Looking at the initial launch, and the hoopla surrounding it, it would be easy to suggest that there has been some movement.

Looking at the week before and the four weeks subsequent to its launch, one could conclude that Bing did gain a share of impressions initially, and that led to a greater share of click more recently — signs of hope!

However, when one steps away from the microscope and looks at the longer term trends, the last four weeks “trends” appear to be more like random statistical noise.

The media blitz has just begun, I know, but until these numbers change meaningfully, I hope everyone will pardon us for turning our attention back to the other 95% of the game.

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You’re the marketing guy who drives sales for your company via paid search plus 100% ethical SEO. You do direct marketing like no one else. You’re working hard, doing great. Then one afternoon, the phone rings. It’s the big boss. “We’re in deep deep trouble — we just got a trademark alert from some aggressive trial lawyers from our online retail partners. Put our PPC marketing on hold now, just do it! We may need some of the best lawyers in America to get out of jail free on this one.”

You might have picked up on a couple, but those 8 sentences include 15 trademarks.*

Likewise, online advertisers occasionally don’t notice third-party trademarks when developing term lists and copy for paid search campaigns. In the case of reputable retailers and search agencies, the misuse is often accidental, but the legal consequences can be large.

Trademark law is based on the likelihood of confusion for the consumer. I can invent a beverage and name it “George’s Amazing Cola,” but I can’t legally call it “Coke” or “Coca-Cola”. The Coca Cola Corporation holds the trademark on their name, and plastering “Coke” on my drink would clearly confuse consumers. IP law also protects visual appearances (”trade dress”), so I can’t legally swirl “George’s Amazing Cola” in Coke’s distinctive red-and-white font.

A company can use another company’s mark in their advertising as long as it doesn’t create a likehood for confusion — say, in a comparison. I can advertise that “George’s Amazing Cola has half the sugar as Coca-Cola” (assuming that fact is true) without infringing on Coke’s IP.

George’s Amazing Cola of course wouldn’t run a print ad or TV ad saying: “Coke, but less expensive”. This is obviously confusing, and no legitimate agency would make that mistake. The number of different print ads and TV ads created is small, the number of eyeballs reviewing each is large; it would be hard to claim that print ad was a mistake.

However paid search managers may generate tens of thousands, perhaps millions of keywords for the search engines, each with its own ad text. Often this is done en masse and without a lawyer, or any human looking at the text before it goes live.

Suppose for example the guy I hired to do PPC thinks an ad for George’s Amazing Cola should come up any time someone searches for “Coke” or “Pepsi.” Having the ad show up isn’t a problem. However, if my PPC guy uses dynamic keyword insertion by custom and posts these keywords the same as he always does: “Get Here!”, I might be in trouble, big trouble. According to one lawyer we spoke with, the courts can interpret each impression as a trademark violation, carrying a $75,000 fine…per impression!

It’s not all that hard to avoid trademarks we see everyday, but there are over 800,000 active trademarks in the US, and many of them are not so obvious.

Suppose you make shirts for active wear, and your PPC manager decides to run all kinds of appropriate adjectives along with “shirt(s)”. She decides any of the following 12 adjectives in front of shirt would make sense: “Cool, hot, slick, super, comfort, red, blue, green, grey, nylon, rayon, cotton”. The two different versions of shirt, singular and plural, create: 24 different keyword advertisements…6 of which are trademark violations. Do you know which 6? Do you have any mechanism for figuring out which 6? Most folks don’t..

If a smart, well-meaning human can step in the mire this easily, imagine how much worse it is when machines are in control? Keywords are generated — sometimes without tremendous care — out of search logs (site search and user search strings from the engines), which could very well contain brands you don’t carry, not to mention other trademarks that no one other than the owner would know were protected. Couple this with the best practice of dynamic KW insertion in the ad text and you have a recipe for disaster.

