Perhaps my series on The Death of ROAS got them thinking. Who knows. But today the Official Google Adwords Blog posted the first of a promised 3-part series on ROI.

In Part I they explain ROI with the payoff quote "When an advertiser tracks and monitors their ROI, they are seeing the complete picture. This allows them to make smarter decisions about their online ads and, ultimately, make their business more profitable."

Interestingly, ROAS is never metioned. Not shown in the tables that list the standard Adwords metrics of impressions and clicks and conversions.

The next two posts promise to tell us how to track and then use ROI. Hopefully these will also include an announcement about Google supporting ROI reporting directly within the Adwords interface.

Posted by Craig Danuloff at 9:56 PM | Permalink | Comments (0)

In the last few posts we’ve seen that ROAS is related but not directly or proportionally to the actual gross margin you earn from your paid search campaigns, and that believing that ‘keywords have an ROAS’ is a dangerous oversimplification because there are many other variables involved. Putting these aside for a moment, let’s look at a more fundamental question: is maximizing return-on-ad-spend even a good idea?

If the goal is maximizing revenue or profit, maybe not. The assumed correlation just doesn’t exist. Consider ‘keyword A’ with a 417% ROAS and ‘keyword B’ with a 375% ROAS – which one makes you the most money?

The answer lies in the interaction of the average cost-per-click and the conversion rate. If ‘keyword A’ has a $0.15 cpc and a 2.50% conversion rate, and ‘keyword B’ enjoys a 3.75% conversion rate with a $0.25 cpc, then ‘B’ produces a whopping 50% higher revenues and 45% more gross profit at the lower ROAS. (See the table above for a full breakdown.)

This example shows that for every keyword where you review the return-on-ad-spend to make future bidding and budget decisions, you really need to factor in cost-per-click and conversion rate. Add to that the importance of margin and the fact that keyword selection and max-bid are only 2 out of about a dozen factors you can manipulate to impact ROAS (and conversion rate) and we arrive back at the original premise - ROAS needs to die.

It would be great if paid search was a simple little game where the skills you’ve picked up in other endeavors prepared you to easily and consistently win. Once upon a time it might have been.

(Thanks to Bruce Ernst for the math and other guidance.)

Posted by Craig Danuloff at 11:14 PM | Permalink | Comments (2)

This third post in the series isn’t about what’s wrong with ROAS as much as how ROAS is misperceived. As the only real measure of performance provided by the search networks and web analytics packages it’s easy to get the impression that ROAS is actionable information. But like a lot of other analytic metrics, it’s really only useful as the starting point for questions and investigations.

Is a 500% return-on-ad-spend good? Is a 159% ROAS bad? As discussed previously, that depends upon the net profit margin of the goods/services sold.

If ROAS is below a certain threshold for a particular keyword, should you delete or pause it? If ROAS is above a threshold is everything peachy-keen? The answer to both is probably ‘no’ at least until the current bid, text-ad, landing page, and offer pricing are considered, modified or tested.

It’s easy to fall into the trap of thinking that individual keywords are either ‘good or bad’. But the truth is that in paid search you’re measuring a system – the keyword, search query, text-ad, position, bid, landing page, conversion funnel, checkout process, product selection, and pricing offers and terms. While it’s obviously not possible to infinitely test every possibility for each of these variables, keeping them all constant and rendering judgment on the keyword clearly isn’t fair or reasonable either.

From a workflow perspective neither the search networks nor web analytics packages are of any help in measuring return (on ad spend or investment) as you perform a more complex series of tests of the other variables that impact the success of a keyword. The fact that all currently available tools fail to support are more complete and realistic view of the search environment clearly has a lot to do with the overly simplistic way most campaigns are still managed and reported on and evaluated.

Take one simple variable, text-ad creatives. Wouldn’t it be great if the revenue or ROAS graph for a keyword marked the points in time where different creative tests where run and showed the impact of those tests (v1 vs v2 vs V3)? Wouldn’t that be better than reviewing results and toggling to the text-ad report and then continually switching date ranges to check when ads were changed and how results varied? Or setting different tracking codes and comparing the tests to each other without being able to directly graph their progress?

