AdGooroo is well known in the SEM industry for their SEM Insights and Natural Search Insights products that help marketers get a very accurate view of paid and organic listings on Search Engine Results Pages.

In full disclosure, I’ve been using AdGooroo since 2006 and I have found their level of innovation, technology, and service to be at the highest of levels. I didn’t use the Trademark Insight tool until a few years ago, but it’s just one many products they offer in their suite of integrated tools.

Why Are Trademarked Terms So Important To Monitor?

Think about it: in most paid search marketing accounts, the branded terms are usually the highest converting and most efficient traffic stream you can have. Not only could competitors literally be taking money out of your pocket, but they could also be driving up your costs.

If they’re bidding aggressively, you’re probably following suit to maintain good average positions—so if you can knock some of those folks off of those SERPS, then you won’t have to bid as high to get in the same spots.

When you also realize that your quality scores could go up because your click-through rates could improve, it becomes obvious how impactful trademark wrangling could be.

As AdGooroo notes in their product literature:

Most companies do nothing to stop competitors and affiliates from advertising on their brand terms because of the difficulty in identifying offending ads. AdGooroo’s 24/7 automated brand monitoring service solves this problem by identifying those advertisers who are bidding on or using your brand terms in their ad copy.

Notice they mention affiliates as well. One of the biggest offenders (and I know this from personal experience) to trademark infringement are affiliates.

It’s become commonplace for most major advertisers who run affiliate programs to not allow their partners to run paid search ads on their branded (or trademarked terms) so that they’re not bidding against themselves or losing sales that they could have garnered.

I’d like to give these folks the benefit of the doubt and hope that when they do break these policies that they do so in ignorance and not on purpose…but the negative results are the same whether it’s competitors or affiliates.

So How Does Trademark Insight Solve This Problem?

Well, if you’re not up to speed on the engine stance on this issue (check out, for example, the AdWords trademark enforcement policy), the gist is that in most cases, it’s up to you to file a report.

Understandably, Google can’t sift through every advertiser on their platform and know who has the authority to use these terms.

So, right now, if you wanted to police your trademark terms, you would have to constantly manually search on your terms, take screenshots, fill out the paperwork, etc. Trademark Insight smartly automates this process.

Now for my favorite part of Search Marketing Toolbox, we go under the hood!

Once you load up your keywords, Trademark Insights takes over and checks for your terms across eleven search engines and fifty different countries. This prevents some rather savvy folks from trying to “geo-spoof” (not geotarget in your company known HQ areas).

After a day or two, here’s the kind of report you will see:

And here’s the detailed listing of the incidents…

You get a list of all advertisers and ad servers:

You can even see infringers based on destination and display URL:

Here’s my absolute favorite part of the tool which to me makes this product a no-brainer. In a few easy steps, Trademark Insight generates the proper engine form with all of the necessary info to file a complaint as outlined by the particular engine’s trademark policy.

How nice is that?

And finally, you can setup a daily email report to check if an incident occurred was discovered the previous day without even having to log in to the platform. Talk about “set it and forget it”!

If you’re a search marketer who has trademarked terms in your account and you’re not tracking infringement, it’s definitely possible you’re missing out on a quick fix to performance improvement. With AdGooroo’s Trademark Insight tool, you can monitor and file engine complaints quickly and easily.

Good hunting!

In fact, one of the major draws for me to SEM was that it was a gold rush to new territory.

Appealing to my Gen X trailblazer sensibility was the fact that there weren’t a bunch of stodgy gray-hairs telling us how it was supposed to be as many of my peers were discovering in their established career paths. No hard rules. No classes offered. My textbooks were the blogs; my classrooms were lightly attended search conferences; my homework was trial and error on Overture and the newly launched AdWords. I was a keyboard cowboy.

Feel free to slap me if I ever start a sentence with: “In my day…”

Now, over a decade later, this SEM is a thriving segment of the advertising ecosystem. With $18 billion in the US this year, set to rise to over $30 billion in 2015, the search marketing industry (with most of the dollars going to paid search) is ripening.

There are hundreds (thousands?) of dedicated search agencies and fully operational in-house teams with recognized delineation of roles. We’re not yet a fully mature industry, but there is a sense that we have plateaued — in a good way.

Advertisers have truly embraced this channel and understand the benefits and how it is priced. Early on, it was a battle for budgets, but I’m happy to say that I haven’t had to defend why paid search has shown up on digital campaign plans for years.

Depending on your experience level with paid search, your day-to-day responsibilities vary. Tasks that were challenging when you were first starting seem effortless now. But new duties are always popping up.

Below, I’d like to offer some advice to each strata of our industry. This may also help folks rather new to search better understand the career path ahead of them and the expectations that come as you take on more important roles.

Note: The years of experience listed are strictly arbitrary and just a loose guide for this post. I’ve met folks with two or three years’ experience who really know their stuff and have certainly run into so-called experts with many years in search who are still fairly clueless to the subtleties of the art.

Search Novice (first year)

Welcome to search! Right now, the most important thing for you to figure out is if you really even want to be in search engine marketing. It’s a growing field and should offer some great job security moving forward, but if you don’t get excited about optimizing accounts, analyzing spreadsheets and dropping CPCs like they’re hot, then this might not be the career for you.

However, if you are enjoying the little exposure you’ve had already to the medium, then it might be worth your time. I didn’t stay solely in search, but the lessons I learned while being 100% focused on SEM have helped me as a full-service digital marketer. Right now, just keep doing the tasks you’re given, keep asking good questions and get that AdWords certification.

Search Apprentice (1-2 years)

Now that you’ve been doing this for a while, it’s time to get deeper. If you haven’t been reading trade blogs such as SearchEngineLand.com daily, then you need to start.

Browse the headlines and read what interests you. Over time, you’ll start to figure out what’s going on and who the players are, and you’ll get a better feel for what this industry is all about.

On the work side, you should now be able to handle small accounts by yourself: pacing, reporting, optimizing, etc. Stewarding accounts shouldn’t be too hard for you even if you’re not always getting the high performance you’re shooting for. You should be building your own set of best practices that you can count on to work when you need them.

Search Marketing Analyst (3-4 years)

At this point, you’ve probably figured out that search, or at least the online advertising world, is for you. Congrats! There are a lot of people out there who haven’t found the right line of work, so you can consider yourself lucky.

Now that you know that you’re in this for the long haul, it’s time to really get serious. You should already be a leader on your team in some aspect, but you can now take the opportunity to step up. Mentor the newer folks and look to your boss for more responsibility.

You’re also going to be relied on to be in more important meetings with either clients or senior folks at your company. If you can’t shine and make your department look good, you’ll get left behind when it comes to promotion discussions.

We’re looking to you to really have mastered paid search by this point and start showing initiative to improve processes and build efficiencies without being prompted. When a new big account comes in the door, it should be a no-brainer for you to handle everything without needing supervision.

Search Marketing Manager (5-6 years)

Congratulations! You’ve obviously proven yourself very capable. Not only are you a bad-ass search analyst, but you also have the intangibles that organizations need to manage and supervise others.

However, just know that being great at search doesn’t always mean you’re great at managing. Hiring/firing, training, cost analysis, vendor review, etc., are all now hitting your desk. You’re going to be doing actual paid search less but rather ensuring your company’s paid search practice is as good as it can be.

