Google delivers—but online merchants
face a constant challenge keeping up
By Mary Wagner
Since Google Inc. announced plans to go public last month, discussion of Google’s financial prospects has filled the pages and screens of business media around the world. But while speculation on share price and disposition has set the investment community on fire, it does little to answer the questions about Google that are uppermost in the minds of those responsible for the near-billion dollars in revenue reported by the search engine—the online marketers whose pay-per-click programs drove 95% of sales.
While Google is hardly the only search engine, it has the status of a phenomenon in the culture of web users. Its penetration there is so pervasive that its name has morphed into a verb. Google’s profile among consumers towers over its competitors’ partly because it’s always been its own branded destination for consumers, and the impending IPO only turns up the volume on an existing buzz. Overture Services Inc. (formerly search engine GoTo and now owned by Yahoo Inc.), Google’s closest competitor, powers an enormous volume of web searches and offers both consumers and advertisers many options and products similar to Google’s—but because it’s never been a destination site, its name is known to relatively few consumers.
20% time
Google’s well-publicized culture of innovation also has raised its cachet. The company gives engineers what it calls “20% time”—while working on assigned tasks for 80% of their workload, they’re paid to dream up and develop new applications with the rest of their time. Some of Google’s most recent offerings trace their roots directly to this initiative.
In fact, between the search options readily visible on its home page and what’s being tested elsewhere on the site, Google seems to be growing more tentacles than an octopus. And as result, marketers are finding managing the various paid and unpaid ways to be found on Google to be an increasingly complex task.
Optimizing for a search engine’s algorithm is, basically, engineering a web page in such a way that it is a.) found by the engine’s spider and then b.) ranks high in search results because its content meets the engine’s criteria for query relevancy.
It’s how marketers first started angling for more Google traffic, and it’s still important, because 70% of all clicks in Google are on such “natural,” or unpaid, search listings. Most of those are clicks within the first three pages of results, as studies have shown few consumers will go any deeper.
But natural search optimization is not what kicked more than $900 million into Google’s coffers last year. To leverage its more than 200 million searches a day into income—while at the same time, it consistently argues, provide a better search experience for users—Google has in the last few years debuted ad products that let marketers secure prominent placement by paying for it. AdWords are paid listings that appear on top of or alongside natural search results clearly identified as sponsored links. Overture is currently suing Google over AdWords, alleging patent infringement. Google has also rolled out AdSense, a year-old contextual advertising program, which serves up sponsored links on relevant content pages of non-commerce-focused web sites.
G-mail
Froogle, the separate shopping search engine that Google has been quietly developing for more than a year, offers marketers a direct feed into its index at no charge. Some question whether the feed will stay free; though Google insists it doesn’t plan to charge for it. Froogle already serves sponsored links alongside natural search results, as Google does. G-mail, the free e-mail service Google is now testing, uses AdSense contextual technology to “read” the e-mail exchanges of its subscribers and serve up relevant sponsored links alongside. In exchange for their permission to serve the ads, G-mail subscribers get free e-mail service with 10 times the storage capacity of competing services like Hotmail.
The new ad products and its push to serve ads outside of its own results pages give Google more ways and places to display paid ads and scoop its percentage off any resulting clicks. And some observers say the new Google offerings are just the beginning. “AdWords, AdSense, Froogle—there will be others,” says Stuart Larkin, vice president of partner services at search marketing company Performics Inc. “To utilize them you’re going to have to have the right tools and technology.”
Some of the technology that lets site operators manage those programs is available at Google itself. The sign-up process for AdWords asks retailers to enter a cost per click they are willing to pay on the keyword. That generates Google’s estimate of the number of clicks the keyword is likely to receive and what the average position within the paid listings is likely to be, based on the cost per click.
