Why is Adwords King?

Why is Google Adwords so popular as an advertising channel? I have had many people tell me that it is because it is so effective at targeting, and generates a higher return on investment.

It stands to reason...people are out searching for what you're offering at the very moment that you reach them. I could certainly make that argument to a client with confidence.

But then again, where else could the searcher find so many of your competitors all in one place? Does this swim against the stream of relationship marketing at all?

I've had clients tell me that they focus on Google Adwords because its scalable. Someone told me the other day that he could quadruple his registrations overnight with Adwords, if he wanted to.

Really? He could come up with four times as many targeted, traffic-generating keywords and maintain the Return on Investment he has acheived up until now? Does that mean he is currently missing out on optimization opportunities? Or maybe he operates in a world without competitive pressures of supply and demand.

Here´s my theory

We all hunger for instant gratification and total control that Adwords gives us.

We chronically require the soothing gratification of being able to control our actions and rectify our mistakes...because the capabilities of Web Analytics hold our bad Media Placement decisions up for scrutiny.

No more worrying about having to ride out a long-term advertising contract with a third-party supplier that is underperforming

No dabbling in the mysteries of SEO and the hoped-for results that MIGHT materialize at some time in the future. Even if their is compelling evidence that organic traffic is cheaper and more loyal.

Has anyone out there been doing this long enough to remember Flycast?

Well, in the early days of the Flycast ad network, I could manage my own placements site by site, control the cpm I paid on each site, the volume of impressions I was willing to accept (yes, we still paid cpm back then). All through my own handy management application. That was back before Google even took ads.

I loved it. I pitched it to all my clients. Here was a place that I could measure and optimize performance, and demonstrate the results. I could easily demonstrate to my clients how we were saving money. Making them money. Improving their performance all the time.

In those days, keyword advertising was mostly sold on a cpm basis. You signed long-term contracts, and someone else was in control of the level of optimization. Paid search represented a relatively small segment of the market.

OK, so if its all about controlling your ROI in real time, why don´t affiliate programs rule the ad revenue universe?

Again, it´s the risk of exposure. When you get 40 or 50 thousand affiliates signing up for your program, it can be difficult to police their advertising practices. And cleaning up the messes created by overzealous affiliates can be a lengthy process. Not that I recommend avoiding affiliate programs. I love them.

Nor would I recommend avoiding adwords. Now don´t get me wrong. I like Adwords. I love Adwords. Google repeatedly makes me a hero to my clients because I can exercise tight control over advertising, test effectively and scale spending up and down easily in response to the changes in the business climate.

They have done an excellent job of developing tools that are valuable and functional, and their success reflects that.

But I think it is important not to have blinders on about the specific value of Adwords, and SEM in general and its place in the Internet Marketing spectrum. Throwing all of your eggs into the Adwords basket can mean passing up on more lucrative advertising channels in favour of more immediate control.

The powerful analytics applications available on the market increasingly allow us to take the "lifetime value of a customer" view in measuring ROI, and to develop and refine a variety of channels to optimize our returns.

Thoughts on Measuring User Generated Content

I have been reading a lot lately about measuring user generated content, in preparation to take on the role as Moderater for the UGC group of the Web Analytics Association. I keep coming across discussions about measuring audience engagement. People publishing alternative formulas for quantifying audience engagement using bounce rate, recency and frequency as proxies for different aspects of engagement. They are all informative discussions of the alternative means of establishing a metric. They introduce potentially useful new paradigms. And yet, I find myself continually asking - why?

I have to admit that the "audience engagement" metric smells to me like one of those marketing-championed, artificial, qualitative-concept-as-performance-statistic labels like "brand awareness"... Sorry, I am a direct marketer at heart, and I´m all about the conversion ratio - It´s why I love analytics. Brand awareness is mostly a happy side-effect of maximizing sales, or some other desired "transaction" in my world.

When I first enrolled in a graduate business program, I was majoring in nonprofit administration, with a focus on the administration of arts organizations. I remember during my first year, I was taking a Policy course, in which the prof stood up and asked everyone "What is the manager´s primary responsibility?" I figured this was one of those broad discussion topic questions, and people around the classroom were piping up with all kinds of answers about efficiency, facilitation, training of their reports, clarifying vision and mission and so on.

The professor just stood looking grim and dismissive, subtly shaking his head. It began to dawn on me that this was not a topic for discussion. There was a right answer, according to him. Only one, and here it is:

The primary responsibility of management is to maximize shareholder value.

