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.

So the big question:  Is Google using Adwords CTR & Performance data to influence their natural listings? We believe so!

Here is an article from Business Week entitled “The Counterattack on Google“. This article outlines much of how Google’s Adwords system employs a yield based mechanism to monetize their search results, as opposed to the current bid to position model pioneered by Overture, which Yahoo currently employs. In recent months, Google has added the Quality Score variable to improve the rankings in favour of greater relevance and less price emphasis. The virtuous cycle is that the happier the users are, the more they will search on Google, and this strategy is most definitely working. It’s working so well in fact, that Yahoo has rebuilt the system and relaunching it (currently dubbed Project Panama), which they hope will compete with Google.

I’m not going to go into all the current flaws in the Yahoo system which is being relaunched soon, but I’m going to address the strategic flaws in the Yahoo/MSN battle with Google.

This is something that both companies have really overlooked, and also the analysts trying to figure out how MSN & Yahoo are going to compete, which they need in order to forecast the share prices going forward. The flaw is that these analysts don’t realise that there are some critical flaws in the strategies of the two giants playing catchup. I don’t believe that unless there is a critical change in strategy, that MSN/Yahoo will beat Google in the short term and Google is going to grow very quickly in foreign markets in particular.

So what are MSN/Yahoo doing wrong?

The Internet is the world’s largest economy. What Google does right is that it allows advertisers based in any geographic area, to use a centralised system and buy advertising across multiple countries, without relying on reloading their campaigns, etc etc. Someone targeting all French speaking countries, for a French language product, simply selects Canada, France, Belgium, etc and all IP targeted traffic from those countries are served with the ads in questions.

Google has solidified their position in global markets, including smaller ones such as South Africa, by allowing anyone in the Internet Economy to participate in their global ad marketplace. This further increases relevancy. As a South African, when I search Yahoo.com or MSN.com, I don’t see commercial ads targeting me, but I do on Google. Yahoo & MSN insist on a decentralized model, which makes no sense to me whatsoever and companies in South Africa are unable to target local users on MSN.com & Yahoo.com.

MSN & Yahoo have strong brands outside the US, but they are not able to easily monetize their search, because of this decentralized “region by region” strategy. Google’s has really built a classy system around allowing anyone from anywhere to participate in their global marketplace in any language and any currency. This is where I believe the Yahoo\MSN will fall short in the long term.

By looking at Google’s earnings growth outside the US, I believe that not enough focus has been placed on the global market by the other search engines and also, US advertisers do try to target foreign countries with their products. Kudo’s to Google on this one.

Furthermore, this strategy will leads to other complications in the Contextual products in that Yahoo\MSN are not able to target international publishers very well. If the ads that Yahoo serves through YPN (Yahoo Publisher Network) only have US advertisers – and Yahoo US Advertisers only wants this traffic (i.e. no international traffic) – they will fail to deliver the solution that serves the needs of the publishers and hence does not compete with Google’s AdSense solution. Yahoo needs to focus on taking on Google globally, not just in the US. Many of the Yahoo search solutions are too locally (US) focused. It looks like MSN may follow this route as well.

Google has succesfully used Geo-Targeting to build it’s business, but MSN & Yahoo have gone with proprietary marketplaces – a key differentiator. Google tries to provide relevance while monetizing as many searches are possible, regardless of where they are based.

If Yahoo/MSN wants to take on Google, I do believe that they need to go back to the drawing board and rework their global strategy, and not to focus purely on each geography separately. They need to increase the monetization potential per search. Focus on the Internet as a medium, not a geographic location. In order to be relevant, you must act as a marketplace, connecting advertisers to searchers, by placing restrictions or hindrances such as geographic location, currency, language, etc, they will not maximize the revenue per search.

Take this example:

For every hundred searches on a search engine this could be the sample demographic:

40 US – English
10 US – Hispanic
30 Other Countries – English
10 Other Countries – French
10 Other Countries – Other Languages

For these hundred searches on Google.com – Google could yield a Clickthrough Rate of 100% because it has advertisers targeting every search, in it’s global marketplace.

If you looked at Yahoo or MSN, they would only be able to yield good results past US English, and maybe France. Also, because the auctions are run in multiple countries, they do not get the benefit of overlaying multiple bids and relevancy to get higher CPC’s and a mix thereof. Forget CPC auction benefits for just a second – their listings are now less relevant and have lower yields per search – something their stock prices are reflecting.

This is the brutal truth, whether they like it or not. MSN has got a great new angle with their demographic targeting capabilities and this shows that they are focused on revenue per search, but I’m not happy that the strategy is correct, especially given MSN’s strong international presence and brand. MSN have also integrated Search into MSN Messenger, which gives them an even stronger international base from which to grow their search capabilities. The problem is that when users search, they’re not going to see the local plumber advertising unless MSN has a local marketplace.

