Why a Strong Brand Is a Search Marketer's Best Asset

Travelocity: Nonbranded Keywords Only Convert 4% of Searchers

By Abbey Klaassen

Published: March 15, 2007

CHICAGO (AdAge.com) -- For brand marketers using search, a brand name may be their best asset. That's the finding of a recent Travelocity study, which challenged assumptions around the "portfolio approach" to paid search, a common practice in which marketers buy a wide variety of both brand terms and nonbranded terms -- like when an automaker buys its brand terms but also buys "SUV" or "convertible."

Jeffrey Glueck, CMO at Travelocity, isn't sold on the 'portfolio approach' of paid search, in which marketers buy a variety of nonbranded search terms and hope those terms lead searchers to their brands.

Photo Credit: Rohanna Mertens

Pay more for nonbranded?
Conversion rates tend to differ greatly for brand terms vs. nonbranded terms. Typically there is a higher conversion rate on brand search terms, making them appear more effective, and a lower conversion rate on the nonbranded terms, making them appear less effective. Marketers often assign value to the last click when it comes to search, but proponents of the portfolio approach explain that value should be added to nonbranded search terms. They say marketers should pay more for nonbranded search terms than they might appear to be worth because they eventually contribute to clicks and conversions on a brand search term, in a sort of funnel effect. (Not surprisingly, search engines often promote such an approach.)

But Jeffrey Glueck, chief marketing officer at Travelocity, wasn't completely sold on that idea -- at least not without research to back it up. He cited a Nielsen NetRatings study that showed half of all searches on Google and Yahoo are comprised of 100 terms -- and that half of those terms are brand terms. He went on to cite another study from marketing-services agency 360i that found buying brand words typically accounts for just 5% of a marketer's total search spend but that those brand words drive 80% of the profit from search.

"Brands still matter on the internet," Mr. Glueck said, addressing attendees at the IAB's Performance Marketing Forum this week in Chicago. "Most of your profits come from buying your own brand name." So Travelocity took a closer look at that funnel to figure out what types of ad words people are clicking on before the conversions.

One search term for most
He tracked Travelocity's visitors coming from paid search and found that 65% of people only interacted with paid search once, via a single keyword. He found 27% interacted with paid search multiple times -- but just searched repeatedly on the same term. Only 8% searched multiple times with different terms.

The final findings? Only 2% of paid-search conversions fall into the category where the searcher originally clicked on a nonbranded term only to click and convert on a branded term at a later date. Travelocity now credits nonbrand phrases as being responsible for only 4% of each booking, meaning 96% of Travelocity's booked trips are the result of branded key words.

"For us, we can take a loss on nonbranded terms like 'Hawaii vacation' -- but not much of a loss," Mr. Glueck said. Ultimately, he said, it is a "profound mistake by all of us to think we've figured out how to measure ROI on search. We're in stage one."

More rigorous ROI
He also advocated applying more rigorous ROI to all of his company's online advertising. "You never want to pay for advertising that's not incremental" to business you'd already be getting, he said.

And when it comes to online advertising, relevance rules. Travelocity research showed that banners that had dynamic copy to reflect a user's geography -- for example, if the ad knew, thanks to internet-protocol targeting, that the user lived in Minneapolis and offered flight prices from that city -- performed six to seven times better than static ad banners. Travelocity also spends heavily on travel sites because it's important to reach people in a relevant mind-set, Mr. Glueck said. "But we're looking for ways to expand that inventory" through other types of targeting, such as behavioral.

Hotel Sites Go Back to Basics

What's the latest thing in online marketing for hotels? Site design.

Hotels have awakened to the challenge from online travel agencies, and they are shifting money into online marketing to meet it, according to a new study by Hospitality eBusiness Strategies (HeBS).

The worldwide study of hospitality executives found that 68% of hoteliers plan to shift their budgets from offline to online marketing in 2007.

Emerging media will not be part of the mix for most hotels, based on respondent opinions about what produces the best return on investment (ROI). Web site optimization was listed most often (72%) by hotel execs, followed by search optimization and organic search (68%) and Web site redesign/design (62%).

Only 17% of respondents named consumer-generated media, blogs and their ilk as bringing high ROI. This is particularly relevant for online video, because individual hotel videos are a competitive advantage that many online travel agencies do not have.

eMarketer senior analyst and travel specialist Jeffrey Grau noted the motivation behind hotels' focus on the fundamentals, saying that "to compete with online travel agencies, hotels are focusing on improving the usability and functionality of their Web sites."

New media is even more of an afterthought in intended 2007 budget allocations, where it came in among the least allocated Internet budget items.

Although this approach may seem single-minded, hotel executives are onto something. In a January 2007 study of US ad executives by Outsell, as reported by MediaPost, 75% named company Web sites as effective or extremely effective at lead generation.