This event particularly stands out in my memory because, as a young and idealistic nonprofit-administration major, I had to wade into the fray, and start arguing about whether the point held true when there was no profit motive. No profit? Inconceivable. My classmates largely decided I was idealistic and naive.

But when I think about it, the statement does hold true for me. Where there is no profit motive, the constituents are the shareholders. The responsibility of governments is to maximize value for its citizens. My responsibility as a Marketing Manager is to maximize the value for the shareholders in the company where I am employed.

Add to this two other things that I have come to believe about designing analytics systems.

1. For an interaction between two parties to be useful and measurable online, there must be a "transaction" - an exchange of items of value, whether it is email address in exchange for whitepaper, or dollars in exchange for box of chocolates (more on this in an upcoming article).

2. The objective of a performance metric is to track expected or predicted progress towards a specific, measureable goal, based on historical performance.

And so, with this in mind, I come back to the question of measuring User Generated Content, and the audience engagement metric. And I just want to present the idea in the following framework.

I am a Marketing Manager. My responsibility is to maximize shareholder value. In that context, how does measuring audience engagement serve my objectives, constitute a transaction, and track predicted progress towards a measurable goal? The answer to these questions will, I believe, serve as a framework to lead me to the appropriate metric for audience engagement.

Of course, it is obvious that the development and contribution of user generated content constitutes a significant, and valuable transaction on a website (in most cases, excluding spam, and other like content that subtracts, rather than adds value). I don´t think any marketer would argue this point in the world of web 2.0. But the measurement of this contribution must be placed in the context of a specific a measurable goal that serves towards the objective of "maximizing shareholder value", in order to constitute an applicable metric.

What do you think? Should measuring user generated content be subjected to a more rigorous framework, or is there perhaps value in an organic approach, to identify possible future goals, metrics or trends opportunistically? I propose that such activities are usually a distraction for upper management, and breed misunderstanding, wrong assumptions and distrust of the analytics process. Do you agree or disagree?

Social Networking, User Generated Content and Designing Analytics

I have, for several years been a subscriber to Christopher Knight´s free newsletter www.ezinearticles.com. This morning, I received an invitation from him to connect via:

Linkedin
Myspace
Facebook
Twitter

I accepted his invitation to connect on LinkedIn, because of their handy notification system which tells me when he adds new connections...and as a metrics junkie, I am really curious to know what kind of conversion rates he gets. I wrote in my invitation to connect and asked him to let me know how many invitations went out, so I could get some kind of ballpark idea of the response rates. Of course, I have no idea where I fall in the response curve, so whatever I can observe is suspect as an indicator of what Chris actually experiences in terms of response.

Hopefully he´ll write and tell me what kind of response he got. Now that we´re linkedin buddies.

I recently joined the Web Analytics Association, and volunteered to help coordinate an online special interest group on "measuring user generate content". So, of course, faced with the pressure of writing some stuff to contribute, I´ve been looking at everything through the UGC lense the last little while.

I have to admit, UGC and Social Networking to me spill over into eachother´s swimming pools a lot. I have no idea where to draw the lines. I mean, here is some UGC spawned by Chris´s mailing this morning (look at me, calling him Chris, now).

So, like always, when puzzling with this kind of fuzzy area, I go back to what for me is "first principles".

"What am I trying to acheive?" defines how I approach measuring. How well does the UGC serve my objectives? and what proxies can I construct from within the available data to represent the milestones in moving toward my objectives?

So...connecting to someone I have never met or worked with on linkedin.com presents all kinds of interesting questions.

Have I in some way established a closer relationship with Chris Knight by connecting to him on linkedin? He surely will get a better idea of who his readers are. I checked, and he has 500+ connections (we were already 3rd level connected via 7 or 8 other people). Now, the UGC of his contacts, their profiles, their relationships, has been brought into my field of vision. I wonder how the Web Analytics guys at linkedin interpret that data.

How do they measure UGC?

What defines success for them? If each of their members has a higher average number of connections, can they take that stat as indicitave of business success? Or could it possibly be indicative of a dilution of the primary objectives of linkedin? which for me, as a user, is at least partially to establish some level of prequalification or trust among new contacts. If everyone is a contact, how do I differentiate?

How do other people decide who to connect to via various social networking channels, and how do those decisions to connect define their perception of the channel, its usefulness, and their propensity to generate UGC for the channel? And most importantly for the analytics junkie...how can we extract and interpret data that will accurately inform us about these things...and serve our objectives?