ROAS is just one example of the conspiracy of false simplicity in the paid search world today. It’s helping the engines make a lot of money, and costing advertisers a bundle.

Posted by Craig Danuloff at 11:02 PM | Permalink | Comments (0)

For a long time, all we had were clicks. Paid search marketers bought keywords and ‘traffic’. The engines reported on click counts and costs. But they couldn’t tell you anything about sales and revenue.

Web analytics packages, on the other hand, identified paid search traffic and associate the engine and the keyword with the revenue. But they didn’t have cost-per-keyword data. So for some time we were left to eyeball (or painfully match up in spreadsheets) the interplay between cost and revenue.

Several years ago the two began to meet. Google and Yahoo added ‘conversion tracking’, and added API’s that enabled cost data to be pushed into web analytics packages. Suddenly, if you could properly tag your site (often no simple feat) and get the API’s to work properly (often an intermittent miracle) it became possible to see how many orders and how much revenue each $dollar of paid search (or each explicit keyword, adgroup, etc.) was generated. We entered the era of ROAS.

Compared with having no meaningful relationship between cost and revenues, this was a great advance. But as mentioned in the first post in this set, return-on-ad-spend (ROAS) is a very limited and superficial way to measure results and success.

The problem is that ROAS ignores the cost of goods or services (plus many other fixed marketing costs) and gives the impression that every dollar returned above those spent for the advertising is a positive result. A 400% ROAS, for example, sounds terrific.

But if your margins are 25%, to take one simple example, you need a 400% ROAS just to break even. The chart below gives further examples of the ROAS required to hit certain ROI depending on your average margin.

Most businesses don’t have consistent margins across their product lines or service offerings, so the simplicity of translating ROAS into ROI in your head isn’t practical. And with promotions impacting online pricing - coupons, discounts, and special offers – actual margin calculations can vary sale by sale. To further complicate things, ROAS is reported on a keyword basis, but revenue is often generated from a basket of products that themselves have different margins.

The deeper you look, the less relevant and less useful ROAS becomes.

Posted by Craig Danuloff at 9:58 PM | Permalink | Comments (6)

Paid search advertising is incredibly simple to purchase. But it’s nearly impossible – and in many ways literally impossible – to understand and analyze what you’ve purchased or how effectively that money has been spent.

Why? Because the fine folks who make it so easy to buy and pay simply do not share the information you need (and I’d argue deserve) in order to understand what you bought. And to a lesser extent because the after-market analytics packages take what they’re given and pass it on to you without adding any value beyond rich formatting.

What about ROAS you ask? Ah yes. Return On Ad Spend. The one aspect of your results that is easy to calculate and even supported by the search networks. ROAS measures whether you are ‘making’ more money than you are spending. It’s fine as far as it goes, providing an initial indication of the health of your overall program and perhaps individual campaigns.

But ROAS has a number of shortcomings and even flaws, and as a metric should really be killed once we finally get Page Views into the ground.

What’s wrong with ROAS? Here’s a partial list:

• As a measure of gross revenue it ignores the tiny little reality of COGS. In other words, you can have a large positive ROAS and still be losing money on every sale. A metric only an ad network could love.
• As provided it only tells you how a blended set of search terms, positions, text ads and landing pages are performing and gives no visibility or account for the prior or subsequent actions of site visitors. As a result, it’s impossible to have an intelligent surgical reaction, and very likely to drive actions that produce quite unintended consequences.
• With its basis in the advertising spend, the easiest way to drive up ROAS is to cut certain spending. Mathematically that often doesn’t yield the highest revenue or profit. It’s like driving a car and optimizing for miles-per-gallon without regard for your destination.

In the next three posts I’ll take a deeper look at each of these flaws and talk about things you can do to overcome them.

