NetElixir Blog

4 years - nothing much has changed in SEM space

I visited the SES Show after about 4 years, yesterday - in NYC. I was excited to be attending SES because this was the first show we attended after founding NetElixir - SES, San Jose 2004.
So much has changed in the search world. The power equation has changed considerably between Google and others. Disappointingly, not much has changed on the SEM space. The usual suspects, iCrossing, iProspect, Did-It, Efficient Frontier, were all there. There were new agencies and SEM tools. All agencies started their pitch by stating that their proprietary technology was awesome because... Back in 2004, they started the same way... Its disappointing.

But seriously, SEM companies are struggling to establish a differentiator. Everyone does the same stuff - only the presentation is different.

So, is there no differentiator in SEM space?

Yet, advertisers are stressed - they complain about their agency or their SEM technology.  They would do so only when there is a need gap.

What is the need gap? Here are some standard replies on "stress points" that we collected when we conducted the 2nd Annual PPC stress study - a) meeting ROI target consistently  b) managing change (in account/in promotions being run, etc) c) increasing CPC d)Search engine function in an opaque manner e)ad copy quality  f) click fraud

Common sense would dictate that any SEM agency that addresses the above mentioned need gaps effectively should  crack the success formula. Why is it then that no one has been able to do this?

I would think the inherent dynamism of search advertising can be blamed for this. Like any other medium(example television), search serves ads that are consumed by  prospects and non-prospects. There is a difference, however, between search and (say)TV. In television you have set channels that telecast specified programs at specified times. The user's choice is limited - she can jump from channel to channel but she cannot spontaneously see what she wants to if no channel is telecasting the program of her choice. (The video sharing sites like YouTube tackle this better). In search advertising - the user chooses what she wants to see. The good part is that its mostly measurable - at least - you could get statistical data for user groups.  However, the advertiser has to  know what the user wants to see (predict) and moreover, categorize the user intent into monetizable and non-monetizable parts. The challenge is user sophistication while searching keeps evolving / improving. (Think of it like this - you are almost trying to peek into the minds of millions/billions of users - anticipate their usage sequence and be visible  in appropriate places). Understandably, this makes things very complex. To amplify the complexity, Google and other engines keep on tweaking the channel in their constant effort at dis-intermediation (and to keep their stock prices high)-thereby complicating things for advertisers and SEM agencies(and actually for themselves). Its also frustrating to see how Google tries to make money by purposefully creating complexity.

For an SEM agency to stay on top of all this and effectively address client needs (ROI, increasing CPC, etc) becomes an in-surmountable challenge. To make matters more complex, since search advertising LOOKS SIMPLE (whats so great about selecting a few thousand keywords and placing ads on them), every person thinks he knows the best. This is equivalent to a situation that you want to run TV ads and after you approve the ad and it is aired, you want to tweak around the ad a bit because you feel the product shot does not look as good as you wanted it to look. Since the advertiser has access to the search ad center (or mostly they do have - some agencies do not let their clients access their own account!!), they are not restricted from constantly making changes themselves.

The challenge becomes even greater because of the tremendous demand supply gap in trained SEM professionals and lack of standards and best practices. Most of the SEM professionals have learnt either by managing accounts themselves or by reading stuff and attending seminars. Everyone thinks they know the best because the account that they managed 3 months back really saw a jump in ROI. They think they have got the secret sauce to replicate the success. This is a big mistake. Each campaign is unique - every site is unique - every business is unique. Just because an SEM agency was able to deliver great results for a flower shop does not mean they will be able to do so for a pet food supplies shop.

So, is there no way out of this catch 22 situation.Can the SEM agencies do anything?

Well partially there is. Here is how.(And the pre-condition here is that the advertiser client does not make changes herself randomly)
1. Every account has to be approached with a fresh mind - ample efforts have to be made to understand the business/the goals/the plans
2. There should be a set service delivery framework. The engagement manager's role should be to combine the business' uniqueness with the framework. This requires dedicated focus. This requires time.
3. Business objectives should be fed into the technology. Just because the technology has the capability to optimize performance based on ROI does not mean anything for someone who wants optimization based on value per click or number of sales or (maybe) a complex factor that's dependent on multiple independent variables. In short, technology has to be customizable. Thats a whole new paradigm and we will discuss that in greater detail in a later post
4. Its almost like saying that the SEM agency's dedicated team will become a part of the advertiser's team - quite literally. They have to be super employees though - who have to not only execute efficiently but also advise and consult - spot trends and maximize opportunities arising out of the trends.And they have to do it "non-stop".

