Search Ad Tools Help Manage Complexity

January’s JPMorgan estimate that placed global search advertising spending in excess of $30 billion for this year (growing to $60 billion by 2011) got more than a few people thinking about what percentage of search advertising dollars are being spent effectively.

Search Engine Strategies has been a haven for big announcements in the search category for as long as I can remember. Next week, we head off to San Jose for the 10th SES event there, and many announcements will accompany the week’s festivities.

Among them, a study from WebTrends which estimates that billions of advertising dollars are being left on the table by advertisers who need more than a little help managing their paid search advertising programs.

Lost Dollars

WebTrends has monitored search advertising for more than two years since purchasing ClickShift and renaming the tool to WebTrends Dynamic Search. Using the baseline numbers in managing search, WebTrends analyzed 90-day performance from launch to see what happened when optimizing using a third-party tool instead of manual program management.

According to WebTrends, many of the advertisers included in the upcoming analysis had deployed some level of third-party bid management. WebTrends comparative analysis of advertisers spending $30,000 (or more) per month and focused only on media spending, not the total cost (human capital investments) of expenditures for advertisers optimizing for Return on Advertising Spend (ROAS).

WebTrends claims that advertisers overall saw a baseline improvement ROAS of 44 percent lift in the 90-day time period. Interestingly, average lift figures included the fee structure for using said tool.

Variables May Vary

Search advertising requires multiple computations in an infinitely complex arrangement along with constantly changing algorithms. Naturally, human beings can’t perform many of these tasks, so advertisers turn to third-party tools to help manage the bid process.

WebTrends attributes the lift in their analysis to “taking the human out of the equation” in paid search marketing. The classic example of setting a bid rule for “X” keyword grouping with maximum bids in place and trying to manage a campaign manually is mistake many advertisers make.

One of the advantages of using a third-party tool lies in the ability to move advertising dollars from search engine “A” to search engine “B.” Of course, one has to wonder just how important this asset will be as Google continues its path to global domination. Yesterday, Hitwise announced that Google’s total U.S. search share exceeded 70 percent for the first time.

Another advantage is the ability to abandon computational logic when the situation calls for it. In other words, if you have distressed inventory or geographic timing-based goals, some tools will allow you to abandon traditional logic when necessary and push the spending pedal to the metal.

Combinatorial Math

Search advertising tools have been unhappily married to search providers since they first appeared on the scene. The needs of advertisers (ROI) seemed at odds with the needs of search engines (ad revenue). The early days of “do everything” APIs and toolsets got a wake-up call not long ago when bandwidth demands exceeded the willing supply from search sites. The paid search tool business has never been the same.

The second windfall for tools is occurring much more slowly. Increasing consolidation and acquisition of search advertising tools by big holding companies is slowly opening a window of opportunity for independent providers.

Advanced search tactics are becoming mainstream for marketers, but never forget the basics of Web marketing. If your site lacks the basics, like compelling calls to action, in-demand products, great navigation, etc., no search tool can help you.

Join us for SES San Jose, August 18-22 at the San Jose Convention Center.

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