Posted by Craig Danuloff at 5:55 AM | Permalink | Comments (2)

Turning off poor performing keywords - especially when they're well targeted - can be a surprisingly tough decision. Marketers and managers want to see their ads running for the terms and phrases that they believe define their businesses. And there can be a hesitancy to taking the hit on the top-line revenue number even when considering the negative returns.

From an analytics point-of-view, we've developed a way to quantify and display the opportunity or benefits of turning off keywords using the SAINT classification capabilities of Omniture SiteCatalyst and SearchCenter. The result is a chart/table as seen below (click to zoom) that shows the historical revenue and expense associated with terms we've chosen to pause/turn off.

In this example, we see a series of keywords turned off over a six week period, and the revenue and expense that was spent on them over the past 60 days. In other words, if these terms had been turned off sooner, this client would be over $5,000 ahead (the actual number is higher than shown because many of these terms were off for much of this time period.) It's a great way to bring visibility to an activity that we know is right but often makes certain people nervous.

Of course, we could display this report showing the actual revenue and expense associated with each keyword, but aren't doing so here for privacy reasons.

Note that we could easily do this pro-forma, tagging a bunch of terms and presenting the historical losses in order to get approval to go ahead and pause/kill the keywords. I'm sure it sounds like an easy decision to some, but believe me there are CEO's, VPs of Marketing, and Line managers out there that do not like to see top-line revenue go away, regardless of the ROI. Sometimes making a visual case for stopping the losses is required.

Obviously, this process should go hand-in-hand, or follow, an effort to determine why these keywords aren't working, and improve creative, bids, landing pages, or offers to make them perform better. But sometimes there are barriers to getting some of those items fixed, and sometimes a keyword just can't win.

To create this report in Omniture, create several classifications in the SearchCenter Keyword Classifier, including KW-Status (which we load with On or Off) and KW-StatusOffDate. Export the SAINT file to excel, populate these two fields, import the SAINT file, then create the report from the Commerce >> SearchCenter menu.

Posted by Craig Danuloff at 1:01 PM | Permalink | Comments (1)

Everyone is understandably pleased about Google’s decision begin sharing the URLs of sites that run your adwords ads on their content network, because the transparency (and related features) will allow you to filter unwanted sites from your distribution. Opting into the Content Network is no longer an all-or-nothing proposition.

This is great for many reasons. The consensus seems to be that the real motivation for the change is big brand advertisers who somehow couldn’t be cajoled into buying blind placements like the rest of us online dopes. (Don't believe this stuff about them being afraid of Quigo.) These guys have a lot of money sitting on the sidelines, and Google wants it – so they’re finally willing to give the rest of us something we’ve been requesting for years.

The big win here that I haven’t seen mentioned in the flood of articles and posts, is the impact this will have on click fraud. The Content Networks (Google’s and everyone’s) are home to all kinds of shady characters, and the inability to see who was sending clicks (and spending your money) has always left us with the sneaky suspicion that the reason Content Networks virtually always underperform the Search Networks or Google itself is fraud.

Seeing the URLs will enable us to note a sudden spike in traffic from any site, review the sites to see if they appear reputable, and understand traffic patterns in a way the ‘black box’ system didn’t.

But I’d like one more thing. (Don’t I always?) Don’t just share the URLs in the adwords interface, pass them along in the referring URL so we can collect and track them via our own website analytics. It would be great to track individual URL performance over time, associate click-costs to products sold to specific referring sites, and even define site groupings of our own choosing to look for patterns in what makes a successful Content Network ad-hosting site.

Transparency is good. The ability to track is better.

Posted by Craig Danuloff at 9:03 PM | Permalink | Comments (0)

Yahoo's introduction of Ad Quality, which is being officially released on February 5th, is the buzz in the SEM Industry. But is it really going to be an eye-popping event or just another scheme to keep us testing and spending our hard earned advertising dollars. Usually, the first thing that comes to mind if your an SEM geek like myself, is that this is Yahoo’s attempt to mimic Google's ever-popular Quality score. Google’s quality score is reported to consist of relevancy from the keyword level, Ad/creative level and landing page where relevancy – all of which means that SEO techniques are starting to play a significant role in the rewarding of CPC and AVG Position.

