The PPC Buying Cycle: Buyer Beware!

How often have you heard that keyword level performance data can be misleading? That PPC managers need to consider the phases of the buying cycle when evaluating terms? That specific keywords tend to steal conversions from the more general keywords that started the customer's consideration, and that you should keep spending money on the general terms even though the efficiency looks awful?

It's pretty obvious why the engines might want to trumpet this story: it makes them money. By convincing advertisers that they should spend money on general search terms regardless of the observed efficiency advertisers are encouraged to spend without the moorings associated with ROI goals.

Real data about the buying cycle

Google and Compete Inc. presented a study of the buying cycle that managed to answer none of the salient questions.

We presented a study almost three years ago at SES that challenged the notion of the buying cycle, but decided it was time to revisit the topic.

First, we grabbed data from a number of retail clients representing different verticals and different business models (such as pure plays, catalogers, brick and mortar retail). We then sought to answer the questions:

1. How often do potential customers see multiple ads before placing an order?

2. Does the interaction happen the way search engines say it does?

3. Did we find that the first ad, the last ad, or a combination of ads a potential customer saw led to a purchase?

4. Do the different types of retail businesses witness different behaviors?

Impact of cookie window length

First, let's talk about cookie windows. Longer windows show greater impact by multiple ads. But for a retailer, unless your Average Order Value (AOV) is huge, you need to place some "make sense" limits on how long to give credit to an ad. Most of our clients have windows of 14 to 30 days with some shorter and some longer depending on what the data suggests. Out of respect for the argument that there is this long consideration cycle, I went ahead and looked at a 45 day window for these clients.

Impact of non-branded searches

We looked the complete list of searchers that someone did before purchasing, and for the purposes of the study, only looked at data for buyers who did at least two non-branded searches. We define "brand" as the retailer's trademark and variants exclusively, hence "Sony Cybershot" is a non-brand phrase for Best Buy, but a brand phrase for Sony.com. For well known retailers there is a 4% - 8% impact of non-brand clicks being followed by brand clicks as customers remember that they found the perfect ring at Zales. We count these as non-brand orders, and and not used for our study unless there was more than one non-brand keyword involved. With those parameters understood, we found that interesting cases of multiple non-brand keyword touches occurred in between 10% and 15% of the orders for the vast majority of retailers. A few higher, a few lower. That's not zero, but it's not earth-shattering either.

More interesting: when we spent some time studying the impacted orders we found that in only about 35% of the cases did the story play out as advertised, with general searches being followed by more specific searches; in about 15% of the cases the other keywords were simply slight variations on the initial search (eg: "VCR sales" and "Buy VCR", or "Nikon lens" and "Nikon lenses") and in 50% of the cases the initial keyword had no relationship whatsoever to the last keyword prior to the order (eg "loveseat slipcovers" and "gold earrings").

The more we extend the cookie window the greater the propensity for the keywords to be unrelated, indicating that, in fact these were separate shopping events, and that person looking for loveseat slipcovers, bought from someone else :-( Our research on what the person actually purchased was anecdotal, we just tested 15 or 20 samples and found that in each case the order related to the last keyword, not the first.

Those sites that appeal to hobby enthusiasts see more customer interactions from views of multiple ads than general retailers. Indeed, the impacts of AOV, business type and vertical were all quite interesting.

What this means about the buying cycle

To our thinking this confirms several tenets of search marketing strategy:

• The engines are not evil, but neither should they be expected to look out for your interests
• Cookie windows matter and should be carefully considered. I'll publish our methodology for helping retailers determine their window over on the RKG Blog in the next week or so.
• Within paid search, "last click" credit allocation schemes seem to be a better proxy for the truth than either "first click" or "shared credit"
• If Keyword level performance data suggests a keyword is underperforming, it probably is.

Researching your own search data is a valuable exercise. It may help you determine whether the Buying Cycle should impact your keyword efficiency targets, or whether, for you, it's much ado about nothing.

Report: Big Three Agree To Code Of Conduct For Repressive Regimes

In 2004, Chinese journalist Shi Tao used what he believed was an anonymous account from Yahoo to tell an overseas organization that the Chinese government had warned his newspaper against covering the 15th anniversary of the Tiananmen Square crackdown. Another Chinese dissident, Wang Xiaoning, had posted a message calling for political reform to a Yahoo Group.

Both were arrested and sentenced to 10 years in prison after Yahoo revealed their names to the Chinese authorities. Since then, the company has taken a lot of flak for that decision, including a public condemnation by Congress. The families of the dissidents also filed a lawsuit, which Yahoo settled last year.