A Modest Proposal: Ask-Before-Attack

Through an industry trade association, like the NRF or the IAB, establish a mutal “Ask-Before-Attack” collective contract. Advertisers signing the contract would agree that if they had a trademark dispute with any other member of the collective, they would raise that dispute first by calling the other member, marketer to marketer. No immediate lawsuits. If the other member complies and stops using the mark in a reasonable time frame, the mark owner must consider the issue settled. No lawsuits for past damages, regardless of how long the mark had been misused. If the other member disagrees, because they believe their use does not infringe, and they continue to use the mark, then the mark owner can bring in their lawyers and seek redress through conventional legal means.

I’m not a lawyer, and perhaps such an agreement would dangerously dilute marks.

However, PPC Advertising is still a new and VERY different medium. It is not clear that the courts, much less the mark owners recognize just how easy it is, given the volume of ads created and the absence of close scrutiny, for honest folks to get into a world of trouble.

* The trademarks “The Marketing Guy Who Drives Sales”, “Paid Search Plus”, “100% Ethical SEO”, “Direct Marketing Like No One Else”, “Working Hard, Doing Great”, “Big Boss”, “Deep Deep Trouble”, “Trademark Alert”, “Aggressive Trial Lawyers”, “Online Retail Partners”, “PPC”, “Marketing On Hold”, “Just Do It”, “The Best Lawyers In America”, “Get Out Of Jail Free” are each the property of their respective owners.

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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The volume of misinformation and hoopla surrounding Quality Score (QS) is astounding!

Some of the kooky ideas I’ve heard and read recently:

1. Quality Score is a measure of how well the landing page relates to the user search.

Utterly False: Web design shops may be guilty of propagating this myth, but it’s certainly persistent! Landing page plays the following role: if your landing page is just a collection of links to go elsewhere (usually sponsored links) you’re an AdSense Spammer and your QS will drop to zero. Good riddance! If your landing page loads really slowly, that will hurt your quality score. That’s it, nothing else. As long as you’re a credible destination and not crazy slow, landing page plays no role whatsoever.

2. Quality Score is a black box with lots of mysterious elements.


Not Really: The exact mechanism for calculating QS is proprietary, of course, but the elements in play are not: measured/historic CTR of the Keyword-copy combination , measured/historic adgroup CTR, measured/historic account CTR, measured/historic domain CTR. From these elements Google calculates a best guess for the CTR of the ad in question. This is normed for position, calculated only from google.com traffic that matches the KW exactly and fixed on a scale of 1 to 10. More on this final bit later.

3. The advent of Quality Score represented a major change for Google

False: The notion that positions should be determined by Bid x CTR was the brilliant insight that maximized Google’s revenue per impression per ad. Any step away from CTR would reduce their revenue. Quality Score had a major impact on AdSense Spammers and Affiliates, but changed very little for legitimate advertisers. For legitimate companies this represented a shift from measured CTR to predicted CTR (one and the same given adequate volume).

4. The way CPCs are calculated has changed dramatically

False: The magic formula revealed by Google’s chief economist is exactly the same as it was before with the respective QS in place of the CTR. As long as we understand that QS is a linear function of CTR, so that a QS of 8 means you have twice the predicted CTR of a QS of 4, there is no difference in the calculation pre- and post- QS launch.

5. PPC Programs can be managed simply by focusing on QS and paying little attention to bids

Are you serious?!? We actually heard someone make this claim on stage at a conference. Writing compelling ad copy is important. Highlighting differentiating reasons to shop with you is valuable. However, once the copy is tightly targeted, and the messages tested and compelling, there are no more levers to pull. It’s very difficult to beat well-written control copy in a test. Bids can be changed dynamically and smartly to respond to changes in traffic value, there is only so much tuning you can do with copy. If you don’t have a flexible, powerful bid management system perhaps you don’t have any other levers to play with, but if you do have a system you’ll get far more bang for your buck analyzing, reacting to and anticipating changes in performance data through proper bid management.

For legitimate advertisers, QS is simply a normed system for evaluating an ad’s CTR. One of the really clever features of this normalization is that the advertiser can get an immediate sense of whether the CTR is good, bad or indifferent and that’s a huge boon.