Yahoo’s attempt appears to be only a ¾ of the way there. According to the recent Yahoo's Press Release, their Ad quality is exactly what it sounds like, the quality of the Ad/Creative and the impact that is has on it’s users. Yahoo is basing their new Ad Quality on a few common factors: (1) Historical performance (2) CTR% related to competitors & Ad position (3) Yahoo's coined phrase “Expected Performance”.

Now, all of a sudden Yahoo has their own ranking algorithm for determining the winners and losers.

So how do we crack the code? It’s surprising to me that nowhere in the press release is there any mention of word “landing page”. It appears that Yahoo is simplifying the Google quality score algorithm, and just concerning itself with Ads and the selection of keywords of where the ads are being served. Could these other “various relevance factors” include landing pages, relevant keyword groupings and url naming structures? I guess this is their way of keeping their customers guessing on how to save a buck in the long term, while for now forcing us to continue to spend money on testing to see what is really working and what is not.

Greg Meyers is a Sr. Search Marketing Manager at Commerce360

Posted by Greg Meyers at 3:56 PM | Permalink | Comments (0)

There's an interesting article over at ClickZ concerning Google's inability to accept ads posted through 3rd party ad servers. Larger brands and agencies want to centralize the administration and reporting of their campaigns, and today Google makes this virtually impossible.

It would seem that the increasing attention on 'Quality Score' from both Google and soon Yahoo will also have an impact on the use of paid search as a branding tool. These types of campaigns are far less likely to use strictly verifiable (ie semantically consistent) language in either or both of the ad and the landing page, so one would expect they'd have trouble getting ranked highly and potentially even run for many of the keywords they'd want to target.

It will be interesting to see how that plays out, with the almighty dollars squared off against the pursuit of relevance.

Posted by Craig Danuloff at 9:55 AM | Permalink | Comments (0)

Yahoo Search Monetization System. Yes that’s right. Yahoo’s CEO Terry Semel has the nerve or ‘nads to call his three-years-too-late replacement of the Overture code base the "Yahoo Search Monetization System". Subtle huh? At least it sounds better than the “Yahoo-Will-Get-More-Money-Out-Of-You System.”

Mr. Semel must really be concerned about getting the YHOO stock price up AND be very comfortable in the fact that most of his advertisers really don’t have a whole lot of choice about doing business with him.

Of course, the real name isn’t very good either. It’s apparently supposed to be called ‘Yahoo Search Marketing’ a descriptive name that in no way makes it easy to distinguish between the software and the broader Yahoo search engine or organic search marketing on Yahoo.

Inside the application itself all the logos say Yahoo Marketing Solutions – so much from brand consistency. Of course everybody refers to it as Panama (including Semel). Just for a laughs someone left the name 'Overture US' in the pull-down menus in the internal reporting system for use when you want to see Yahoo-only reports. And they’ve hidden it at the easy to remember and type URL of marketingsolutions.yahoo.com.

Our experience thus far has been that the Panama interface is quite nice and a massive improvement over the old Overture offering. The internal reporting is good, there are some nice things like the chart of high and low bid prices for a keyword, and the system is snappy in terms of performance.

The transition has been another matter, with poor notification, an insane ‘auto-reorganization’ which is applied to campaigns, and broken/backlogged import methods as the only choice with which to fix the unrequested ‘upgrade’ campaign changes. The whole thing has had all the comfort and class of a shotgun wedding.

You’d think that if someone built a system just to take our money they’d at least try to make it a pleasant experience. And give it a friendly name.

Update: A good list of issues with Panama.

Posted by Craig Danuloff at 12:06 AM | Permalink | Comments (0)

Search Engine Marketing is putting a major dent into the online marketing budgets of many businesses. A December 2005 study done by SEMPO (Search Engine Marketing Professional Organization) states that “SEM was a $5.75 billion industry in North America in 2005, and will grow to $11.1 billion in 2010.”

