Sponsored Search by Chris Trayhorn, Publisher of mThink Blue Book, August 1, 2008 Search and navigation are different behaviors, yet search engines are used to doing both. This means a good search engine can handle search and navigation requests. Google’s popularity is in large part due to the fact it is also a good “navigation engine.” Its ability to find the right site when a user can’t recall how to reach the site directly is excellent. — Danny Sullivan, Noted Search Marketing Speaker and Authority[1] It turns out that 71 percent of sponsored search clicks are navigational – that is, they come from users who already know what product, service or brand they want; they just don’t know how to get to the right website. So what does that mean to you? Well, first of all, it indicates the possibility that you’re probably overpaying for branded search. And secondly, it undercuts the theory that the last click before a conversion was the one that drove the sale. It tells you that almost three-quarters of your sponsored search buy is not bringing in new prospects – it’s simply delivering people who are already actively looking for your URL. What’s more, new research by Microsoft’s Atlas Institute shows that more than half of what you pay for sponsored search goes to navigational clicks. Is it worth it? To understand how navigational search impacts search marketers, we analyzed a large cross-section of paid search traffic, looking specifically for evidence of navigational search activity. Our analysis provides statistics on the pervasiveness of navigational search, as well as insight into navigational behaviors. RESEARCH METHODOLOGY For this research, we analyzed click log data for 120,000 unique users occurring between Nov. 1, 2006, and May 1, 2007. The click data we analyzed originated from paid search advertisements purchased through Yahoo Search Marketing, Google AdWords and Microsoft AdCenter. A total of 275,858 paid search clicks were recorded for the set of users during this period. Thirty advertisers were included in the study, each advertiser accounting for 4,000 unique users. In the discussion that follows, we use the term conversions to describe the primary measurable events advertisers use to gauge the effectiveness of their advertising campaigns. Examples of conversions advertisers might track include order completions, “contact us” form submissions and page views. CATEGORIES OF NAVIGATIONAL SEARCH In our analysis, we categorized each sponsored search click according to two behavioral dimensions. Repeat-visit behavior. If a user clicked on multiple ads leading to a given advertiser’s website, we considered each instance after the first to be a repeat visit. We considered repeat visits to be navigational because they imply prior knowledge of the advertiser. Branded keyword search. A click was assigned to this segment if the key phrase associated with the click included the advertiser’s brand name or explicitly matched the advertiser’s website URL. For example, if a user clicked through to the ACME Corp. website, the following key phrases would be categorized as branded: acme.com www.acme.com acme corporation acme corporation website WHAT WE LEARNED The charts that follow summarize our findings. Figure 1 shows the results for each segment as a percentage of total clicks. The percentages given are an average for all advertisers in the study, which means each advertiser had an equal contribution to the overall averages. Looking at the data, we notice that nearly half (48.3 percent) of clicks were from users who had been to the advertiser’s site before. Well over half (59.6 percent) of clicks also came from branded key phrases. Only 29 percent of clicks were attributed to nonbranded first visits. This relatively small segment is often how search marketing is characterized – as a means of attracting and acquiring new customers. To quantify the impact of navigational search on overall search budgets, we also looked at the media cost by segment (Figure 2). The 59.6 percent of clicks attributed to branded key phrases represented 34.2 percent of total cost. This shift is to be expected, given the relationship between click-through rate and bid price. Ads with higher click-through rates require lower bids to maintain top positions. Since branded key phrases are directly related to the advertisers’ brand or URL, higher click-through rates and lower cost per click (CPC) rates are expected for these ads. THE IMPACT OF NAVIGATIONAL SEARCH ON CONVERSION ATTRIBUTION Navigational search raises some concerns regarding how advertisers measure the performance of their campaigns. Current reporting standards attribute conversions to the last ad click or impression prior to the conversion event. Thus, virtually all campaign reports ignore the fact that consumers are being reached by multiple ads, on multiple sites and across many channels. Since navigational search behavior typically occurs in a user’s immediate path to conversion, navigational search ads often appear to be the source of high volumes of conversions. Put simply, navigational search behavior implies that the user already knows the advertiser. That prior knowledge may have come from a variety of other marketing touch points and interactions, and in many cases, from existing customers who are returning to the site to buy again. To accurately measure performance, an advertiser should consider all ad exposures prior to a conversion. In support of this point, there is mounting evidence that crediting the last ad or click with the entire conversion is shortsighted. A recent study from the Atlas Institute found that two-thirds of converters were exposed to ads from multiple sites.[2] A separate study found that sponsored search clickers were 22 percent more likely to convert if they were exposed to display ads from the same advertiser.[3] If we take a holistic view of all tracked ad exposures, a conversion should not be attributed to the last ad clicked, but rather shared among all interactions that lead to a conversion. This means that advertisers currently have an inflated view of the value of navigational clicks, and are likely undervaluing non-navigational search clicks and other media types. CONCLUSION: WHAT THIS MEANS FOR MARKETERS Billions of dollars are being spent every year on navigational search clicks, and in all likelihood a significant portion of your search spend counts toward this number. The phenomenon of navigational search isn’t bad for search marketers. It is in fact an indication of the growing reach of search engines. But navigational search behavior should factor in to how you manage your search marketing campaigns. Below are a few tactics to consider when managing paid search. Separate out your branded keywords when looking at clicks, cost and performance. This will help you understand how paid search is contributing to your overall advertising efforts. If branded keywords are driving a lot of sales, it’s likely that other marketing channels are generating interest in your brand. In addition, analyzing repeat-visit behavior will help you optimize your search campaigns. A high incidence of repeat visits is an indicator that a keyword is being used navigationally. This information can be useful in planning natural search optimization and could change how keyword performance is being valued. Test what happens if branded key phrases are bid down or removed altogether. Several of the advertisers in this study were not bidding on any branded key phrases. In most cases, those advertisers ranked at the top of the natural listings for brand-related key phrases, which is often true for advertisers. A well-placed natural listing may be all the navigational searcher needs to click through and convert. Consider all touch points that led to a conversion, not just the last ad. As discussed above, navigational search can mask the impact of other advertising media due to last-click attribution of conversions. To gain an accurate understanding of how different channels contribute to conversions, use one tracking mechanism to measure the performance of all ad types and look beyond the last ad when attributing value. ENDNOTES Danny Sullivan, “Browser-Based Searching,” The ClickZ Network. April 10, 2002. www.clickz.com/1006191 Jed Fowler, Analyst, The Atlas Institute, “The Impact of Overlap on Reach, Frequency &Conversions.” www.atlassolutions.com/uploadedFiles/Atlas/Atlas_ Institute/Published_Content/IODMI.pdf Esco Strong, Sr. Analyst, The Atlas Institute, “The Combined Impact of Search and Display Advertising. www.atlassolutions.com/uploadedFiles/ Atlas/Atlas_Institute/Published_Content/ crosschanneldmi.pdf Filed under: White Papers Tagged under: Perform, The Atlas Institute, White Papers About the Author Chris Trayhorn, Publisher of mThink Blue Book Chris Trayhorn is the Chairman of the Performance Marketing Industry Blue Ribbon Panel and the CEO of mThink.com, a leading online and content marketing agency. He has founded four successful marketing companies in London and San Francisco in the last 15 years, and is currently the founder and publisher of Revenue+Performance magazine, the magazine of the performance marketing industry since 2002.