Mark Grote: Microsoft SEM & SEO

FROM AFP NEWS

SAN FRANCISCO (AFP) — Microsoft says it has adjusted its freshly-launched Bing search engine to make it easier to filter out porn. Adults-only images and video will be served from a separate domain, explicit.bing.net, so that content can easily be barred from Bing search results, according to Bing general manager Mike Nichols. "This is invisible to the end customer... MORE

The Wall St. Journal is reporting today that Microsoft is expected to show for the first time publically its new search effort, at “D: All Things Digital”.  The technology conference, hosted by All Things D bloggers Walt Mossberg and Kara Swisher, is being held May 26 – 28 in Carlsbad, California, and features a number of big names in tech, including Microsoft CEO Steve Ballmer, Yahoo! CEO Carol Bartz, Twitter founders Evan Williams and Biz Stone, and many others.
Naturally, I won't confirm anything one way or another right now, and I have no comments about what others are writing - I will let others speak for themselves. I will say it's interesting reading though.

I often get the question for how Dynamic Keyword Insertion works. It seems there is confusion around how an add will appears in search and if it will be generated with misspellings should the user mistype a word.  That is not how keyword insertion works. But rather than just recreate the wheel of SEM, here's what Google describes as Keyword Insertion:

Keyword insertion is an advanced feature that helps you provide users with more relevant ad text while using a single generic ad for multiple keywords. AdWords will insert individual keywords into the same ad text so that a user sees a distinct ad for their keyword search, if their keyword triggers one of your ad group keywords. This minimizes the work you'll need to do to manage larger ad groups and campaigns. Keyword insertion is best demonstrated by the following ad examples:

Create Ad Text

 The following is the text you would enter into the ad text fields when creating a new ad for your account.

Ads Seen by Users

Users may see the following ads for searches that trigger your ads. The keyword shown would match a keyword or keyword variation you've chosen for the ad's ad group.

In a pure auction-based environment like those that existed previously, having multiple units bidding separately on the same keyword(s) could in fact drive costs up through competition with each other. However, this is not the typical case today because auctions are based on algorithms involving multiple criteria that are far more complex than the simple appearance of an additional bidder.

So we developed a rationale to be a our guideline for how we deal with overlapping keywords that may be useful for you as well. Here is why we decided not to manage keyword overlap:

Rationale

1.       If we chose to manage overlap, a separate landing page would need to be developed to give visitors a choice between all the products that they could be looking for in the case of "email" as an example. That keyword could apply to Office, Small Business, Hotmail and other teams. We believe this would have drastically negative effects on Quality Score which will, in a touch of irony, actually cause the very thing we hope to avoid - increased costs.

2.       Shared keywords make up a very small proportion of the overall number of search terms purchased by Microsoft. In Q1 FY09, in the Microsoft Dynamics campaign we found that of all keywords, approximately 34 overlapped against a universe of 1,800, and accounted for only 2% of the total keywords purchased.

3.       Keyword data predicts that it would be nearly impossible for non-overlapping keywords to drive enough traffic to meet the campaign goals without including them.

4.       Managing keyword overlap for an enterprise company like Microsoft is untenable because of the multiple product lines Microsoft promotes and the thousands of keywords used in our campaigns.

5.        The challenge with managing overlap is that not all keywords go through the central marketing group.  Unless we were to centralize SEM, the only point of visibility is our agency, and even then, many small marketers could bypass us and them.

6.       Despite their small numbers in the Dynamics campaign, the overlapping keywords drove 36% of the initial responses but, they ultimately led to 45% of the conversions we generated.

7.       We believe the search engines have built-in serving technology which in cases where enough inventory exists, reduces the chances of multiple ads of the same company from appearing on the same SERP, further minimizing the impacts of keyword overlap. Furthermore, because the inventory levels are so large in search, our budgets constrain us from saturating our coverage for overlapped keywords, much less non-overlapped keywords, if we were so inclined.

Conclusions

When launching a SEA campaign, it’s always important to include all the keywords that are relevant to the campaign goals even if they overlap with other campaigns. In practice, the difference in overall campaign costs does not warrant wholesale changes in campaign planning. Any positives gained would only be offset by introducing negatives in customer experience. Equally important is the feasibility of managing overlap. Because each business unit can bid on those keywords it values most, any keyword disputes between campaigns are typically settled already in a free market fashion allowing those campaigns to bid on the keywords it values most. Moreover, consumer intent cannot be predicted, so it is best to let campaign goals and the market landscape drive keyword purchasing decisions.

The latest reports from Hitwise revealed that Google has increased its marketshare, gaining 2% of the US searches from the previous month of June 2008. The latest data shows that Google posted an inpressive 10% increase in share of US searches year over year and now accounts for a 70.77% share of all the searches conducted in the US.

Following Google was Yahoo! Search with 18.65% share, Microsoft's Live Search with 5.36% and Ask.com at 3.53%.

This latest data shows the work that Microsoft has ahead of itself if it seeks to cut into Google's dominance on the Web. Unfortunately for Microsoft, the latest Hitwise reports show that Microsoft is falling farther behind instead of narrowing the gap.

There are several things to take into consideration if it is truly your will to build an in-house SEM team. This is not intended to be exhaustive but only to serve as a general guideline of things we built and put into place at MSN.