Will the above steps solve all the stress points that an advertiser has to face. The answer is NO. But, the agency that does all the above 4 points effectively, will have an enormous edge over all other agencies who are taking a set approach to all cases - using same processes and same technology -- and praying for strong performance numbers.

- Udayan Bose

2nd Annual PPC Stress Study Results

We released the 2nd Annual PPC Stress survey results today. We had 140 retailers participate in this year's survey. They ranged from giant e-tailers like WalMart to one person shops.

Despite all concerns about rising click costs and click fraud, e-tailers are investing more and more on paid search advertising. Also, the sophistication level keeps increasing. We believe that use of long tail keywords is one "probable indicator" of level of sophistication (attempts to monetize the long tail).

I am amazed - still - at the number of people a firm dedicates to its PPC campaigns and the time spent in management. Understandably more people are willing to outsource.

Number of specialized agencies are still very few. PPC Management still is done by boutique firms who offer other services as well.

My forecast remains optimistic - I don't see any signs of a PPC slowdown till 2011/2012.

You can read the press release here : http://www.emarketer.com/Article.aspx?id=1005557

You can download a free copy of the executive summary here - http://netelixir.com/stressreliever.html?ne_ppc_id=31&ne_key_id=-5

Thanks,

Udayan Bose

LXR Solo Launch at Shop.org Annual Summit in Manadalay Bay, Las Vegas

The day has finally arrived when LXR Solo would be unveiled to the world of e-tailers. Understandably its a very important moment for all of us at NetElixir.

We have spent the past 2 years building the technology - testing the algorithms - simplifying the UI and building a tool that is relevant and useful to online retailers.

There is an interesting history behind this tool. Let me share that with you.

Circa 2004 - I tested the 3 most popular PPC tools in the market - GoToast (became Atlas One Point subsequently), Bid Rank and Search Ignite (end of 2004). There was a clear emphasis on "bid management". The bid rules were complex - even for someone like me who had a decent amount of hands on experience in the space. Also, after having struggled as a marketer to run an optimal PPC campaign I knew that bid management was a small part of the entire PPC management process.
I wanted to develop a PPC tool that had three key strengths -  SIMPLE TO USE, POWERFUL PERFORMANCE & RELEVANT REPORTING SYSTEMS.

Simple to use - I wanted to build a tool that was for marketers NOT Geeks - for me simplicity was- ABILITY TO GET A CAMPAIGN UP AND RUNNING IN 10 MINUTES FLAT!

10 Minutes flat!!! That was considered an impossible thing (and still is considered so) in our business

Powerful Performance - When I was a marketer my focus was to get the Cost Per Lead DOWN and to get the number of leads/sales UP. Period. I wanted to build a tool that helped marketers do this WITHOUT THEM HAVING TO GO THROUGH A BIG HASSLE OF SETTING BID RULES etc.

Albeit, the conversions or sales (or leads) are dependent on multiple factors like quality of website - competition, promotions being run and the tool does not have any control over that.

But, the tool ensures that its able to generate the BEST PERFORMANCE within the mentioned constraints and defined SCOPE.

Relevant Reporting System
As a marketer I hated getting overwhelmed with reports that had very little use for me. When I set about building this tool this was one of the most important criteria for me - generate RELEVANT REPORTS - USEFUL REPORTS.

Back in July 2004 I developed a document on "the new system and method in Search Engine Marketing". This document was to become our guiding document for LXR Solo.

A challenge every boot strapped start up faces is to attract good/solid people who can convert the concept into a workable business/technology. We were no different. We were "tiny" and hiring good techies was beyond us at that stage.

I approached a top technology institute in India - National Institute of Technology, Warangal. With the help of one Professor (Dr. Somyajulu), an experienced Database specialist (Vishal Pannala) and a team of 5 M.E. (Master in Engineering), Computer Science students we developed a working prototype by end of 2005. This was arguably the best decision I have ever taken as an entrepreneur.

