The power of search (Source: Universal McCan)

Copyright 速 2007 Universal McCann

2

The power of search

Some ancient history

Over the past ten years, ‘searching’ has quickly established itself as a vital part of social culture, which has connected us with a wealth of online products and information. It is so prevalent that the verb “google” was recently added to Oxford English Dictionary, the Yahoo search history of a suspected terrorist in China was cited in court and the final indication that any phenomenon has entered the mainstream came when Google was satirised on The Simpsons.

Initially, search engines trawled the Internet recording where certain content was so that when a user entered a search query, they could be instantly directed to it. As search traffic grew, advertisers needed more control and the opportunity to integrate their search with other media.

The search bidding model has turned planning upside down– bids can now be changed at any time allowing advertisers to alter their costs, exposure and returns during campaigns. With search, advertisers are not constrained to the same ad performance once a campaign goes live. Advertisers can analyse the volumes of sales they generate at different costs and then alter their search spends accordingly ‘in running’.

What started out as a relatively simple, performance-based business model has become one of the most efficient forms of marketing around.

Copyright ® 2007 Universal McCann

In 1998, Overture Services launched the world’s first ‘paid’ search model where advertisers could bid on keywords for each consumer click. Advertisers had complete control over the keywords they appeared for and the accompanying creative and bids (and hence rank) could be changed at any time through the network’s interface.

Google entered the pay-per-click (PPC) market in 2000 with its AdWords product and introduced a second dimension to the ranking mechanism- Quality Score. If a search listing is deemed to be highly relevant and give a better user experience than its competitors, rank is improved. This is now the most commonly used PPC model.

3

Most search engines now serve both paid results and natural results in order to give users the best experience possible. Paid results tend to be at the top and down the right hand side of the search engine results page.

Targeting reversed Search marketing is reactive - responding to consumers’ request. By searching, consumers identify themselves as targets. As they are mission led and engaged, they are more likely to make a purchase.

Microsoft recently launched adCenter, a paid search product which creates greater targeting opportunities for marketers. Through adCenter, advertisers are able to specify that their search campaigns are displayed higher to certain demographics. When these users search, listings targeted at them are returned more prominently.

Aggregator of all components To facilitate this sort of targeting, the battle for customer data has intensified. As a result Google’s entrance into the email and messenger arenas is significant because it will be able to build up information about its users.

Copyright ÂŽ 2007 Universal McCann

Tracking and technology Due to the sheer volume of search terms in most campaigns, search management tools are essential.

These tools can undertake a variety of account management processes from mimicking competitor activity to automatically managing to ROI or sales targets.

To mimic competitor activity, an advertiser can nominate URLs and any keywords that the advertiser has in common with the competitor to be bid just above or below, giving the advertiser a similar amount of advertising exposure.

Tools that automatically manage to an ROI or sales target will track the number of sales each keyword is generating and then work backwards, considering the visitor to sale conversion rate, and set bids accordingly to meet targets. E.g. if an advertiser has a cost per sale target of $10 and the website is converting visitors to sales at 5%, then the search tool will set the bid price at $0.50.

4

New Way of Budgeting Although these tools save time for account managers, human management and interaction is still vital. To achieve the best results for a campaign, people are needed to assess other influential factors such as weather, TV schedule (during popular television programmes, search volume falls) and competitor offers. Traditionally, media planners assign budget to each medium in advance of the purchase.

However, paid search allows budgets to be amended in running, in line with performance, effectively reversing the whole model.

As with all online media, paid search is completely measurable. Tracking tags put on to an advertiser’s website allow the advertiser to compare what is invested to the number and value of conversions generated, right down to a search engine or individual keyword level. From this information, paid

Copyright ÂŽ 2007 Universal McCann

search campaigns can be finely tuned so that they are efficient and meet objectives.

Tracking tools can map consumers’ engagement with multiple advertising assets before an online transaction - from an email shot to a banner impression through to a paid search click. Analysing user journeys can identify patterns of where certain adverts appear before a purchase is made. From these patterns, messaging can be adjusted to appeal to consumers at the stage they are likely to be at on the buyer journey. More often than not, a brand term is searched for just prior to a transaction. Creative messaging around fast delivery or short application process will appeal to a consumer at this stage.

5

Continued growth As consumers search and advertisers invest heavily, search continues to grow. Spend has doubled year on year since 2003. In 2006, $4.15 billion was spent on search in EMEA and this is expected to more than double by 2010 to reach $9.1 billion. Similar growth is anticipated in the US, with $6.97 billion being spent in 2006 and $14.21 billion expected to be spent in 2010 (eMarketer). Paid search accounts for between 55- 60% (IAB) of digital marketing budgets in most markets making it the largest online advertising sector.

As search is user driven, its two main growth drivers are broadband penetration and ecommerce.

