Vinny Lingham's Blog

• 5 Ways To Spot PPC Click Fraud
  Gordon is one of our Senior Campaign Managers and has a great post on ways to spot click fraud.
  (tags: Click Fraud pay per click)
• Yahoo releases Widgets 4
  Wow – this is an impressive release!
  (tags: Widgets Yahoo)

I read a survey the other day, that about 70-80% of advertising execs in the USA do not know what Web 2.0 is. Not surprisingly, South Africa by and large hasn’t caught up yet either and there is only probably a very small segment of our population that knows what it is. “Web 2.0″ is an industry buzzword which means that pretty much only the people in the industry really know what it means and it’s effectively a hook for new people coming in, to summarize where our industry has evolved to.

The flip-side, is that anyone (well, maybe not ANYONE) watching the international Web 2.0 trends can pretty much dominate the local markets here and disrupt the old economy companies that are lethargic.

Granted it’s a bit difficult to displace Hotel groups, etc, but the media companies are going to run into big problems unless they take a Rupert Murdoch-esque route. On a quick side-point on hotels – back in 2004 I visited one of South Africa’s largest hotel groups’ CMO with probably 100 hotels at least to discuss online marketing services (for their very bad website that needed redesign), and I quote : “People don’t book hotels online, they go through travel agents”. At that stage we were doing about $250m/year in bookings for one of our UK travel websites. This sort type of mindset says it all – but it’s changing quickly due to increased competition (isn’t survival of the fittest a great motivator?!).

I received the following disappointing email today, but I totally understand.

Dear Vinny

Reference is made to the invitation sent to you to speak at our Web 2.0 Summit Africa 2007 scheduled for the 16th – 18th May 2007, at the Hilton Hotel, Sandton in Johannesburg.

It is with deep regret that we inform you of our decision to cancel the summit. This has been a very difficult conclusion to arrive at, though necessitated by the following factors:

* A considerable number of companies seem to have no idea what web 2.0 is all about and how it will help their companies.
* The few other companies that seem to have heard and read about web 2.0 are indicating that it is not what they would like to be involved in just yet. They need time to find out how it will help their companies grow.
* Above all, we seem not to have a business case on this summit in South Africa.

Having given these factors an in-depth consideration; we felt it would be in the best interest of all to cancel the summit at this stage before we proceed any further.

However we will be more than happy to give you first priority to speak at the same and other related events in the future. We sincerely apologize for any inconveniences this may have caused.

Looking forward to your continued support in the future.

Yours Sincerely

People often say that we’re in a Web 2.0 bubble – but my view is the same as Joe Kennedy’s: “When the shoeshine guy starts giving you stock market tips, sell!”.

The leading CEO, CMO’s and marketing execs still don’t understand the paradigm shift that is occurring, let alone the shoe shine guy. We are at the start/middle of a long sustained boom (great article from Fast Compant, by the way) and although there are a lot of startups in this space, common business sense will prevail.

I has barely finished the eComXpo session and no sooner had James from the InsureMe Blog expanded (stole ) the themes of one of my upcoming blog posts that I was planning! Thanks a lot James! I’m going to write about it anyways!

Basically, James already details what I said during the show, but just to clarify what I mean by Return on Effort, here is my short and simple take on things:

The question was asked as to whether or not it is worth spending time on 2nd tier (non-Google/Yahoo/Ask/MSN) search engines and running campaigns with them.

There are a couple of key issues here, one is market growth (momentum) that Google in particular has, and the second is ROE (Return on Effort)
Let’s make the following assumptions for the US market search engine market (taken from VastPlanet):

Google Market Share = 53% (with AOL)
Yahoo Market Share = 28.1%

MSN Market Share = 10.5%

Ask Market Share = 5%

The Total for The Titans is a whopping 96.6%.

Now, until Snap, Become, Miva & all the other 2nd tier engines send traffic out of the massive :- combined 3.4% market share that they have & I can’t see the logic in advertising with them, and here is why:

If in one of our campaigns at Clicks2Customers, we have to allocate a campaign management resource to setup a campaign on a 2nd tier engine (which we don’t deal with). Now let’s assume for a decent sized researched campaign of 5,000 keywords with dedicated ad copy (as all engines are different and have differing editorial rules), it takes them 100 hours to do (and that’s quick, using our technology and existing processes).

