Today,
Matt Greitzer of
Razorfish proposed search engines offer a branded keyword lock-in option for brand owners. Essentially, pay a fee, not a PPC, and then be guaranteed first position, with all other competing ads aligned on the rail (but they should still be part of the auction model). The suggestion on setting the fee is:
“The fee should reflect the incremental value of branded keyword clicks along with a reasonable premium for price stability and the brand value of a guaranteed top position.”
This reflection came after being told that the CPC of a branded Keyword increased 300% over the prior month, with no changes at all on their end. I’ll forgo overly commenting on the “set it and forget it” PPC management strategy this statement implies (unintentionally as razorFish is a good agency), and instead focus on the “value” proposition.
We have target metrics to align costs and value. If the branded keyword is costing 300% more than a month ago, then somewhere a competitor figured out their metrics placed the value of the keyword at a significantly higher cost than they were previously bidding. In effect, the market has provided you with the potential value of the keyword. If you are not seeing the ROI on a transactional basis (since this is your brand, the the competition is leveraging it for the transaction), then your competitor has either figured out something that you missed, or is messing with the bid landscape (which will subside as they go bust).
If you then take the transactional value, add to it the brand value and then layer on top of that a ‘stabilization fee’, you end up paying more and losing more upside, than if you simply deploy the resources necessary to properly manage the program.
A fixed fee is great for agencies. Tack on 15% and you can set the program, visit the results monthly, give your clients a report, and send them a bill. This is reminiscent of when I was selling online advertising back in 1995, the precursors to search and IYPs of today. At the end of the contract, the client’s questions came: “what did I get for my spend?” and “what, exactly, did you do to earn the commission?”
One of the attractions of search engine marketing is that, if done properly, it propels us into an understanding of our clients’ business from pre-click to sale, and being able to clearly demonstrate value. We run programs that close online as well as offline; our compensation only happens when our clients close the sale. We spend our own money, track results with our clients, and run the risk of losing money if we screw up. This model is one of the reasons our clients have come to us to run their corporate search programs.
Since this is our own money, you might think that I would be in favor of fixed placements, for all the reasons Matt points out. However, stability comes at a price… growth. If we see that our CPCs are increasing day over day, we have to ask ourselves, “did someone figure something out that we missed?” Rather than seeking the shelter provided by a fix placement model, the beauty of the market-based system of search is that it gives you day-to-day, hour-to-hour feedback on how well you are doing. Not just in how well you hold your keyword position, but how well you help your clients grow their sales.
So, rather than suggest the engines shelter us for the competition, I would propose that the onus is on us:
1) Focus on the entire buying process to align value
2) Continuous conversion / sales monitoring
3) Use transactional metrics to assess relative performance
4) If there is a CPC change, investigate the competition and ask yourself what they are doing better
I understand that these proposals do nothing to mitigate the CPC fluctuation, and are at the heart of most SEM, but when simply followed, they can do much to help improve the value you receive out of each click. Very often, I am telling people that good SEM is not rocket science, just good hard work (with some social and statistical science thrown in
).
Finally, I have to make the point that I am not thoroughly convinced that a first position strategy is necessarily warranted. Of course, if the c-level office wants it, you give it to them. But, as a corner stone of SEM, this strategy is has not always born fruit and made financial sense. We have to be very clear on the motive for any postion, if any, we target for our clients.