In the past if you saw that a KW-copy combination has a CTR of 3% and it’s in position 3 on average, there’s really no way to know if that’s good or bad. Not only did the position impact the raw CTR, making it hard to know whether the copy or the position was driving the number, the range of “good” CTR changes dramatically based on the KW. The tighter the KW defines user intent the higher the range of CTR will be for the sponsored links. The less clear the lower the range. Someone searching for “Yamaha” could be researching motorcycles, pianos or stereo equipment. Someone searching for a “Yamaha FZ6R” is pretty clearly looking for a street bike, so the match between advertiser and user will be very tight.

Normalizing the CTR so that you know at a glance ads that have a good CTR (QS >=7) or bad CTR (QS < 5). This lets you identify the KW with problematic CTR performance easily. There may not be an easy fix for low QS. If your competitors pitch "Low Price Guarantee and Next Day Shipping" and you can't match those offers, then you may not be able to win the copy battle. But, sometimes tightening the copy for a particular cluster of ads can materially impact performance. Normalization has made management easier.

Quality Score is important, just as CTR has always been, now we just have a bit better ability to identify and address the problem children.

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In reading over the legal document, it really only applies to Google Adwords accounts using daily budgets to cap spend. Furthermore, it pertains to instances where Google has overcharged advertisers an amount beyond that Account Budget Overrun. I believe this has previously been billed to advertisers as “Account Budget Overrun”, the total amount charged above and beyond the daily budget limit. Within the document, Google denies any wrongdoing.

Don’t take this as legal advice, but…
If you have used Google’s campaign daily budget feature over the past few years and have frequently been “overcharged” (above and beyond your daily budget), it might be worth taking a look at the settlement. Otherwise, it may not be worth investigating or pursing.

Barry Schwartz has a nice write-up of the payout breakdown.

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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.

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You may have heard hyperventilation to wit: Bing overtakes Yahoo! That turns out to be a gross overstatement, and a marvelous example of why it’s dangerous to extrapolate from small sample sets.

Here’s what we’ve seen so far in terms of PPC ads, the financial engine that drives the engines.

Remembering that Bing went live at the very end of May, beginning of June there are a couple of really interesting trends that leap off the page.

1. Totally unrelated to the Bing launch: Check out the weekend effect! Again, this is a percentage of totals, not a measure of absolute volume. It suggests that MSN gets a materially larger share of traffic during the work week than it does on the weekend. Does this mean people use MSN more frequently at work because it’s the default search engine for IE? Left to their own devises on the weekends, they choose Google/Yahoo even more often? Fascinating!
2. The Percentage of Total PPC Sales from the Big three coming through Bing increased substantially over MSN live, much more so than did costs, clicks or impressions. This could indicate better targeting logic, or that the folks giving Bing a test drive are decidedly higher quality prospects.

If we look more carefully into who’s losing the share of sales that Bing appears to have gained the answer is clearly not Yahoo. In fact Yahoo and MSN both seem to have benefited from MSN’s PR campaign. Not surprisingly the engine of choice for ‘early adopters’ — Google — is the one seeing its user base sniff out the competition.

With respect to Bing, the initial uptick in the quality of traffic is quite encouraging. Higher Sales per Click will lead to higher bids and more monetary share for MSN. The fact that despite the media blitz surrounding the launch, the impression share and click traffic share hardly moved is somewhat more concerning. If consumers are truly happier buying through Bing it could give MSN some momentum, but they can’t just rely on the early adopters and search geeks. They need to pull in and keep the average Joe as well.

As Lance Loveday points out, Bing has a steep hill to climb and it’s not clear that the media approach they’ve taken is going to do the job.

We’ll keep an eye on the trends. MSN has finally given us something to write about!

A follow up post, eliminating trademark search and controlling for a couple other factors paints a very different picture.

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Does your PPC program drive more sales than it’s credited for? The answer is certainly “yes”, but the sources and volume of under-reporting might surprise you.

