Post on 19-Dec-2015
SEARCH MARKETING
PAID SEARCH
PAID SEARCH - RHS
PAID SEARCH - FEATURED
IN THE 1990s, STANFORD STUDENTS SERGEY BRIN AND LARRY PAGE DEVELOPED A SEARCH ALGORITHM
THEY TRIED TO SELL THEIR SEARCH ALGORITHM TO YAHOO FOR $ 1 MILLION
Source: Hal Varian’s Berkeley Lecture on Search Economics
THEY FOUNDED GOOGLE IN 1998 AND WENT PUBLIC IN 2004
AROUND TEN YEARS AGO THERE WERE MANY SEARCH ENGINES
62%
20%
9%
5%4%
TODAY, THERE ARE EFFECITVELY 5 PRIMARY SEARCH PROVIDERS
comScore April 2008 Search Engine Rankings
86%
12%
2%
AND 3 PAID SEARCH PROVIDERS
Based on June 2008 Covaris numbers reported at mediapost (msn is inferred)
PAY PER CLICK MODEL
$0.25 x 10000 clicks = $2500
$1.00 x 2500 clicks = $2500
$10.00 x 250 clicks = $2500
GOOGLE’S ORGANIC SEARCH GOAL IS USER SATISFACTION
GOOGLE’S PAID SEARCH GOAL IS USER SATISFACTION
ADVERTISER SATISFACTIONMAXIMUM PROFITABILITY
PAY PER CLICK MODEL
$0.25 x 10000 clicks = $2500
$1.00 x 2500 clicks = $2500
$10.00 x 250 clicks = $2500
WHY AD POSITION MATTERS – EYE TRACKING
Source: Jan Pederson’s Search Quality Presentation at Berkeley (2007)
PPC - BIDDING
ashtonsd90.com bids $1.38
ritzcamera.com bids $1.17
shopcartusa.com bids $3.23
ritzcamera.com bids $1.17
HOW RELEVANT IS THE LANDING PAGE AND AD?
RANK THEM
ashtonsd90.com bids $1.38
ritzcamera.com bids $1.17
shopcartusa.com bids $3.23
NORMAL AUCTION
ashtonsd90.com bids $1.38 , ranks 2nd and pays $1.38
ritzcamera.com bids $1.17, ranks 3rd and pays $1.17
shopcartusa.com bids $3.23, ranks 1st and pays $3.23
VICKREY AUCTION (VCG)
ashtonsd90.com bids $1.38 , ranks 2nd and pays $1.17
ritzcamera.com bids $1.17, ranks 3rd and pays ???
shopcartusa.com bids $3.23, ranks 1st and pays $1.38
GOOGLE AND YAHOO USE A GENERALIZED SECOND PRICE (GSP)
AUCTIONGoogle’s customers are ranked based on a quality score * their bid and pay slightly more than the next ranked bidder not exceeding their maximum bid.
PRICE AND RANKING ARE RECALCULATED EACH QUERY
AD RANK = BID x QUALITY SCORE (QS)
ashtonsd90.com 1.38 x 4 = 5.52
ritzcamera.com 1.17 x 6 = 7.02
shopcartusa.com 3.23 x 1 = 3.23
HYPOTHESIZED PRICE = NextPlace(AR) / QS +.01
ashtonsd90.com 1.38 x 4 = 5.52 pays 3.23/4 = .82
ritzcamera.com 1.17 x 6 = 7.02 pays 5.52/6 = .93
shopcartusa.com 3.23 x 1 = 3.23 pays minimum .05
HOW MUCH WOULD NIKON HAVE TO PAY FOR NUMBER 1?
HYPOTHESIZED PRICE = NextPlace(AR) / QS +.01
Company Bid QS AR
Ashtonsd90 ? 4
Ritzcamera 1.17 6 7.02
Shopcartusa 3.23 1 .05
GOOGLE SYNDICATES ITS ADS TO PARTNER SITES
GOOGLE SYNDICATES ITS ADS VIA ADSENSE
A FEW ADSENSE SITES GENERATE GOOD REVENUE
As compiled on mindofmichael.com
ADSENSE PARTICIPANTS AGREE NOT TO DO BAD THINGS
ADSENSE PARTICIPANTS AGREE NOT TO DO BAD THINGS
ADSENSE PARTICIPANTS AGREE NOT TO DO BAD THINGS
ADSENSE PARTICIPANTS AGREE NOT TO DO BAD THINGS
CLICKFRAUD
PAID
SEA
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FR
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WHEN I CLICK HERE, I DON’T CLICK HERE
PHOTO ATTRIBUTIONS
Slide 37: 'Happy Kids NEED A Healthy Sandbox‘ www.flickr.com/photos/44124458380@N01/567277264