According to one industry observer, comScore is about to release numbers indicating Bing’s share has jumped 0.6% in the last month and a half, while Google and Yahoo each lost 0.3%. Now share of search volume and share of advertising revenue (factoring in syndication partners) are different animals, but from our data, comScore may be under-reporting the shift.

These data are aggregated so our higher spend clients dominate the results. We’ll take this apart to study medians later.

MSN/Bing’s growth from 5.3% in February of 2009, to 9.0% in February to date is highly impressive. Where much of that growth seemed to come at the expense of Yahoo early on after Bing’s launch, January and February show Google starting to feel the heat. Google’s share of paid search advertising dollars dropped from almost 81% in December to under 78% in the first week + of February.

Questions abound:

• Did Google buy a Superbowl ad because they’re seeing erosion of paid search share?
• Is Bing’s growth solely a function of Cashback, and is Cashback financially sustainable for them?
• While we and others have criticized Bing’s commercials, are they starting to have an impact?
• Has Google been distracted by all its other endeavors and taken its eye off its core product?
• Is there something screwy in our data that we haven’t accounted for?

Given that I pulled the data myself the odds of the last question being salient aren’t bad. One of our far more careful, thoughtful, judicious analysts will probably “tut, tut” me later.

Folks who budget search, and go so far as to budget by engine, might cause a shift in share simply by executive decision. But that’s not what we see in our data. Our clients don’t budget for the most part and don’t budget by engine at all. We’re spending more on Bing because the quantity and value of the traffic dictates spending more.

Paid search is only one piece of the advertising mix for Google, but it is a big piece. If this trend continues expect to see some refocusing from Google.

Love to hear if others are seeing similar trends!

Technorati Tags: Bing Market share, search engine market share

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This is one of those questions that has crossed my mind a number of times, but I never got around to looking at the data until now. I have no doubt that there are comScore studies out there, but with all due respect to those sharp folks, I don’t think their sample is representative of the general population.

METHODOLOGY

We took a random sample of our clients, and studied just over 1.8 million orders placed through our ads on those clients’ sites. We wanted to find out how loyal those buyers were to the engines they used. We eliminated all clicks from content networks, comparison shopping engines and other programs, so that we were left with only Google’s Adwords Network, Yahoo’s Network, MSN/Bing, and Ask.com’s Network. We also eliminated clicks on ads for different clients, and clicks more than 60 days prior to the order.

With this streamlined data set we answered the question:

For each engine, what fraction of the people using that engine first used that engine exclusively during their browsing?

We also looked to see whether the data looks different before Bing launched and subsequent to its launch.

FINDINGS

At first blush, the engines all appear to have fairly loyal followings.

This says that Google enjoys the highest level of loyalty with 97.6% of buyers who first touched a Google ad using only Google ads prior to their purchase.

However, this probably isn’t the right way to think about the phenomena. As we’ve noted previously, most PPC buyers touch only one ad before buying. The fact that they used only that one engine is perhaps less compelling evidence of ‘loyalty’ than we would see if we take a different tack.

In this next pass, we eliminated all the orders placed by people who only clicked one ad one time. What’s left answers the question:

For people who clicked more than one ad before buying, what fraction used the same engine/network for each click? And, has this changed since Bing launched?

These data paint a much more dramatic picture.

• Pretty clearly, Google users are much more loyal to their engine than the users of Yahoo and Bing.
• The degree of loyalty hasn’t shifted much since Bing’s launch, and one might surmise that Google folks are the ones testing the waters a bit as their loyalty number seems to have dipped a tiny bit.
• The Ask.com numbers are distorted by two factors: 1) on Ask.com Google ads intermix with their own; and 2) Most Ask.com traffic comes from their network, not Ask.com. As such, I’m eliminating them from the rest of the discussion (you’ll note some of the percentages below won’t quite add up to 100% as a result of excluding them after running the numbers.)

Once they leave, where do they go?

To do this analysis correctly, one would need to do a Markov chain analysis or something like it to look at transition probabilities. I didn’t have time to do that. Instead, I just looked at a gross measure of first engines and last engines within the set of multiple ad touch buyers. This obviates the distinction between Martha who went from Google => Yahoo => Google, and Ben who uses only Google. As such, having first engine and last engine the same is not identical to being an engine loyalist as studied above.