By end of 2005 we had grown significantly thanks to the gaining popularity and acceptance of our outsourced 24x7 PPC services. I set up a tech team  in-house to refine the tool and make it "marketable". They did an awesome job. By  September 2006 we already were testing the tool with a large Australian agency - ineedhits (http://www.ineedhits.com/). They have been our agency partners since then. In March 2007 we entered the German market and got one of the largest SEM agencies - Ziel Traffic (http://zieltraffic.de/) -  to test our technology. We did well. Passing the German Test gave us confidence to launch the tool in US.

Now, the challenge was - should we launch the advanced version of the tool or should we start with a basic version (upto 500 active keywords in management) targeted at PPC advertisers who spend $25k per month on Google or less.
Our statistician's research showed that there were about 100,000 advertisers in US alone who were in that range that might be ready for the tool. Also, this number is likely to grow at a significantly faster pace than rest of the market.

Hence, we decided to launch LXR Solo (targeted at e-tailers).

We want maximum marketers to benefit out of this tool and hence have priced it at an affordable $499/month. We wanted the marketers to feel satisfied with the tool and stick with us ONLY IF THEY FEEL THE TOOL HAS BEEN USEFUL FOR THEM - hence there is no long term contractual obligation.

We start the beta test for the tool on 15th October 2007. We have capacity for at most 25 beta testers. They get to try the tool free of charge for 30 days - 15th October-14th November 07.
You can sign up for LXR Solo using this link -  http://netelixir.com/lxrsolo/lxr-solo.html

- Udayan Bose

Google Adwords Overwhelms me!

A small business owner (small~ less than 20 people, less than $30 mill annual revenue)in 2004 could run an adwords campaign by himself and make a decent bit of profit. Now - that is IMPOSSIBLE.

We bagged an important online retail account last week. The client is one of the largest online jewelry stores in US. I asked their CEO why he considered outsourcing PPC advertising management (given the fact that the campaign was being managed in-house for the past 4 years and PPC remains the most important customer acquisition channel for the company). He put it in simple words - " Google adwords overwhelms us".

I could not agree more.

Google has been introducing changes in adwords at a rapid pace (rapid is probably an understatement, here). And, a lot of this has been prompted by Google's drive for "dis-intermediation". Google wanted to give all the tools a marketer might need to manage his campaigns in-house. But, they overlooked the fact that all these tools actually made the campaign management process much more complex - making it even more important for an advertiser to take SEM Agency help. Had they understood the market - on an overall level a bit more, this might not have happened.

The market scenario is this -

1. There are VERY VERY FEW (read 1 in 1000 people who claim that they do SEM) who are really good in PPC campaign management. And they are more likely to be working for interactive agencies or SEM agencies or big companies. The demand supply scenario is totally skewed - demand outstrips supply by a wide margin (and thanks to Google, the gap between demand supply continues to increase)

2. Even the interactive agencies and generalist SEO companies are struggling. In the past 3 years, companies (and people -- calling themselves "consultants") had jumped in the SEO/SEM space. It seemed such a no-brainer business to generate good returns from. The entry barriers were miniscule, businesses were diving into SEO/SEM like crazy and  because marketers were ignorant about SEO/SEM, any gibberish on "meta tags and quality score" had a "WOW! Effect".

However, this was too good to last long.

Agencies simply failed to recognize the importance and value of the most important element(or, entry barrier) in this industry - KNOWLEDGE.

Most SEO agencies got one guy trained on adwords (or maybe hired one guy who knew adwords). Then they tried to build a team around the "in-house adwords guru". (Google introduced Google certification and this made life even simpler for "self sworn gurus").

They often neglected two very important things - 1) in a mad rush to join the client land grab they neglected the importance of processes and systems - hey this was a new industry getting built and to expect that you could win the game without processes is STUPID 2) they underestimated the fact that they could get hit as well by an adverse demand-supply equation. The IN-HOUSE adwords guru, one fine day, got an offer from a big agency ,and left... taking 70% of the "captive" knowledge base with him... and leaving the agency stranded

To compound the agony of the agencies, Google was introducing a new feature every week (quite literally). The SEO firms have started feeling the heat. They now spend hours hoping... that there is that "ignorant agency (KNIGHT IN SHINING ARMOR) with pots of cash" somewhere, that could buy them out. They know time is running out fast.