Additionally, shareholder Andrew Knopf sued the company this summer for breaching its fiduciary duty by cooperating with the Chinese authorities -- a move that he said harmed the company's "goodwill and reputation."

Now, Yahoo, along with frenemies Microsoft and Google, has agreed to a voluntary code of conduct for dealing with repressive regimes, according to the San Francisco Chronicle. That paper reports that the guidelines call on companies like Yahoo to push back, somewhat, by interpreting governmental requests for information narrowly.

But these types of voluntary agreements only go so far.

Yahoo -- which sold its China division to Alibaba Group and became a minority stakeholder in 2005 -- has always said it had no realistic choice other than to honor the Chinese government's request for information.

U.S. companies like Yahoo tend to argue that they must follow the laws in other countries where they do business -- even if that means disclosing names of users whose only crime was to criticize their leaders.

But if Yahoo and other U.S. businesses want to protect their users, they're going to have to consider flat-out defying foreign governments. Yes, it's possible that this course of action could result in companies shuttering abroad. Even so, there's a long-term benefit to standing up for human rights.

Video: What are computer cookies?

Verizon: Trust Us, We Won't Sell Data!

Verizon recently told lawmakers that it had no plans to provide data about subscribers' Web activity to behavioral targeting companies like Phorm or NebuAd unless consumers specifically consented.

Verizon, along with Time Warner and AT&T, also indicated they believe that all behavioral targeting companies should only track Web users that had affirmatively opted in. While none of the companies went on record as supporting new laws requiring opt-in consent, the remarks certainly suggested that they might favor new regulations.

"The largely invisible practices of ad networks and search engines raise at least the same privacy concerns as do the online behavioral advertising techniques that ISPs could employ," Dorothy Attwood, chief privacy officer at AT&T, testified. "A policy regime that applies only to one set of actors will arbitrarily favor one business model or technology over another."

Now, however, Verizon appears to oppose new privacy laws. A recent post on the company's policy blog (first reported by GigaOm), concludes that self-regulation will suffice to protect people's privacy, because companies know they will face bad publicity if they violate users' trust.

To some limited extent, that might be true. No ISPs are currently testing NebuAd's platform, and that's probably at least in part because they weren't prepared for the bad PR. But it also seems likely that Congressional pressure, including the threat of new regulation, made them back down.

With or without Verizon's support, new legislation might be coming. House member Ed Markey, a Democrat from Massachusetts, has said ISPs should not sell information about subscribers' Web histories unless users have given opt-in consent, and some observers think he might introduce legislation to that effect next year.

Meanwhile, NebuAd rival Phorm is still facing pressure abroad. While U.K. authorities cleared the company recently, E.U. officials aren't happy about the secret tests that were conducted two years ago. Last week, a regulator sent a second letter to the U.K. government, demanding to know how the country intended to enforce European privacy laws that restrict companies' ability to collect personal data about individuals.

Study: Quadruple the Number of Visitors Rejecting Third-Party Cookies

Users have apparently been adding insult (rejection) to injury (deletion) when it comes to the cookie-deletion controversy. The percentage of website visitors rejecting third-party cookies quadrupled last year, from roughly 3 percent in January to 12 percent in December and has hovered at that rate up to this month, according to WebTrends, MediaPost writes. The analytics company looked at records of some five billion visitor sessions, during 16 months, on thousands of its clients' websites.

The WebTrends research showed that third-party rejections occurred most frequently in retail, with 16.7 percent of visitors declining third-party cookies; other high-rejection-rate categories are telecom (15.4 percent), healthcare (14.7 percent), manufacturing (13.3 percent), transportation (13 percent) and media (12 percent).

iMedia writes that WebTrends has launched version 7.5 of its analytics tool, which will better deal with the cookie-deletion controversy. The new features will allow the company, and publishers, to "bypass the third party cookies and leverage the first party cookies that the customers are already setting," according to a WebTrends spokesperson.

Burst Cookie Survey: Consumers 'Don't Understand, Say Maybe Useful, But Some Delete Anyhow'

Burst Media has weighed in on the internet cookie controversy with its own survey, slicing and dicing the responses (see below) of over 10,000 web users (14 and older) about their knowledge and perception of internet cookies - and the extent of and reasons for cookie deletion. "Privacy and security issues taint online users' overall perception of Internet cookies," said Burst Research Manager Chuck Moran. But adds, "Only one out of four say they want internet cookies eliminated…[so] there is significant opportunity for the interactive industry…to build user understanding and trust."

