Enter The Cookie: How RFSA Will Affect SEM

Imagine doing a search on Google for the word [fuzzy bunny slippers] and seeing a mortgage company touting their wares in the first paid result.

Impossible, you say, Google’s Quality Score would crush this hapless mortgage advertiser in just a few impressions, right? Maybe in 2011, but maybe not in 2012.

The reason: a new AdWords feature called AdWords Remarketing Lists for Search Ads (sometime  called RFSA). RFSA allows you to remarket to your site visitors – on Google Search Results.

So, if someone had just visited your mortgage website but not converted, you could conceivably re-market to this very user when he/she searched for [fuzzy bunny slippers] on Google.

The Significance Of Cookie Segmentation In Search Results

To be clear, the [fuzzy bunny slippers] analogy is a dramatic (but probably not very realistic) example. A better example would be an advertiser cookie-ing a user who visits a California Super Jumbo Refinance page on the advertiser’s site, and then serving an ad that emphasizes California super jumbo refinance rates when that same user types in [home loan] a few days later.

The advertiser might also elect to bid more for this particular user – pushing its ad to the top of the user’s personalized AdWords results – but not bid at all (or bid to a lower position) for any other user.

This is a profound change in the landscape of AdWords search advertising. If you think about Google AdWords today, you essentially have four ways to segment your traffic:

1. Query-level segmentation (this would include the keywords you buy and the match type you choose)
2. Geographic segmentation
3. Day-parting segmentation (time of day and day of week)
4. Device segmentation (desktop, tablet, and mobile phone)

RFSA represents the first time that Google is allowing advertisers to implement cookie-segmentation, that is, user-specific segmentation. The possibilities for this type of segmentation are endless. For example, you could:

• Exclude users who have already converted on your site from seeing your ad in their search results (and prevent navigational clicks to your site)
• Bucket users based on the page of your site they have visited (or time spent on site, etc.), and then boost bids on high-potential users and decrease or eliminate bids on low-potential users
• Create user-specific messaging in ad text that is based on user behavior on your site, instead of just the inferred intent from the query the user searched
• Bid on queries you would have previously avoided, but only for retargeting purposes (e.g., very high-volume keywords like [mortgage] or perhaps even [fuzzy bunny slippers] in an extreme case)
• Remarket or upsell new products to users who have already converted on another product

Haven’t We Seen This Movie Before?

As an advertiser, your initial reaction may range from glee (Yay! Better targeting on AdWords) to horror (Boo! More levers I have to try to manage in AdWords). My prediction for the ultimate impact of cookie-based segmentation in search results is that it will have a similar impact to the introduction of remarketing on the Google Display Network (GDN).

Remarketing on GDN has had several consequences for advertisers:

1. CPCs have increased. Remarketing increases the number of advertisers vying for a particular placement, thus increasing prices
2. Complexity has increased. Segmenting different users with different remarketing messages (and bids) takes a lot of effort Things have gotten a little easier since Google launched its new AdRoll-esque “smart” remarketing tag, but for advertisers with lots of products or services, remarketing segmentation is almost a full-time job(!)
3. It’s become a zero-sum game. Remarketing enables big spenders to generate millions of incremental impressions without hunting down every last placement on GDN. This encroachment of the big spenders only serves to push out smaller – perhaps more SEM-savvy – brands who were winning the long tail game on GDN. Remarketing helps kill the long tail on GDN

It stands to reason that RFSA on AdWords will have a similar impact: big advertisers with big budgets and big marketing teams will be able to a) spend more, b) get more clicks, c) create better targeting and d) generally push smaller advertisers out of more and more auctions.

While it is sad to see opportunities for small businesses on AdWords slowly disappear, it’s hard to fault Google for creating innovation that ultimately creates more relevant ad results.

The Moral Of The Story: Get To Know Your Cookies

Despite fears that regulators may launch a war on cookies (as in Europe, where legislation requires advertisers to potentially ask consumers for permission prior to installing a cookie), the trend – at least in the U.S. – seems to be moving toward an online advertising world where the cookie is truly king.

My agency focuses on search, social, and display, and in the last six months alone, each of these marketing channels has seen product releases that place a huge importance on cookies. These include:

• RFSA
• Google’s new smart remarketing tag
• Facebook’s FBX – which allows advertisers to retarget users within Facebook results

To be clear, this stuff is no longer just retargeting 101, the “this person didn’t convert so I’ll just follow them around the Internet until they do” type of marketing. Rather, this is highly nuanced segmentation of both potential and existing customers. It’s about modeling behavior and serving up ads with the right message, right offer, right timing and right bid based on personal behavioral data.

If you thought AdWords was complicated before with only query, geo, day, and device targeting, you ain’t seen nothin’ yet – cookie-based retargeting might just blow your mind. If this sort of segmentation takes off – and I think it will – all SEMs will have to start paying attention to cookies, and fast!