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How Search Distribution Networks Affects Conversion Rates

Page history last edited by PBworks 13 years, 9 months ago

How Search Distribution Networks Affect Conversion Rates

by Tim Daly, Friday, December 8, 2006

 

WITHOUT A DOUBT, GOOGLE SPEARHEADED the idea of "relevancy," and both Google and Yahoo helped the search channel explode. They did this by providing measurable and effective results through their systems and approaches. However, BusinessWeek's recent cover story about click fraud revealed the dark side of paid search advertising and the inherent risks with content and search distribution networks. While some networks increase reach and relevancy as well as deliver qualified traffic to advertisers, there are many that just disseminate others' content and ads for profit.

 

The solution may lie with Google and Yahoo being more upfront to advertisers about their partners and how they generate impressions to their paid search listings. If not, advertisers will see ever-decreasing ROI from less than terrific distribution networks-- which will ultimately negatively impact the amount of money being spent in the channel.

 

While fraud exists on several levels--and we know the search engines are looking into this very seriously--there are critical questions surrounding which partner sites are running the ads and the conversion difference between them, as well as between the major engines.

 

The only scientific way to identify Yahoo and Google's partners (currently MSN doesn't use a distribution network) is to review the latest Weblogs for referring URL details. This tells us just where the ads run. Although as many as 15% to 20% of the log lines now contain null data due to manipulations by the distribution partners depending on the search engine provider, some good data is available and we can classify the engines' partners as follows:

 

Preferred Search Engine Distributors--these are prime sites with good-quality traffic that have developed unique organic search algorithms or a unique viewing audience that delivers a genuine search query.

 

Unique Content Distributors--these are also good sites with good traffic, which have created a true business model and developed a unique base of content in-house.

 

Pure Search Arbitragers--these Web sites are the rotten apples, with no unique content and no loyal audience, serving no purpose other than to disseminate others' content and ads for profit.

 

Each of these groupings delivers significantly different conversion results. Advertisers that employ Weblog analysis tools can uncover the hidden truths, but for those who cannot afford these tools, below are some typical findings we see for advertisers:

 

  • Preferred Search Engine Distributors generate conversion rates 80% to 100% that of consumers searching directly on Google and Yahoo.

 

  • Unique Content Distributors generate conversion rates 25% to 70% that of Google and Yahoo. This wider and significantly lower range is due to their recently increased search arbitrage activities.

 

  • Pure Search Arbitragers generate conversion rates 0% to 10% that of Google and Yahoo. These distribution partners deliver little to no qualified traffic to sites and have a significant negative impact on conversion rates.

 

An analysis of the ROI from search distribution network partners for a particular e-commerce company revealed shocking numbers. The top-line findings were:

 

 

  • 60% of the traffic came from Yahoo, Google and MSN; 15% from Preferred; 6% from Unique Content; and 19% from Search Arbitragers.

 

  • 77% of the sales came from Yahoo, Google and MSN; 17% from Preferred; 5% from Unique Content; and 1% from Search Arbitragers.

 

Obviously, paying a premium for the search arbitrage traffic didn't return the desired ROI.

 

Kudos to Google for letting marketers opt-in to these networks. The next move should be to go a step further and allow marketers to choose which search distribution partners they want to advertise on. Marketers should also be able to apply different CPCs on a network-level basis. Running an ad just on AOL, for example--only at a slightly lower CPC--should be an option.

 

Currently, to advertise directly on Yahoo, marketers have to accept its entire distribution network. This should be optional--and marketers should not have to wait until Project Panama is launched.

 

In closing, for all of us in the business, the collective interest lies in ensuring the viability and growth of the category. A good start would be for Yahoo and Google to work with us and acknowledge the names and the sites of their search distribution partners. While the loopholes in the system will make it a challenge, the concern over click fraud should be viewed seriously and lead to action resulting in money being spent more efficiently. For isn't that the goal of all advertising?

 

Tim Daly is senior vice president, marketing and strategy, at SendTec Inc.

 

(Reprinted from Search Insider)

 

 

 

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