While the calculations give the retailer a read on the likelihood of placement, they do not guarantee a specific position in the rankings, notes David Fischer, director of AdWords at Google. “The order in which your ad appears on the page is based on two factors, your cost per click and your click-through rate. The click-through rate is a great proxy for relevance,” Fischer says. So under the formula, for example, the retailer in the No. 2 spot in Google’s paid listings might actually be paying the engine less per click than the retailer on the number three spot, if it has a higher click-through rate. “The power of the ranking formula is that it factors the two together,” Fischer says. Google also offers a conversion-tacking tool that retailers can use to gauge their ROI on keyword campaigns.
Google has expanded click-through opportunities for itself and the marketers who use AdWords by distributing AdWords across its network of more than 130 search partners. Searches at the partner sites trigger AdWords as well as natural search results from Google. Beyond that, the AdSense network distributes relevant ads to media and other content destinations as large as major metropolitan newspaper sites and as small as Floridata.com, a one-man operation run by a Florida gardening enthusiast.
“AdSense matches qualified leads with merchants and applies that across a broad swath of the Internet. You are able to achieve great reach that way,” says Fischer.
As long as Google is limited to serving ads on its own pages, its revenue can grow only incrementally. But a contextual ad program breaks through that ceiling. “You now have available not just page impressions on your own interface, but all of the page impressions of any web site on the Internet that will carry your ad,” says Fredrick Marckini, CEO of search engine marketing company iProspect.com Inc.
That’s part of the thinking behind G-mail. Introduced this spring, G-mail applies the same contextual ad technology to e-mail, serving up paid ads relevant to the content of subscribers’ e-mail exchanges. Some critics have raised privacy concerns about G-mail, but Fischer points out that it’s technology, not humans, that scan subscribers’ e-mail for content and that no record is kept of that content. Furthermore, G-mail packs its own spam filter. Should any pesky unsolicited e-mail slip by the filter into an in-box, G-mail subscribers needn’t worry about it triggering ads for, say, Viagra. “We are not showing ads for the type of content people might not want to see,” Fischer says.
G-mail has been in test only since April and its success as an advertising tool remains to be seen.
Modified approach
Google also isn’t releasing any results for Froogle, though it’s a mark of confidence that in April it bumped up Froogle from a hard-to-find location in the Advanced Search function to a featured link on the Google home page. If Froogle’s index is basically a subset of Google’s broader one, and a merchant’s pages already are in Google, chances are they’re already in Froogle as well. That said, why should retailers in that position bother with the direct feed to Froogle, even if the feed is free?
The answer is that natural search results on Froogle and Google will likely differ. While Google’s search results for products will draw from content including product reviews or discussions and manufacturers’ pages, Froogle results will show only e-commerce pages. Furthermore, Froogle’s ranking formulas for both natural search and paid listings differs slightly from Google’s, says Froogle’s director of engineering Craig Nevill Manning.
“The standard Google ranking didn’t work as well as we liked for Froogle, so we modified it somewhat,” says Manning. “Then we mixed in some secret sauce from the Froogle side, which takes advantage of the fact that we have structured data such as price and images.”
Froogle gets those data most efficiently from the direct feed, though it also crawls merchants’ web sites regularly in the same way Google crawls sites. “We want everybody to be included in the index, so if a merchant doesn’t give us a feed, we’ll do our best to crawl the site and understand how it’s formatted in order to recognize prices, images and names of products. But we may not always get it right,” Manning says. “And we may not crawl your site as frequently as you’d like for updating prices. The feed lets merchants upload a text file every day with updated information.”
Manning offers a hint to merchants seeking to optimize pages for higher rankings in natural search on Froogle. “When merchants give us a product name, the more standardized that name is, the better,” he says. Under that rule, merchants selling a Nikon CoolPix 5700 digital camera, for example, should list it in exactly those terms, rather than using a longer description such as, “ Nikon CoolPix 5700, great digital camera, and five megpixels with three flashcards.” Says Manning, “That will be more likely to confuse our algorithms in terms of ranking and figuring out whether the item is relevant to a query. People tend to put in fairly short search queries.”
