Jul 152009

Multi-Channel Impact on PPC

My monthly PPC Column at Search Engine Land in case you missed it.

At the Rimm-Kaufman Group, we've spent a good bit of time over the last year studying the impact of multi-channel marketing on PPC advertising. By studying all traffic to our client's sites we can determine how often multi-channel interactions happen, how the different channels behave with respect to tendencies to be involved in these multi-touch interactions and tendencies to be first rather than last. Armed with this data, we can then see how different allocation schemes impact perceptions of each marketing program.

Previously, we tried to put the "PPC Buying Cycle" -- touches on multiple PPC ads -- into its proper perspective. Turns out it's a pretty small effect. Unfortunately, many agencies continue to hype the effect as they seem solely interested in having their clients spend more rather than spend wisely. Is the same true with the "Cross-Channel Buying Cycle?" Yes and no.

As we look at the data across a number of multi-channel retailers we've found that marked differences in the way consumers use each channel mean that cross-channel interactions have profound impact on some channels and not much on others.

Likelihood of Multiple Touches

Channels that have the greatest likelihood of multiple touches, have the most potential to be impacted by changing allocation from last touch to something more advanced. Our data suggests that the channels most likely to involve multiple touches are: affiliates, comparison shopping engines, and email.

Consumers who buy after clicking a Competitive (non brand) Paid Search ad are the least likely to have been to the site previously through a different channel. In our research, only 10 to 20% of buyers who touched a PPC ad last came through any other channel previously. Compare this to Affiliate traffic, where 60 - 75% of buyers came through another channel first.

This means shifting from last touch to shared credit to first touch allocation only impacts 10 to 20% of PPC orders, while the same shift has a much larger impact on the perceived value of affiliates, CSEs and email.

Initiators versus Followers

If channels were all equally likely to be first as last in multichannel interactions we might find that the net effect of changing allocation schemes is zero. That turns out not to be the case. Some channels are far more likely than others to be the first touch when more than one channel is used.

Competitive PPC is much more likely to be the first touch when there are multiple touches involved. This means that moving credit from last touch towards earlier touches does tend to "help" PPC. Natural search benefits from this same phenomena.

In contrast affiliates are almost always the last touch in multi-touch interactions, meaning shifts away from last touch credit have a decidedly negative impact on the perceived value of affiliate programs. CSEs and email tend to suffer as well.

The Net Effect

What we've found is that these two factors together mean that yes, in fact, the perception of PPC benefits from crediting earlier touches in the cycle. However, because fewer PPC orders are in play than other channels -- that first effect -- the change is smaller than many folks seem to think. Indeed, in our research moving credit from 100% to the last touch to 100% to the first touch, competitive PPC only picks up 5 to 10%. Less draconian allocation shifts take those numbers down even further.

Shop.org is organizing a group to define standards for credit allocation. I've joined this group, and I hope that folks in the group are as interested as I am at looking at data rather than hyperbole. It's not clear to me that a single standard would even make sense, but defining terms, understanding the data requirements etc could be useful. We shall see.

Stay tuned for more data from our multichannel research to date.


7 Responses to "Multi-Channel Impact on PPC"
Jim Novo says:
Awesome work, confirms what I have seen. Your data sets are much larger and varied so it's comforting to get the "so it's not just our business" flag thrown. If you think through the average search behavior, it's not a surprise that affiliates and CSE's tend to be the more cannibalistic sources. First people try to find the product that meets their needs, THEN they go looking around to confirm / justify price.
Thanks Jim. It is gratifying and comforting when what "makes sense" is supported by the data. Via Twitter we heard that Kevin Hillstrom sees similar numbers as well. We can't ALL be wrong, can we? :-)
Billy Wolt says:
Does your data include affiliates who are running ppc or just banners? Should companies go to such drastic measures as limiting what channels affiliates can use? Perhaps after that initial ppc, the customer recognizes the brand banner and is more likely to click and purchase? I'm just thinking outloud, just a random bunch of thoughts on this subject.
Hi Billy, This definitely includes affiliates running PPC ads. One client noted that their top 5 affiliates were also the top 5 sponsored links on Google when someone searches for "{Trademark) Coupon". Most affiliates claim that they have tons of loyal users who go to them first and find deals. I suspect that in truth even the biggest players get the vast majority of their traffic from "Brand Coupon" searches. Does it make sense to prevent affiliates from using PPC ads? Amazon thinks so, and so do I.
Billy Wolt says:
I'm glad Amazon turned off ppc for affiliates. We saw drastic changes since that policy went into effect in May. Hopefully other retailers will wake up and see how affiliate ppc is actually hurting their internal efforts.


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