Broadband has allowed consumers greater online access which naturally increases their propensity to search and purchase. With 70% of online transactions beginning with a search query (Nielson/ Netratings), if an advertiser wants to drive online sales, it is imperative that search marketing is used.

A market within a market Although there are countless search engines around the world, they are usually displaying the results of Microsoft adCenter, Yahoo Search Marketing and Google AdWords. In Europe, search engines such as AOL, Lycos and Ask, although actively marketing their search products, are actually displaying Google AdWords, Yahoo Search Marketing and Google AdWords results respectively. Without the providers, these search engines would just be an empty page. By advertising with Google Adwords, Microsoft adCenter and Yahoo Search Marketing, advertisers can reach almost 100% of internet users.

Copyright 速 2007 Universal McCann

6

USA

Others

The major players

13%

Microsoft

Google

10% 51%

In the US, approximately 51% of searches are powered by Google, with Yahoo responding to approximately 26%. Microsoft, whose MSN and Live Search engines were previously powered by Yahoo Search Marketing, now makes up approximately 10%

26%

Yahoo Search Marketing

of search results. Despite Microsoft’s and Yahoo’s best efforts, Google is still increasing market share - it gained 1.4% of the market between March and April 2007.

Europe Others Microsoft Yahoo Search Marketing

Demonstrating its market share, but also the importance of search to the communications mix, the biggest media house in the world is Google, with a market value of $219bn (Media Guardian).

Google 13%

6%

In Europe, Google already has a greater share, responding to approximately 70% of searches in most markets. Yahoo and Microsoft power approximately 11% and 6% respectively (eMarketer).

11% 70%

China Others 11%

Google 27%

46% Baidu

Copyright ® 2007 Universal McCann

16% Yahoo Search Marketing

The search market in China is more diverse with Baidu, the engine preferred by 88% of the population, responsible for approximately 46% of the market.

Google and Yahoo make up approximately 27% and 16% respectively. Much of Baidu’s dominance is put down to its MP3 search facility, exemplifying Asian culture’s love of technology.

Language is a challenge to search marketers in Asia. There are more than 85,000 characters Zhonghua Zihai (Chinese) dictionary and India has 24 languages each spoken by more than one million people. Keyword research is more important in Asia than in other markets due to the diverse languages spoken.

7

Click fraud With top click prices approaching £15.00 in some sectors, advertisers need to ensure that they are paying for legitimate clicks. ‘Clickbots’ have been developed to repeatedly click paid search links, exhausting advertisers’ budgets and giving no return.

Although click fraud exists, the search providers police it very carefully and for most advertisers, search is still the most effective form of direct response marketing.

Diversification Paid search is not fixed to PCs, it is dynamic and can be utilised on any new platform. Google CEO Eric Schmidt has stated several times that he sees mobile carriers offering free usage in exchange for the opportunity to target users with adverts. It is not unrealistic to predict that in the future, search providers might allow free calls from a mobile phone in exchange for exclusive usage.

Google recently announced plans to join Microsoft, Symbian and Linux in the mobile operating system sector. Google Asteroid will be open source, allowing Google to work alongside software developers rather than compete with them. With more than 2 billion mobile devices in the world compared to less than 1 billion PCs, mobile advertising holds a lot of potential.

By developing the software that consumers use to operate their mobile phones, Google will have significant control over the mobile advertising sector.

Local search allows users to search for products and services within a pre-defined distance from themselves. As the location of users is vital to local search, it is a feature that will work well on GPS mobile phones such as the Nokia N95 series. Consumers are able to pinpoint themselves on a map and then receive local advertising and offers.

Each of the major search providers have invested heavily in the display market recently. Google’s agreement to buy DoubleClick, Microsoft’s purchase of Avenue A and Yahoo’s purchases of Right Media and Blue Lithium demonstrate that they each see the display market as a potential growth area.

Copyright ® 2007 Universal McCann

In the US, advertisers can purchase television, radio and press placements through Google presenting massive targeting opportunities to these traditional media. Although the bidding model is proven to work within paid search, it remains to be seen whether it is transferable to other media.

Google’s purchase of YouTube in 2006 has given it the chance to advertise on a new platform and reach new audiences. As the television signals move online, this purchase positions Google well against the likes of Joost.

8

Integration across channels Search is very effective when run alongside other media activity. It can enhance the other media by allowing consumers to interact with the brand as well as acting as a sales channel.

Paid search campaign visibility can be increased around other media exposure by time and by location. The timing and intensity of paid search campaigns should be in line with the impact of the other media. A national television campaign can be supported by search listings being ranked higher during and following commercials to capture the interest generated. Local advertising campaigns can be supported by local search campaigns.

