Tracked Performance: a Double-Edged Sword
The ability of advertisers to measure the performance of paid search has made Google the massive, profitable and growing enterprise that it is. As internet access and speed improves significant natural growth will continue for years to come.
However tracking also makes it tougher for Google to sell more advertising and more types of advertising to the same customer base.
IN THE BEGINNING…
10 Years ago, advertisers spent lots of money with web portals. AOL, Yahoo, and MSN commanded huge fees for prominent placements within their shopping malls, and advertisers were willing to pay those fees because the high-level tracking suggested that they drove a great many sales.
Direct marketers at the time also learned that “Banners suck.” Given that, the portals were about the only game in town.
Time-Warner became AOL/Time-Warner
However, as the tracking became more granular, and advertisers had the ability to learn which placements within those portals ‘drove’ all the sales, they learned much to their dismay that it wasn’t the “Anchor Tenant”/ Gold Merchant placements that drove business, rather the lion’s share of the sales came from user’s searching for the advertiser’s by name. AOL “drove” sales through “AOL Keyword [Your Trademark].”
Advertisers recoiled and the swaggering sales reps from the portals found it difficult to get companies to re-up.
At the same time, Goto, Comparison Shopping Engines, and upstart Google provided an advertising environment through which performance could be tracked to the most granular levels. That tracking revealed that the money previously wasted on portals and banners could be invested in these search engines for much much greater returns on investment.
AOL/Time-Warner became…Time-Warner, money poured into the search engines, and Google became the darling of Wall Street.
As SERPs become saturated with ads, and CPCs become naturally limited by the tracked value of the traffic, revenue growth through paid search becomes more challenging for the engines and more limited to the sheer number of searches conducted.
Advertising dollars drawn to the engines by the strong ROI are now limited by those same ROI constraints.
Content advertising has failed to provide the growth opportunity desired because the tracked performance suggests that traffic isn’t worth very much.
Display advertising (don’t call them “banners”), in-stream video ads, and mobile ads are hoped to be the new opportunities for getting back to the huge growth rates in online advertising enjoyed in the first decade of the 21st Century.
But that tracking thing poses problems when the ROI isn’t apparent. To date, few advertisers have found the measured ROI of those channels to be able to withstand the kind of ad spend that goes into paid search.
At RKG we’re wading into the Display Advertising arena hoping that our facility with data driven marketing, coupled with the new tools available for controlling ad service, coupled with the new, more efficient marketplaces for buying display advertising will yield measurable ROI at meaningful volumes. We shall see.
In the meantime, those with an interest in pushing advertisers to spend more harp on two different themes:
- Ads drive more business than tracking reveals; and
- It shouldn’t be all about ROI anyway, advertisers should think about the branding value.
There is also great truth in #2, but there is trouble lurking here as well. Clearly exposure to an advertiser’s brand has value, whether a visit to the website, a compelling display ad impression, or even a glace at a text ad. How much value there is in each of those very different levels of brand involvement is hard to say. But the problem is larger than the more esoteric value calculations alone.
The problem is competition. Advertisers have no shortage of opportunities to spend branding dollars. There have always been opportunities to place advertising for brand building. Whether through billboards, store signage, print, radio, direct mail, television, the opportunities for and competition for branding dollars is huge and long-standing.
Paid search sold itself, but as the engines wade into the pool of brand building ad sales they will find many old, large, ferocious sharks in the water. Momentum and time are certainly on the side of the engines and ad exchange networks as the web continues to draw more and more eyeball-hours. However, selling brand advertising is a different beast, requiring far more effort and expense. Growth in these media will happen, no question about it, but it will be hard won growth.
Detailed tracking will change brand advertising, too. Smart brand advertisers and their agencies will think deeply about the value of different types of brand interactions and how a user’s past experiences with the brand might influence those values. Driving by the right metrics will produce better ROI no matter how distant the connection between the R and the I.
It has been said that “offline dollars turn into online dimes” as a result of tracking, and perhaps that is as it should be.
The road ahead is exciting, but very different from the road we leave behind.