JumpFly Blog: AdWords, Yahoo & Microsoft Advertising

Has the faltering economy finally caught up with Google and their lucrative AdWords platform?

Perhaps in the short-term, according to Merriman Curhan Ford analyst Richard Fetyko. Yesterday, Fetyko issued a release via Barrons stating, “Based on our checks, the decline in consumer and business purchasing is having a dampening effect on search-engine marketing (SEM) — keyword prices are down 5%-30% from the third-quarter of 2008, traffic to ecommerce sites is also down year-over-year and quarter-over-quarter, and click-through-rates on ad listings are declining as well. SEM is expected to be among the last places to see cuts, and we are there now. Advertisers are adjusting their keyword buys to protect their margins and returns on investment, which are under pressure as sales-conversion rates and average order value dropped, based on our checks. Google’s paid-click volume is also under pressure. Since consumers and businesses have reined in their spending, they are searching for fewer commercial items and are clicking on fewer ads (click-through rates dropped), which translates into slower growth in paid-clicks volume (key revenue driver). Weakness has also spread overseas. Domestic growth has decelerated in 2008, and we expect international regions to slow in the fourth-quarter of 2008 and 2009 as well. U.K. ad revenue was flat for the last three quarters, and the rest of Europe and Asia are seeing cutbacks in ad budgets as well.”

Not surprisingly, various research agencies are reducing their projections for online advertising growth going forward. Just last week, marketing research firm eMarketer reduced estimates for U.S. Internet advertising to $25.7 billion for next year, about $2.7 billion less than a forecast from just three months ago, but still a 9% increase over this year. EMarketer predicts U.S. search ads will generate $12.3 billion next year and that “display ads” will rise nearly 7% next year to $4.9 billion (less than the 14% growth previously suggested). Considering we’re in the midst of the worst financial crisis since the 1930s, I would say that any growth at all is pretty good! The reason for continued growth in PPC advertising despite this crisis is because it works.

While “decelerating growth” may be a sobering reality for Google, it will not bring them to their knees. In the near term, Google may have to make some adjustments, but they appear incredibly well positioned to potentially dominate multiple marketplaces going forward, including organic search, sponsored search advertising, online video & the wireless market. Organic search, PPC advertising and online video (via YouTube) are already in the bag, at least for now, and Google’s wireless Android platform is new but already creating a lot of buzz. Actually, I personally think that what Google has already accomplished is amazing and I look forward to witnessing their future innovations. They always seem to be one step ahead of the competition.

Holiday Reminder- The busiest shopping day of the year, Black Friday (this Friday) is followed by the biggest online shopping day of the year, Cyber Monday (next Monday). Happy Thanksgiving.

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New clients will often ask us here at JumpFly which search engine is the best to begin pay-per-click (PPC) advertising on. Clearly, Google is the first obvious choice if you are looking for the greatest volume of traffic. According to the latest numbers from Hitwise, Google received 71.7% of U.S. search queries in October 2008. That’s a huge chunk of online traffic and search volume moving through the Google search box. If you only had one search engine to choose, there is no question that you should choose Google.

Yahoo search volume is dropping consistently, down from nearly 22% in October 2007 to below 18% for October 2008. MSN took a drop from last year as well in their search volume, but it seems to be holding in the mid 5% range from month to month now. So that does beg the question, is it even worth running PPC campaigns on Yahoo and MSN? Clearly, there is some volume to be had on both of those search networks, so they definitely have some value to some advertisers. If your budget is tight, though, and you are testing the PPC waters, I would suggest starting on Google only and then see where you can go from there.

Another strategy to consider for Yahoo and MSN, which we have implemented and seen success with, is to start out strong on Google for a month or two and then only move your best performers over to Yahoo and MSN. Since Google does bring in the most volume by a large margin, their search platform can really give you a good indicator as to whether a certain product, or a certain groups of keywords, or specific ad copy, will bring you the ROI you are looking for. It isn’t always an apples to apples comparison, and what works on Google does not necessarily always work on Yahoo or MSN, but you can certainly get some strong indicators as to what might work on the other engines by analyzing what is working on Google first.

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Google just announced yesterday a new keyword tool they released in beta called the Search-based Keyword Tool.  Before further exploring this new tool, I would first like to revisit the regular Google Keyword Tool and its recent improvements.

The Keyword Tool at Google AdWords

I use Google’s Keyword Tool for a large majority of keyword research now.  Yes, services like Keyword Discovery or Word Butler will give us a longer list of long-tail keywords, but according to Google, bigger is not always better in a new campaign.

Google’s Keyword Tool has been improved greatly over the last few months.  We now get very detailed search volume numbers - be sure to change the match type of your results to “Exact” before taking those numbers seriously.

They have also fixed a problem they were having a couple of months ago where they were randomly presenting terms that were not as relevant (called “Additional Keywords to Consider”) before the relevant terms.  That has been fixed and we now see the Related Keywords first on every search.  They have also fixed little annoyances like the scrolling and the ability to download all the terms at once.

So, how is the new Search-based Keyword Tool different?

It’s main difference is that instead of taking your suggested words, Google will now go look at your website and provide suggested keywords based on its content. 

There are  a few new features that make this tool an interesting addition to our arsenal of research tools here at JumpFly:

1. A magnifying glass icon takes you straight to Google Insights for that term.

2. Ad/Search Share tells you how your ad is showing up for that search term

3. We can filter the results by search volume, competition and suggested bid.

I am disappointed that the search volume numbers are apparently from the broad match search volume - not nearly as useful as the existing keyword tool that allows you to change that to exact match for more accuracy.  I also feel that I get a much larger and comprehensive list when I use the Google Keyword Tool.  However, if we are looking for a single term or set of terms, this tool lets us narrow things down quite a bit and may help uncover some valuable new keywords.

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