This is pretty cool data even given the crudeness of the study.

At first blush one might conclude that Yahoo and MSN are in big trouble: not only are Google users more loyal, but users of other engines are much more likely to move to Google than to any other. However, percentages lie. Google is the biggest so it’s normal that, for the subset that use more than one engine starting with MSN/Bing, most will go to Google.

The more interesting question is:

Do they migrate one way or another disproportionately to the size of the market share?

That’s what we show below. The expected percentage is calculated taking the relative market share — as defined by the entire data set from the first pass — of the other engines into account. We then calculated the percentage difference from the expected values.

This is kind of interesting! What strikes me is that MSN/Bing users are disproportionately more likely to move to Yahoo than to Google, and Yahoo users are disproportionately more likely to move to MSN/Bing. Perhaps this indicates that these folks really are committed to finding a Google alternative? I don’t know. I’m not entirely confident of my methodology/thought-process, and given that the first – last view is a pretty hacky approach we probably shouldn’t read too much into it.

CONCLUSIONS

Google appears to have by far the “stickiest” user base. This suggests that Bing has its work cut out for it if it is to gain share. That said, those who don’t use Google primarily are more likely to prefer other alternatives to Google than to follow the majority. The market demands a viable alternative.

WHO CARES?

This may be of most interest to the engines themselves — though they certainly already know this stuff — and perhaps to my friends at the big investment banks who want to gauge the future performance of those companies.

From a PPC management perspective, it’s kind of a non-issue. The lion’s share of the traffic comes from one touch buyers and engine loyalists. Moreover, by raw order count, the number of people who move from a first ad touch on engine X to a last ad touch on engine Y is almost exactly equal to the number moving from Y to X. This is true for all of the interaction Google <=> Yahoo; Yahoo <=> Bing; Bing <=> Google. As such the net effect on ad buying strategy is nil.

LIMITATIONS

Almost too many to list, but here are three more that might not be obvious.

• We’re only counting clicks on the advertisements. If someone clicks on a Google ad, then searches on Bing and clicks on a natural search link from that advertiser and makes a purchase, we’re calling them a Google-only user.
• Engine loyalty may have nothing to do with satisfaction levels. It is entirely possible that Yahoo and Bing are guaranteed to have lower loyalty numbers simply because of Google’s dominant market share. “Everyone” uses Google, so the curiosity-factor for Yahoo and Bing users has to be greater.
• We’re looking at Networks, here, so when Ebay switches from Yahoo’s network to Google’s people who used Ebay ads exclusively appear to have switched loyalties. Also, people who use off-beat search engines and bounce around might seem to be either loyalists if the sites all happen to be in one network, or switchers if they aren’t in the same network, even though their behavior is essentially the same.

I’d love to hear what others think about this. Am I looking at the numbers the right way? Am I thinking about the numbers the right way. Does this actually tell a story?

Technorati Tags: Bing Market share, MSN Yahoo agreement, search engine market share

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The goal of Cashback is to get more users to make Bing as their regular shopping-related destination.  But most of the increase in traffic that we’ve seen thus far has come from deal websites and forums, where users will post that if you search for a specific keyword, you’ll get a percentage off at an advertiser.  What usually follows is a deluge of traffic on a keyword or small set of keywords.  This effect isn’t inherently good or bad: in many cases, we’ve seen traffic (and costs) spike, and there is a commensurate increase in sales.  In other cases, costs will rise and the keyword will become grossly inefficient.  But this effect does a few things.

First, data for that keyword is now meaningless: its performance is no longer driven by the natural search behavior of users.  Second, if the term suddenly has great performance, it’s important to keep the keyword’s bid in check when the deluge stops: a term for which you should pay $0.50 shouldn’t be bid $2 in response to the influx of forum traffic, because you’ll be burned when the traffic stops (and you shouldn’t pay $2 even when the traffic is coming).  Third, it forces more attention to be paid to MSN, the smallest engine, to make sure costs don’t run away on a single term.

2. Direct Links From Forums Can Circumvent Tracking

In many cases, forums will post Cashback-related deals tied to a specific keyword that a user has discovered.  In recent cases, however, users will post links that send the user directly to Cashback, bypassing the advertiser’s (or agency’s) tracking.  The effect is twofold: first, depending on how their tracking is set up, the advertiser is likely no longer able to tell that the traffic is coming from Bing, since it skips tracking appended to URLs and tracking that is dependent on an agency’s redirect server.  Instead of seeing a spike in traffic and a spike in PPC sales, there’s just silence.