Firefox Edges Up Against IE In Small-Medium Businesses

Toronto-based online time tracking and billing provider, FreshBooks, did a survey of 140,000 small to medium-sized businesses on the use of the Firefox browser versus the Internet Explorer.

And this is what they found - Firefox's browser market share increased 1.35 percent in February, 2007 to 38.95 percent. At the same time, IE's share fell by 0.73 percent to 56.95 percent.

The survey also reflected the fact that Firefox users were more willing to upgrade from FF 1.5(10.03 percent) to FF 2.0 (28.92 percent). In contrast, IE6 still outnumber IE7 users by 34.36 percent to 22.59 percent respectively.

Nonetheless, Microsoft Windows is still the operating system of choice; its market share went up modestly in February to 88.92 percent. Freshbooks said that hard sell behind Vista is responsible for the increase.

Linux has also made some gains, its market share went from 1.54 percent to 2.01 percent, while Mac OS fell a little from 9.04 percent in January to 8.55 percent in February.

Analysts speculate SMBs Firefox might just turn out to give IE a run for the money since more SMBs are looking to put the open source browser on their desktops and converting to IE7 might still be a long ways off.

See Into the Future of Mobile Markets

MARCH 9, 2007

Marketers are looking to the Japanese mobile market as a model of the converged media future.

What stands out in the Japanese mobile market is the fact that innovation is shifting toward business models and marketing tactics as opposed to technical features and functions.

"The explosion of non-official mobile content Web sites is causing the sun to set on the i-mode business model of a dominant mobile carrier selling incremental content and services to its user base," says John du Pre Gauntt, eMarketer senior analyst and the author of the new Japan Wireless: Marketing to a Mobile Society report. "Flat-rate pricing for 3G services and a broadening of the scope of industries with a strong interest in mobile services means that mobile marketing and advertising has become all the more important in Japan."

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According to Japan's Ministry of Internal Affairs and Communications (MIC), the number of Japanese mobile subscribers has been inching up only slightly over the past year.

In February 2007, Japan passed the 100 million mark for mobile subscribers. Effectively, that means the country is fully penetrated with advanced wireless services and only the extremes of society (the extremely young, the extremely old, the extremely poor) are not served by mobile services.

More important for marketers, Japan's mobile environment is now fully ramped into 3G services. According to MIC figures, the number of 3G subscribers for all carriers now exceeds 60 million.

With full penetration of mobile — and advanced penetration of 3G — wireless captures much of the Internet-based activity of the Japanese public.

eMarketer estimates that approximately 70% of the Japanese population, or 89 million people, is connected to Internet, usually by high-speed connections.

Of that Internet population, mobile just edges out the PC platform as the preferred access device.

"In a sentence, the good news is that marketing has just about trumped technical features and functionality for reaching Japanese consumers," says Mr. Gauntt.

For example, the best-selling handset in Japan at present is Motorola's Razr, a phone that sports neither a video camera nor a mobile wallet, technical features that are standard on most other Japanese models.

"Instead, consumers are attracted to the cultural fashion statement offered by the Razr's sleek physical design," says Mr. Gauntt. "But the Razr story is not simply one of consumers channeling their function fatigue into a 'retro' product. The marketing of the Razr to the Japanese public was a textbook case of integrating celebrity endorsement, social networking, mass media and targeted messaging."

The classic i-mode business that launched the mobile Internet in Japan is declining. Whereas just two years ago the proportion of official i-mode sites ("official" meaning that the customer bought content and/or services through his or her DoCoMo billing relationship) vs. non-official mobile sites was about 70-30 in favor of the former, the ratio has flipped circa 2007. Now, the prevailing trend for new mobile Web sites as well as consumer time and money is for the non-official experience.

"Japan's situation is well advanced compared with mobile markets in North America and many parts of Europe, where the primary value proposition seems to revolve around a singular technical niche, such as the music phone, TV phone or e-mail phone," says Mr. Gauntt. "Yet all major advanced markets seem to be converging toward a kind of maturity beyond novelty features."

Summing up, Mr. Gauntt says, "Being among the first fully converged, fully mature media societies, Japan offers marketers a valuable lens for benchmarking where they are heading."

Site Development Lags Expectations
By Adweek.com

NEW YORK Despite increased attention by many companies to their digital presence, a wide-ranging study has found that Web site development is not keeping pace with consumer expectations.

The Web Marketing Association had 300 industry experts examine over 2,400 Web sites, judging each on criteria ranging from design to copywriting to ease of use. As a whole, the resulting Web development index declined 3 percent in 2006 from 2005.

"Judges' expectations and consumer expectations are outclimbing what Web development has been doing," said Bill Rice, president of the group, which gives awards for the best Web sites.

