Shimon Sandler

Interview with Kevin Lee, Search Superstar

Kevin Lee is no doubt one of the thought leaders in Search Engine Marketing. He is co-founder of Did-it.com, Chairman of SEMPO, a weekly columnist for ClickZ; and he is a regular speaker at all the Search Engine Strategies conferences. Additionally, Kevin sits on the Search Council for the Association for Interactive Marketing and the IAB Search Committee. Considering his busy schedule, he graciously agreed to answer a some questions about the current state of Search Marketing.

1. How would you describe the state of Search Engine Marketing today?

Marketers are trying to decide where the functions of organic and paid search engine marketing belong within an organizational structure as well as how to integrate search into an overall marketing and media plan. While paid and organic SEO share keywords and a SERP (Search Engine Results Page), they are very different disciplines and require different technology as well as different expertise.

2. How important is the golden triangle in Paid Search vs. SEO?

As the paid listings get more relevant and the search engines get more and more SEO spam, I predict that Google, Yahoo and Microsoft will allocate increasing screen real estate to paid listings. As the relevance of the paid listings approach or surpass organic results it’s actually in everyone’s best interest to show paid listings.

3. What percentage of budget would you recommend an advertiser allocate for Paid Search vs SEO?

Budget allocation between SEO and Paid Search is an individual decision. However factors that influence the ratio are competitiveness in each, breadth of content, base pagerank (or how well the domain is already doing from a linking perspective), CPC prices across the keyword universe for that marketer, in-house vs external resources, technology infrastructure for current site.

4. How would you differentiate Maestro from other bid mgmt & conversion tracking software?

Maestro has evolved t be much more than a bid management and conversion tracking platform. What you do with the click once you buy it is as important as making the decision which clicks to buy at which price in which engine at what time of day, etc. Currently, except for a few agency relationships, Maestro is used exclusively by internal Did-it teams. We invest a significant amount of time and energy training and re-training our teams on how best to use Maestro, including the testing and advance click-routing features.

One way to think about why we evolved beyond bid management is a comparison to traditional media. It’s not just where you put the advertising (the media buy), it’s the creative, the offer and the follow-up that makes a campaign successful.

5. What’s your opinion on Portfolio mgmt vs. Keyword bid mgmt?

By end of the first Quarter of 2007, all the engines will have a hybrid, opaque auction that uses predicted CTR and other relevance factors as well as bid to determine position. In that kind of ecosystem, it is all about the math. The systems in the best position to effectively manage bids are those that have the best formulas able to both predict the value of a click to a specific advertiser, and the likely responses to a marketplace of bid changes. Portfolio is a word used by some to describe a specific set of formulas. The right way to manage keywords differs by client just like the best way to manage a basket of stocks differs based on the investor and their appetite for risk or volatility.

6. In a branding campaign, do you see any value in Impressions?

Impressions at the top of the SERP clearly have a far greater chance of being seen. But impressions are not created equal. Like banner placement, listing placement on a page is even more critical. However, given the new bid landscape formulas any listing that achieves high position will likely be a combination of relevant creative (high predicted CTR) and a reasonable bid.

7. Can you explain how Did-It uses the Predictive modeling approach to manage paid search?

Not without an NDA in place. Suffice it to say that the best campaign management systems bind a balance between prediction (proactive action) and reaction (using very recent data to respond to changes and opportunities in the marketplace).

8. How would you describe the performance of MSN Search since they terminated their agreement with Yahoo?

Performance has been stellar because most advertisers aren’t live there yet (no pun intended). Sure there is room for improvement in the front end, but performance is very good.

9. What tactics does Did-it use to manage Click Fraud for their clients?

If I said too much, then those tactics wouldn’t work anymore. Careful analysis of trends and knowing what earlier data will predict helps ferret out the material instances of click fraud or the introduction of a large poor quality syndication partner by and engine. Additional analytics help identify if there are specific problems from a source of clicks.