You might even now be managing friends that used to be at the same level — it’s not easy going from bud to boss, but that’s the expectation. It’s important for you to make sure everyone under you continues to progress in their knowledge, even if it means forcing them to attend webinars and read the trades.

It’s your job to toe the company line and execute the vision of your director or VP while also being able to amicably offer your counter opinion when you feel something’s not going right.

Search Director/VP (7-10 years)

At this point, you’re probably not doing much day-to-day SEM. In fact, there’s a possibility that you don’t even know your AdWords login or the CPA on your best client. But that’s fine. Your focus should be on the department.

Your role is to help the team by making sure they’re working together like a well-oiled machine and that you are using your resources (people, budgets, time, etc.) in the best way possible. You’re also the main driver of your vendor partnerships, and if at an agency, providing a huge role in new business discussions.

Basically, you are search for your company. The things you think are important will now be what everyone under you thinks is important. They’ll be looking to you for guidance on the direction of the department for the next several years.

It’s absolutely crucial for you to have a deep understanding of not just search but the advertising industry (not just digital anymore.) Your company is counting on you to lead them to the promised land — don’t let them down!

Search Guru (10+ years)

Right now, there aren’t many SEM pros out there with 10+ years’ experience. But soon, there will be. Search really blew up around 2005, so by 2015 we’ll start seeing more and more folks with a decade or more of experience under their belt.

A guru might be a manager, a VP or even owner of their own company, but wherever their role on the team, success is determined by how much they make everyone around them better.

They’ll be patient with the novices and apprentices and help them avoid common errors. They should take analysts under their wing and show them the advanced techniques that only a decade of experience can offer.

It’s important for them to support their managers and provide great advice as these folks transition to from being employees to employers. For directors and VPs, the guru is a tremendously valuable resource for thought leadership and to help keep them informed on the search industry while their focus is being pulled in every direction.

Now that we’re ten years in, the roads have been paved. You should be able to form a fairly clear picture on the road ahead if you stay in this industry. Ten years from now, we’ll have college programs and folks will be getting degrees in either search or keyword marketing or some future combination.

Good luck, have fun and enjoy!

Ha! If it was only that easy!

Most of you reading this post have used one in the past. Have they worked well for you? Listen to any paid search veteran and you’ll hear stories of autobidders gone wild and delivering varying results.

I know that in the past, I’ve recommended in this column to just use auto optimization technology on your tail terms and manually optimize the important head terms of your account.

They’re good for managing low-impact keywords at scale but be careful not to just set and forget them. You may come back a week later and find that your pacing has slowed tremendously as the autobidder has paused every keyword except the handful that can meet your CPA goal.

Certainly, autobidders are not simple software. To build them right, you need to take into account dozens (if not hundreds) of variables and be able to slice and dice the data in order to decision upon bids inside paid search platforms.

To learn more about these tools, I spoke with Dr. Rob Cooley, Chief Technology Officer for OptiMine Software, a smart-cookie who has spent countless hours thinking about autobidders and trying to improve on them.

After speaking with him for more than an hour on this subject, I was wowed by the depth of what goes into cracking the autobidder puzzle.

Q: So, Rob, why do you love working on this complex issue?

Rob: My passion has always been creating data driven analytic applications and I tend to get bored if things are too easy. When I started working on my PhD in the mid 90’s there was this new thing called e-commerce that wasn’t very well understood from an analytics perspective. I dove in and found so many fun hard problems that needed to be solved in the space that it ended up being the subject of my thesis. Fifteen years later, I still haven’t run out of hard problems to work on.

Q: What has been your professional experience in this field?

Rob: I started consulting for e-commerce companies in the late 90’s while finishing my PhD, mainly working on things like shopping cart abandonment. In 2000 I joined a Xerox PARC spin-off that was focused on personalized search and acquired fairly quickly by Google in 2001.

Then, for the next eight years, I ran the technical operations for a data mining tool vendor. That gave me the opportunity to lead over 300 engagements where I had my hands on data to help solve a wide variety of marketing and advertising problems. The issue of pricing for online advertising kept popping up with customers, so in 2008, I decided to start OptiMine.

Q:  Before we begin, let’s define for the readers what an autobidder is.

Rob: My definition of an autobidder is a software application that automatically sets online advertising bids for every biddable entity (e.g. the “keyword” for paid search) in order to improve some performance metric.

Q: What are autobidders good for and what don’t they do well?

Rob: If done right, an autobidder improves performance while meeting critical business constraints, such as increasing profit while providing some minimum order volume, or increasing revenue while maintaining a minimum return on ad spend.

While they can provide some time savings, what they don’t do well is operate in a lights out environment without any human intervention. Someone with domain knowledge and an understanding of the business has to drive.

This is a common mis-perception about autobidders that I think comes from some early solutions in the market-place that were very black box in nature. In my opinion if you can’t steer the application, it wasn’t done right.

Q: Just how hard it is it to build a good autobidder? What are the variables or limitations that you have to consider?

Rob: It turns out that it’s incredibly hard to build a good autobidder. To do it right, you need to predict the future cost and value for each and every keyword. However, the vast majority of keywords have very little or no history of clicks or even impressions.

In addition, there is a lot of volatility even for the keywords that do get daily clicks and impressions. In technical terms, this is known as sparse noisy data.

Q: You mention there are different types of models out there, what are they and what are their pros/cons?

Rob: OK, here goes the deep dive…

To answer this, first there are some background terms you need to know.

Models versus Rules

A model based system uses past performance data to train statistical models to predict future performance. For example a model based system could predict the bids necessary to achieve a 200% ROAS. A rule-based system is typically a pre-defined set of reactions to certain situations. For example “if ROAS is less than 200% then lower bids by 10%”. In general model-based systems are predictive and rule-based systems are reactive.

Keyword versus Cluster models

 Within model-based solutions there are some that have different models for each keyword and some that group keywords together into clusters. The purpose of the clustering is to get around the sparse data problem by adding data from several keywords.

Global versus Local optimization

This is a really important distinction. Everyone throws around the term “optimize” or “optimal”, but there is a technical distinction between global and local optimization.

A local optimization simply bids each keyword or cluster separately from the other keywords or clusters. So if the goal is to maximize revenue with a minimum ROAS of 200%, every keyword is bid to obtain a ROAS of at least 200%.  A local solution won’t tradeoff low ROAS from one keyword with high ROAS from another.

A global optimization (referred to as a portfolio approach by some vendors) considers all of the keywords at once, assigning bids so on average the group as a whole maximizes a goal while meeting some constraints. It may turn out that one keyword can drive a ton of revenue at a ROAS of 180% and another at a ROAS of 220%, as long as the average ROAS is 200% the global solution will declare success.

You can spot a global solution by the looking at the available settings. If the words “maximize” or “minimize” are available as settings, then it’s a global solution. You generally can’t ask a local solution to “maximize revenue” or “minimize CPA” while meeting an additional set of constraints, you can only give it targets such as “provide a $15 CPA”.

Okay, now that you understand the ground work, I can answer your initial question.  The following are the four approaches on the market in terms of autobidding technology.

Global Keyword-Level

This is the gold standard or holy grail of bid management. The pros are performance and explainability. The cons are that it’s really hard to figure out since you need to predict behavior across a range of bids for each keyword and then solve a fairly nasty global constraint-based optimization.

