Top 10 Coconut Headphone Moments in SEM

Posted on Wednesday, July 15th, 2009 by Print This Post Print This Post

Categories - Analytics, Featured, SEM

If you don’t know what Coconut Headphones are, check out the background in my recent posting on Top 10 Coconut Headphone Moments in SEO (or just think in terms of tinfoil hats).   Below are my top 10 favorite moments in Search Engine Marketing (i.e. Paid Search) where I’ve seen someone in the industry make a decision, or a statement, that requires a leap of faith to believe with no clear basis in fact.

10.      “Why aren’t we ranking number one for our brand term?  I’ve been going in every day and checking and we just fell to #3!”

This is a great one.  If you do the same search over and over, Google will modify the paid search results for you on a personal level.  So if the same result keeps coming up #1 and you never click on it, guess what – eventually Google will give up and start presenting something else in an effort to try to get you to click!  It’s not immediately obvious to end-users though, so we do get the occasional CEO or Chairman of the Board of a client who drops us a note to this effect – a perfectly understandable question and one of my favorites.

9.      “Bleeders are bad, so we should cull them wherever possible.”

I’ve heard this a LOT over the last year from various people in the industry. The problem with overaggressive culling of so-called “bleeding” keywords, particularly long-tail terms that get clicks very infrequently is, it takes money to make money; you have to accept that some keywords at any given moment in the short term will be consuming spend without conversion – it’s the cost of allowing the remaining low-click keywords to stay active so they can be the converting ones.  Culling bleeding keywords too aggressively is like going to Vegas and putting nickels into every slot machine in the casino, then slowly eliminating slot machines that don’t seem to be “performing”.  If you do that long enough, you won’t be putting nickels into any slot machine at all.  Out in the tail, you need to bet across a wide number of slot machines precisely because you don’t know which ones are going to hit this time; the key is coverage over time to capture the payoffs.  That being said, culling bleeders does make sense if they’re bleeding over a longer period – if a term is never going to convert, that’s a no-brainer.

8.      “Your quote is higher than the other agency I’m considering. Why are you so expensive?”

From time to time I’ve heard this from prospects; the question that really should be asked is “why is this other agency bidding so low?”  Is it because they are planning on putting your account on autopilot?  Like most things in life, if you go with a partner that will go all-out in a full-court press and have multiple experts with specializations in each area of search marketing working on your behalf (like TSA does), then you’re far more likely to get real results and a great ROI at the end of the day.

7.      “It’s not statistically significant, but the data we have suggests it’s performing well”

Sometimes I’ll see analyses of keywords or creatives with limited history; it’s human nature to want to put things in a box and tie a nice ribbon around them, but if it’s not statistically significant, then all you can really say is, “we have no idea if it’s performing well or poorly – yet”.  The key is to let enough data accumulate, then you’re your determination.

6.      “We have extensive bid optimization technology developed in-house”

Much of the time when an agency claims this, they do bring something substantial to the table (like TSA’s AdMax Online Marketing Platform which has, among many other features, an industry-leading bid optimization engine).  But all too often, an agency’s in-house technology behind the scenes is based on a 5-letter word starting with E and ending in L, and does not have the horsepower for your account to…OK, I’ll say it…”Excel” ;-).  Microsoft Excel has its place of course and it’s a great tool – but it’s like a cruiser; you really need it in combination with an aircraft carrier to get the job done right.

5.      “How does your bid optimizer work.  I understand the mins and caps, but how does it actually calculate the bid recommendation?”

You have got to be kidding.  Seriously though, I get this question fairly frequently – it’s like asking Colonel Sanders, “What’s the recipe for your fried chicken?”.  First of all (ignoring the fact that he’s actually dead of course ;-) Colonel Sanders would never give it to you because he doesn’t want his competitors to obtain it.  Secondly, he doesn’t want you making the fried chicken at home!!!  If your agency has sophisticated in-house bid optimization technology, the reality is, that is key intellectual property of the company, and they can only go so far in explaining it to you  – so please give your account managers a break and stop asking them this!

4.       “I don’t care what the math says, we need to [insert action here]“

Search Marketing is the ultimate ROI-driven marketing activity; numbers are what it’s all about.  If you are presented with math-based proof that something is going on, with statistical significance etc., but choose to ignore it, take heart that the math doesn’t care what you’re saying either…

3.       “You should either leave the keyword where it is, or bid it up”

Actually, bidding a keyword down can often make perfect sense.  If you can free up some money to spend somewhere else and get relatively more conversions than you lost, of course it makes sense to bid that keyword down in position.  As humans, we suffer from an “anchoring” effect where they look at an existing position for a keyword and the only question they ask is, is it in the right place or should I bid this up?  We tend to ignore that bidding down can be an effective tool to drive higher volume and ROI.

2.       “I always bid $1.01, $1.03, or $1.05 rather than $1.00 because I figure the other guy is bidding $1.00″

This makes some intuitive sense, but in Google’s case for instance, the auction is determined not simply by your bid but also by your Quality Score; if your bid is that close to your competitor’s bid, the Quality Score difference will very likely overwhelm any such extremely minor difference.  However, I must admit some personal fondness for this strategy anyway, because it’s highly competitive, a little sneaky, and who knows, once in a long while, maybe it will make an ever so slight difference.

1. “I pushed them up, but these keywords won’t play!”

My absolute favorite.  What this jargon means is: “I bid higher on some keywords, and although position and spend both increased as expected, it unfortunately did not result in an increase in additional conversions”.  Anthropomorphizing keywords always cracks me up.  Bad keywords!  Go home or I’ll tell your Mom!

And, because this one goes to 11:

Contribute your own favorite SEM/PPC Coconut Headphone moment below!

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4 Responses to “Top 10 Coconut Headphone Moments in SEM”

  1. Vince says:

    Hey Ted, this is an excellent top ten list. I like how you phrased each issue with a question and proceeded to answer it. These are some great pitfalls to look out for, we are really trying to learn more about effective SEM. I found you through Twitter and am now following you, we are @toptentopten. You can cross-post this to our site http://www.toptentopten.com/ and link back to your site. We are trying to create a directory for top ten lists where people can find your site. The coolest feature is you can let other people vote on the rankings of your list.

  2. Bradd Libby says:

    RE: #2 “I always bid $1.01, $1.03, or $1.05 rather than $1.00 because I figure the other guy is bidding $1.00″

    Ted said: “it’s highly competitive, a little sneaky, and who knows, once in a long while, maybe it will make an ever so slight difference.”

    One of the reasons all of the major search engines base each ad’s CPC on the next-lower ad’s bid (i.e., a ‘second price’ auction) is that, in this sort of system, honest bidding is a dominant strategy. That is, to bid more than a click is worth to you wastes money, while bidding less sacrifices conversions. This is true regardless of the bid of the ads in positions above or below yours.

    So, what Ted says is about bidding a few cents above your assessed value of that keyword is true – “maybe it will make an ever so slight difference” – but unfortunately that ‘slight difference’ is most likely to be in the wrong direction for your bottom line.

  3. Great article, Ted.

    As a Google Adwords Qualified Individual I understand the complexities in efficient and cost effective bid management, but I’m certain the relatively simple Google interface and powerful Google tools give many new-to-adwords users a false sense of understanding when they try self-manage their Adwords accounts.

    As with anything complex involving $$$, you can lose your shirt pretty quickly (ask the mortgage guys!) when you only *think* you know what you’re doing. For the experts who manage bid management accounts day in and day out, it really is easier to show positive ROI on SEM spend when you understand the math *and* have the tools to apply it.

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