B8679: Digital Marketing

Prof. Dante Donati

Search advertising
Today’s Agenda

▪ Company Analysis by 2 teams

▪ Demo of Facebook Ad campaign

▪ SEM (Search Engine Marketing)

▸SEO (Search Engine Optimization)
▸Paid search advertising

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Consulting Project

▪ First round meetings done or in progress

▪ Stage I report due on Feb 21, 2022

▸Fully specify the needs of the company
▸Propose and discuss approaches to address the needs
▸Identify personas and channels
▸Guidelines file on Canvas

▪ Protocol for all meetings going forward

▸Share the stage report with the company after submission
▸Collect feedback on the stage report, and adjust it accordingly
▸At least 2 days before EVERY meeting, send an agenda to the company,
with bullet points you want to discuss in order to prepare the next-stage
report (you can also share a draft of the next-stage report)

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Company Analysis Presentations

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Demo—Display Ad Campaign on FB

https://www.facebook.com/business/ads

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 What is SEM?

▪ Search Engine Marketing: Generating consideration and traffic

to websites by increasing their ranking on the results pages of
search engines
▸Two aspects: Paid Search and Search Engine Optimization

▪ SEM role
▸Usually most efficient vehicle to drive web traffic
▸Mainly direct response (down-funnel)
• Arguably the most important channel for customer acquisition
• “A search is a statement of intent.” – Susan Athey, Former Chief
Economist at Microsoft
▸Also branding (up-funnel)

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 When to use which?

AWARENESS Based on impact on consumers at different

purchase stages
▪ Up-funnel: Reach (awareness, branding)
INTEREST ▸Social media, display, TV, radio, print

▪ Down-funnel: Depth (research, consideration,

preference)
DESIRE
▸Search, email, print

▪ Ongoing (repurchase, two-way

ACTION communication)
▸Retargeted display, social media (two-way
communication)
REPEAT

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2023 Share of Search in Digital Spend: ~40%

Classified: ads posted in a categorical listing of specific products or services, e.g.: online job boards, online real estate listings, automotive listings,
online yellow pages, and online auction-based listings

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 Google dominates search

2019 vs 2022

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Sponsored

Organic

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 Where is it more important to be
located high on a search engine
Sponsored
results page (SERP)?

• Organic results
• Sponsored results

Organic

Pollev.com/dantedonati
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 Organic and Sponsored CTR by position

Organic CTR:
Source: moz.com

Sponsored CTR:
Source: moz.com

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 Eye tracking results

Source: https://www.pegs.com

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 Branded vs. nonbranded keywords

Source: moz.com

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“Keyword Popularity and Consumer Click
Behavior” Jerath, Ma, Park (2014) JMR
Are there any discernable patterns in consumer click behavior on a
search results page?

Using a dataset of >30M individual searches they find:

▪ As popularity of keyword (as measured by keyword search
volume) reduces:
• Total clicks by consumer increase
• Fraction of sponsored ad clicks increase

▪ Implications:
▸Consumers searching less popular keywords are more “down funnel”
▸For more popular keywords, important to be ranked high on organic side
▸For less popular keywords, important to be ranked high on sponsored side
POSSIBLE TO ACHIEVE?

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 SEM - Search Engine Marketing
Organic Results Sponsored Results
(“Search Engine Optimization”) (“Paid Search”)
Less direct control over ranking Can directly influence ranking, based
on bid
Limited control over message Control over message
-- Message is typically generic / -- Can be more product focused /
brand driven benefit driven
-- Pulled from code on website -- Copy test, frequent update
When done well, it can be a very Compensates for inconsistencies in
effective method of increasing SEO, ensuring consistent placement
traffic and leads
High organic rankings have a High paid rankings have a positive
positive effect on the brand (and effect on the brand (and vice-versa)
vice-versa)
69% of total search clicks are
organic
Can be expensive (if outsourced) & Budgeting opportunity
time consuming Immediate results
Not quick process and/or results

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 Search engine optimization (SEO)

To here

Getting from here

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SEO

▪ SEO is the process of improving a website in the eyes of

both users and the search engine’s “spiders” to be listed
as high as possible within search engine results

▪ Strategically what you need to tell the search engine:

▸Content: What are you about?
▸Quality: How good are you?

