Sep 162010

Are Two Hooks Better than One?

Paid search's ability to drive a substantial volume of sales cost effectively leads many marketers to assume that they can double their success by simply creating another website. By creating an alter-ego company that carries the same goods and services, it is not unreasonable to assume that one could effectively have two hooks in the water and get double the benefit from paid search.

In our experience, it helps in some cases but not in most.

The engines understandably frown on this sort of behavior; duplicate listings whether paid or organic reduce the user's options and therefore worsen the user experience. Google used to police this heavily, but I think they've found, as we have, that ultimately advertisers will police this themselves.

In categories with many well-known companies competing in the sponsored listings, we've found the click-through rates for the new no-name brands to be so bad that gaining traction is simply cost prohibitive.

Brand matters!!! Good reputations generate clicks, improving QS and reducing the cost of prominent placement. Moreover, trust improves conversion rates making the traffic more valuable allowing for higher bids and the virtuous cycle continues.

Even in segments with mostly less well-known advertisers competing for traffic, the second listing often does more harm than good if the price points are high. We've often seen click fees effectively double as a result of the second hook, but conversion rates essentially drop in half for the two sites combined, particularly for more considered purchases. It makes sense: for a high ticket purchase when comparison shopping is likely the same user is exposed to the same experience twice: same selection of goods and services, same price points. Two hooks = twice as much bait, but still just one fish taking the bait.

The Exceptions:
This is much less true when the price points are low, the selections are compelling, conversion rates are high and the customer is likely to buy from the first merchant that has what s/he wants at a reasonable price. Having two offerings can be quite cost effective in these cases.

Having multiple hooks is also very effective for conglomerates, where the different brands have truly different offerings, different histories and likely different customer demographics. Gap Inc. doesn't have this problem because the Gap, Old Navy, Banana Republic, etc. are truly different companies.

Two hooks on the same line oftentimes doesn't work. Two different fishermen (fisherpeople?) in slightly different parts of the lake does.

Cross-brand effects are a fascinating subject in and of themselves: if someone clicks on a Gap ad, but tabs over and buys from Old Navy, should the Gap ad get credit for driving that order? Does it depend on whether the user conducts another search in the interim? Does it depend on the time lag? Interesting questions, but we'll go into that another day.

Have you folks had similar experiences, or is there magic to duplication in situations that we haven't encountered?


4 Responses to "Are Two Hooks Better than One?"
Jun says:
Another great post here George. My team had the same experience before. We created an alter-ego for our site, and it did not work the way we expected it to be. To correct the issue, here's what we did. Instead of duplicating the entire site, we created micro-sites, each of which focuses on a targeted aspect of the business we are in. Then slowly moving the campaigns from the main website to the more targeted micro-sites. And it worked like a charm. Increasing QS, and of course conversions and ROI.
Tomas says:
Hi George, we're seeing increasingly that companies inadvertently end up in this situation b/c their business divisions in the past set up their own websites and ran them independently from the corporate mothership. Now that head offices have caught on, they want to centralize their marketing. So i don't think you can purely approach this phenomenon on a rational basis as their is often a lot of company politics and history underlying these practices. Personally, I prefer clients that concentrate their efforts where they are most likely to pay off. When a brand is strong, it most often makes sense to build around that. When the sub brands are distinct one should keep it like that. the one area where it makes real sense to have a holding company consolidating marketing i think is in areas like remarketing. By combining user information from various websites, one is better able to build user profiles for highly targeted and complimentary marketing across websites.
Jun, Tomas, thank you for your comments. Jun, we too have seen the micro-site approach work very well in some cases. Tomas, you raise an excellent point: History can tie hands.


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