So, what am I trying to say...

Google might still pull it off... at least they feel they can - their BIG DIS-INTERMEDIATION plan. The resistance comes from just one segment - Process driven SEM firms - the ones that have developed solid systems, processes, technology - KNOWLEDGE BASE  and have established robust training practices/processes.

And yes, there is one more big HOPE AGAINST Google's dis-intermediation attempts - Yahoo!

I am hopeful that with  founders - Yang and Filo- coming back at the top - they would at least provide a  stiffer competition to Google.

Unfortunately, I can't say the same thing about MSN (wish I could). They seem to be helping Google  increase domination, indirectly, through pathetic support and AdCenter platform.

- Udayan Bose

Bracing Up for a profitable holiday season

My friend and e-tail expert, Lauren Freedman wrote a nice article today for Practical eCommerce - Marketers should be preparing for the holidays now, http://www.practicalecommerce.com/articles/507/Merchants-Should-Be-Preparing-For-The-Holidays-Now/

As is the case with any article she writes the article is extremely practical and drives the point home - 2007 holiday season would be the biggest ever and a prudent marketer needs to start thinking about it right away to gain maximum mileage.

After having managed more than 50 e-tailer SEM accounts and having interacted extensively with merchants of all size, I have been able to distill some "to do's" for an e-tailer.The points are self explanatory and might seem almost obvious. Nevertheless, merchants tend to ignore these repeatedly.

1. Begin with a "measurable business goal"

2. Break it down to sub-objectives - "be very clear about what you want to achieve"

3. Write down a plan for achieving these objectives - (suppose budget was not a constraint,what would the plans look like)

4. Establish measurable action points for each of the  plan items

5. Allocate a budget to each point - allocate resources for management

6. Draw up a time-chart for the entire plan

7. Draw up a contingency plan for each action point (worst case scenario planning is advised)

8. Find the right partners to work with by August and get them involved in your plans - share your goals - get their ideas

9. Drive hard for SUCCESS.

- Udayan Bose

Wall Street Journal and misleading Google advertising

I did a search for "wall street journal" on Google to land here -

Wall Street Journal
www.wallstreetjournal.com      Wall Street Journal Free Delivery & 8 Weeks Free

I clicked on the link to land here -
https://www.wallstreetjournal.com/Gryphon/jsp/retentionController.jsp?page=11223&S=63JSBK&psid=search

I filled in the registration information and clicked submit, and hey.. what do i get -

the offer is no longer valid!!!

This is atrocious. The landing page should have been different (and accurate), or I should at least have been informed of this before I added my credit card information.

This is what happens when companies run PPC campaigns with the help of agencies that "do not care" or are "simply negligent".

Whatever, it is - this experience was a big "dissonance creator" for a WSJ fan like me.

Marketing on the web is NOT EASY. There are multiple touch points that you as a marketer need to have control on. Just consider this - each minute (probably each second for a big name like WSJ) there are thousands of visitor interactions - and when someone is filling up the registration form and submitting his credit card info - its beyond just interaction. One goof up, and it creates a snow balling effect beyond what you might even dream of as a marketer.

These days - with internet adoption and usage being at an all time high - each negative experience with any single person dilutes the brand image (in however miniscule a proportion). This does not show up immediately as it is too small to impact a big brand , but such negative experiences add up to a big impactful force.
Online advertising agencies have as important a role to play as the marketers. They are getting paid to manage much more than just the marketer's campaign. They are the in-charge of managing the marketer's IMAGE - REPUTATION - BRAND.

I meet agencies all the time - who rave and rant about their new account wins, how they are coming up with new ideas to manage new business they are flooded with, how are cashing in on the internet gold rush...blah, blah, blah... not many-a-time have I heard them speaking about - "how they have worked with their EXISTING CUSTOMERS and delighted them with their passion - ownership and level of involvement.

Internet advertising is "DIFFICULT" - Period. When you advertise on the web, it's like getting into a "global brain- technology - process - war" .

You don't win wars if you rush in to fight with antiquated weapons - you just "get killed".

