September 1, 2005, 12:00 AM

Making Paid Search Pay Off

In the race between Google and Yahoo, it`s strategy that wins for marketers

Take Coke vs. Pepsi, translate the concept into the world of paid search marketing, and you`ve got Google and Yahoo. Like the two cola giants, the two engines are the dominant brands and they`ve saturated their marketplace. And like Coke and Pepsi, at first pass they may seem little different--at least in terms of their audience and their ability to do what pay-per-click search engines do: connect advertisers with customers.

But subtle differences exist and the question for retailers is: How much impact does choosing one over the other have on a search engine marketing campaign? More specifically, are those differences ever sufficient to justify betting the whole farm on one engine over another for pay-per-click campaigns?

In what`s essentially a two-horse race (because paid search results on MSN.com, the third major search portal, are provided by Yahoo), the short answer from search marketing consultants is: No. Marketers want to be on every engine they can. But a more complete answer to search engine strategy is more complex and nuanced than that, and it stands to become even more so as the search engine marketplace expands.

It`s both

"Now, any major advertiser is crazy not to be on both Google and Yahoo, because there`s just no disadvantage," says Nico Brooks, director of search technology at digital marketing technologies provider Atlas, a unit of aQuantive. "On a campaign of 1,000 viewers and 10 keywords, you`re better off halving the size of the campaign and taking the five best-performing campaigns to both engines than picking one engine over another."

In fact, most big pay-per-click marketers play on both engines, and often with the same keywords. Though there`s significant overlap in the users reached by the two engines, there are also subtle differences in audience demo- graphics, psychographics, ad position determination and other factors that account for the fact that the same keywords don`t perform identically on different engines.

One of the most significant differences is in how Google and Yahoo rank paid ad listings on the page. Yahoo`s model allows a straight bid for position. The way to be in the top position under Yahoo`s sponsored listings for a given keyword is to pay the highest cost per click on that word. Some PPC marketers prefer this model because they like to know exactly which position they are getting for what they are spending and because it gives them the power to obtain a particular rank on the list, if they are willing to pay for it.

Google uses a relevancy algorithm that blends what the marketer pays per click with the number of clicks a listing gets from users to determine the ranking of paid results listing for a given keyword. The result is that, unlike on Yahoo, on Google marketers can`t control whether they`re in the top positions simply by boosting their payment per click.

"We treat click-through rate as a vote by the end user," says John McAteer, head of Google Retail. "By clicking, users are telling the advertiser what is most important to them." McAteer says it`s Google`s belief that ad ranking delivers more meaningful results to searchers. "The proof would have to come from advertisers working with both Google and Yahoo to see what works best for them," he says.

Check out the difference

Director of the retail search category at Yahoo Search Marketing Diane Rinaldo points out that Google`s model favors marketers that have a strong click-through rate. "With our model, they bid for position, but then, those marketers with strong click-through rates don`t have the same advantage they have on Google," she says. As a result, she adds, some marketers view Yahoo`s model as an advantage, some as a disadvantage. "It`s the same with AdRank," she says. "Some love it, some hate it."

Beyond the difference in how they position ads, experts say some audience differences among the engines are worth calling out. For one, Google gets the most searchers. In June, for example, Google`s total audience in unique visitors for paid and unpaid search across Google.com and the sites to which it distributes search results was 79.96 million, compared with 64.03 million at Yahoo sites and 47.77 million at MSN sites, according to comScore Networks Inc. AOL had 34.06 million searchers, while Ask Jeeves had 39.82 million.

Google`s greater traffic volume is a key part of how it positions itself against other engines. "Google pushes its relevancy and sheer traffic numbers. They do still have the majority market share and they want to tell you about how many people you are going to reach and how much you are going to be out there," says Tim Kauffold, director of client services at search engine marketing company OneUpWeb LLC.

The engine audiences differ slightly in gender composition. Among the top five engines, the search audiences at MSN, AOL and Ask Jeeves skew slightly toward female users. In June, 51% of MSN search users were women, as were 51.9% of searchers at AOL and 53.7% at Ask Jeeves. At Google, however, the audience skews towards males: 51.5% in June, according to comScore. Yahoo`s search audience was split almost exactly between men and women.

"The differences aren`t huge, but with 48.5% of Google users being female versus 52% at AOL, that equates to a pretty big delta when you`re talking about the entire Internet population," says James Lamberti, vice president at comScore. That may have implications for marketers targeting a male or a female audience.

Buying power

Lamberti notes other differences among engines found in comScore`s data. ComScore`s buying power index--the average of any given demographic group`s propensity to buy online--shows that in June, users of MSN search were 48% more likely than the average Internet user to buy online, versus Google search users, 42% more likely to buy; and Yahoo search users, 31% more likely. Ask Jeeves search users were 17% more likely to buy than the average Internet users, and AOL Search users, 3% more likely. "That`s important to showing the value of the consumer and the fact that they have money in their pockets," Lamberti says.

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