E-commerce Insights: Winning at Paid Search ’07

8. Use contextual advertising with caution. Contextual advertising (AdSense, Yahoo! Publisher Network, etc.) performs poorly for many catalogers. First, these potential customers are viewers, not searchers, and therefore are less qualified prospects. Second, an overwhelming majority of click fraud occurs on the content networks.

Generally, less sophisticated search marketers should avoid advertising on the content networks. If you do so, separate the tracking of these ads from the reset of your search marketing campaign so you can monitor them carefully. There are quality clicks at reasonable prices to be found in the content networks, but it takes expertise to find these needles inside the haystack.

9. Scrutinize your affiliate program. Many catalogers drive up their paid search costs by mismanaging their affiliates. Analyze where your affiliates get their traffic. Don’t allow affiliates to advertise on your brand name. And by all means, don’t provide affiliates with better offers than those on your site.

10. Manage your agency. If you use a search agency to manage your paid search campaigns, consider the following:
• a large fraction of your sales will be driven by your brand name;
• these terms typically have low cost; and
• your agency played no role in brand reputation.

Then consider compensating your paid search marketing agency as a percentage of ad spend, as opposed to a percentage of sales.

Establish clear return on investment metrics. Ensure your contract has an easy out (30 days or less) if performance or service targets aren’t met. Negotiate a maximum monthly dollar cap on your agency fee to protect you from soaring bills in your heaviest traffic months.

11. Audit your search programs every six months. Compare the costs shown in your search reports with the actual invoices from the engines. Compare the sales reported in your search reports with order detail records. Determine whether any orders are counted twice due to different cookie tracking.