The funny thing is that I’ve had this discussion with MSN & Yahoo representatives and both companies are either dismissive or blasé about this particular strategic approach. If you carefully analyse the numbers, you’ll see that search is going to grow alot faster in many smaller markets, and if MSN & Yahoo are going to roll out marketplace by marketplace (slowly) they’re going to have to battle an even bigger Google ( I know, scary though). This is just one of the major flaws in the counterattack, but there are probably more than I can count.

It’s simple math that for every search, you need to display the most relevant adverts which generate the most money across the widest net of advertisers, and if they’re not doing that, they’ll never beat Google…

Where the heck does Ask.com fit into all of this? Walter Mossberg wrote this great article about Ask.com. He even claims that it stands up to Google!

I never really liked the old AskJeeves, but Ask.com is certainly something else. Maybe Barry Diller wants to be the next Bill Gates, err… Larry Page….Sergey Brin…. whatever…

Suspension of synthaSiteâ„¢ Beta Program
We have decided to suspend the current beta program, while we address issues of scalability and server capacity. As this process will not be able to facilitate a proper support structure to public users, we have decided to discontinue the current beta program with effect from 2006-04-28. We do not have a launch date for our next round of Beta testing as yet.
Access to the synthaSiteâ„¢ will be available until 2006-04-28. We advise you to finalize all sites before the above mentioned date. All deployed websites will still be functional after access to synthaSiteâ„¢ has been closed. The feeds will not be editable after closure and this may affect the quality of feeds when they are updated on our server.

We shall continue to develop in-house sites that use our affiliate partner feeds, such as ThatShoe.com.

Thank you for your participation in our beta program. We will keep you updated on any further progress made on our public service offering over the next few months.

Dough introduced the adCenter product and informed the audience that the product is available in Singapore & France. There is a 3 phased approach to setting up a campaign with MSN adCenter.

Learn About Your Customers:
Traffic Trends
Demographics: Age, Gender, Wealth, etc
Income
Geographic
Day Parting

Connect through Targeting
By paying additional fees per demographic segment, you can target better.

Refine Your Campaign
By using audience intelligence capabilities, MSN will allow you to slice date.

How to get into MSN:

Getting into the US Pilot:
Contact your account exec if you already advertise with us
Apply for invite-only us pilot:

http://advertising.msn.com/msnadcenter

Learn More

Varnished: http://advertising.msn.com/msnadcenter/
Unvarnished: http://forums.searchenginewatch.com and http://www.webmasterworld.com

Next up is James Speer from Ask Jeeves.

Introducing the PPC Solution from Ask Jeeves

According to James, the overlap with AJ and their respective competitors is low enough to warrant using AJ.

Spend Management – “We back our benefits with technology”

Forecasting capabilities

View monthly run rates – for your campaigns and/or specific keyword(s). The monthly run rate represents the expected value of traffic (in dollars) that will be delivered to the campaign (or keyword) during the month based on the network’s traffic history.
Ability to set campaign-level budget limits.

James says that they focus on customer service, given the fact they are a smaller engine.

Proactively Blocking Click Fraud

“What are we doing to prevent click fraud?”

Proprietary software tracks and evaluates the validity of each click.

Multi-faceted Evaluation allows a broad array of factors to assess the validity of each click.

Next up is Hilary Hoover Keller from Google.

Success with Google Adwords

The Google Network reaches over 80% of Internet users.

Tips for Creating Successful Account:

1. Planning your account
a. Choose keywords relevant to your products/services
b. Multi-word keywords tend to perform better
c. Place keywords in ad text
d. Set URLs per keyword for Landing Page control
e. Create Multiple Ads – best performing gets shown
2. Monitoring Results
a. Use Google Analytics
3. Refine your strategy
a. Are your products grouped logically into ad groups?
b. Are clicks converting to sales? On all keywords?
c. Is there room to expand your successful keywords?
d. Are you getting enough traffic?
e. Are the sites you’re showing on, giving you enough results?

Contextual Advertising: Increase your Reach Across the Web

Search Campaigns – Search is effective at the instant consumers are ready to buy.

Contextual Campaigns – Reach consumers are all stages of the purchase cycle.

Content Bidding
1. Content Campaigns – Adwords ads that will only run on the content network
2. Content Bidding Control – Set bid for content clicks separately

Converting Clicks – Landing Page Optimization

Lead users to the advertised product, service or solution.

Quick but effective presentation – the next speaker is an old speaker at these events, and I have the privilege of still being his client, 4 years later.

It’s a very visual presentation, so it’s not easy to make notes on the fly. I’ll see if I can post the presentation later on.

Good session all round!