• by Gerry Bavaro , July 14, 2008

A recent MarketingSherpa survey reported that more than 40% of marketers said that they didn't track conversions (23%) or ROI (20%) for their search campaigns.  Like it or not, the focus in paid search is real-time optimization of keywords: bidding and all things click-related.  This is the playing field where we primarily fix our attention based on its competitive, dynamic nature. Is this focus important? Yes, but there's a price we pay for such a polarized view.

Paid search is technology-driven, and much of the discussion centers on bid management: how we push and pull various levers to optimize the real-time purchase of a click.  Even as we're getting a taste of the future of our industry with the rise of ad exchanges and auction-based platforms for display media buying, we can't help but focus on API-driven bid management platforms because they're powerful tools not yet fully exploited. But by focusing exclusively on bid management and the manner in which we buy search and other media, we exclude crucial variables. The most important is what happens after the click is bought, the user is transported to the ad's destination, and the all important act of conversion either happens or doesn't.

Of Ads, Fishing Lures, and Conversion Rates

In an important respect, search ads aren't really "ads" at all. They're more like fishing lures that are snapped up as an appetizer to the more substantive meal ostensibly served at the destination site. One can do a great job crafting such a lure, paying sensibly for its position in the SERP pond or a contextual lake, and yet fail miserably when it comes time to deliver the payoff meal. The price one pays for such a failure is steep, because conversion rates are the currency that determines how much you can afford to pay for future clicks. For example, a marketer with a $50 CPO, paying 50 cents per click, will break even at a 1% conversion rate. Obviously, by doubling the conversion rate to 2%, lowering the CPO to $25, he can either pocket the surplus or reinvest them in higher bids that drive more orders. If the scale of a given search campaign is sufficiently large, such an improvement can result in a significant slice of market share won from competitors.

The Future of Post-Click Testing

Sophisticated offer, landing page, and page-to-ad relevancy testing is required to find the combination of post-click elements most likely to lead to conversion improvements. While many SEM agencies and competent in-house teams do this, I foresee a future in which such testing is both more ubiquitous and is accomplished in a fashion more likely to discover combinations conducive to enhanced conversions. Ideally, what is required is a system that can assemble content elements on the fly in response to each click's characteristics. Such characteristics would correspond to those identified by the search engines, i.e. geo, day-part, and demographics, and perhaps history. The power of such a system will reside in its ability to immediately route clicks to a theoretically unlimited set of experiences deemed most likely to result in a conversion. Several vendors, including Offermatica and Optimost, have been working in this area for some time, but others will surely follow in their footsteps. Beyond the current multivariate testing paradigm, there's no real reason why the search engines can't get in on the same game.

Is This Web 3.0?

While the Web is still a relatively young medium, it's remarkable that its basic forms haven't changed much since 1994. Personalization is an old idea, yet we still think of "Web sites" and "Web pages" as the essential content building blocks, although more and more of these pages are dynamically generated.  We're moving away from the "one to many" content model to one in which Web content will be increasingly dynamic, personalized, and narrowcast, to the point that the concept of "Web sites" will yield to "Web states." That is, instances of content that will not exist until prompted into existence by the intent-driven action of a given user and data available that will dictate content creation. As with many recent innovations we've seen, the impetus that's driving this rapid evolution will largely come from marketers seeking to provide a seamless path of relevancy along the click chain. The process by which such new forms of content will arise, will be one of continual testing and real-time, heuristic content optimization designed to maximize conversions.

A Better Approach to Quality Score

With Quality Score a major factor across the larger engines, we will see more marketers struggling to optimize relevance across keyword lists. The result is inefficiencies in a market where click prices continue to increase. The process of making keywords perform will be as much a matter of real-time relevance-tuning as it is about your bid and ad copy strategy.  Furthermore, why should you be adjusting factors to increase Quality Score reactively (the standard practice now)?  Why not optimize all the time with a real-time, dynamic approach to the content and experience offered?  Maximized Quality Score will always yield a higher quantity of profitable keywords that can drive additional scale and provide marketers with a first punch advantage on Quality Score improvements.

We just took a walk down a road I like to call "dynamic, real-time marketing," which may be more vision than reality right now, but in the land of paid search and converging forms of online media, conversion is king and will someday make this road a well-traveled highway.