10. Paid Search spending is forecasted for double-digit growth, year after year for the next several years. With the huge influx of advertisers, do you think there is a future for PPC arbitrage?

Pure click arbitrage will be increasingly challenging. However, the lead-gen arbitrageurs who sell the same lead miultiple times will still have significant success in the market due to the economics of selling a lead multiple times.

11. How does Did-it track offline telephone orders that come from Search, down to the keyword level?

There are several ways we do that. Essentially we customize the process to the needs of specific marketers because some of them don’t control their telemarketing operators and need complete automation, others are already asking customers for coupon codes or extensions for their other marketing activities and therefore don’t necessarily need to provision huge blocks of inbound numbers or use more costly VoiceXML driven systems which incur a per-minute cost. In a predictable business, just knowing the percentage of phone orders, and the relative value of operator assisted orders is enough. However, for some businesses it makes total sense to use inbound toll-free redirection, perhaps even on a per-keyword level.

12. How comprehensive is Did-it’s process for developing and managing keyword lists for paid search?

As comprehensive as it needs to be. Keyword refinement is an ongoing process, not just something done at the initial stages of the campaign. Having some listings in broad or phrase match becomes a net by which additional keyword expansion can occur. Also, we have some internal tools built using fairly expensive third-party data that can be killer for keyword discovery.

13. How do you rate the comparison shopping engines vs. the SE’s in terms of performance? Do you happen to like any one better than the rest?

CSEs are a great part of an overall search mix. I have no particular preference because some work better than others for different clients, especially now that they have branched beyond traditional SKU-based retail into additional categores.

14. Any thoughts on why MSN stopped accepting submissions to their web directory?

Lets skip this question, since I have no strong opinion here.

15. How has Did-it enhanced it’s technology and/or services offering since last year?

An improved suite of testing tools has significantly improved our ability to run AB and Fractional Factorial design tests for those clients for whom it makes sense. We have been honing our AI (the bidding system) to factor in changes in Google’s AdRank calculations. I can’t talk too much about the click-routing enhancements, those we talk about only under NDA.

16. What is the typical profile of a Did-It client?

Any serious search engine marketer who spends more than $30K a month on search, contextual and behavioral media. These marketers also understand that constant testing is critical to continued improvement. There are dozens of things to test and each successful test multiplies its efficiency gain against earlier successes. It also helps if marketers have a strong understanding of their own business and marketing objectives.

17. How much do the services of Did-it cost?

Typically it is a percentage of spend, but in some cases we have been willing to structure some other deals where we also participate in upside profit gain through our involvement in the campaign.

18. If you could give one piece of advice to somebody about optimizing their Search campaigns…what would it be?

Think beyond the keyword. Keywords are only one way of targeting, take advantage of the fact that different people search on the same keyword but your most valuable customer may be targetable though additional means beyond the keyword including but not limited to time of day, day of week, geography, and in Microsoft, Age/Gender. Combine additional targeting on a core campaign with search retargeting (following prior search visitors around the web with relevant advertising offers), and you have truly begun to optimize.

19. Does Did-It target any specific vertical industries? If so, what industry-specific resources, services, expertise, and/or client base does Did-It offer to this industry?

At this point, I think we have clients in nearly every industry. So far the CPG and brand marketers have not come calling, because I think they are a bit perplexed about how best to take advantage of search, contextual and behavioral media.

20. What’s your Executive Vision for Did-it? How will you execute this vision?

Did-it will continue to excel at helping clients unleashing the profit potential from their campaigns. We have hitched our cart to the major players building media marketplaces, Google, Microsoft and Yahoo. We also continue to monitor other firms who are making media available through other automated or partially automated markets. We plan to apply our years of leadership in the auction-based-media space to the future advertising marketplaces. I’m even writing a book about the way search has been a catalyst that may change the way marketers buy media, and how that coincides with major shifts in the way consumers consume media online and offline.

