• by Steve Smith , Staff Writer @popeyesm, October 26, 2006

Ready, aim, segment: adventures in search targeting

If there's one thing the major search engines can deliver, it's tonnage - masses of eyeballs with varying degrees of interest. But most search engine marketers tell us that the next big stage for them is learning how to parse those masses much more efficiently. Even as the major engines continue their land grab of video, application, and social networking assets - such as Google's $1.65 billion acquisition of YouTube - marketers are focused more on targeting.

And competition for search inventory and rising keyword costs compel marketers and online media planners to take a closer look at buying cycles and target text ads more efficiently at specific points along the purchase funnel.

The search engines themselves are in various stages of readiness to execute targeting techniques. There are various local targeting techniques for directing ads by syncing up ZIP codes with DMAs (designated market areas), and msn recently introduced demographic and behavioral targeting to its AdCenter product. But for the near term, the real action in targeting seems to be at the marketer level, where search engine marketers (SEMs) are finding novel ways to drive these mass-eyeball engines down ever narrower roads to finely tuned targets.

As keyword prices soar in some popular categories, targeting introduces necessary efficiencies. At 360i, day-parting reduces budgets and helps outflank competitors. "Targeting is a big focus for us," says David Berkowitz, the firm's director of strategic planning. "If rival advertisers blow their budgets by 3 p.m., then you can ramp up in the evening and get prime positioning, saving significant money and increasing click-through rates."

Day-parting has become de rigueur at iProspect, says CEO Fredrick Marckini, because some verticals convert better on nights and weekends, while B2B segments perform best on weekdays. "But that takes a lot of intentional control," Marckini notes. "Bidding agents are a necessary evil."

Smart Bombs

When it comes to levels of control, search targeting may become as precise as drawing circles on a map and laser-targeting text ads geographically.

That is what SearchAdNetworks does for satellite broadband provider WildBlue, which targets rural customers who don't have access to high-speed Internet through DSL or cable. WildBlue needed to deploy searches of broad but pricey keywords like "Internet broad band" without wasting its budget on click-throughs that may never convert.

"Those terms are extremely expensive and you compete against the AOLs and EarthLinks," says Alex Porter, SearchAdNetwork's vice president of business development. Even with the usual engine tools for targeting ads to DMAs and ZIP codes, he adds, "You will spend your money needlessly." Instead, Porter used hundreds of population density maps to identify zones nationwide with fewer than 5,000 people. Using a "polygon mapping" tool in Google AdWords, WildBlue literally drew outlines of rural areas to which the text campaigns were exposed via their Internet Protocol addresses.

By bidding aggressively on expensive keywords but ensuring that only the most qualified searchers saw them all the way to click-through, the campaign helped increase WildBlue subscribers from 25,000 to 100,000 in six months. "The return has been absolutely phenomenal," says Porter, who notes that it has the lowest cost-per-acquisition of any part of the marketing mix. These kinds of search smart bombs represent the future, he adds, because "the needs of the clients dictate that [search advertising] gets [more] targeted."

Hot Vacations

With the right search targeting, you can find "long tails" and new markets you didn't know existed, like selling upscale consumers resort vacations in 120-degree heat. June at the Fairmont Hotel in Scottsdale, Ariz., is not considered peak season by any stretch. Fairmont's agency iCrossing, however, maintains a portfolio of well-tested keywords previous campaigns have shown are tapped by high-end consumers, such as "4 star" and "amenities." Using geotargeting, the campaign introduced a "desert summer" package to Southern California residents. Supported by radio spots, the plan layered demographic targeting onto geotargeting to deliver an off-season clientele Fairmont never had before.

More than delivering better ROI on specific campaigns, targeted search also helps iCrossing understand the customer it's trying to reach. "There is more message-testing that can be done against the demographic to see the response," says Scott Linzer, iCrossing's director of media. "In many cases the online campaigns we run are tests to gauge response and use online messaging offline."

At Performics, Stuart Larkins, vice president of search marketing, says his company is using search to do more than just sell to specific demographic targets, but also to understand them better through their search behaviors - to figure out how they think as they buy. A recent Performics study demonstrated, for example, how consumers are using search throughout the buying cycle and need to be targeted at various points in the purchase funnel.

"This was really a breakthrough year in understanding consumer behavior in search rather than throwing it all against the wall," Larkins says.

The Elusive Grail

Still, as marketers drill down into location, demographics, and day-parting tactics, the targeting miracle everyone wants remains in the wings. "The future is behavioral," says 360i's Berkowitz. "If you only want to target someone who's made a certain type of purchase, it could have a big impact on messaging."

Yahoo and MSN can now apply behavioral profiles to distribute banner ads throughout their networks. Using personal search behavior patterns to target results and text ads remains a future goal that may have to overcome consumer privacy issues. In the meantime, SEMs are learning how to parse the massive search traffic behaviorally.

At the cutting edge of SEM, marketers are connecting search to behavioral targeting by funneling their click-throughs into a behavioral network on the backend. For example, the high $20 price tag of general keywords in the Web-hosting sector can drive cost-per-acquisition up to $120. It can take years for a host to break even on every new customer. The firm eBridge Marketing Solutions recently deployed a search retargeting technique from Revenue Science: Anyone clicking through on a Web-hosting text ad gets cookied on the landing page, so that banners for that host will appear when the user moves elsewhere on the Revenue Science network. By reselling people who have been exposed to the brand initially through search, "We've been able to convert those visitors into clients and bring the acquisition cost down to $70 to $80," says eBridge CEO Hartland Ross.

As artful as the SEMs are becoming in targeting customers using available tools, the search engines themselves will need to step up with more and better tools to stave off new challenges. Emerging technologies like behaviorally targeted display ads could pressure the engines to kick-start their own behavioral targeting plans. "It should raise the stakes," says Marianne Wolk, analyst for Susquehanna Financial Group. "Search engines will be forced to improve upon current contextual offerings to participate in more targeted placements to compete for existing inventory and ad budgets."

As searchers become more sophisticated, the limitations of general engines are bound to become clearer. Content consultancy Outsell reports that business searches fail to deliver the desired information 31.9 percent of the time. How long will consumers tolerate the natural inefficiencies of big search, especially as popular alternatives emerge?

Increasingly consumers and advertisers may go instead to specialized B2B portals like GlobalSpec or AllBusiness, WebMD, or Kayak. "The next wave is the world of vertical search," says iProspect's Marckini. Search engine contextual networks don't give marketers the same level of control over where their ads turn up as specialized networks serving smaller categories.

ESPN.com recently replaced Yahoo's text links within the Quigo network, which enables marketers to target ESPN specifically within a network of sports sites. The big engines are loath to offer advertisers site-specific targeting control over ad distribution, even as many have begun demanding it and finding alternatives. "Imagine the power of doing targeting within a vertical - imagine the power of advertising to women who are searching Webmd or all medical sites. That is a killer app," Marckini notes.