Local Keyword-Level

In effect this is the approach advocated by Hal Varian. Bid each keyword separately based on the predicted value. The main pro is simplicity since you don’t need to predict behavior across a range of bids, just bid a percent of the predicted value. The main cons are limited settings and lower performance when there are constraints.

In a lot of cases, a local solution leaves money on the table. You can set a target but you can’t layer on multiple constraints. And while it may be achieving a ROAS of 200% you don’t know if it was actually possible to hit 250% that day because it is simply trying to hit the target, not maximize a metric.

Global Cluster-Level

Here, you still have a global optimization but models based on clusters of keywords are used to handle the sparse data problem. Some vendors are actually a hybrid of this plus the keyword-level global. e.g. they use keyword-level for head terms and clusters for the tail.

In either case, the pro to using clusters is model stability, meaning the results are repeatable. The cons are performance and lack of automation. The performance drop associated with clusters comes from the fact that each keyword is unique, and the value of extra data is outweighed by the loss of uniqueness. The other issue is clustering typically needs statisticians to manually tune the models, so cluster-based solutions are rarely pure software applications.

Rules-Based

This is probably the most common solution available. In theory, the pros are simplicity and understandability. I’ve found that’s often not the case since if you layer a set of 25 rules on top of each other it is very difficult to wrap your head around exactly what will happen to the bids. The main con is performance. Because of the reactive nature of rules, they can be very good at what I call profit protection, but they rarely lead to optimal results.

Q: There are seemingly thousands of these technologies out there, whether inside licensable tools or in some home-grown, proprietary platforms.  Where do you think many of them stand in terms of effectiveness and why?

Rob: I think my opinion of the effectiveness of the various solutions out there is best summed up by the fact that I chose to quit my job and found a company at the height of the financial crisis because I was confident I could create a better solution.

In terms of why, I have a strong opinion that you need a solid academic foundation in data mining & optimization techniques, strong domain experience with online advertising, and a lot of field experience with actual data mining and analytic applications to put together a viable solution. From what I can see, a lot of creators of bidding solutions are missing one or more of those three key points.

Q: So what’s the autobidder at OptiMine?   Why do you think you have something special over there? Does it have a cool name like “Conan the Keyword Destroyer” or “Bidder Bidder Chicken Dinner”?

Rob: Sorry, no cool name. It’s just OptiMine Bid Management. It uses a Global Keyword-Level approach per my answer above. The reason we think we have something special is that we regularly improve performance (profit, revenue, ROAS, etc) by 25% or more in controlled tests against other technologies. We haven’t lost a competitive test.

Q:  Can you share some results on how you’ve compared to competing platforms?

Rob: Here’s an example for each of the three competing types described above.

OptiMine vs Global Cluster-Level

The goal was to drive as many new accounts a possible at a fixed CPA. Against a competing global cluster-level solution, OptiMine drove 216% more new accounts at the same CPA. The key issue here was the age of the clusters. In this case they hadn’t refreshed their clusters and the keyword grouping was simply obsolete. There were a handful of good keywords hidden in clusters of bad keywords. The act of separating those out and bidding them up was what led to the volume increase.

OptiMine vs Local Keyword-Level

The goal was to drive as much profit as possible while maintaining a minimum amount of revenue. Against a competing local keyword-level solution OptiMine drove 37% more profit. The key issue here was seasonality. The local solution had much simpler models that just didn’t pick up a declining seasonality as fast as OptiMine.

OptiMine vs Rules-Based

The goal was to drive as much revenue as possible at a fixed cost of sale (inverse of ROAS). Against a rules-based approach OptiMine drove 30% more revenue at the same cost of sale. The key issue here was tail terms. The rules put in place were simply too conservative for the tail terms. OptiMine drove 159% more revenue out of the tail which led to the overall 30% increase in revenue.

Q: So, I saw the announcement that Adobe is using OptiMine’s technology in SearchCenter?  Sounds exciting…can you talk more about this relationship and how it will work?

Rob: Yes, the next release of SearchCenter will allow their customers to use the OptiMine bid management technology. Essentially, it’s Adobe’s version of our interface. The back-end number crunching is still done by OptiMine, but instead of the OptiMine UI the features and functions will be seamlessly integrated into the SearchCenter UI.

I balked. But I took the bait. “What’s that even mean, dude?” I said.

Josh went on to explain that all signs point to the fact that display is going to become the dominant advertising channel online and that search retargeting will become the dominant tactic for display advertising.

Thus, display is changing the value of search as search will become even more valuable for targeting than it has been for the last decade with just buying text ads on search engines.

“Soon, not doing search retargeting will be a fireable offense for an advertising agency,” Josh boldly explained, and continued his argument:

“The advertiser will ask: ‘You mean a user went on a search engine, raised their hand saying they want a new cell phone, and the user only received one text ad via the search engine, next to our competitors text ads, and on a page that the user likely only spent 30 seconds? You never followed up with that user beyond the search engine, in a one-on-one setting on their favorite publisher, and with a picture of our product?  You’re fired!“

Okay. Got it. But being the skeptic I am, I decided to dive into the evidence to see if he was right.

Exhibit A:  Display Will Outpace Search

Don’t look so surprised. We always knew this was inevitable. The fact is that paid search is a pull medium as it requires users to search on an engine to trigger an ad. Display is a push medium which simply requires page views to deliver [normally multiple] ads to the user.

Bottom line:  page views online are growing exponentially faster than searches on search engines.

Check out the eMarketer chart below. Search spending is on pace to almost double in the US by 2016 whereas display almost triples. If this chart were to extend out to 2020, there’s no doubt (based on current market conditions) that advertisers will be spending more on display by that time.

Exhibit B:  Display Offers More Impressions Than Search

“Search retargeting gives advertisers a second chance to reach consumers who might have not been ready to transact during their search experience,” says Harrison Magun, SVP of Paid Media & Analytics at Covario. “Search retargeting is the gateway to display opportunities for search advertisers.”

Let’s do some fuzzy math. On a Search Engine Results Page (SERP), we’ll assume that on average, there are six paid listings on a page. One million unique user searches for Keyword X would equate to (1 million searches x 6 ads per SERP) six million ad impressions, right?

However, let’s say that there are twenty advertisers who would want to target users who searched for Keyword X.

If they all use search retargeting and were able to reach those million users an average of five times, that would be (1 million searches X 20 advertisers X 5 Frequency) one hundred million ad impressions.

So, in this example for the same one million searches, traditional paid search would deliver six million impressions versus search retargeting with one hundred million impressions.

In the case of highly competitive keywords, there may be literally dozens and dozens of advertisers using search retargeting to push well over ten to twenty impressions to those users.

In that case, this could mean hundreds of millions of impressions chasing those one million users who searched on Keyword X.

Exhibit C:  Search Retargeting Works For The Same Reason Search Works Well

One of the main reasons why paid search works so well is the expressed intent that’s passed from the user to the advertiser. We can reasonably assume that someone is interested in grilling when they search for “buy bbq grill” or are in the market for a Hawaiian vacation when they search for “best deals on cruise to Hawaii”.