Second, because the Cashback piggy bank is paid for by a portion of an advertisers ad spend, this direct traffic will deplete the funds in the piggy bank without contributing to it.  Because of the lack of tracking information, it’s important to keep an eye on sales (and the piggy bank) at all times.  Without careful management, this can create a problem due to the third issue.

Bing has told us that direct links should no longer work for Cashback sometime around October 15th, and we’ll provide an update once it’s confirmed that the situation has changed.  Until then, advertisers who are on Cashback should make it a priority to check whether or not their website is generating sales that aren’t being properly tracked, and should make sure that their piggy bank is in good health.

3. Microsoft Holds Advertisers Ultimately Responsible For the Funds in the Piggy Bank

Provided that your Cashback percentage is set intelligently, the ad spend you incur should offset the sales that are generated through Cashback-enabled ads.  But should an imbalance be created and go unresolved, Microsoft will invoice the advertiser in 30 days for the negative balance in the Piggy Bank.

This is understandable.  Microsoft shouldn’t be on the hook for huge discounts that retailers offer — there’s no reason for them to foot the bill for a company’s sale.  But rather than turn off an advertiser’s ads when a large imbalance occurs, or even throw a number of red flags, MSN lets the ads continue to run and simply bills the advertiser later.

Coupled with the previous issue that we’ve noticed — shoppers using direct links that circumvent advertiser tracking and the piggy bank — this creates the possibility of making the advertiser responsible for huge discounts on traffic they didn’t know existed.  It is entirely possible that sales will spike many-fold and you’re left unaware of the situation until Microsoft sends you the bill.

Update: In response to this post, Bing pointed out that they send a weekly email with the status of your piggy bank and they are happy to talk with advertisers about improving the performance of their campaigns. These reports show the number of clicks, the amount of transactions and the amount owed in rewards vs the remaining funds in the piggy bank.

We believe that it is critically important that advertisers read and understand these reports. The volume of submitted Cashback rebates can spike suddenly due to traffic from forums and deal websites. Bing will not stop your piggy bank from running into the negative; should it do so, advertisers can later be billed for the amount they owe in rewards.

We’ll leave it for others to decide whether or not, carefully managed, this can be a profitable business model for them: theoretically, you could capitalize on the possibility of forum traffic by setting a high Cashback percentage, raking in the sales, and simply paying back Bing for the traffic.  In this case, you would set your Cashback rebate to whatever your A/S target ought to be: if your cost-to-sales target is 20%, simply pay Bing 20% for the sales they’ve helped generate by setting a Cashback percentage of 20%.  But we feel that this is more similar to affiliate marketing than PPC, and we’d prefer that Cashback traffic come from searchers who choose to use Bing, rather than deal-seekers who bypass Bing altogether.

4. Fraud Can Become A Problem

We’ve seen two main sources of user fraud when our clients have opted into Cashback.

First, users will make purchases with the intent of getting Cashback discounts, and then return the item later.  The Cashback waiting period is 60 days, so advertisers who who have return policies longer than 60 days are especially at risk of having users make large purchases and then return the items later.  For those who have shorter return periods, it is crucial that the retailer set up an arrangement (most likely a feed) with Bing to report to them orders that are returned so that those funds are not depleted from the piggy bank.  Bing has made it clear to us that it is (understandably) the responsibility of the advertiser to deal with returns.

Second, users would use Cashback and buy gift cards in huge amounts — greater than $1000, and sometimes as high as $5000 — and receive Cashback on the gift card purchase.  After receiving the card, the users would then return to the site and make another purchase using the card, receiving Cashback a second time.  This creates an large imbalance between the funds entering and the funds leaving the piggy bank, since users are making expensive purchases (twice) without generating an appreciable amount in costs.  Many retailers (smartly) exclude gift cards from Cashback eligibility.

5.  Don’t Run Your Brand Terms on Cashback

It’s not smart to opt your Brand terms into Cashback.  None of our clients have done so — we urge them not to.  The primary reason for this is due to the same piggy bank balancing that’s required to properly run a Cashback campaign.  Brand keywords are cheap to run.  Even if your total costs on brand terms are quite high, the conversion rate on brand terms is typically much, much higher than it is for non-brand terms.  By including brand keywords in Cashback, you’re going to be paying high rebate amounts out of your piggy bank with a disproportionately low level of associated costs to refund the bank.  You might find yourself quickly in the red — something that Bing told us has happened to other retailers.