If you drive your program through your web analytics software you may be missing 10 - 30% of the sales! This is not the fault of the software as much as it is the convenience of using javascript tags for tracking. In past years, part of the problem came from browsers not happy about running 3rd party javascripts, but those problems have been fixed.

The problem now is not with javascript flakiness as much as when the script is run. Almost everyone wisely puts the javascript tracking in the footer of their web pages. The reason? You don’t want the customer to have to wait for the javascript to run before loading the rest of the page. If there is any problem, you want the page to load and the footer to hang so that the user can shop unimpeded.

Herein lies the rub. Because it’s in the footer the javascript can only cookie the browser after the whole page loads. For heavy, slow, image-laden pages, customers often move on to the next page before the footer loads. If the user sits on that subsequent page long enough to fire the javascript the problem will be that you’ve lost the url parameters that allow your tracking system to know the source of the traffic. That user is now flagged as “untracked” even though they came through a paid advertisement.

We know this happens and understand the scale of the problem because it shows up whenever we do data audits with clients, but also because we sometimes employ both our standard tracking and a javascript tag when we’re studying marketing channel allocation for our PPC clients. The problem isn’t that orders we see are tracked to other programs; it’s that the sales we know came through a PPC ad aren’t tracked to any marketing program.

Knowing this, you might say: “Well, if I have a sense that this happens 20% of the time, can’t I just adjust my advertising efficiency thresholds by 20% to compensate?” Yes, you can, but the problem is that some destination pages are more susceptible to this problem than others, either because they load more slowly, or because users are more likely to navigate off of them quickly. This will disproportionately penalize some types of keywords over others resulting in lost opportunity as those ads are mistakenly bid down the page.

A better way to track high-dollar marketing programs is through use of a fast redirect. The redirect is fast if, and only if the redirect server doesn’t have to do a database look-up. If the server has to look up the destination url the redirect will be slow and the server will bog down during traffic bursts. We pass the final destination url to our redirector as an encoded parameter so the redirect takes less than 0.1 seconds and the volume of redirects is almost irrelevant.

Using a redirector provides much more robust tracking, but can/should be cause for concern as well. With all of that valuable traffic passing through a third party box it’s valid, indeed essential to ask: “what happens if the box goes down?” We stressed out about this, too. Our approach was to build in multiple redundancy by having multiple redirectors. To keep these independent, these servers are located across the country, and use different internet backbones. All the servers share the work, and are self-checking and self-correcting. If a data center becomes unavailable — say, due to a server failure (almost never), or due to DC connectivity problems (very rare), or due to routing hiccups somewhere on the web (not rare, but brief) — we use smart DNS to reroute traffic to the healthy machines within a minute. No system is 100% perfect, but this redundancy and automatic checking provides extremely high uptime.

Handling order allocation issues can be done on the fly, with the confirmation page tag sending marketing allocation along with the order details, or through a back-feed of order ids and marketing channel credited. Any competent search agency can then base its bidding and reporting on only those sales your system has flagged as paid search or unknown.

We see all the costs associated with PPC advertising, but we don’t see all the sales generated. While this post may cause some eyes to glaze over, understand that this is not minutia by any stretch of the imagination.

Better tracking technology plugs a big hole, but others remain. Users drop cookies, use multiple browsers, and sometimes search on one machine but place the order on another after shopping around. We can track spillover to the call center, but measuring foot traffic driven to the stores remains elusive. However, those who throw up their hands and conclude that direct marketing metrics shouldn’t be applied to search simply aren’t trying hard enough.

That’s the maxim, it doesn’t seem to apply to all relationships between service providers and those who hire them. More importantly, customers don’t want it to.

Consider the doctor-patient relationship. Doctors provide a service, patients hire doctors to take care of their medical needs, but there is no corollary notion that “the patient is always right.” If I walk into my doctor’s office and say “Doc, I feel awful, I think I have Ebola”, I most certainly don’t want him to take my word for it and send me to an Emergency Quarantine facility.

Similarly, I wouldn’t want my lawyer to turn to me in court and ask “Do you think I should object to that?” or “What questions should I ask this witness?”