These are astounding numbers, and should encourage us to consider: (1) How much are we willing to spend to get a customer? (2) How much money are we willing to spend to sell a specific product/service?

Paid Search Marketing is a multi-faceted business channel where complexity, relevancy and structure is considered a best practice. During its infancy we measured success based simply on clicks/increased traffic and CTR%. Later the engines and analytics tools enabled us to measure ROI of each campaign and keyword. Today this just isn’t sufficient – you have to drive to a known and acceptable cost-per-acquisition based on not only the required ROI but also gross and net margins on a SKU and keyword-by-keyword basis.

In recent years the paid engines have started to supply all kinds of nifty “bells & whistles” that allow us to try and get the most out of our budgets. But they don’t provide the tools it would take to dig even deeper to find that “right mix” that really makes sense from a business perspective. Why not let us upload acquisition cost targets or margin levels and the report back on net contribution margins after all direct marketing costs?

Maybe they don’t want us to know that we’re losing money while they hope we try to make it up in volume.

Consider this example: Suppose all of your SEM campaigns are well structured and finely tuned. You also have a high CTR%, your CPC is low, and your ROAS is hovering around 150%. In most instances, this is a very successful SEM channel. However, you then realize that your customer acquisition and product margin costs are just breaking even with the achievable 150% ROAS. Even though looks good in reports, it isn’t “cutting the mustard”. After analyzing your margins and acquisition costs you realize that a 250% ROI is necessary to make sustainable profit.

It’s easy to become so consumed with the available analytics and metrics that you lose sight of the context in which these measures and numbers exist. A positive ROI looks great, but it doesn’t mean it’s a worthy investment. To make sure you don’t get caught, know your goals, understand your acquisition costs, and establish a sensible ROI% based on your margins. Then you can closely monitor the metrics at both the keyword, ad-group and campaign levels and ensure that your paid search is really driving your business forward.

Greg Meyers is a Sr. Search Marketing Manager at Commerce360

Posted by Greg Meyers at 12:07 PM | Permalink | Comments (0)

BusinessWeek claims that small and medium sized companies are being priced out of the paid search market by ‘Brand Giants’ like Best Buy and Zales.

Funny then that Zales isn’t anywhere on the first page results for ‘Diamond Ring’ nor are any other major jewelers I’ve ever heard of besides online pure-play BlueNile.com. But small guys (or big guys with really lousy marketing and web design staffs) diamondring.com, goldmine.com, and worldjewels.net are right there.

Are there major changes going on in paid search? Yes. Are the ‘Brand Giants’ with more budget than sense changing the game in many categories. Yes. Is it the agencies and the tool vendors and engines themselves who are facilitating this wild spending? Mostly. But there is a lot more going on.

• As Andy Beal points out, there is an evolution going on, and in some cases what has ebbed will flow.
• As Nick Carr highlights, big co’s can and do factor ‘branding’ into their willingness to pay.
• It’s also true, or at least published in a study, that 60-90% of the conversions from online search happen offline – so guys with bricks have more ability to eventually capture revenue.

But as the diamond example shows, it’s really wrong to universally characterize ‘Big Guys’ as the cause of click-cost-inflation. Small fry’s can be irrational too. Or they can be smart. The reasonable price for a keyword is the price that makes you a profit – and therefore the more efficient your ability to convert leads to sales, or the better you are at extracting a higher price or a greater lifetime value from customers or a lower COGS from your suppliers, the more you can afford to bid.

So the right reaction to higher click costs may not be to start buying radio ads but instead to reconsider your landing pages, persuasive scenarios, pricing, and everything else that impacts how smart or easy it is to do business with you.

