Web Search & Marketing Newsletter - April 2010

Welcome to the latest issue of our monthly newsletter which looks at some of the latest news and developments in the web search and marketing field.

This month we look at the latest figures published by the Australian Internet Advertising Bureau which show a further growth in spend in 2009 - with a 9% year-on-year increase - demonstrating that this form of advertising continues to grow in popularity despite the impact of the global financial crisis on most other forms of advertising.

We also look at Google's new AdWords Search Funnels reports and how these can be used to analyse conversions more closely than was previously possible through AdWords. Finally in this issue, we review how Google won a legal battle in Europe over AdWords trademark issues and how this could affect advertisers that are using trademarks in their search engine advertising campaigns.

You can read more below, or you can also browse through previous editions of the newsletter, either by month or by subject . We are also reporting the main news stories during each month in our regular web marketing blog or you can get the latest updates by following our Twitter account.

On to this month's edition...

Online advertising sees further growth in 2009

Recent figures published by the Internet Advertising Bureau (IAB) in Australia show that the online advertising sector continued to buck the trend seen by the wider advertising market and recorded further healthy growth in 2009, with a 9% year-on-year increase to record a total spend of $1.87bn to the end of December.

The results from the quarterly Online Advertising Expenditure Report (OAER), compiled by PricewaterhouseCoopers (PwC), also showed that for the three months ended 31 December 2009, the total expenditure was $513m - the largest fourth-quarter recorded and an increase of $50.5m, or 10.9% from the fourth-quarter of 2008.

The IAB says that the continued growth of online advertising expenditure comes at a time when the total advertising industry is expecting a decline of up to $900m in the Australian marketplace for 2009 due to the impact of the global financial crisis. This shows that many companies are not cutting back so much on their online marketing spend as in other areas, or that new companies are starting to use online advertising in some form.

The general display advertising and search sectors both performed well for the full year, with search and directories advertising accounting for just short of $1bn or 50.5% of total expenditure, representing a growth of 17% year on year. This is mostly comprised of Google AdWords expenditure, which dominates this category and although Google doesn't release their figures, the estimate is based on the same formula used by PwC in their regular surveys.

Spend on display advertising also grew in the year, up by 7.2% and it accounted for almost $500m or 26.6% of the total expenditure for the 12 months. However, classified advertising is the one sector that continued to lose share and saw a slight decline of 2.3% year on year, accounting for 22.9% of total expenditure for the year.

Within the general display figures, email based advertising comprised $9.3m of advertising expenditure for the last quarter, up from $7.9m in the previous quarter. Video based advertising increased its share of advertising expenditure from $4.7m to $5.3m for the same period.

Little change was reported in the pricing methods for online advertising expenditure, with the Direct Response pricing method comprising 26% in General Display advertising and CPM 74%. CPM pricing is based on a straight Cost per Thousand pricing methodology, sponsorship, or CPM-like Pricing, while direct response based pricing is based on a non-CPM display methodology. This may include any pay per click, pay per sale, pay per action or pay per lead.

If you'd like to know more about these figures, or how online advertising could improve your business, please contact us now.

Google launches AdWords Search Funnels

At the end of March, Google announced the launch of AdWords Search Funnels, a new series of reports made available to advertisers that provide a greater insight into the ad click and impression behaviour on Google that leads up to a final conversion – such as a sale, contact enquiry or newsletter signup.

The new Search Funnels reports are being rolled out to AdWords accounts over the next month or so and are more detailed than the information previously shown about a conversion, which just mentioned the details about the last search term and advert used before the conversion occurred. Now advertisers can see when customers perform multiple searches before finally converting and also show the full picture by giving an insight into the ads customers interact with during their shopping process. With more advertisers trying to track the 'attribution' of a final action, Google is adding a new level of data to try to explain this process.

Google is tracking activity by searcher over a 30 day period, so that it can link previous activity to an eventual conversion. Using a similar report format to Google Analytics, the following reports are now being made available to AdWords advertisers:

• Overview – shows the total conversions; average days to conversion; average ad clicks to conversion; and average ad impressions to conversion
• Top Conversions – gives the number of conversions for each particular conversion type and the value of those conversions (if being tracked)

Sources Analysis

• Assist Clicks and Impressions – shows results based on the number of assisting clicks and impressions, as well as those just from the last click. This means that the keyword was clicked upon, or the impression was shown, on the path to a conversion, but wasn't necessarily the last click or impression that resulted in a conversion.
• Assist/Last ratios – helps to identify keywords that might be more valuable than they appear from a last click perspective, i.e. they might have been instrumental in getting the conversion, but wouldn't otherwise get the credit they deserve, as they weren't the last click. The best way to confirm the assist value of a keyword is by testing it to see if increased bid levels yield improved ROI.
• Assisted Conversions – as above, but performance based on the number of assisted conversions.
• The difference between Assist Clicks vs. Click-Assisted Conversions - the easiest way to understand this is via an example. For a conversion path like: keyword 1 (clicked) > keyword 1 (clicked) > keyword 2 (clicked) > conversion
  keyword 1 would earn 2 Assist Clicks, but only 1 Click-Assisted Conversion.
  The same definition applies for the difference between Assist Impressions vs. Impression-Assisted Conversions.

