How to Get Started

There's nothing tough about getting started in paid placement. Table 3-1 listed the URLs for you to visit to fill out your sign-up formall you need is a credit card and an Excel file with your target keywords, your listings, and the URLs searchers should go to when they click your ad. Following a review by the search engine (lasting one to five days), your ads are approved and you can start bidding.

Occasionally, a listing is rejected after review. Each search engine sets its own policies, but most shy away from controversial content, which varies based on local laws and customs. (In Germany, for example, it is illegal to advertise any religious Web sites.)

Search engines are becoming more careful about the copy they allow in advertising. Although one of the great things about paid placement is the control you have over the wording of your listing, search engines must ensure that their searchers are not misled by exciting offers leading to less-than-scintillating Web pages. Reviewers are becoming sticklers for your offer matching what is on your Web page, so make sure that your ad is consistent with the URL on your site to which it leads. If you do not, your campaign might be delayed during your wrangling with the paid placement editors.