The keyword is a huge indicator of what kind of messaging to which a user would respond best. Right now, with many display ads being loosely targeted to user site behavior or geographical location, search retargeting’s ability to target to users who have identified their intentions via searched keywords is proving to work.

According to Michael Davis, Senior Media Planner at Razorfish:  “By using site and search retargeting with Magnetic, we’ve seen glowing results for our clients. This targeting combination allows us to leverage both customer acquisition and customer retention strategies online.”

Exhibit D:  Search Retargeting Is Growing

This tactic is blossoming as we speak. Besides Magnetic, other search retargeting companies already in this space include Chango and Simpli.fi. As well, Criteo is getting involved and so is mediaFORGE.  The big player that seems to be making moves on this front is Google.

As reported in AdAge recently, Google is “quietly building an exchange for buying and selling data.”  There’s no definitive reports that this data exchange (dubbed “DDP”) will include search data, but the Big G must know that they’re sitting on a virtual fountain of search retargeting gold as the leading search engine in the world.

Judge’s Decision:  Display Is Changing The Value Of Search

Based upon the evidence, I’m going to have to agree with Josh Shatkin-Margolis on this one.

• It’s inevitable that display’s budgetary importance will outgrow paid search over time
• Search retargeted display will offer many more times the impression opportunities per keyword search than traditional paid search advertising
• Due to the passing of the user intent [keyword] to the advertiser, search retargeting could very likely become the dominant targeting tactic in the display ad space
• The search retargeting industry seems to be growing, not slowing

Josh is not saying that search will become irrelevant. If anything, search will always be a very important part of digital advertising. It’s still growing, albeit slower than display overall, but it’s definitely here to stay.

However, what he’s saying is that because of the reasons listed above, marketers will begin to see the value of search to be both on the SERP and off the SERP. As display grows (and search retargeting grows with it) search extends far beyond where it is now.

Thus, display is changing the value of search which should be good news to the search pros out there! It’s going to make search even more important than ever.

It’s almost like trying to beat the stock market – only someone with a crystal ball could really nail it on the head every time.  However, with some historical information and a few calculations you can get fairly close to figuring out the right bid to use for each keyword.

Today, let’s check out how Google Chief Economist, Hal Varian, teaches bidding in his Google AdWords Bidding Tutorial. He explains that proper bidding is anchored in a simple cost vs. profit analysis.

All you have to do is make sure you bid in a way so that you bring in more revenue than you spend. It’s easier said than done and you will certainly have trouble bidding correctly for every keyword, but as long as you follow this standard process, you should be able to bid well more often than you bid poorly and come out ahead in the end.

Basic Bidding

The first step is to figure out the conversion rate of the keyword. This should be a fairly easy metric for most SEM pros to figure out, but for any newbies to this industry, your conversion rate is your Total Number of Conversions divided by your Total Number of Clicks. So, if a keyword drove five conversions from every one hundred clicks, your conversion rate is 5% (5 conversions/100 clicks).

Once you know that keyword’s historical conversion rate, you then need to figure out your Value per Click (VPC).  The VPC calculation is your Max Profitable Cost Per Action (CPA) multiplied by your conversion rate.

What is your Max Profitable CPA? It’s the most you’re willing to pay for that action/conversion and not lose money. In his tutorial, Varian recommends not padding that number for profit but rather setting it just at the break even point.

For example, if you’re reselling leads for $100 each, you may set your Max Profit CPA at $100. You’re in this to make money, right?So, you may feel the urge to bring it down to $75 to make sure you make $25 per lead, but try to resist that temptation.

Think about this: what if I told you I could get you a million leads for $90? Would you really turn away $10 profit per lead? If you used $75 in your calculation, then you may be end up optimizing out of that profit. For this exercise, we’ll go ahead just use $100 for the Max Profitable CPA.

With a Max Profitable CPA of $100 and a conversion rate of 5%, your Value per Click is $5.00 ($100 x 5%). Basically, at the end of the day, each click of that keyword is going to be worth five dollars to you. This also means that if you paid five dollars per click, you would just break even. To make a profit, you have to pay less than your Value Per Click.

Varian makes a simple observation that your actual Average Cost Per Click (Avg. CPC) in almost all situations is going to be lower than your Max Bid. So, using that rule of thumb, Varian concludes that bidding at your Value per Click should always lead you to a profit. However, you may find yourself bidding over your Value per Click often because your Avg. CPC still is below that threshold.

The five dollar bid now puts you in the ballpark, but I would argue that doesn’t mean you’re in the game. Since raising your bid usually increases your Click Thru Rate (and conversely, clicks), does that mean by raising your bids will automatically increase conversions?  Of course not. And will that incremental cost lead to more profits?  Not always.

In fact, in the video (see screenshot below), there’s an example where lowering the five dollar bid to four dollars actually creates more profit because, even though it generates less total revenue, the higher costs associated with a higher bid eats into the net revenue.

Advanced Bidding Using Incremental Cost Per Click (ICC)

To truly win at paid search, you need to take that starting bid and optimize to an optimal bid in order to maximize your efforts.  But how do you do that?

To accomplish this, the tutorial presents the metric, Incremental Cost per Click (ICC), which is the Cost of Incremental Clicks divided by the Number of Incremental Clicks.

In the example below, you can see that increasing your $4.50 bid to $5.00 does get you eighteen more clicks, but at an incremental cost of $103.15. When you divide them, that’s an ICC of $5.73.

And once you calculate out your ICC for other bid levels, you can easily see which bids come closest to your Max Profitable CPA without going over. In this example, $4.00 is your optimal bid.

To calculate out your ICCs, you would need to have the performance data for your keyword at various bid levels. Back in the olden days of search (circa 2004), we would have to build tests to set different bids and then analyze the data. But now, we have Google’s Bid Simulator that can provide some of this data.

What is the Bid Simulator? From the AdWords Help article on this topic:

The Bid Simulator enables you to see the advertising results you could get if you used a different maximum CPC bid for your keyword or ad group. It doesn’t predict the future, but it estimates the click, cost, and impression data that your ads would have received over the last seven days had you set different bids.

For example, suppose you have a maximum CPC bid of US$1.00 for your keyword, and you wonder what results you’d get with a bid of US $1.50 or US $0.75. The bid simulator shows the clicks, cost, and impressions you would have seen with these other bids over the last seven days.

To generate data, our system analyzes the auctions on Google and the Search Network from the last seven days. The bid simulator uses internal auction data, such as Quality Score information for you and your competitors, to estimate where your ad would appear and how frequently it would have gotten a click. The bid simulator keeps everything the same except for your bids. For example, it uses the same values for your competitors’ bids, traffic on Google, and Quality Score.

Thanks AdWords! To access the Bid Simulator in the UI, go to the Keyword tab and look in the Max. CPC column. Click the little graph icon and you will see a table like the one below that shows you clicks and impression based projected out at various bid levels. You can use this information to calculate your ICC and find your profit-maximizing optimal bid.

Here’s an example of what you’ll see when you click the Bid Simulator icon in AdWords:

Looks good on paper.

Easy, right? Ha. Well, on a training classroom’s whiteboard, it works out just fine. But we all know that there are many real-world variables that will disrupt this perfect plan of action.

Remember, the Bid Simulator is just a simulator. There’s no guarantee that your account will act in accordance to its projection. As well, even Varian admits that you should check the tool on a regular basis as the numbers might change due to changes in the competitive landscape of your keywords.