From 100 to thousands
Marketers looking to drive the most gain out of Google’s growing complexity need an expanded strategy. Larkin notes that Performics has in the past six months seen an uptick in new clients who’d previously been running both Google and Overture campaigns on their own. “It used to be they could buy 100 keywords and have an effective marketing program. Now they realize they need to buy thousands if not tens of thousands, so they need help to scale those programs,” he says.
And help abounds for those willing to pay search engine marketing firms, which have developed different approaches to Google. The first advice Marckini gives clients attempting to figure out what advertising to buy on Google is to not buy anything before optimizing pages to Google. “Optimize your site for natural search first because in Google, that’s where 70% of the clicks are happening,” he says.
As a next step, marketers should consider buying Google’s paid AdWords. “30% of the people who are on Google are clicking there—and they may be a different 30% who are clicking on natural search results,” Marckini adds. The next step is the direct feed to Froogle. While not the most heavily used shopping engine, he says, it has enough traffic to have an impact on revenue. Then, depending on their market, retailers should look at Google’s contextual ad program, AdSense.
“There are reports contextual advertising doesn’t convert as well as paid search. But our experience is that it introduces you earlier in the buying cycle to the consumer who’s doing research,” Marckini says. “The customer may not buy then, but they may go back and buy it on your search ad later. The key is paying hyper-close attention to the conversion rate on these programs, because you can spend an awful lot on keywords that don’t convert at all.”
That’s why Lisa Wehr, president of search marketing company OneUpWeb, advises clients looking for a new Google strategy to start by closely examining what they’ve already done. “If they’re a current AdWords advertiser, they should look at what are the keywords and conversion ratios they’ve experienced,” Wehr says. “One of the biggest holes I see is that marketers aren’t tracking this, so they could be flying blind.” While Google does offer a conversion tracker, OneUpWeb expects to roll out an independent tracking tool next month.
Factoring in the search results it feeds to AOL, Google’s reach is broad but it’s very nearly matched by that of Overture, which powers search at Yahoo and MSN. Like other search marketing specialists, Wehr often fields retailers’ questions on the relative value of buying keywords on either engine.
“Unless the retailer already has a history with one or the other we recommend doing a test,” Wehr says. “We choose a small set of keywords and run them on both, using the same creative, and see where the results are coming from. Then you can refine your keyword list to the point where you can see that these keywords work better on Google AdWords, but those are more effective on Overture.”
Perfomics’ Larkin starts forming a retailer’s Google strategy around the size of the retailer. “Are they a retailer that sells a single product like Gevalia Coffee, or are they a retailer with multiple products like an L.L. Bean or even a Target? The smaller retailer is going to be limited in the number of keywords they can buy that are relevant,” he says.
Next up, he asks retailers to define campaign goals. ROI campaigns may have unlimited budgets if results hit certain parameters, but branding campaigns will have a fixed budget. He then starts retailers on the free Froogle feed, where he says Performics’ clients have seen a lift in traffic since the link jumped to Google’s home page. But the biggest driver of traffic has been paid listings, and like Wehr, he’s frequently asked to handicap paid listings on Google vs. Overture.
“If it’s an ROI campaign with unlimited budget, we recommend using both engines if not more. With a fixed budget, we will put the money where it gets the most reach and frequency and we will use one over the other. If the average CPC for a campaign on one is 25 cents, and for the same traffic it’s 35 cents on the other, go with first one,” he says.
Larkin finds that AdSense works best for retailers in niche categories whose products lend themselves to content sites. “Our client Bass Pro Shops has a lot of fishing gear. If AdSense has distribution to a sports site about fly fishing, that’s a great partner,” he says. l
mary@verticalwebmedia.com
< font size="4">Poppies and peppers and a Google strategy
While search engine marketing firms can offer counsel on how to form a Google strategy, it’s the marketers who take the lumps, and the rewards. Wildflower seed retailer AmericanMeadows.com has experienced some of both.