21. Any predictions on the outlook for the Search industry, and how Search fits into the digital marketing mix?

Success in search is to a great extent a byproduct of all other media, marketing, PR, sales and advertising initiatives. People don’t search spontaneously. They are driven to search by other media, word-of-mouth, PR, and even store experiences. An integrated marketing and advertising plan goes beyond even the digital marketing mix to understand media mix models and how consumers make buying decisions. Making search decisions in a vacuum results in the wrong decisions being made.

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Thanks Kevin.
I gotta say, I love hearing you speak at the conferences, and this interview was just as fun…no, more fun. There is a lot for the readers to digest here. Speaking for everyone, we really appreciate the time you took to share this wealth of knowledge.

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Comments

  1. Thank you Shimon and Kevin for this valuable post. Maestro seems to be a key factor in the success of Did-it’s paid search campaigns. What bid management tools do you recommend for the smaller mom and pop shops that cannot afford Did-it services and the Maestro technology? In other words, if you had to go out and buy commercially available bid management software, what would you pick?

  2. [NOTE: I'm with Efficient Frontier and so my views are thereby potentially biased.]

    The response to question #5 seems more than a bit obfuscatory. Applying portfolio theory to the optimization of paid search campaigns is neither an approach among other equally meritorious approaches, nor is it more or less appropriate depending on the advertiser’s particular circumstances.

    To be clear, portfolio optimization is defined as “considering all of the possibilities for how best you could allocate spend *across* a keyword portfolio, and then picking and implementing the set of keyword targeting and bid/max-CPC choices that best reach the client’s overall business goal(s).” [For those that want to see an example of portfolio optimization: http://www.youtube.com/watch?v=wcKzi8iJEng ]

    As the above bidding example shows, there is the optimal, portfolio way of managing keywords, and there are other less optimal ways, but your interviewee would have readers think otherwise. Perhaps this is because – as his evasiveness on questions #4 & #7 strongly imply – Maestro has no math value-add in a search marketing world where, as he says, it’s “all about the math”.

  3. Avi, you’ll likely find that the search engines themselves will start providing a rudimentary level of bid management functionality right in the interface in order to serve the mom & pop advertiser. Yahoo’s Panama already has the beginnings of bid management. Other third party options all have their strengths and weaknesses. Attend SES, Pubcon or AdTech and talk to folks with campaigns of your size, volatility, type and complexity and see what tools they have found successful. Consider testing more than one tool.

    EF must have a RSS alert set to my name ;-) Wonder why?

    Views (biased or not) don’t matter. It is all about doing what it takes to reach full potential of a marketing campaign (PPC or otherwise). Traditional agencies don’t put all their effort into media buying and media mix models and forget to test creative. The great ad agencies apply what they learn about customer segments to tune campaigns in every way from the media purchased to the sale. Otherwise all advertising would get stale quickly and plateau in efficiency, or worse, slide backwards.

    I’m quite comfortable with the power of our math and the ability to break through plateaus using both killer data analytics (automated and manual) AND smart investment of time and energies into continuous testing and improvement of campaigns, end-to-end. Truth is, the media buying (bidding) math alone doesn’t win the PPC search marketing war. Many reading this post have used a variety of bid management platforms running a multitude of formulas know that someone (preferably a team or person who has the expertise) has to take the campaign beyond the bid. With all the engines moving to opaque marketplaces and increasingly complex hidden calculations being made to predict clickthough or relevance (think quality score), additional expertise can make a huge difference. Clients who partner with a vendor and dedicate the appropriate resources will reap the rewards.

    Long term, I believe that in house SEM departments will seek the kind of partnerships where vendors can provide technology, resources and expertise. Every in house SEM I’ve ever talked to has a to-do list a mile long. It’s nice to have an agency to turn to in order to prioritize initiatives strategically and move campaigns forward.

  4. One thing I have to add: I look up a variety of long-tail search-related terms for research, and almost 80% of the time I have found an article written by Kevin near the top of the listings. This man has been sharing his considerable knowledge for years and we are lucky to have him in our industry, IMO.

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