If you manage $50,000 or more per month on paid search advertising, evidence suggests that as much as one-third of it is wasted due to sub-optimized search marketing campaigns. Does this mean you are a bad search marketer? The answer is, unquestionably, no. However, the following statistics are sobering and suggest you may want to look at how you manage and optimize your campaigns:

· Paid search advertising is getting increasingly competitive. It makes up nearly 45 percent of all global online advertising expenditures, and JPMorgan forecasts that spend to reach $30 billion in 2008.

· Keyword inflation continues to rise due to competition and the market. Industry studies show Google has surpassed 70-percent share in searches for the first time, and a likely deal between Yahoo/Google may increase Yahoo’s pay-per-click search rate by 22 percent.

· Optimized campaigns can achieve the same results at 69 percent of the cost. WebTrends clients—who previously used a combination of manual methods and bid management tools—experienced an average return on advertising spending improvement of 44 percent only 90 days after switching to WebTrends’ new automated SEM optimization solution. In the past, they essentially wasted 31 percent of their paid search spend.

What’s a retail search marketer to do? In order to continue generating positive returns, today’s search marketers must be smarter, faster and more efficient than their competitors. They must continue to experiment with new campaign variables (ad text, landing pages, geotargets and many others), build a long-tail keyword inventory and stay on top of messaging. Search engines themselves are offering more sophisticated user segmentation and targeting options, resulting in the typical paid search program now having almost limitless possibilities for testing different variables. Each new variable exponentially adds to the number of factors and mathematical performance data that must be tracked. For example:

· 10 keywords, 10 positions, 1 creative = 10^2 combinations

· 1000 keywords, 10 positions, 5 creatives = 5 x 10^4 combinations

· 1000 keywords, 10 positions, 10 creatives, 2 landing pages = 2 x 10^5 combinations

· 1000 keywords, 10 positions, 10 creatives, 2 landing pages, 3 networks = 6 x 10^5 combinations

The real problem, and underlying opportunity, with search engine marketing optimization is that today’s methods and solutions rely on a human to do most of the heavy lifting, from a/b testing, reporting consolidation and results analysis to the seemingly never-ending bid rules creation and adjustments. The expansive keyword portfolios and the sheer number of campaigns that large advertisers manage require a new way of doing things. Forward-thinking marketers will need to discover the optimal balance between what machines do best—handling the constant cycle of analysis, testing and updates across an organization’s paid search portfolios—and the insight and perspective into external industry events and business drivers that humans can bring. In the future, automated SEM optimization solutions will help strike this balance.

Alex Yoder is WebTrends’ president and CEO.

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Tags: alex yoder, Electronic Retailer, keywords, optimization, paid search, Retailer, search engine marketing, sem, webtrends

This entry was posted on Tuesday, August 26th, 2008 at 6:43 pm and is filed under Advertising, Branding, Direct Response, Marketer, Online, Research, Retailer, Web Analytics. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.