There’s also outside factors such as seasonality, economic downturns, new innovations in the marketplace, etc. that can drastically affect your conversion rates and Max Profitable CPA.

This is where the real value of an SEM pro comes in to be able to take the very quantifiable approach that Varian outlines and weigh it with the unquantifiable instincts that expereince can add.

Added value awesomeness from TenScores:  The Bid Optimizer tool.

In this column earlier this year, I interviewed TenScores founder Chris Thunder regarding his quality score tracking tool. As you know, Adwords doesn’t currently provide historical data on Quality Scores.

TenScore’s tool allows you to link your AdWords account and then pulls down your QS daily so that you can track the progress of your optimization efforts. This is a really light, cost-efficient tool that could make a wonderful addition to the SEM toolbox for anyone serious about improving their Quality Scores.

Recently, I came across the TenScores free Bid Optimizer tool, which is a very simple online calculator that lets you insert your keyword’s Bid Simulator data and then graphs out your various ICCs in order to figure out an optimal bid.

It’s a really great tool that takes a lot of the math out of the bid calculations and makes it actionable. Just pop in your data and you’re ready to roll.

Bravo to TenScores and Chris!  Here’s a screenshot:

Good luck to everyone out there on your bids!

I started buying keywords on Overture with a company I wasn’t even doing marketing for, which got me into some early e-commerce activity, and then to the agency world.

It definitely feels like a marriage…there have been some good times, some bad times. Some amazing times, and some really down in the dumps times. I’m nowhere near the person I was when I started and neither is the search biz.

We’ve both grown tremendously in the last decade and I don’t think either of us realized just how big this thing was really going to be. I feel like a proud spouse watching my significant other’s success with a huge smile.

I’ve learned a lot in ten years too — usually by making mistakes. Aptly, here are ten insights I’ve gained in ten years. Maybe some of you folks new to search won’t have to learn like I did — the hard way.

1.  Test. Optimize. Repeat.

This was one of the first major best practices I learned all of those years ago. Everything you do in paid search is just an experiment waiting for its testing period and analysis. No tactic is set in stone. No result is considered the best; performance can always get better if you can get smarter.

2.  The Most Granular Level Is Not The Keyword

I’ll credit SearchRev with really hammering this home when I worked with them in 2008. Their paid search management tool was the first one I had seen that allowed each ad or keyword to have multiple landing pages loaded in.

Just the same way you would test multiple ads with each keyword, why not test multiple landing pages for each keyword/ad combination –  because conversion rates will definitely be affected and optimized at that level?

Now, years later, the most granular level of paid search might be more like:  keyword + match type + bid + geotargeting + ad + landing page.

I feel that if you treat the keyword as the most granular level, you’ll make clunky, high-level adjustments to the campaign elements which could end sending ripple negative affects across the account.

3.  Put More Into The Upfront Work

Some of the grunt work of SEM such as research, keyword building, ad group and campaign grouping, etc. have a tremendous effect on the success and management of the account. If you put really great effort into the research, the insights you uncover will pay dividends during the flight of the campaign.

Sometimes, we overdo the research just to ensure we’ve done enough. And just really thinking through the architecture of how you build your ad groups and campaigns before you begin can make future reporting, analyzing, and optimization more efficient.

4.  Short Head/Fat Middle/Long Tail

I detailed my philosophy on this in a column a few years ago and it’s still the way that I approach paid search management.

The Short Head are your top handful of terms that really drive most of your spend and conversions — usually these are your branded and product terms. I recommend looking at those every day manually as those have the biggest effect on your account.

The Long Tail (at least how it’s been bastardized for SEM from Chris Anderson’s original vision) are all of those hundreds or thousands (maybe even hundreds of thousands) of keywords that just get minimal searches per month. Usually, some sort of tech solution or management tool is best utilized to handle these at scale using auto-optimization technology.

The Fat Middle terms are the ones between the Short Head and the Long Tail.  They don’t necessarily warrant to be checked every day,but they’re certainly more important to the account the tail terms and do require some manual attention on a reoccurring basis.

5.  Don’t Get Complacent When Performance Is Great

Even the most professional SEM pros probably struggle with this one. You spend months, if not years, getting the account in a great place and its performance is knocking the socks off your boss (or your client). You just don’t think you can squeeze any more water out of that stone, especially with other accounts waiting on optimization which may not be performing so well.

To combat this at my agency, we institute an optimization plan of attach at either the campaign start or on a reoccurring basis for ongoing accounts. The optimization team can go off the menu at any time if they feel that an account doesn’t need the scheduled optimization that week, but they have to replace it with something better.

6.  Never Stop With Your Education

Another best practice that I learned fairly early… Things change so often in this industry that you have to stay on top of it, even if you think there’s nothing new going on.

I especially credit Google and their aggressive product roadmap with AdWords. Their innovation schedule is unbelievable and that product grows in power every year it seems. Plus, as the digital marketing industry in general grows and evolves, it affects the way search is used and perceived.

7.  Have The Right Tech Stack

Get good at evaluating SEM vendors and understand what’s on the market and available to you. Yes, you could do paid search with just AdWords and AdWords editor. But I think there are major limitations if you don’t use some of the advanced tools that are out there. Some of them are even free! Check out my Giant List of Keyword Tools post from last year for some ideas.

8.  Get Up To Speed On Your New Tools As Quickly As Possible

This took me years to learn. Many times, when you start with a new tool, there’s so much to learn and you’re already busy with other things, that the tendency is to phase out the onboarding process.

However, I’ve completely turned around on that way of thinking. What I learned was many live, account mistakes occurred during the onboarding process that could have been avoided with training. Also, time is money. You’re probably bringing in this new tool for a reason—so whatever that reason is, why not get it going ASAP?

9.  Everyone Needs To Be Great (Not Just Good) At Excel

For the lucky few of you out there that have been able to completely wean themselves off of Excel, I applaud you. But most of us have to spend some at least some time in spreadsheets.

That being the case, everyone in your organization (except maybe the cleaning lady) needs to be great at Excel. We utilize on-demand Excel video training as well as our own on the job learning.

10.  The Search Industry Is (Still) A Small World

Today’s colleagues may be tomorrow’s clients. Your local engine rep could be at another engine next year. This is the nature of our little world and it’s a good idea to read the trades, follow the industry (hires/fires/acquisitions/etc.) and attend conferences.

Most importantly: be nice to Google.

I’ve had my fair share of issues and screaming matches over the years with them, but the hard fact is that Google is search at least for now and the foreseeable future. It’s not always easy to work with them, and I’m not always easy to work with either, but if I want to work in search marketing, I have to have a good relationship with the Big G. I’m glad to say my relationship with them is better now than ever.

Ultimately, it’s still just a company of people and they do hire great folks. Usually the issues are more about policy the individual folks have zero control over, so they’re just as frustrated as you when they can’t help you out.

Stock image from Shutterstock, used under license.

In essence, QS is really Google’s attempt at click optimization  to ensure the ads with the highest chance of being clicked make it to the top of the page. It makes sense that Google would rather have a cheaper $1 ad clicked three times out of five than a more expensive $2 ad clicked only once out of five.