Conclusion

Whether or not Cashback is Bing’s ticket to challenging Google in the world of search is debatable.  We’ve written previously that with clever marketing, Bing could overtake Google in the world of shopping-related search.  The issues we’ve outlined here aren’t crippling to Cashback, and they can all be successfully managed.  It’s just important that advertisers do so.

Technorati Tags: Bing Cashback, Bing Market share, discounts, paid-search

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For the average RKG client, Bing’s share of clicks grew noticeably over July and August after showing little change in June.  Just under 6% of paid search clicks from the big three engines came from Bing in June.  That percentage grew to 6.7% in August, easily a high for 2009.

Interestingly, the story is a bit different if we combine all client results rather than taking an average.  Under this view, MSN’s share of clicks has increased more steadily in 2009.  In January, 5.6% of RKG client clicks came from MSN.  By August that had increased a full 2 points to 7.6%.

So, is Microsoft’s huge investment paying off?

With Microsoft and Yahoo’s pending search partnership, we need to consider the source of the new Bing click share.  Unfortunately for Microhoo, it appears that they have simply moved share from column A to column B, while Google remains as dominant in the space as ever:

Technorati Tags: Bing Market share, MSN Market share

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They will have a tough time convincing us that the Google natural search results we’ve relied on for years are somehow defective. That’s good; it should be hard to convince people that night is day.

A much more compelling message would be:

“Shop through Bing Cashback links and save up to 50%”

“Give up your trusted resource to try ours” — hard sell; “Save money here” — easy sell

Our Microsoft rep came to visit earlier this month to talk about the new, better presentation of Cashback that is coming soon. The interstitial pages will vanish in the new system provided the retailer can place the Cashback promo on their site. This will take some programing by the advertisers, and whether they are willing to make the effort for a tiny program and are able to devote IT time to this pre-Q4 lock-downs remains to be seen.

As it runs now the interstitial pages depress conversion rates enough to offset some or all of the benefits of the discounts. Better presentation will help tremendously.

Essentially Bing Cashback allows retailers to use up to 75% of the money they spend on Bing advertising to subsidize discounts. Who doesn’t like the idea of giving discounts without sacrificing margin? [There are interesting games to be played with the discount percentages to make sure retailers use up all of the Cashback funding available and use it as wisely as possible that I'll detail in a subsequent post.]

The point is this: to take down Google Bing doesn’t need to gain a majority of the natural search traffic, they just need to gain the edge in the shopping traffic. That’s where all the money is. Let Google have the money eating research traffic. If shoppers learn that they save money by shopping on Bing then the advertising dollars will follow.

And, Google remains vulnerable here. Folks at the very top of the org chart assured me that the broad match bug we identified was in fact a bug and that they would fix it, but 8 months later it hasn’t been fixed. They say they’ve been focused on the new UI and that now they’ll take a look at this, but come on folks, we’re talking about one line of code. The reality is Google fears that fixing this will lead to reduced revenue at a time when their growth rate has slowed, and they’re feeling the weight of unprofitable ventures like YouTube.

As it stands advertiser’s ads compete with themselves for traffic, and less targeted keywords with higher bids and the wrong landing pages are served instead of exact matched keywords with better pages. Bad experience for the users, bad experience for the advertisers who end up having to bid down keywords when they shouldn’t, and ultimately this may prove to be Google’s Achilles heel.

The door is open for Microsoft to buy the traffic that is the life blood of their competitor in this space. Will they walk through that door?

Technorati Tags: Bing Cashback, bing gains share, Google broad match

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Search Engine Land has a good write-up outlining the arrangement.

Our take? This is a good thing for PPC on three fronts:

1. The Yahoo service reps stay on using the MSN platform. This takes the best of both worlds. Yahoo’s reps have always been top drawer in our experience and the Bing API interface is excellent — it would be great if they didn’t update the API every time there is a .net update, and if they didn’t force ordering on XML which should be stateless, but…
2. By combining traffic, the Bing and Yahoo data sets will be far more robust allowing data-driven firms to work more of their magic. Heck demographic targeting might actually become valuable when there is enough data to model.
3. Reducing redundancy won’t hurt. Having to launch promotional copy across three engines takes time. Dropping from 3 to 2 will reduce grunt work and allow our analysts more time to focus on higher value analysis.