If I ask an engineering firm to build a building using only tissue paper I trust that they’ll politely decline.

However, in a restaurant if I ordered a burger, fries and a beer I’d be pretty upset if the waiter said “You’re a bit over weight, and I’m a bit worried about your blood pressure. I’m going to bring you baked fish, a side salad and a glass of nice cold water instead.”

Even if we ask the waiter to bring us some lemon for our glass of milk, we expect the waiter to do what we’ve asked.

What’s the difference?

Three come to mind:

1. Knowledge Differential: The doctor knows more than we do about medicine, but we know more than the waiter does about what we want to eat.
2. The Stakes: Asking for and receiving a goofy haircut, buying a ridiculous tie, or ordering a Cabernet with halibut may offend the service provider’s sensibilities, but what’s the harm? Indeed we do want bartenders to refuse to serve us our fourth martini because the consequences of alcohol poisoning, drunk driving, etc are deadly serious.
3. The service provider’s comfort zone: It is no more difficult for the landscape contractor to plant the wrong shrub for the climate than it is for her/him to plant a better choice. However asking a lawyer to practice law differently, or a relief pitcher to throw pitches that aren’t in his repertoire poses significantly more difficulties. Imagine Susan, an orthopedic surgeon having shoulder surgery. If she hires Fred to do the surgery it’s probably wise to let Fred do the procedure his way, even if she’d do it differently.

What about the relationship between a PPC management firm and its clients? Is this closer to doctor-patient or waiter-customer?

Undoubtedly it varies. Some agencies and consultants offer little more than “a pair of hands” that require the customer’s guidance, but certainly the top agencies should be expected to have much deeper knowledge of search than their clients.

With respect to the stakes: to my knowledge, no one has died as a result of PPC advertising gone awry, but the volume of money can certainly mean jobs. Certainly if a client asked us to run “Daddy needs a new pair of shoes!” as the ad copy we’d try to talk them out of it, but would certainly accede if pressed. We do believe we have a responsibility to advise our clients against tactics that we know from experience will be a disaster for them, but there are no lives on the line.

The last criterion might be the most salient. There are different philosophies of what matters in search, different bid management approaches and different ways of handling account management. Asking your PPC vendor to engage in practices that they’re philosophically opposed to doesn’t make sense all around.

A good client-vendor relationship is predicated on a good fit between the client’s needs and the vendor’s approach. A critical part of the sales process should be assessing that fit. Neither party will be happy if the fit is wrong.

Is the PPC Client always right? No, but ultimately Yes. We think the responsible agency should push back when asked to do what their experience suggests will hurt the client’s interests. We think the agency should ultimately do what the client asks, and we think both parties should be free to exit the relationship quickly if the fit isn’t right.

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For the past 8 months RKG has reported on Year-Over-Year performance trends among our retail client base. For consistency we’ve studied the same group of 20+ companies who’ve been with us for more than two years and who spend significant amounts of money on PPC.

It’s important to note that the clients we study do not budget for search. Rather, we are given efficiency targets and tasked with spending as much as we can within those targets. Hence increases and decreases in spending are primarily tied to consumer behavior. As conversion rates and average order sizes increase we can spend more, as they fall we’re forced to spend less to hit the targets.

As we see the numbers, May represents the first real Year-Over-Year gain in quite some time. The median was a 10% lift in sales YOY. Folks ask us: “Do you have any clients that are (up significantly, down, down significantly, etc)?” to which the answer is “yes”. The standard deviation on the 10% growth is something like 40% and depends tremendously on the vertical.

Perhaps a more stable benchmark is “What fraction of the study group is up year over year?” Let’s look at those trends over the last 10 months:

Surprisingly, much of this growth has been fueled by rebounding Average Order Sizes. Traffic volume and Conversion rates remain weak.

A pessimist might suggest that this is a Mother’s Day phenomena. “Mom, we can’t afford to come see you this year, so we’re sending you a nicer than normal gift…”

We hope that it is emblematic of a recovery underway.

Anyone else care to share what they see?

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