To suggest that this maturation marks the end of the benefit of the web as the great equalizer is just plain wrong. There are zillions of segments where small guys now have a national market that didn’t exist before and there are no big guys to blame if click costs go up. Plus, organic listings can still be won with quality and effort (if you have some time). It’s easy :-)

Posted by Craig Danuloff at 8:37 PM | Permalink | Comments (0)

Late last year in reaction to some SEO/SEM in-fighting, I offered some comments on organic search optimization. Another element of the debate was how the work of organic search optimization compared to the effort (and required skills) for paid search management.

While both tasks generally fall under the umbrella title of ‘search engine marketing’, in reality organic and paid search marketing execution have very little in common. The skills, tools, and even personality characteristics which I’d associate with organic and paid optimization are in large measure dissimilar.

Both paid and organic search remain a definite mix of art and science, but with the relative percentages are inverted. Organic remains largely art while paid search is dominated by science. The lack of clear organic analytical information, as mentioned in the previous post, is one significant reason.

While a lack of technology and control make organic search optimization difficult, it is ironically the increasing sophistication of management and reporting tools that make paid search management increasingly tough for the casual practitioner.

Driving a paid campaign means deciding on and controlling an amazing list of variables: keywords and phrases, campaign and ad-group organization, match types, negative keywords, bids, repeating all of these on each different engines, the engine content networks and their controls, the text ads for each keyword group, day-parting, geo-targeting, landing pages, and PPC analytics (CTR, CPC, Ave Pos, and ROAS at minimum).

The issues and twists associated with each of these aspects are significant, and those arising from their interaction and interdependence boggle-the-mind. (I'd list them, but who wants to read a 10-page blog post?) The ways to make really bad mistakes and places to exercise terrible judgment are numerous.

So is paid search management harder or easier than SEO? What in the world is the point of any comparison? Is one better than the other? At least that is an interesting question.

My answer tomorrow.

Posted by Craig Danuloff at 10:41 PM | Permalink | Comments (0)

Amazon continues to be one of the few online retailers that doesn't think like a retailer. Yesterday they announced ClickRiver, a proprietary pay-per-click network through which they will auction text ad space on Amazon.com product pages. On one hand this isn't new because they've run various forms of Google ads on Amazon pages for some time now, and the store long ago became a multi-retailer location with their Amazon Marketplace and other partnership initatives.

But ignoring the debate about whether they should be the click broker themselves or tie into another network, this move shows that Amazon understands a lot more than most about the way people use the web and the role their pages play in that process. In essence:

• People are interested in a huge array of products and services, many of which even Amazon doesn't carry. The ClickRiver ads are limited to products/services complimentary to any given product and non-competitive to Amazon.

• People know how to click (and leave) a web page to go find what they need. Not putting these ads there will not prevent them from wandering off to find these accessories (or whatever) if that is what they want to do.

• Their SEO success brings a lot of traffic, which both creates revenue also drives bandwidth and hardware costs. A great many of these clicks/people probably are looking for something related to the items but not the items themselves.

• If they're going to leave, you may as well get paid. Even if Amazon has conversion rates 3-5x the industry average (and I don't think they do) there are tens of millions of visitors leaving every day without buying something. But Amazon knows something of their interest and intention based on their navigation - the odd of ClickRiver ads being relevant is very high.

I just did some back-of-the-analytics math on for another retailer, and found that at $0.50/click the value of 1/3 of non-purchasing uniques would currently be worth upwards of $2M annually. That's a double-digit percentage of total revenue in this case. Could they capture that high a percentage, or that CPC, and do so without cannibalizing their own sales?

Impossible to say. Worth figuring out.

A related thought: Google Adsense should enabled any retailer to do this by making it possible to filter the ads displayed on your page by item/brand/category in addition to just blacklisting certain competitive URLs. They're scanning the target page anyway to calculate their quality score they so should be able to do a pretty good job assuring that ads are in fact complimentary and non-competitive. It would be great to allow all retailers to apply Amazon's strategy.