None of this will happen over night. They expect to close the deal in early 2010 after careful sniffing by regulators, and “full implementation” may take 24 months.

Will “Ya-Bing!” pose a real threat to Google? We’ll see. Looking just at Paid Search, the share is still only 20%. Google is still hugely dominant. But it certainly gives Microsoft a fighting chance. Now, if they can just pry AOL away from Google…

Technorati Tags: MSN Yahoo agreement, Yahoo Bing alliance

On the Shopping homepage, what happens when someone clicks on the link for “Beautiful bathing suits” under “Plus size summer fashion”? Answer – A Bing Shopping search is performed for the search query: “women’s plus size swimwear”.

Notice that MSN adCenter PPC ads are now visible, even though the user never queried that particular phrase.

As an advertiser, do I like the fact that my ads are appearing or not? On one hand, I’m almost guaranteed to receive more impressions, and likely clicks, since users don’t have to type any query into a search box in order to see my ad. Instead, the user is prompted to shop for the category/product by Bing Shopping homepage suggestions. This however, could also be the very reason that I dislike these listings. If users were not actively searching for the category/product, one could argue that they may be less likely to convert. We’d possibly encounter increased traffic volume on lower quality buyers.

In general, I don’t think the extra traffic will cause headaches from a PPC perspective. Most of the traffic should be relevant, and should hopefully increase the sales volume at the same ROI. However, I’d pay close attention to any general phrases, though, as they have the greatest danger for buyers who are early on in their purchasing decision. (ex. Under “Father’s Day electronics” one of the results is “laptops”)

Something to be mindful of!

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One of our Senior Analysts pointed out to me that the Bing Launch numbers look quite a bit different if a couple of factors are taken out of consideration. Eliminating data from trademark searches for our clients’ brands for some reason paints a substantially different picture. Thankfully, I was able to re-run the numbers before speaking with the Wall Street Journal!

Here are the more carefully calculated numbers:

Clearly, the big motion from the pre-launch week beginning 5/25/09 to the first week post launch beginning 6/1/09 was in the share of impressions. MSN’s share of impressions among the big three (excluding content ads) moved from 3.1% to 3.7%, a 22% increase. Lots of folks checking out the new kid on the block, not many actually clicking on the ads. The slight upticks in conversion rates and AOV may be a function of better targeting, or stealing quality traffic, or it may just be statistical noise.

Who’s losing share of impressions to them? Yahoo indeed:

Pretty clearly, the industry junkies and others swayed by the media buzz are giving Bing a look. To succeed, Bing will need to do more than generate impressions. Bing needs to capture dedicated users and become the engine of choice for serious shoppers. That will take time, money for buzz creation, and ultimately a truly better search experience. Microsoft has the first two, but we’ll see what conclusion users draw about the last.

Technorati Tags: Bing Launch, MSN Market share, search engine market share

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A couple of notes on the data:

• The benchmark we’re using is advertising expense not impressions or traffic volume.
• We looked at Paid Search only, not content or banner deals
• We studied the advertising network, not strictly the engine’s domain.
• Our systems are engine agnostic: our clients do not set engine budgets, indeed most don’t have budgets at all. We allow money to flow based strictly on where traffic can be purchased within efficiency tolerances.

Given that understanding, here’s what we saw over the past 15 months:

Two observations come to mind:

1. It appears that since last August, Yahoo! has regained some ground.
2. Google seemed to get a larger holiday kick than the others.
3. Even with MSN Cashback and MSN’s willingness to buy Market Share from Google — I’m sure others saw Google ads for Live Search on high traffic KW, yes? — MSN gained no share whatsoever.

With respect to 1, I’m not sure if the fluctuations between Google and Yahoo relate to Yahoo showing Google ads for a period last spring and summer, or network partners coming and going. Could Google’s holiday bump be a function of advertiser’s focusing more on Google bidding than others at the holiday driving up CPCs for those of us who apply seasonal adjustments automatically across all engines?

Do others see similar trends? Do others have better explanations than I do for them?

Technorati Tags: Paid Search Engine Share, PPC Market share

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