Gaining a few extra bucks is just a short term tactic, but Google has shown time after time that they think in decades, not years. The true value of quality score is that it optimizes the paid search results so that they are almost as (and sometimes even more) relevant than the natural results. This makes their Search Engine Results Page (SERP) even that much more germane to the user’s query and helps secure Google’s search engine as the top choice for most of the world’s searches.

Last year, we passed the point where AdWords with quality score has been around longer than Adwords without quality score. So, it’s no longer a new variable to consider but rather a cost of doing business in paid search and only hardcore SEM vets can even remember back before QS.

In fact, quality score optimization has become one of the dominating topics in our industry for good reason:  those keywords with high QS enjoy higher positions at lower costs. That kind of optimization is a no brainer for SEM pros to aim for.

A little birdie told me that the founder and president of search management platform ClickEquations, and fellow Search Engine Land contributor Craig Danuloff, was writing a book on quality score. Craig is a recognized industry thought leader and a very knowledgeable guy on all things SEM, so I thought it would be interesting to pick his brain on why he wanted to write about QS, what kinds of things are in the book, and what the future might hold for quality score.

Q: Okay, so why a book on quality score?

Craig: It started out as a series of blog posts, and as I dug into it the size and complexity of the topic, it was clear that a more substantial effort and treatment was needed. It also became clear to me that the role quality score plays is even more central and crucial than most people realized – the success or failure of every keyword in your account is in large part due to quality score, so not understanding and controlling it is very expensive.

Q: Why did it take you two years to complete?

Craig: Primarily because the folks at Google are given very good training in resisting advanced interrogation techniques – they do not give up their secrets easily. It’s also a surprisingly large topic with many facets that I wanted to really research fully, think through carefully, and explain clearly and properly. It just took a lot of time. Plus it’s not my day job, and Bob Dylan keeps going on these long tours which are extremely distracting.

Q: We know the Google definition of quality score…what’s yours?

Craig: Broadly, I think of it as feedback to how well executed the advertising efforts are around a keyword. It measures not only how well you’re doing the things Google wants you to do, but also how well you’re doing the things any advertiser should want to do well to maximize their own revenue – targeting, creative, etc. It is also an honest friend that will tell you when a keyword isn’t working and maybe pausing or deleting is the best solution.

Q: To relative rookies in Search, just how important is quality score versus other KPIs?

Craig: I believe it’s the most important KPI in paid search. If you look at overall for an entire account, which very few people do, and create a quality score distribution graph (which I help people do via a free Excel template that comes with the book) you get a stark picture of the success or failure in your account and very good ideas about what to do to change or improve it.

On an individual keyword level, it not only serves as feedback but as I mentioned it literally drives success – determining how often your ads appear, the position they appear in, and how much you pay per click. You can’t win with a poor quality score and it’s very hard to lose with one (or many).

Q: What are some of the frequently asked questions you hear with regards to quality score and how do you answer them?

Craig: As with anything, questions tend to focus on the problems or exceptions. Accounts that have chronically low quality scores frustrate people immensely, and there hasn’t been a good explanation of why this happens and what to do about it.

When an account is filled with quality scores below 7, there are systemic and probably historical problems that need to be addressed. You can’t fix that at the keyword level. There is a chapter in the book devoted to fixing quality score disasters, and several others that lay out ground-rules and step-by-step methods for improving quality score.

Q: What do you think are the biggest misconceptions out there right now about quality score?

Craig: There are many, but the biggest one surrounds what ‘relevance’ means. In the words of Inigo Montoya “You keep using that word. I do not think it means what you think it means”.

For now, let’s just say Google is not using the dictionary definition of that word. Getting to the bottom of that is I think the blockbuster reveal in the book – the PPC version of a formerly secret love child.

Q: Don’t want to give too much of the book away here, but what is your top level approach to addressing quality score?

Craig: At the highest level it’s easy – pick keywords that will attract a narrow set of search queries and then write text ad copy that those people will find compelling and persuasive. CTR drives quality score and the best way to get clicks is to have every ad directly answer the question implicit in every search. If you do that, everything else takes care of itself.

It’s hard to follow this advice because there is pressure to grow accounts which leads you to keywords that aren’t perfectly targeted for your business, because the time and tools needed to organize well aren’t available, because the metrics in your account that appear to be giving you feedback really aren’t, and because good copyrighting is a tough task and most accounts don’t have enough time allocated to it.

Good quality score management is preventative medicine and just like in the real world it’s ultimately a lot easier and cheaper than corrective surgery.

Q: Are there still things about quality score you don’t understand? If Google would answer three questions for you, what would they be?

Craig: Well Google was fantastic and did answer just about every question I gave them on this subject. The book is vastly better as a result of their help. I approached Frederick Vallaeys (AdWords Evangelist at Google) about 18 months ago and told him about the project and said that I really wanted to get the info right and asked for formal assistance from Google. He was immediately supportive and explained that Google would love to have advanced users have a source for the kinds of nitty-gritty details and explanations that they wanted.

In the months that followed, he and his team were extremely helpful in providing interviews and answering questions. Without this assistance I just couldn’t have delivered as many definitive answers and detailed explanations of the thorny issues that have confused many of us for years – so a huge thank you to Frederick and Google on behalf of AdWords advertisers everywhere!

Of the very few questions where they declined to answer or elaborate on as much as I might have wished, I’d still like to know the decay rate on historical quality score (how much more does last week impact results more than last year, etc.), details of the non-linear scale used for actual quality score (they’re not whole and linear numbers between 1 and 10), and there is one nagging issue resulting from the relevance revelation that I actually hope to get resolved and talk publicly in the near future.

Q: Why should people read your book?  What will they learn?

Craig: From a purely financial perspective, quality score has such a dramatic impact on impressions, positions, and costs that even minor improvements in quality score based on lessons from the book I believe will result in thousands or tens-of-thousands of dollars in decreased costs or increased profit for most advertisers – sometimes in just one day.

From my experience, many accounts have major quality score problems and in those cases implementing the facts and ideas in the book should be transformational. So the first reason to read this book is to do a better job and make a lot more profit.

On a more personal basis, I think serious paid search managers want and deserve to finally have all those nagging questions answered. It turns out that most of what is publicly known and shared about quality score is the simplistic version, not just the summarized version. In other words, what we’ve been told isn’t exactly true when you get down to the details and therefore it shouldn’t be relied upon to make the kinds of decisions you need to make every day to optimally manage your account.

The book shares the next level about what is really getting measured, how it’s really getting applied, and the specific steps that can really have an impact. I think even hard core PPC people will learn a lot and un-learn a lot, and walk away with a new perspective about how AdWords really works.

To learn more about Craig’s book, check out these chapter summaries and reviews. He has also written several introductory posts on Adwords Quality Score here on Search Engine Land.

Do I still think it’s a great marketing channel? Of course! It might be the second best form of advertising in the history of marketing behind word of mouth in terms of effectiveness. Its highly trackable ROI and bottom-of-the-funnel net ability to close all other types of advertising is unchallenged. There are strong reasons why SEM is now 51% of all online ad revenue in this country.

But a lot of the milestones in search have been mainly behind the scenes. Paid search quality scores, big organic algorithmic changes, etc have been major game-changers over the last ten years, but the Search Engine Results Page (SERP) innovation has been incremental at best.