Posted by Craig Danuloff at 6:20 AM | Permalink | Comments (0)

Most click fraud articles thus far have involved PPC customers who swear there is click fraud arguing with search engines who claim clickfraud isn't much of a problem. BusinessWeek decided to investigate and talks with a whole bunch of people who actually make money click fraud'ing. They talk to individuals, networks, and technology developers.

Makes it a lot harder to believe the engines when they tell us how well they have things under control. Here's the key paragraph:

A BusinessWeek investigation has revealed a thriving click-fraud underground populated by swarms of small-time players, making detection difficult. "Paid to read" rings with hundreds or thousands of members each, all of them pressing PC mice over and over in living rooms and dens around the world. In some cases, "clickbot" software generates page hits automatically and anonymously. Participants from Kentucky to China speak of making from $25 to several thousand dollars a month apiece, cash they wouldn't receive if Google and Yahoo were as successful at blocking fraud as they claim.

Posted by Craig Danuloff at 10:45 PM | Permalink | Comments (0)

Google attempts to squash concerns about click fraud by proving that other people can't solve the problem any better than they can. It's interesting, not surprising, but really doesn't change the status of the click fraud issue at all.

In a new report on click fraud, Google's Click Quality Team claims that many of the 'click fraud detection services' used flawed methods and have their own technical problems which cause them to incorrectly diagnose and report on clickfraud. Mistaken reading of page reloads, and mistaken attribution of advertisers and networks are cited as errors the Google team uncovered.

If these click fraud detectors are selling snake oil, then Google is right to call them out. But just because these guys can't isolate and identify it, it doesn't prove or disprove the existance or extent of click fraud. It just proves that click fraud is very difficult to detect, which we knew. In any case, it's great to see Google engaged and talking. Like their recent invalid click reporting, it's another step in the right direction.

Now how about putting some tools in adsense to show click spikes, document the time interval between clicks from the same origin (and exceptions from these averages), and better yet lists of the URLs where clicks originated?

I don't believe Google or anyone can stop clickfraud, an if it's happening on distributed networks on at a slow pace and followed by some deeper clicks into the site, I doubt anyone can even detect much of it. But the anecdotal cases (or suspected cases) I've seen were batches of sudden clicks, and it stands to reason that the majority of these types of clickfraud are it's easier to detect than the slow, small, random clickfraud. If it didn't feel like Google (and Yahoo for that matter) were so unwilling to help with the big obvious stuff, it would be easier to give them more credibility and understanding on the broader and potentially larger issue.

(Via John Battelle's Search Blog)

Posted by Craig Danuloff at 1:46 PM | Permalink | Comments (0)

Google is now displaying their 'invalid click' numbers within the Adwords interface. (Yahoo, that's your queue.) It's a step in the right direction and they're to be congratulated. But it will not diminish the issue or the debate, which I suspect is their desire.

The reason is that 'invalid clicks' aren't the problem. 'Invalid clicks' is a term they made up to define the click fraud they know about or can reasonably detect. It's the manipulation of "right to life" and the parsing of "I did not have sexual relations with that woman" rolled into one.

Much of today's blog coverage gives them the headlines their PR folks want, making it sound like they've solved a problem. But as the comments here point out, they have not.

So we have invalid clicks, and fraudulent clicks, and Andrew over at Traffick adds one more asking why they charge for 'short visits'. While in some cases that can be an indication of fraud, certainly other traffic sources yield short visits so it isn't a conclusive indicator. It does however demonstrate it was a 'worthless click'. Maybe one day we'll get that stat in Adwords.

Clearly this topic is not going away.

Posted by Craig Danuloff at 6:51 PM | Permalink | Comments (0)

Do users of Google Conversion Tracking or Google Analytics have more of their 'invalid clicks' go uncharged or refunded? That thought occured to me today in thinking more about the Tuzhilini Report, in particular the section discussing 'What Google Knows'. Dr. Tuzhilini makes it clear that Google gains tremendous advantage in fighting click fraud when they have access to post-click information.

So does this advantage result in tangible improvements on an individual account basis? I'd really like Google to answer that question.