Interaction Analysis

• First & Last Click Analysis – these reports are based on what was first clicked leading to conversion, or was last clicked prior to a conversion in terms of each campaign, ad group, or keyword. The reports are designed for advanced analysis of conversion paths by being able to drill down into the next hierarchy from campaign level.
• Top Paths (clicks, impressions & transitions) - shows the most common conversion paths based on ads that were shown and/or clicked prior to conversion.
• Click paths - represent the sequence of keywords that were clicked by customers prior to converting.
• Impressions paths - are useful for exploring the breadth of related keywords customers were searching for prior to converting.
• Transition paths - are useful for seeing conversion paths that consist of different keywords and how customers transition between keywords.

Time Analysis

• Time Lag – shows how long it takes for a customer to convert from the first click, first impression, or last click on your advert.
• Path Length – details the percentage of conversions that had a certain number of clicks, or impressions before them. e.g. 1 click 20%; 2 clicks 30% etc. If the majority of conversions happen after multiple clicks, the next step is to identify opportunities to take action using the other reports.

As shown above, the range of different reporting options are now much more extensive and also quite complex. Advertisers therefore need to understand what the data is showing and how it has been tracked. However, this change will allow advertisers to analyse keywords far more effectively and will help with one of the biggest problems companies have when trying to filter out 'research only' terms from 'buying terms', since research terms like 'fashion' or 'cruise holidays' or 'TVs' are often very broad. So through these AdWords funnels, advertisers can now identify which keywords are for research and which keywords are the money terms and develop a strategy accordingly.

If you'd like more information about how Google's new Search Funnels could improve the marketing of your business, please contact us.

Google Wins European Legal Case Over AdWords Trademarks

On March 23rd, the European Court of Justice announced its long-awaited decision in three Google AdWords cases regarding copyright infringement and the use of trademarks, all with favourable outcomes for Google. The result also has implications for AdWords advertisers who bid on the trademarks of competitors.

The Louis Vuitton luxury goods maker had sued Google in France over its AdWords policy which allowed third parties, including LV competitors, to bid on its trademarked terms as keywords. The outcome was that the ECJ supported Google's position that it merely provides technology services to advertisers who make legally significant judgments using the technology. Therefore the ECJ ruled that advertisers, not Google, make the requisite trademark "use", and Google can qualify as a web host of its advertisers' content and thus is eligible for the associated safe harbour, if it remains sufficiently passive.

Google has been using a different approach to trademarks in some countries. For example, in the US & UK, AdWords advertisers can bid on competitor's trademark keywords although the terms can't be used in the advert text. In most other countries, including France, Google has a policy of allowing advertisers to protect their own trademark as a keyword, to stop others bidding on it.

These different approaches reflect local copyright legislation but makes for a confused policy and the latest ruling means that parties using AdWords may still sue each other if there's an alleged trademark violation. Once Google is notified of a violation, it must act, much like copyright claims for unauthorised use of video in the US on YouTube, for example. In such cases Google removes the video at the copyright owners behest and, if it fails to comply with these requests, Google could be liable.

For advertisers that are able to bid on a competitor's business name or trademarks, they need to determine if this is a worthwhile strategy. Such an approach can create bad feeling between companies and advertisers also have the avoid the charge of trying to 'pass off' their own advert and link as a competitors listing, which can also have legal implications as well as create negative feelings from the searcher. Clickthrough rates on competitor keywords tend to be low anyway, which drives up the average cost per click and it can be a policy that can backfire on the advertiser.

Although Google has escaped serious censure from the Louis Vuitton case, it will need to review its position and practices concerning trademarked search terms. Advertisers will also need to consider the implications of bidding against competitor terms within their local copyright legislation, plus companies that are affected by such tactics will need to weigh up the likely cost of responding to advertisers and taking direct legal action against them.

If you'd like more information about how this ruling and how it could affect the marketing of your business through Google AdWords, please contact us now.

Recent articles from The Marketing Workbench

The Marketing Workbench is our regular web marketing blog covering news and comment on Internet marketing events and trends. If you want to keep track of current stories you can visit this section of our website on a regular basis, or set up an RSS feed. These are just some of the items posted over the past month:

• Google provides more data on AdWords conversions
• Google removes censoring from China search
• Display adverts more effective in Europe
• Managing multi-regional websites
• Pandora and online business survival
• Google adds new function for brand advertisers
• Google requesting link spam reports
• Google executives convicted in Italian trial

We hope you've found this month's issue useful. Please contact us if you need any more information on the items covered, or our advice on any aspect of your website's performance. Also, if there are any issues you would like to see in future editions of this newsletter, please submit your suggestions to us.