Advertisers can drive more effective web responses by integrating with other media and being instructive in their messaging. In a recent Universal McCann Netherlands media campaign for HBO Nederland, the radio spot call to action was changed from “Visit HBO-Nederland.com” to “Google HBO Nederland”. The new message drove double the traffic compared to the original.

Copyright ® 2007 Universal McCann

Tracking search volume over time is the perfect indicator of how consumer interest alters. It can be used before an above-the-line campaign to gauge brand awareness, during a campaign to track any interest changes and then at the end to evaluate the impact. Whether search volume tracking is used to determine who the most popular soccer player in the world is or how brand popularity changes over time, it gives a very clear indication of what is appealing to consumers.

9

The future Demographic data is beginning to be considered in search results, but moving forwards search history will be used to profile users’ psychographics. This will allow the search providers to target much more accurately.

IPTV will completely revolutionise the advertising industry. The ability to track and target specific users will allow marketers complete control over the most powerful form of above the line advertising. Habits from an engaging medium like search will be used to identify what a consumer is interested in and allow IPTV and other digital media commercials to be targeted to match their current interests.

Many satellite television providers already offer their services over the Internet and IPTV provider Joost is in the process of offering completely free television to consumers online. A platform allowing viewers to watch TV and search concurrently will cut the time between attention and action and increase search volume.

As a test, the IPG Emerging Media Lab recently hard coded searches into items in a streaming television programme. Moving forwards, consumers watching shows on IPTV will be able to search for an item just by clicking on it whilst it is on screen.

Although search, in its current state, will continue to grow, its characteristics and components will evolve.

Technology will develop, but characteristics such as being user driven, performance based and auction priced will allow search to diversify further.

Copyright ÂŽ 2007 Universal McCann

10

Rules of engagement and connection Nowadays, consumers want advertising exposure on their terms. Search is the ideal ‘pull’ medium to empower them. They are still being reached by other media, but are responding to that exposure using search in their own time. Therefore, advertisers must integrate and support their other media campaigns with search.

Advertisers must track search accurately from impression to click to conversion. It is important that advertisers can analyse exactly where their budgets are going and what returns are being generated. Tracking should be overlaid between search and other activity to calculate the impacts that each media has on search and also to give absolute sale costs.

As search exposure can be altered at any time, advertisers should look to model their expected returns with differing bid prices. Increasing bid prices will attract more traffic and sales, but the average cost per sale is likely to increase as well. Advertisers should know what volumes and costs of sales they can achieve with different capacity.

Search marketers should consider that consumers can search at any time. If consumers are likely to search late at night or early in the morning then search campaigns should cater for this. The flexible nature of search allows for exposure to be increased or even created at very short notice so advertisers in time sensitive industries should capitalise on this.

As search is such a fast moving medium, advertisers should always be testing the latest products. Best practice is to set aside 10% of budget to identify new sales opportunities. This budget should be excluded from the sales budget and should not be factored into any cost per sales metrics.

In most search campaigns, the vast majority of clicks are generated by very few search terms. By taking the diligence to discover thousands of more detailed search terms (the ‘long tail’), advertisers can sometimes double their traffic. Although appearing on more search terms will naturally bring in more visitors, network tools can often achieve the same thing.

For more information contact Edward Foster at Edward.Foster@universalmccann.com or your local Universal McCann contact.

Copyright ® 2007 Universal McCann

11

Case study: MORE TH>N

new creative (UK) In January 2007, Universal McCann London launched MORE TH>N’s new ‘More is…’ campaign. Apart from being a great new brand message, it gave consumers something new to search for.

Insurance is one of the most competitive sectors within paid search so the cost per sale from clicks on brand terms is substantially less than that from generic terms. If consumers search for more brand related terms then more sales can be generated and for less cost as there is no/ little competition.

MORE TH>N already had a comprehensive list of brand related (including misspelled) search terms. For the new campaign, Universal McCann London added every term and variation that relates to the ‘More is...’ creative. The titles and descriptions of all of MORE TH>N’s search listings were amended to include the ‘More is…’ phrase.

Due to the new messaging, MORE TH>N is currently experiencing approximately 50% extra brand related searches and sales compared to before the new creative was launched.

Over Time Brand Related Performance 1.6

‘More Is . . .’ creative was launched

1.4

Impressions

1.2 1.0 0.8 0.6 0.4 0.2 December

January

February

March

April

Month

Typically, there is a dip in insurance related searches following the New Year spike. However, MORE TH>N has not experienced that this year and search volumes are still growing healthily.

The above the line advertising convinces consumers that they do not just need insurance, they need MORE TH>N insurance. By the time consumers reach the search box, they already know what brand they desire.

Due to the additional brand terms that consumers can search for, MORE TH>N is enjoying more sales for less cost.

Copyright ® 2007 Universal McCann

May