BTW: Matt Cutts took up the topic today, as did WebMetricsGuru (who created a quick summary).

Posted by Craig Danuloff at 10:22 PM | Permalink | Comments (0)

Anyone interested in paid search or click fraud should take the time to read the Tuzhilin Report (pdf) which is a 47-page document written by an independant party to a recent court case concerning click fraud.

It's a complete overview of paid search and an extensive report on the conceptual problem of click fraud and the steps Google takes to combat it. The author had insider-access at Google and covers the topic with a depth that Google themselves generally doesn't.

I'm sure there will be in-depth analysis of this report over the next few days, I'll update this post with links of the best posts I come across.

Bonus Link: A CYA post from Google regarding CEO Eric Schmidt's 'it's a self correcting problem' clickfraud comment. For another view, some snarky but true thoughts from Mark Cuban.

Posted by Craig Danuloff at 10:14 PM | Permalink | Comments (0)

It was only a matter of time for Google to transform and recycle its SEO organic algorithm and apply it to the methods placed within their “Google Quality Score”. This latest tactic of analyzing landing pages which are tied to a specific campaign and/or adgroup, is just another way to mold as well as financially reward its (SEM) paid search marketers using their Google Adwords program.

To achieve a high quality score, the marketer needs to create campaigns/adgroups with a strong focus on Relevancy. Basically every step in the setup process needs to be relevant and targeted to a specific message, brand, category or service. This process begins with the initial grouping of highly targeted keywords, followed by multiple Ads/Creatives written with the same targeted message with keywords embedded in the ads and completing the process, a landing page which not only applies the same targeted message, but also uses the same basic SEO techniques which are used at the organic level to communicate that message. These characteristics use the same fundamentals of SEO such as a relevant Title, tag, and H1-H5 header tags, relevant content on the page and well-defined and relevant anchor text.

Of course, this latest trend will not only motivate Search engine marketers at all levels to run back to their computers and re-evaluate all of their campaigns looking at their landing pages as well as their Ads/Creatives and keyword groups, but it will undoubtedly affect marketing budgets where improvements can be made at every aspect of the campaigns from average position down to Cost per click and Click-Thru Rate.

For marketers conversion is the name of the game, and for searchers (and engines) it's all about relevance. These changes can help everyone get more of what they're after.

Greg Meyers is a Search Marketing Manager at Commerce360

Posted by Greg Meyers at 11:40 AM | Permalink | Comments (0)

27 percent of advertisers reduced or stopped spending on click-based advertising. An additional 10 percent said they intend to curtail spending.

Reading the headlines and many regurgitated reports, I initially had several reactions:

1. Duh. In fact, I'm surprised the number is so low.
2. This is amazingly close to the long expected / previously reported percentage.
3. Man those folks at Google and Yahoo sure are full of sh*t.
4. This is terrible and more must be done to stop it (but don't hold your breath).
5. Wait until someone does a study on self-inflicted PPC waste.

Jumping over to read the original SFGate report, I saw the problem. "Advertiser Reported". They didn't measure anything they just asked advertisers how much fraud they thought was occuring. This takes care of #1, 2, and 4. Asking a bunch of people who have long been told that click fraud runs between 10 and 30% (without anyone knowing the original attribution) resulted in an average half-remembered guess of 14.6%. Danny Sullivan wisely and typically breaks it down to show how all the other numbers are then calculated from this original completely unscientific number.

So in fact nobody still has any idea how much click fraud there is. Given that half of all email is estimated to be spam (how good are those numbers, I don't know, but that seems a lot more measurable) and it seems like 80% of all blog comments are spam (that's not just me, is it?), and that on its face it's not too hard to either manually or in an automated fashion execute clickfraud and doing so results in someone mailing you money (ie quite strong motivation), why in the world would the number be so low?http://blogs.zdnet.com/micro-markets/?p=219

Continue reading "Click Fraud is Bad. Click Suicide is Worse." »

Posted by Craig Danuloff at 5:10 PM | Permalink | Comments (2)