It’s your algorithm!

Most SEM professionals will agree that a solid SEM program strategy is multi-faceted. The program should focus not just on bidding, but also on Quality Score, data gathering and reporting, and aggressive testing of all aspects of the program. That being said, the great promise of bid automation remains a viable, debatable, and important topic.

There is no doubt that autobid algorithms are important to a well-rounded SEM bidding strategy but they can also be detrimental. Success with autobid depends on a number of factors. Obviously, one crucial factor is how well constructed the algorithm is. Perhaps more important, though, is the level of customizability made available by the algorithm. Does it treat core and long-tail terms similarly, or is it specialized for success with a particular kind of keyword? Is it customizable in terms of defining quantity of data analyzed, statistical relevancy, convergence speed, and data tolerance leading to a bid change? Can you influence bid security, day parting, data aggregation?

Search Engine “Recommendations”

If you’ve had a meeting in the last 3-6 months with a search engine account team, then you probably left the meeting frustrated. It appears that sometime in the last two quarters, the powers that be in the big 3 search engines have recognized advertiser’s dependency on them for strategy…so they’ve taken into their own hands to make the most of it. We’ve heard it all: “Holiday starts in October,” “Get ahead of the competition by ramping up spend,” “You’re missing 50% of available impressions…why not increase bids to get more market share [regardless of performance]?” Here’s my question: When did the search engines make the conscious decision to stop caring about customer satisfaction and begin to make recommendations with their own best interests at the forefront of the discussion? At least they used to pretend that advertiser performance was top of mind.

To be fair, this is not indicative of every team I have worked with. Some teams are more capable than others, and teams that handle more mature programs tend to deliver fewer of these pitches – instead focusing on new products beta tests.

Heads vs Tails

Traditionally, search marketers base their search results on a “last click wins” basis. This means that the last click a consumer makes always gets attributed the sales revenue or conversion, regardless of how many other searches were made prior. The result is that brand terms often appear hugely profitable and costly generic terms appear to offer an extremely low ROI, if any at all. This makes it difficult to correctly classify “head” vs “tail” terms.
To combat this discrepancy, whenever we estimate performance for a keyword, we also calculate a confidence interval related to that prediction. When the confidence interval is too large, it means the prediction is useless (typical for keywords with very low traffic). We then need to aggregate in a relevant way (which is usually different from the way keywords are structured in ad groups) to get a critical mass of stats.

For this reason, we offer two different algorithms for automated bid management:
- Long-tail (tail): analyzes a bucket of clicks from a given set of terms and makes bid changes based on statistical significance.
- Core (head): analyzes past performance by week, day, and hour, making bid decisions based on a variety of statistically significant externalities.

Our automated bid management analyzes traffic patterns observed at similar times throughout an account’s history and makes preemptive bid decisions to effectively anticipate consumer behavior and minimize CPCs which effectively maximizes ROI. Automated strategies base decisions upon the smallest possible set of terms. If a given KW has enough data, then the decision will be based strictly on that term’s data set. The data set is expanded until enough data is available to make a statistically significant decision. The first expansion is to the ad group level, and then to the sub-category level in terms of the KWs portfolio group.

Jacqueline Brown

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Breaking through the clutter – choosing the right SEM agency

“Best in class”, “We drive results”, “Industry leader”.
These are just a few of the things SEM agencies claim as their identity. Like everything else, advertisers are flooded with messaging demonstrating that each agency is better than the next but the question is, “why?” What makes Agency X the leader? What makes Agency Y the best? Agencies are great at calling themselves the All-star, but don’t always make it clear for advertisers just why they are deserving of these titles. As SEM is all about numbers, it is particularly important for advertisers to gain clear insight into the pros and cons of each agency and not just rely on a glamorous marketing pitch. Below are a few things to consider when researching SEM companies:
1. Technology. While agencies will usually provide information on their technological capabilities, it is a good idea to dig deeper than this. Find out if they developed their own technology or if they license it from another SEM company. If they license it out, what made them choose this specific technology? Do they plan to change anytime soon? Why or why not?
2. Internal intelligence. It is a good idea to investigate how the company is broken down. A company that is 80% sales, 10% account management and 10% engineers is going to perform differently than a company that is 20% sales, 40% account management, 20% analytical and 20% engineers.
3. Historical performance. Perhaps the best way to see the true colors of an SEM agency is to talk to past and present clients. Agencies should be able to provide references for more official conversations or advertisers can just ask around to get an idea of an agency’s past business successes and mishaps.
4. Personality. At the end of the day, numbers are what count. However, there is a lot to be said for account managers and sales teams that you feel comfortable with. As agencies will work as part of your team, likeability shouldn’t be ignored.
The bottom line is that SEM isn’t a fluffy form of advertising nor is it the most creative. While a flashy website or shiny presentation can be enticing, it is important for advertisers to focus on other factors when ultimately choosing an SEM agency. SEM is about results and results aren’t proven by an agency’s marketing, they are proven through true SEM capabilities and intelligence. By taking the points above into careful consideration, you will be set-up for both strong SEM results and a successful relationship with your agency.