Its free data feed to Froogle has produced some orders, but president Ray Allen questions whether the feed will remain free. Similarly, AdSense listings on content sites have delivered some orders, but he considers the traffic from AdSense less valuable than that from paid listings that appear on Google itself. Web users are in a different state of mind when visiting a content site than when they are visiting an e-commerce site, he believes. “When you go to Google and type in ‘wildflower seeds to buy,’ you are about to buy wildflower seeds. If you are at Floridata.com reading about Black-eyed Susans, you’re there to read about how to grow them,” he argues.
American Meadow’s biggest producer of traffic is Google AdWords. About 25% of traffic to AmericanMeadows in April was referred by Google.com, up from 16% a year ago. In the last year, it’s seen impressions on Google soar, a function of both the buzz around Google and its push for wider distribution. In April 2003, AmericanMeadow’s ads were served 980,800 times on Google and across the sites to which it distributes. In April of this year, it was about 5 million for essentially the same keyword list.
But as Google’s ad distribution increased, so did AmericanMeadows’ spending on the Google ads. Allen maintains 210 to 250 keywords on Google. His average daily spend on Google pay-per-click advertising climbed to $180 this April from $119 last April, while his average cost per click rose to 36 cents from 25 cents, due to greater competition for some keywords. “While Google would say they’ve given me five times the distribution of last year, my cost for about the same things I did last year was up by 67%,” Allen says. “The good news is that while my cost went up 67%, I got 74% more orders from Google than I did last April.”
The bad news is that Google’s monster distribution raised his cost-per-click spend by increasing the volume of traffic from unqualified prospects as it increased the volume of traffic overall. For some of that unnecessary spending, Allen blames himself—a point that underscores Marckini’s advice about taking care not to multiply spending on keywords that don’t convert. AmericanMeadows sells only wildflower seeds, but this season Allen hung onto a paid AdWords listing under “seed.” In response, he got—and had to pay for—a lot of clicks from people seeking vegetable seeds. “We paid for a lot of tomato people,” he says. After the season’s over Allen says he’ll weed out from the list the most expensive and non-producing keywords.
In April, Northern Tool & Equipment Catalog Co. saw its web sales off Froogle triple within a month, says e-commerce manager Nate Miller. Sales took off after Google that month moved the link to Froogle from deep in the site to its home page and also started running a short list of top Froogle results identified as product links at the top of Google search results.
Northern Tool started submitting its data feed to Froogle early last year. Northern Tool uses Performics Data Feed technology that converts feeds from marketers to meet the requirements of different search engines and shopping aggregators, which means the marketer doesn’t need to build a separate automated feed for each search engine on its own. “It’s free to submit it to Froogle, and we already had this feed built, so we said, let’s just submit it and see what’s out there,” says Miller.
Northern Tool’s first conversions off Froogle were in May 2003. For the next three months, conversions off Froogle totaled $40, then started moving into the low thousands of dollars. This March, sales off Froogle links were in the $5,000 range, then they tripled in April. “In May, to date we have surpassed April—it could be double what April was,” Miller says.
Though pleased with those results, Miller calls them “bittersweet.” That’s because just prior to when Google started running top Froogle product results over its regular results this spring, Northern Tool had spent effort and resources optimizing its product pages to Google’s engine so they’d rank at or near the top of natural search results. “Then in April we see they are running three product links (from Froogle) on top of that,” Miller says. “Now it’s just one more thing I’ve got to optimize for. Because I might be No. 1 under electric drills, for example, in the natural search results on Google, but I could be No. 7 in Froogle, so I don’t get listed at the top of the page in those top three results from Froogle that are on Google.”
Miller indicates it’s also not clear yet whether Froogle is producing incremental sales or drawing off sales that might otherwise come in over other links, paid or unpaid. “I’ve still got great placement in Google, but now I’ve got to worry about Google AdWords, Google natural search and now Froogle, and balance all of that,” he says. “Froogle is an opportunity, but it’s also another complexity in the Google landscape. How these all relate to each other is the next level of search engine management.”