▪ Practically how to tell the search engine:

▸HTML coding: Page title, URL, Headers, Image tags, Page body
▸Content within web pages
▸Backlinks (who links to you) & Social Engagement

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 On-Page Coding

Page title
URL

Page
H2
H1 body

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 Keyword Strategy in SEO: Choosing the Right
Keywords to Target
Remember that your rank in both organic and sponsored results varies by keyword

Decreasing Search Volume

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 Basic advice from Google… Also, good practices generally

▪ Structure:
▸Accurate titles, Simple URL, Simple website navigation

▪ Content:
▸Quality content, keyword variations
▸Avoid “keyword stuffing” (rule of thumb: keyword density 2-4%
of content)
▸Organized images with text descriptions
▸Social media sharing
• Passive: Socially enable content (likes, pins)
• Active: Ask for likes, retweet, pins

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 Backlinking: How Google finds and evaluates sites?

▪ Backlinks/Inlinks: Links that point to your website

from an external site
▸Considered “online currency”
▸A “silent” vote of confidence from the site linking to you

▪ This is hard work! Request links via PR relationships

and social media channels

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 Black Hat vs. White Hat SEO

▪ Legitimate (white hat) vs illegitimate (black hat) SEO

▪ Backlinking prone to black hat abuse

▸Create or hack sites to refer to others
▸Buying links for SEO purposes

▪ Use reputable SEO company & beware guarantees like “We will
make you #1 site on Google”

▪ Penalties from Google include temporary lower listing or

removal—expensive to remedy!

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Penalty for “black hat” SEO on Google

▪ Overstock.com
▸Violation: Offering discounts to schools in exchange for links back to
Overstock.com
▸Penalty: Overstock blocked from ranking in the first page of results at
Google for 2 months

▪ JCPenney.com
▸Violation: Paid other websites to link to JCP.com
▸Penalty: JCP blocked from ranking in the first page of results at Google for 3
months

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Why are we in position 2?
How much did we pay for this?
Are we paying more than ad in position 3?
Now
 Sponsored search ads are sold using auctions
▪ Search engine runs an auction for every search

▪ Advertisers only pay when a user clicks

▪ Sponsored search auctions are based on a “Generalized Second

Price” auction
▸You pay the “minimum needed to keep your position,” which is
the next highest bid + 1¢

▪ Many refinements such as “quality score”

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Generalized Second Price (GSP) Auction

Ad Bid Pos1 Ad B $1.2 Ads

Ad A $0.9 Price = $0.90
Pos2 Ad A $0.9
Ad B $1.2
Ad C $0.8
Ads
Ad D $0.6 Pos3
Ad C $0.8
Organic
Pos4
Results Ad D $0.6
 GSP example
Consider an auction for the keyword “shapeups” with 2 slots and 3 advertisers:
Skechers, Footlocker and DD’s Shoes (“DanteDonati’s Shoes” which is a no-name brand).
The bids they place are $1.20, $1.50 and $1.75, respectively.

Then the top two advertisers will be DD’s Shoes and Footlocker,
and they will pay $1.51 and $1.21, respectively.

What’s undesirable about the outcome?

• For consumers?
• For search engines?
• For advertisers?

What can be done about it?

Quality score

▪ Quality score affects eligibility to compete in auction,

likelihood of winning auction, and the actual amount paid per
click
▪ Google AdWords wants clicked page to match user’s search
preferences.