- Udayan Bose

Internet Retailer Show 2007

Just got back after a super Internet Retailer show in San Jose. Quick observations -
1. Steve Rogers - the organizer - is undoubtedly the best I have seen - ever smiling, courteous, affable, super organizer. He has got the attendee list to over 3000, which is extremely creditable
2. Online Retail is booming - this show was an eye-opener in every way - huge crowd - interesting sessions - average participant knowledge level higher than most other shows
3. There was not much new that any exhibiting vendor had to offer - that is disappointing - I guess, companies are moving towards "efficiency boosts" in their solutions rather than selling creative stuff - clear sign of an evolving industry
4. Retailers of all size need help on PPC management - our theme "NetElixir eliminates PPC stress" resonated with the attendees - as a result we got unprecedented number of e-tailers to visit our booth
5. Google dictates "everything" in the internet space
6. MSN would never EVER POSE ANY THREAT for Google (or Yahoo) - they have no clue what to do
7. It's sickening to see exhibitors waste money on "silly stunts and freebies" - its just a criminal waste of money - I am a strong believer of the fact that unless freebie is well aligned with the booth theme - its  a waste of money. Hats of to Gwyn for a  well thought out  freebie + booth plan

- Udayan Bose

ACCM Boston and the Plight of Marketers

I attended the ACCM Show at Boston last week. We had a booth there.

It was a well organized show that attracted (my estimate) around 3000-4000 attendees.

My "post-show thoughts"-

1. I bet 90% of marketers are just too overwhelmed or too confused by the number of options that are available today to promote their business

2. Our booth was in the Analytics Pavilion of the Exhibition area. The area drew a fair amount of traffic. I could literally sense an added degree of urgency in the marketers towards web advertising. An attendee who had attended all previous versions mentioned that she could "literally sense" a shift towards the web from the more traditional channels

3. (Pardon my arrogance but..) There was nothing really new and novel - however there were companies that had a more efficient approach to solving a pertinent customer problem. This is something to be expected as the industry evolves. We are entering a phase (or I would say - have entered) where process - systems - efficiency - productivity - would be important in the "services" arena- more important than a stupendous idea/product that does not touch the "masses".

- Udayan Bose

SES, Munich - March 2007

This post comes exactly two months after SES, Munich 07 - where I had my first real taste of the SEM business in Germany.
My comments -
1. Given the penetration levels of the internet, I had expected greater sophistication from the SEM Agencies. I would estimate that the agencies are still - on an average - a year to a year and half behind US
2. Some very unique mathematical work is in progress in some top universities on multi-lingual search especially on areas like personalization, behavioral targeting, etc
3. I was a speaker in a panel of international experts that discussed the future of search. We juggled around mostly standard topics like potential Google beaters, usability, mobile search, etc. I added an outside US and UK dimension to the discussion. Indeed, search would have arrived when there is a certain degree of searching homogeneity and usage across the globe. Thankfully, the time lag between the most advanced internet nation (Korea? USA? Japan?) and the others is not too large- 4 years?.
4. For the agencies: In Germany "Performance Marketing Agencies" are in vogue - there are very few pure play PPC management firms (actually, I don't know if there are any)

5. German online advertising market is poised to "explode" - and the smart early movers would win significant amount of business here with adequate focus

-Udayan Bose

Click Fraud Hype or cheap publicity

I have written on this topic earlier. Its appalling to see companies hype up click fraud issues. Click Forensics recently reported that 14.2% of clicks were fraudulent in Q4,2006. This is a ridiculously high number. And honestly, its impossible to come up with any number based on limited data set and limited knowledge. As expected Google refuted their claims.
http://www.marketingvox.com/archives/2007/02/02/google-click-fraud-study-inaccurate/

I am firmly of the opinion that click fraud threat is being hyped up at times for petty/selfish gains. Click Fraud exists - there is no question about that - however the percentage incidence is much lower than 14%.

Today Marketing Sherpa came up with an interesting study - Online marketers rated the tactics used by them in 2006 as best and worst.
The "expected" best tactic - paid search advertising. (an overwhelming 49% of the respondents rated paid search as the best online marketing tactic used).

Long live paid search.. down with the false hype for Click Fraud.

- Udayan Bose