Nearly one-third (30.4 percent) of respondents say they know "Nothing/Never Heard of" cookies. Only one in five (21.6 percent) say they know "A lot" about Internet cookies; 28.1 percent say they know "Some information, but not a lot," and 19.9 percent say they know "A little." Survey respondents were also asked what should be done about cookies - near equal proportions agree (26.5 percent) as disagree (25.8 percent) with "Internet cookies should be eliminated"; and nearly half (47.7 percent) say they are unsure.

Some 38.4 percent of all respondents say they delete cookies at least once a month. This number increases to 42.1 percent among 25-54 year-old adults. Also, 60.6 percent of respondents who delete cookies say they delete "all Internet cookies." More than one-quarter (28.2 percent) say they keep some cookies they "know they need or want," and 11.2 percent say they delete cookies only from unfamiliar websites.

Less than half (48.1 percent) of all respondents say they have deleted cookies from their computer. Men are more likely than women to say so: 54.5 percent versus 41.8 percent. Within the core adult (25-54 years) segment, nearly three out of five (58.4 percent) men and 47.4 percent of women report deleting cookies.

Over half (58.2 percent) who said they know "a little" about cookies said cookies "Keep them from having to refill personal information" when visiting a shopping or commercial website. Similarly, 55.6 percent of that respondent group agree that cookies "Allow [them] to enter sites they have registered with" without reentering a username/password each time they visit. Few of them disagree with these statements; for both statements about one-third of respondents are unsure. The "a little" respondents rejected the statement "Internet cookies can keep me from seeing the same online advertisement over and over again". Only one out of five (23.6 percent) respondents agree with this statement - and one-third (34.9 percent) disagree.

Making Cookies Digestible for Users

The Wall Street Journal takes its turn at laying out marketers' palliative attempts to make sure that cookies don't continue to cause computer users heartburn (via paidcontent). With a significant proportion of users misunderstanding - and deleting - cookies, marketers and publishers are scrambling, according to the WSJ piece, which refers to the recently founded industry group Safecount, formed in part to counter the efforts of antispyware makers that sometimes lump legitimate cookies with actual threats found in computers. Others want to lobby Congress. And some have apparently moved on and are experimenting with creative, probably controversial, approaches that let sites serve up targeted ads even if a user has deleted cookies.

One company has begun marketing a technology known as a persistent identification element, or PIE, which uses Flash to secretly make backup copies of cookies before they are deleted. Apparently a handful of publishers and advertising companies are using the technology to track users.

Jupiter: Wealthy, Web-Experienced Users Delete Cookies Most

Those who have more experience with the web and are wealthier are the most likely to delete cookies, according to a Jupiter Research report, "Profile of the Cookie Deleter," a follow-up of the cookie study from earlier this year that spread conflicting shockwaves through the world of online advertising with the claim that 40 percent of web users monthly delete cookies. Citing the new report, MediaPost reports that 60 percent of consumers online for more than five years report deleting cookies, compared with 34 percent only online for less than one year. Those from households with annual incomes over $60,000 were also more likely to delete cookies than those less affluent.

Among cookie deleters, a high percentage said they do so manually: 56 percent of male respondents and 47 percent of female respondents. And 30 percent of men, along with 24 percent of women, say they use cookie-deleting applications. Furthermore, 31 percent of men and 20 percent of women say they actively block new cookies.

Cookie deletion, usually prompted by privacy and security concerns, may not be as much a concern for younger users of the web. Only 33 percent of respondents between the ages 18 and 24 say they pay attention to stories and articles about internet privacy and security, compared with 62 percent who are age 45 and older.

Marketers May Not Recognize Click Fraud

Research released this week on click fraud from Ben Edelman, attorney and assistant professor at the Harvard Business School in the Negotiation, Organizations & Markets unit, suggests online marketers lack the technical expertise to tell when they're being robbed.

Edelman finds online advertising fraud can happen without sophisticated spyware, even to cost-per-action advertisers. At first glance, conversion-contingent advertising (cost-per-action/CPA, affiliate marketing) seems the perfect way to prevent online advertising fraud. By paying partners only when a sale actually occurs, advertisers often expect to substantially eliminate fraud. Unfortunately, he says, this view is overly simplistic and optimistic.

Edelman notes in his report that banner ads from Allebrands invisibly load affiliate links, which is the simplest example to understand. Other affiliates load affiliate links and drop affiliate cookies as users merely view a banner ad. By viewing a banner ad on a third-party Web page, he explains, "the affiliate can drop its cookies and obtain a commission on purchases users make from the targeted merchants within the return-days period."

What are cookies video

What are Computer Cookies?