Display
URLS
GSP auction weighted by quality score

▪ Google assigns a “quality score” (QS) to each advertiser

▪ Uses QS to convert placed bid into “effective bid”

▸Effective bid = Bid * QS
▸Bidders ranked by “effective bid”

▪ Price per click =

(Effective bid of bidder below you)/(Your QS) + 1¢
 GSP with quality score example
Consider an auction for the keyword “shapeups” with 2 slots.
There are 3 advertisers: Skechers, Footlocker and DD’s Shoes ( “DanteDonati’s Shoes”).
Advertiser Bid QS
DD's Shoes $1.75 4
Footlocker $1.50 7.5
Skechers $1.20 10
Which will be the top two advertisers and what will each pay per click?
A. DD’s Shoes ($1.75), Footlocker ($1.50)
B. DD’s Shoes ($1.51), Footlocker ($1.21)
C. Skechers ($1.20), Footlocker ($1.50)
D. Skechers ($1.14), Footlocker ($0.94)
Formulae:
Effective bid = Bid * QS
Price per click = (Effective bid of bidder below you)/(Your QS) + 1¢ Pollev.com/dantedonati
 Improving your quality score

▪ Three-pronged strategy:
1. Improve your expected click-through rate on the ad
2. Improve the match between your keyword set and your ads
3. Improve your landing page to engage people who get there

Google gives “Above Average,” “Average” and “Below Average”

ratings on all of these to give you an idea of where you can focus
your improvement

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Running a sponsored search campaign

▪ Setting up a sponsored search campaign takes only a

short time
▸https://ads.google.com

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Choose targeting location, languages targeted, and primary URL

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Choose keywords

▪ Suppose you have a lawn mowing service. Which

keywords will you bid on?

Pollev.com/dantedonati

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Source: Google
After this, you design the ad

A Google ad has many components:

The primary ones are: URL and paths, headlines, descriptions, callouts, structured
snippets

Optional ones are: sitelink extensions, call extension, callout extensions, price
extensions, etc.

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Running a sponsored search campaign

▪ Continuous feedback enables fine-tuning

▸A daily campaign report looks something like this:

Avg.
Day Bid ($) QS Rank CPC ($) Impressions Clicks Sales ($)
1 1 8 1.2 0.78 1800 88 58.08
2 0.9 8 1.3 0.75 1300 54 37.26
3 0.8 8 2.1 0.6 2000 32 29.76
4 0.7 8 2.3 0.58 1600 21 20.79
5 0.6 8 2.6 0.57 1200 12 12.96

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 Metrics for Paid Search

Metrics for a paid search campaign (can be at a keyword level or aggregated

over keywords):
▪ Average Rank
▪ Total Clicks
▪ Total Impressions
▪ CTR = (Total clicks)/(Total impressions)
▪ Cost per click (CPC) = (Total spend)/(Total clicks)
▪ Conversions or $ Sales
▪ Conversion rate = (Total conversions)/(Total traffic to website)
▪ Cost per conversion = (Total spend)/(Total number of conversions)
▪ Profit = (Total $ Sales attributable to ads – $ Spend)
▪ ROI (also called ROAS) = Profit/Spend
 Progression of Metrics – Simple to Advanced

▪ Exposure and response metrics like exposure, reach, click-

Rudimentary
through rate, conversion rate

▪ Cost-based metrics like CPM, CPC, cost per conversion

▪ Value-based metrics like value of an impression, value of a

website arrival, value of a conversion

▪ Return-based metrics like ROI/ROAS

▪ Metric for allocation decisions like mROI, response elasticity

Advanced

▪ Long-term metrics like brand value created and customer

lifetime value (CLV) if customer is acquired
Takeaways

▪ Search engine advertising is nearly half of all online advertising

▸Primarily “down funnel” because consumer has already shown intent and
awareness through the search

▪ SEO (improving organic list rank)

▸Be transparent to consumers & search engine, no “tricks”
▸Limited control and effects are slow

▪ Paid search (improving sponsored list rank)

▸Significant control over rank through bids
▸Easy to set up, continuous feedback and tunable
▸Use metrics and careful calculations to make keyword and bid decisions

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Paid Search Ad in practice: watch the tutorial

https://drive.google.com/drive/folders/1gcVGANzaioFc8JfFzPtKKqrLW7ja5gDU?usp=share_link

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