September 30, 2008, 12:00 AM

Google takes the wraps off

The search king gives marketers more insights to work with—and more to do.

Secrecy was long the watchword at Google. But as it’s become increasingly dominant, and scrutinized, Google has gradually changed its ways, providing marketers with more information that can help them move up in paid search results and improve ROI in other ways.

For instance, Google is providing more transparency into how it calculates the Quality Score that determines the position of a retailer’s ad on a search results page, and more ways for advertisers to fine-tune pay-per-click programs.

“Google realizes that the more data they give us, the better decisions we can make, the more money we can make and the more money Google can make,” says Christopher Kenney, senior marketing specialist for VistaPrint Ltd., an online retailer of customized business cards and other office products.

That’s just what’s happening, as more marketers shift more of their search budgets to Google from other search engines, helping to drive up prices for positions on Google search results pages. That makes it all the more crucial for online retailers to pay close attention to changes in Google policies lest they fritter away search marketing dollars by not keeping up with the latest tips and tricks.

Prices rise

Google’s pay-per-click ad rates went up 14% in the second quarter of this year, when it accounted for 77% of search advertising spend, according to search marketing firm Efficient Frontier Inc. Google’s dominance of search ad spending exceeds its lead in search-Google accounted for just under 62% of searches by U.S. web users in July, according to web measurement firm comScore Inc.-indicating that many marketers believe they get better results from Google than from the major competing search engines of Yahoo Inc. and Microsoft Corp.

CPA2Biz.com, an online retailer of products and services for accountants, says it gets 15-20% of its traffic from Google natural and paid search, roughly 10 times the traffic it gets from either Yahoo or Microsoft’s Live Search.

“Nearly 10% of our overall online sales are driven from Google traffic,” says Melissa Rothchild, vice president of marketing services at CPA2Biz Inc. “We continue to find Google a very effective site traffic referral source.”

Satisfied searchers

Google has always insisted its policies were aimed at delivering the best possible experience to end users, and those end users give Google high marks. The search leader scored 86 out of 100 in this year’s American Consumer Satisfaction Index, an annual survey by the University of Michigan’s Ross School of Business, up 10% from last year. Yahoo, Google’s closest competitor in search, slipped 3% in the survey to a score of 77 while Microsoft remained at 75.

Google’s growing popularity likely means still higher pay-per-click ad prices, experts say. “Google has been increasing prices for a long time, and there’s nothing to indicate that they will stop,” says Kevin Lee, executive chairman and founder of search engine marketing firm Didit. “But clearly they care about the user experience and reward the marketer when the user experience is better. That’s useful to the marketer depending on how savvy they are in search marketing.”

VistaPrint is an example of an online retailer that is trying to be Google-savvy, and reaping the benefits. By taking advantage of the broader data Google now provides, VistaPrint was able to improve its return on search marketing spend during the 2007 holiday season-even when it had to pay more for each click on an ad.

VistaPrint’s results

VistaPrint reduced its cost per new order by 14% and its cost per customer acquisition by 12% during the holiday period, Kenney says.

“Cost per click for the keyword terms we targeted actually increased, but because we were able to drill down and truly optimize where our search ads were showing up, the overall numbers got much better,” Kenney says.

By using a mix of in-house analytics and Google’s management console for AdWords, the Google search ad bidding system, VistaPrint gets a better view into how its search campaigns are performing, Kenney says. “Google gives us a lot more reports to run, so we can see down to the keyword level how consumers are reacting to certain terms,” he says.

That came in handy, for instance, when VistaPrint found that bidding on its own name caused its search ads to appear when consumers searched for Microsoft’s Vista operating system, which has no connection to the products VistaPrint offers.

The retailer was able to fix the problem by working with the additional granularity Google allows in keyword management. “Now we can block out content related to the Vista operating system,” Kenney says.

Kenney says Google’s help with managing search data is a big part of what sets it apart from other search engines. In addition to its dominance in search volume, Google also offers the most complete and useful set of tools for analyzing that volume, he and others say. “Google offers both more search volume and more insight,” Kenney says.

Google provides more transparency than competing search engines, agrees David Szetela, CEO of search marketing firm Clix Marketing. “When we’ve got to move over to Yahoo and Microsoft to create and manage campaigns on their platforms it’s more painful because it takes more time,” he says.

Yahoo’s moves

Yahoo has opened up its search platform this year with beta versions of its Search BOSS and SearchMonkey programs, which let marketers inject images and deeper site links in search ads and better control ad rankings, says Prabhakar Raghavan, chief strategist for Yahoo Search.

It has also introduced a search marketing platform that, like Google, partly ranks paid-search ads based on relevancy as well as bid price. And it now offers a “Quality Index” that, like Google’s Quality Score, indicates the level of value Yahoo places on particular search ad material.

Kenney says the best recent development he has experienced with Yahoo is an improved ability to track the effectiveness of “assists,” or keywords that lead to the final keywords that convert consumers to buyers. “This helps justify where to spend your money even though certain keywords may not be getting credit for conversions,” he says.

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