Yes, we did see a shift to “universal search” in the last few years which added map listings, images, videos, products, etc to the page on occasion, but ultimately, the SERP is still a page of links:  static blue underlined gateways to the rest of the Web.

So, going into the Reinventing the Search Experience session last week at the Search Insider Summit, I wasn’t expecting to get absolutely blown away from what I saw from the senior-level engine representatives about the future of the SERP–but I was.

To give you a quick teaser,  Yahoo’s SVP of Search, Shashi Seth declared that “today’s SERP experience will be virtually unrecognizable in five years.”  Wow!

My fellow SEM professionals…I want to give you a moment to let that sink in. Today’s SERP will be virtually unrecognizable in a matter of years. In short, what I heard and saw made me realize that next industry game-changer has already been set into motion.

In five years, search will be reinvented to the point that even makes me wonder where SEO and paid search will fit into the picture. Of course, I only had a glimpse into what the Big 3 are up to. However, I’m sure they’re not even considering giving up their cash cow, but rather how to grow it.

Serving Content In SERPs

Later, commenting on the presentations, Internet pioneer Esther Dyson aptly cited the Bill Gates’ quote:  The future of search is in verbs.

What does that mean? It means that instead on just finding things with search, we’re gong to be doing things with search. Why transport people all over the Web and have that audience be serviced by someone else?

The key to this change (note – I’m unifying the vision here based on their individual and separate presentaitons) is that for a good portion of the top queries, there is a rather predictable set of intents. And if the engines know why people are searching for these terms, then they can present much richer content and features that handful of [very precise] links.

The search engine results page will become an actual Web experience, not just a digital version of the yellow pages.

The engines only gave us glimpses into what’s on their minds these days, but here’s an example on how I interpreted the vision:  think about what users are looking for when they search for a movie’s title. If it’s not out yet, they’re most likely looking to watch a trailer. While it’s in theaters, users are mainly looking for reviews, showtimes, and directions to theaters. If the movie is out of theaters and users are searching for it, they seem to be most interested in where they can rent, stream, or buy it.

So, if you were a search engine looking to rengineer the SERP experience, what would you do?

Well, before the movie comes out, how about showing trailers? Right now, that traffic is being shot off to movie sites where they are monetizing that traffic, not you. I bet if you were an engine, you’re probably be thinking “why am I sending people away when I can provide the same content right here on the results page?”

Right? Think about it. I bet the top slim percentage of queries represent a massive percentage of actual searches. If the engines can really map out the top intentions of each search and present not only the Web links but also highly relevant content to the searcher, then we have our game-changer, folks.

It’s not hard to think how the SERP could provide much deep content experiences for such queries as: used BMW, ipad 2, or American Idol. Heck, even chocolate cake.

Think about it. I bet that most people wouldn’t have to go very deep into the Web if the SERP had not just links, but actual real content such as chocolate cake recipes, images, nutritional info, and where to order one for delivery [and in your area]. It would be as though chocolate cake had a Facebook page. :D  That’s one I would definitely “like”.

The senior engine reps presented a few mock-screenshots of how they might best display this content to users. For example, in one presentation there was an image of a multi-tabbed large box above the search results where users could flip through various content categories, almost like a microsite.

I’m sure there are many ways they could lay this content out to best service the searcher and it’s not a stretch to think that it would probably even be very customizable and gradually personalized over time.

Ultimately, my guess it that the SERP will probably end up looking like Yahoo’s home page…except all of the news stories, images, videos, product feeds, links, tools, etc. will be related to the query the searcher just typed in.

Well, I’m not sure how this will all net out. The effect of the social revolution is changing everything online and with mobile set to emerge as the dominant gateway to the Internet, it’s inevitable that search will have to change with the times. I’m actually pretty excited to see how my dear, little industry will evolve over the next decade and how it will affect my role.

Are you ready?

For example, is the person asking me looking for a general approach tip? If so, I may tell them to always be testing or to keep a very granular focus. Sometimes it’s more execution focused, such as a single thing they can do to improve results. If that’s the case, I may talk about quality score, match types, or even query mining.

But certainly, the best advice I can give in almost any situation is what I call step optimization. This is an umbrella approach to my core paid search management methodology with a focus on optimizing every step of the path from account creation to conversion.

With so many best practices, tips, and tricks floating out there around SEM, the amount of things you could be doing to better your account performance can be overwhelming. By focusing on the fact that there are steps in the process, it’s a constant reminder that each step is an optimization project in itself.

Instead of putting all your eggs in the bid optimization basket or the landing page optimization, why not try to affect each step?

Basically, with small positive optimizations across the board, you can end up with big results. Let’s check the math. Say you have an account with:

• 1,000,000 monthly impressions
• A 1% Click Thru Rate (resulting in 10,000 clicks)
• A $1.00 Cost Per Click ($10,000 per month)
• A 10% traffic rate from the landing page to the conversion form (1,000 users)
• A 10% final conversion rate (100 monthly conversions)
• Average Conversion Value of $100 equals $10,000 in sales

Right now, this account is just breaking even. But what if we could positively affect each step in this process?

• +10% impressions to 1,100,000 monthly imps
• +1 percentage point increase in CTR to 2% would result in 22,000 clicks
• A 20 cent drop in Average CPC would be $.80 or $17,600 in traffic costs
• 5 percentage point increase to 15% of traffic from landing page to conversion form (3,300 users)
• 2 more percentage point increase to the conversion rate to 12% (396 conversions)
• Another $20 to the Average Order Value to $120 equals $47,520.

So, yes, the budget jumps from $10,000 to $17,600, but the sales increase from $10,000/mo (breaking even) to $47,200–you’ve more than quadrupled the investment.

Granted, the math is the easy part. How do you actually do it? Testing, optimizing, testing again… It’s not easy, but that’s why you get paid the big bucks, right?

Here are the six main steps to paid search and some food for thought to help you get started.

1.  Account Creation

It all starts here with the right research to build the most comprehensive keyword list that you can. My rule of thumb is that if the keyword has any relevance to the advertiser’s goal, it’s worth testing–you never know what’s going to engage users and drive conversions. Create a wide net to test. It’s much easier to pause poor performing keywords later than try to add new ones mid-campaign.

Ultimately, you’re in a much better situation when you have to trim back to the low hanging fruit veruses trying to push an account that can’t spend it’s budget–you end up buying even less efficient traffic. Bottom line, it’s a numbers game: the more terms you have to test, the more opportunities you have to find those winning keywords.

2.  Placement & Targeting

The engines have many different options when comes to targeting and placing ads. Here’s where I think many people go wrong. They put up the keywords and ads and blast them on a national level and then wonder why they don’t see great performance. Here’s the reality: some parts of the country are going to perform better than others.

Even if its the narrowist of margins…when it comes time to optimize, you’ll want to run more often in the best locations. In addition to geographical targeting, properly using match types are one of the best ways to cast your net either wide or very narrow.

Really key in on your terms and figure out which term and which match type pairing works the best. Overusing broad match can lead to reaching the wrong types of users and ultimately negatively impacting your quality score.

3.  Bidding Optimization

Years ago, Overture (which was Yahoo’s paid search platform) would anonymously show the top five bids for every keyword. One of the top strategies at the time was called gap surfing which was a tactic used to find the best deal with regards to position.