Let’s assume that currently on Google, we are running with 50,000 keywords and generating $100k a month in sales and in our category, we’re getting 5.3m impressions (searches) per month. All things being equal, by the ratios above, the maximum searches we would get out of ALL the 2nd tier engines combined, would be 340,000 searches with 50,000 keywords. Let’s further assume that we went with the largest 2nd tier engine (not even sure who that is) and the engine had a 20% market share, then I’m going after a market of 68,000 searches related to my product/service – if you divide that further with the fact that you’re only loading 5,000 keywords – it would get scary, so I will neglect to include this in my calculations.

Again, ceteras paribus, if you just work out the back of the envelope stuff, then the absolute maximum that this traffic is worth to me if it converted even just as well as Google does is $1,283 in sales (which I highly doubt, as there are large amounts of Clicks Fraud on 2nd tiers). And that’s with a 20% market share which is not even possible in such a fragment tail-end market.

So, assuming I could spend my 100 hours on Google, and push my campaign performance up by just 10% with an extra 5,000 keywords, then I would be pushing the needle on my revenues by $10,000 (a nearly 400% increase in ROE), why would I bother with 2nd tier engines? I know the argument (from the 2nd tiers) is that it’s cheaper, etc – but at the end of the day, spending those hours improving clickthrough rates and other metrics like conversions etc, will translate into greater savings anyways on the majors like Google – so I don’t buy that argument.

Most Google PPC campaigns I have seen are not even 50% at peaking in terms of digging into traffic in the long tail, and most people are so worried being on other engines that don’t matter and waste their time there. Mine the Google keyword gold instead, and when you’re finished making triple digit gains, then go visit Yahoo and then MSN, and then finally, Ask.

Lather, rinse & repeat.
Someone today said to me that no one ever made a fortune by worrying about the numbers after the decimal. I think that this definitely holds true in this case.

One of my readers, Marc, posed the following question to me (thanks to my new contact page!).

Hi Vinny,

I have just recently found your blog, and greatly appreciate your views on search marketing, with a SA twist!

I have a question that no one has been able to answer and I hope you can help?
If I am based in the UK, but which to target another country only, such as
SA or USA, what would be the best option in terms of currency to use?
When I would create an adwords account I would select “based in UK”, but
then under “I wish to pay in” I can select the local currency.
Does the option I choose place any advantage or disadvantage over my cpc or ad position?

Your help is very much appreciated.
thanks again,
Marc Samouilhan

Thanks for the question Marc.  Funnily enough, we dealt with this issue many years ago, and I never followed up to see if it changed – maybe other readers can give insight on that.  When we posted this question to Google, the response was that all the bidding in the background is done in US Dollars, and then converted to the currency of the advertiser, using a daily spot rate.  In theory then, all bid increments should be roughly equivalent to increments of USD (cents) x Your Currency conversion rate.
Based on that information that we understood to be true at the time, I’ll answer your questions.

1.  The best currency to us, is US dollars.

2.  If you’re running multiple campaigns for multiple clients, it makes sense to try and standardize it to avoid currency nightmares due to fluctuations.

3.   In theory, there is a disadvantage during your campaign price analysis, as you now have to factor in currency fluctuations into the bid price increase/decrease.  You can also overshoot or undershoot the market CPC by placing a bid which a high currency variance (i.e. paying 5p instead of 9c, because the next step up charge is in 2c increments due to the strength of the pound).

My recommendation would be to use USD, based on the information I got a few years ago.  Does anyone know if this has changed?

Just a reminder that I’ll be on the (free) eComXpo show starting at 10am EST / 4pm South African time.  And yes, I’m jet lagged and that’s why I’m up at 3am blogging!  On that point here are some blog posts worth reading:

 Sramana Mitra’s post on Web 3.0
Global Investment in Web 2.0 rises

And being a big gamer myself, this piece profiling Kongregate.