Generally speaking, the process is very operational, as you might imagine, considering all the moving parts that are needed to produce SEM on the scale required by parts, if not all, of Microsoft.  Let me address each of the issues we faced, in the general order we faced them and that should give you some idea of what is required:

1)      People
I know it’s probably cliché to say this, but people are the biggest key to good SEM capabilities. Our SEM staff at Microsoft has some of the best SEM professionals in the business as far as I am concerned. Their ability to read data and know what to do in order to drive better results, is as good as any agency out there. How do I know?  Well, each time we meet with agencies, some the largest in the world, they rarely offered any campaign insights that we do not already know ourselves. That’s one of the true tests that you should seriously consider building SEM capabilities in-house.  Yes, you will read how that it is suicide and never works – opinions always offered from the self-serving agencies themselves.  But if it isn’t great insight, what does an agency offer to your business that you can’t buy yourselves? Building solid campaign strategies from the outset that meet their objectives more often than not, save companies thousands of dollars by not missing the mark. Knowing where you are spending, how you are spending are all keys that if not done right, cost the business in hours which translates to higher costs one way or another. People, therefore, are the single most important distinction between one company, agency or department and the other.

2)      Reporting
Reporting is the single biggest bottleneck in the process. If you’re not careful, you’ll spend most of your time doing reporting which goes on so long that it’s almost time for another reporting cycle before you know it. Therefore, it’s imperative that you streamline your reporting processes. If you have just one customers, it’s not that critical. But if you estimate the time it takes to produce one report and multiply that for 18 customers, then it’s easy to determine if you’re current requirements are scalable. At MSN, we had several custom reports, and needed to write up editorial summaries for the narrative piece of our reports that told customers what we were going to do in the next phase of their campaigns.  This is very time consuming and requires sufficient time to analyze the reports, write up summaries and produce next steps that are thoughtful and based on the data before you. So anything you can do to reduce the time it takes to get to that point, will be the only thing you can shorten your turnaround times for reporting.

3)      Technology
The technology required for SEM in-house needs to come in various parts. I have outlined a few important pieces below:

a.       APIs: APIs will need to be developed between you and the search engines so all your reporting can automated.  This removes the steps of going through the UI of each search engines and downloading reports via those systems only to combine them from 3 files into 1 to supply to your customers. A better way is to use the APIs in push and pull environment streamlining all aspects of your reporting and campaign production processes.

b.      Bid Optimization If you’re serious about doing SEM in a truly automated way, the best method for success is by creating a portfolio based bid optimization strategy and systems that will allow you to achieve the best results without, again, going into 3 separate UIs to change bids on a keywords. If you have 10,000 keywords for a campaign and that campaign is running in 3 search engines with 100 keywords needing bid updates, you have to make changes to 300 different keywords in 3 different systems simply because you do not have a system that lets you do that once and feed it to each search engine with the push of a button.  This, along with reporting, will cannibalize your team’s time again and again, and before you know it, they can only react to what is happening instead of anticipating and thinking about their campaigns before they implode.

c.       Campaign/Account Management: Not as critical but if developed out the gate with your customer and campaigns in mind, this feature in a system would be most helpful. Preloading your campaign requirements and customer targets into the system helps produce success in the long run.  This part of the process helps you choose appropriate landing pages, produce tracking tags, and set bid and budget targets, etc.   

d.      Tools:  The name of the game with Search is often spelled T-O-O-L-S. From keyword development, to improved landing page experiences, to competitor intelligence, tools are very important keys to success for SEMs.  Get a lot of tools and use them often. Most of all, make sure your tools scale for the number of keywords you need. If you’re building a campaign that has a the potential of millions of keywords, like travel destinations would, it’s probably a good idea to run a software through the paces before you commit to buying it to make sure it can handle your requirements

e.      Analytics: Whether you have your own analytics or have to adapt to someone else’s, you need analytics to tell you what is happening on your site after someone clicks on your keywords.  The entire engagement side of the visitor relationship is incomplete without this kind of data feeding into your campaign and bid optimization.  Through the analytics system you can filter and append URLs so that your paid search ads are detected differently and apart from the typical traffic that finds its way to your site. It is through this process that you can parse your paid from general/organic traffic and help justify the expenses of SEM with a cost/benefit analysis and inform true ROI/ROAS reporting.

4)      Agency Support
Yes Virginia, I would recommend some agency support for your in-house team. Agency support, in my opinion is a key ingredient in build SEM capabilities in-house. If this sounds oxymoronic, consider this. Some people think that if you build SEM in-house that you no longer have use for an agency. Not true.  We felt that it was very important to tap into outside POVs on paid search and to extend the strengths our team by leveraging outside talent whenever necessary. If you consider this to be more of a hybrid, in-house/outsource model, you’re not alone.  Within Microsoft, we drove the strategy and intelligence of SEM for its uses within Online Services. We, as the internal SEM team (iSEM) were some of the thought-leaders behind its adoption into our day-to-day marketing business.  From there we adopted an agnostic approach to SEM campaign production.  That isn’t to suggest that bid optimization isn’t important, or is generally the same, because at the end of the day, we need good results. But among those agencies that invested a decent amount of cash into their technology, most, if not all behave the same and can do the same kinds of optimization.  Sure Reprise can say our bid optimization platform does this, where Efficient Frontier does that, but no one has the silver bullet that is the clear advantage over the other.  I mean,  if all things are equal, does it really matter who builds the SEM campaign? We had both internal team members who did the physical production and we sometimes leveraged the agency team to do that depending on our workloads. This added scale and versatility to our functional work models and made it better for the customer. Therefore, the technology that an agency might offer to a company offers more advantages when it comes to scale, automation, time to market, results, and agility for change when things need tweaking or overhaul.

It becomes, then, more of an issue of scale required vs. actual performance from one agency to another.  That’s what is different among them. So, when you step back and look at the landscape again, you see it really comes down to the serviceability and people. What agency will give you the best or most service support if you have a team of SEMs that do the campaign strategic development and leave the production to others? That’s the question to be asking.