For example, if the first place bid was $1.00, the second place bid was $.98 and the third place bid was $.65, you could hit that killer gap and take over third position for $.66. It lead to bidding wars and that transparency was eventually phased out.

However, the fact remains that for every keyword, there’s usually a nice little gap where a major drop in CPC doesn’t affect your position too much. Try dropping your main keywords by pennies at a time to see if you can start finding those cost efficiencies and exploiting them to your benefit. Sometimes it’s just better to get two clicks for $1.00 each at fourth position than one click at $2.00 in first position. Once again, this is something to test.

screenshot from Overture’s bid results tool circa 2003 showing actual bids…amazing!

4.  Ad Text Optimization

The rookie mistake is to think that you want to write ad text so that everyone clicks your ads. The real trick is to make sure the right people (i.e. the most qualified) are clicking and the wrong people aren’t.

For example, if you’re selling a high ticket item that gives people sticker shock and they end up bouncing off of the landing page immediately, then why not be upfront about the cost in the ad so that only serious browsers waste your budget.

Another example is if you sell bulk pricing. Make sure to mention that in your ad text so that people just looking for one or two of your products don’t click your ads.

Check out your keyword landscape by just searching on your top keywords.  How are your competitors using their ad text? You might learn something that can help you–even if it’s the fact that everyone’s using similar copy so you’ll be able to stand out by doing something different. Don’t be afraid to get personal. What’s better?  “Buy Laser Printer” or “Need a New Laser Printer?”

5.  Landing Page Optimization

A solid best practice that was identified early on in SEM was that you should always send ad clickers to relevant pages, but it’s amazing that many web advertisers still don’t follow this simple, yet powerful rule. Don’t just assume that users will take the time to find what they’re looking for.

When you’re actually buying traffic and paying for each visitor through paid search, you should work hard to make sure that the landing page matches the intent of the intial query and the ad text that brough them to the site in the first place.

Try going through your top keywords and ads and put yourself in the mind of the searcher.  Is the keyword/ad/landing page combination really in sync? Not just relevant…highly relevant.

If the keyword and ad are about snakeskin boots, don’t take them to the boot page–take them to the snakeskin boot page. Of course, testing may end up proving that the boot page (a higher level page) actually does work the best, but it’s not usually the case.

6.  Conversion Page Optimization

This is your bread and butter page. You’ve already captured traffic and paid for users to come to your site.  They’ve reached the landing page and made it here where it’s time to convert them. These are your most important users and you can literally double or triple your sales if you get this right.

A good conversion rate might be 10% or 20% so you don’t have to be a match whiz to know that leaves 80 or 90 out of hundred that you can go after.

Try A/B testing to find the best conversion page and then use testing tools like Google’s Website Optimizer to zero in on the right mix of page elements. Don’t ever stop testing this part of your site until you’ve reached [the unreachable] 100% conversion rate.

Affect Average Order Value by upselling to the customer on the order page either with add-ons to their purchase or other proven, relevant items.

Good luck on your paid search approach. Remember, instead of looking for that single golden bullet of optimization, attack every step of your conversion path where little positive wins can lead to huge gains.

I had no idea, however, when I walked into the South-by-Southwest session, “It’s Nature’s Way: Innovative Tech Design Through Biomimicry”, that I would be attending one of the most inspiration conference programs I’ve seen in recent memory.

Led by Chris Allen, CEO of The Biomimcry Group, the presentation focused on the science of biomimicry, which is is the examination of nature, its models, systems, processes, and elements to emulate or take inspiration from in order to solve human problems.

For example, in Africa, “there’s a building that has no conventional air-conditioning or heating, yet stays regulated year round with dramatically less energy consumption using design methods inspired by indigenous Zimbabwean masonry and the self-cooling mounds of African termites!”

The session highlighted many other real-world biometrical applications ranging from Velcro™ and photovoltaic solar panels to advanced seawater desalination methods and more efficient Japanese bullet trains.

It’s hard to believe that science has just recently been able to harness the power of over three billion years of evolution on this planet. Generally speaking, Allen called animals in harmony with their environments “geniuses” at what they do.

In the case of the termite mound, without proper air flow, the insects’ young would literally cook and die. The margin of error is very slim and it’s taken millions of years for the “most evolutionary fit” version of termites to be able to pull off such an extraordinary feat. I think I’m going to look at nature much, much differently than I did before.

The panel was very well-received, and I’m sure that each of the audience members’ brains were swimming with ideas for their particular fields. As a digital marketer with a deep emphasis on SEM, I started to think about ways that nature could lead our industry in new paths of innovation.

How Biomimicry Could Be Applied To SEM

The following are some of my quick thoughts on the subject. Some of these are completely stretch–I’m not a biomimicry expert and I don’t claim to be.  However, hopefully, it will inspire some of you to think out of the box in ways you never thought before and look for inspiration all around you.

One of the more interesting case studies that Allen presented was how the Bank of England is holding up, considering how the human immune system could be used as a model for defending against future financial failures. Our body’s immune system actively works to seek and destroy infiltrations of bacteria, viruses, and other contaminants. Some economists think that there may be something to learn here about how passive fail-safes in the British economy only kicked in when it was too late to avert the crisis.

What if your SEM tool of choice didn’t need to wait for you to discover poor performing elements in your campaigns. What if it was smart enough to tackle problems on its own without the need to set bidding rules or alerts which required manual attention?

Ever notice that schools of fish never bump into each other? According to the session, a major auto manufacturer has been studying this dynamic for next-generation, computer driven cars.

What they’ve learned is that fish use a very simple algorithm to keep the fish on either side of them equally distant apart. This way, when one moves, it creates a cascading affect on the entire school. Very possibly, one day cars will be able to drive themselves and use these ideas to ensure that we never bump into each other either.

How can this be applied to SEM? Well, think about how the keywords in your account affect each other. If you take out too many of your assist terms, your main converting words suffer.

Could there be a way using attribution methodology to better understand how each keyword fits into the puzzle so that you don’t negatively affect one group of terms when you make changes to others? Is there an unknown school of fish algorithm that can better explain how our keywords move together?

In nature, the most innovative occurs in the ecotone which is the area of convergence between two systems, for example, between a meadow and a forest or a jungle and river. In the ecotone, the most wondrous plant and animal life come from the ecotone as each system affects each other to generate new dimensions to flourish.

I’ve always thought that online display can learn a lot from the data granularity and performance optimization of search and that search can learn from the creative aspect and audience and contextual focus of online display. Where the two disciplines meet could be where the most innovation occurs in digital marketing.  Think about what search professionals can learn when they apply SEM in conjunction with email, social, mobile, etc.

There are so many things to consider with biommimcry. Solar energy experts are studying how plants take sunlight and a waste product like carbon dioxide and turn it into energy via sugars. Bees have highly developed pattern and signal recognition that computer server companies are exploring for new insights into technological innovation.

The session ended with this quote from Albert Einstein:  “We still do not know one thousandth of one percent of what nature has revealed to us.” Pretty cool stuff, eh?

I’m not saying that the secret of successful search engine marketing lies within your local ecosystem. The point here is that inspiration comes in many forms. The next time you have a search engine marketing issue that you can’t solve, why not try some out of the box inspiration to help you fix the problem?

You just might find the solution where you never thought to look.