One particular area of concern: innovation, which was rated lowest overall of the seven categories judged.

"Innovation is so hard to not only get but to keep," Rice said. "As soon as you have an innovation, everyone copies you and you're run of the mill again."

The top award went to TBS's Department of Humor Analysis (tbshumorstudy.com), a Flash site that combines Web video and viral features to promote the cable network's comedy programs. Big Spaceship, a Brooklyn-based Web shop, built the site.

Of the 97 industries examined, the airline industry was seen as the most advanced in Web development, which Rice chalks up to the Internet becoming a critical part of its business early. Within the airline industry, American Airlines was cited for its WhyYouFly.com site, created by Interpublic Group's TM Interactive, which not only lets customers book travel but helps them decide where to go.

Yet financial services, another industry that was an early adopter of the Web as a part of its business model, scored lower in past years. "Overall the industry has sat back and said, 'We've made our investment.'"

IPG's R/GA was the most lauded agency, taking 19 awards for work done for clients like Nike, Purina and Verizon. Zugara, a Los Angeles independent Web shop, won 18 awards, including work for Reebok and Sony PlayStation.

Online Publishers Association High On Promise of Mobile

"GOING MOBILE," A STUDY RELEASED today by the Online Publishers Association, confirms that the mobile Web isn't just for ringtones and simple text messaging anymore.

The research reveals that in the U.S. and Europe, 76% of all mobile phones are Web-enabled. Only 32% of consumers use their cell phones to surf the Web, but marketers are trying to change that with compelling advertising. Some have already succeeded: One in 10 consumers internationally buys products and services through their handsets, thanks to mobile marketing.

"Many say they discover new products when watching mobile ads," says Pam Horan, OPA president. "Mobile Web advertising is working," she says.

And it probably will work even better when marketers upgrade from banner advertising and short-message servicing to ads where they can see the product in a still picture or video, says Gregg Smith, chief operating officer and executive vice president at Acuity Mobile.

"There will be more adoption when they can actually see what's being marketed," he says.

The OPA report says nearly 25% of consumers have visited a Web site, spurred by a mobile ad. "Perhaps even more importantly, mobile Web consumers are taking action, even going directly to buying a product after they see an ad," Horan says.

The OPA predicts strong Internet-through-a-handset growth in 2007, particularly in the U.S. and U.K.

"Consumers already are showing how receptive they are to mobile Web advertising, so the platform will become even more attractive as the number of users continues to climb," she adds.

Smith suggests that soon, 50% of consumers will accept mobile ads. Already, 60% of Japanese cell phone users present mobile coupons at the point of sale. "The U.S. is trailing behind, but is catching up," he says. "Fueling this growth is the popularity of advanced mobile services and the willingness of consumers to receive advertising that appeals to their tastes."

Nokia had a nose for just this forecast future. On Tuesday it announced two mobile advertising services: Nokia Ad Service will help advertisers target messages through mobile services and applications. Mobile publishers will be able to deploy, manage and optimize mobile advertising campaigns on the new platform.

"As advertisers struggle to reach personalized targeting with traditional media such as print and TV, mobile advertising is becoming an increasingly attractive channel for brands," says Tom Henriksson, director of Nokia Ad Service.

Acuity is already on the scene with targeted creative for the cellular set. It believes consumers will be more interested in ads delivered to them when and where they expect. A consumer who has approved mobile ads from Jiffy Lube, for instance, will receive one when she's approaching a participating Jiffy Lube location and if she is due for an oil change.

"In some cases, the average response for mobile advertising is up to 10 times greater than Internet response rates--to the ads that turned out to be relevant," Smith says. "The trick here is to guarantee that relevance and weed out the irrelevant junk."

Worldwide Internet Penetration Grew 10% in 2006

The days of US dominance in Internet users are numbered.

Nearly 750 million people ages 15 and older used the Internet worldwide in January 2007, up 10% over January 2006, according to new data from comScore Media Metrix.

India, the Russian Federation and China all saw heavy Internet user growth in 2006, growing 33%, 21% and 20%, respectively. China now has the world's second-largest Internet population, with 87 million users ages 15 and older. The US had 153 million users ages 15 or older in January 2007.

"Internet users outside the U.S. now account for 80 percent of the world's online population," reported Bob Ivins of comScore Europe, "with rapidly developing countries experiencing double-digit growth rates year-over-year."

eMarketer senior analyst Ben Macklin estimates that China will have the world's largest Internet market in number of Internet users by the end of the decade.

eMarketer's own numbers are based on data from the International Telecommunication Union (ITU) and are not limited to users ages 15 and older. They also are full-year estimates, rather than just one-month snapshots. eMarketer put the total number of Internet users worldwide at 1.1 billion in 2006.

Source: eMarketer.com