10/29/2010 I know I’m wasting half of Internet Advertising my ad budget. I just don’t y g j know which half. UW CSE454 10/28/10 Mike Mathieu mike@frontseat.org 2010 Global Ad Spend Industry Structure $$$$$ $ $448 $$ $ $$$ Media Advertiser Audience Billion Ad The Great Divide Brand Direct Response • Emotions • Transactions • Indirect benefits • Gross profits • Banners, TV, • Search, coupons, stadiums 1 ‐ 800, radio, mail 1
10/29/2010 Conversion Funnel Ad Impressions Clicks Conversions Conversions Revenue Monetizing Traffic Share of Voice Costs $$$ TRAFFIC ction LA $ Search ‐ Paid Search Paid ANDING PAGES Cost Per Ac per Transaction Search ‐ Free Conversion Rate Gross Affiliates Display Ads Margin Syndication Email Mobile Offline 100% CTR 0% Reach CR x CPA = RPV Conversion Potential vs. Price Real World Example 100.00% $9.00 90.00% $8.00 sion/ Traffic 80.00% $7.00 70.00% $6.00 Click 60.00% al Potentia Cost per C Relative Convers $5.00 $5 00 50.00% $4.00 40.00% $3.00 30.00% $2.00 20.00% $1.00 10.00% 0.00% $0.00 1 2 3 4 5 6 7 8 9 10 Search Rank 2
10/29/2010 Real World Example Bid Management Impressions 4.4M Term Clicks CPC Pos CR Leads CPA AvgPrice Revenue Spend GM Clicks 2078 Nursing School 5,000 $1.00 1 5% 250 $20.00 $7.50 $1,875 $5,000 ‐ 63% • RefSrc on URL RefSrc on URL RegClick RegClick 69 69 Nursing • Drop cookie Registrations 29 Schools 5,000 $2.00 3 20% 1,000 $10.00 $30.00 $30,000 $10,000 200% • Pass RefSrc upon conversion • Match with ad spend • Calculate CPA Total 10,000 $1.50 2 12.5% 1,250 $12.00 $25.50 $31,875 $15,000 113% CTR=0.0469% CPC=$0.65 Optimized 8,000 $2.43 1 22% 1,760 $11.05 $30.00 $52,800 $19,440 172% eCPM=$0.31 CPRegClick=$19.69 CPReg=$46.76 Industry Structure Online Advertising Risks $$$$$ Revenue Cost Per Cost Per Cost Per Subscription / Share Click Impression Action Sponsorship $$ (CPA) (CPC) (CPM) $ $$$ Media Advertiser Audience Ad Publisher Advertiser Balance of Risk Sort by (CPC_Bid x CTR) RPV Optimization: RPV Optimization Problems with Sort by CPC Example Term: "mba" Ad Title Univ. of Phx: Online MBA Univ. of Washington MBA 100% online university. Foster School of business. Ad Body Fully accredited. Top 30 ranked. CPC $10.00 $0.50 CTR 0.01% 4% Position #1 #10 RPV $0.0010 $0.0200 3
10/29/2010 Keyword Opacity Landing Page Analysis What?? No “Christmas” Impr CTR Clicks CPC CR Leads CPA Spend Nursing School g 100,000 5% 5,000 $1.00 , , $ 5% 250 $20.00 $ $5,000 $ , Nursing Schools 10,000 50% 5,000 $2.00 20% 1,000 $10.00 $10,000 Total 110,000 9% 10,000 $1.50 12.5% 1,250 $12.00 $15,000 MatchDriver 110,000 9% 10,000 $2.00 12.5% 1,250 $16.00 $20,000 No “Christmas” here either! Landing Page Analysis Industry Structure $$$$$ $$ $ $$$ Media Advertiser Audience Ad End Users Better Matching • Context detection Don’t bug me – GPS, location – App vs. content – In ‐ game – Info seeker vs. transactor Unless I like what Unless I like what – Calendars/schedules/events – Social networks/status you have to offer – Twitter ‐ now – Behavioral – esp. w/knowledge of specific site behaviors – Contextual • Privacy – Google “AOL search data” 4
10/29/2010 Context? • Flowers • Mentos gum • Trial Prep • Credit score • Cosmetics • Hampton Inns • WeightWatchers WeightWatchers • Vacation Home Rentals • Home Depot • Web Hosting • WebMD TESTING • Colon Cleanse – Warning • My Teeth Aren’t Yellow • Classmates.com Testing A/B Split Test Try Idea Again Pick Test Winner Analyze Testing Sample Size Problems Sample Size, margin of error, confidence • So many ideas, so little to sample… – Disproportionate advantage to scale • Multivariate testing x = Z ( c / 100 ) 2 r (100 ‐ r ) – Taguchi Method hi h d • Method for calculating signal ‐ to ‐ noise ratio of different n = N x / (( N ‐ 1) E 2 parameters in an experimental design + x ) • Allows optimization with A/B test of each cross ‐ product E = Sqrt[ ( N ‐ n ) x / n ( N ‐ 1) ] 5
10/29/2010 Repetition Testing Professional Photos Before After We observed an immediate 30% increase in conversion rates Fact Sheet Design Opportunities Today Existing Schools (n=1,428) CR • Conversions Best 51.1% – Low ‐ RPV Worst 0.4% – Waste Average 11.6% – Simplicity p y Test # Schools CR Lift • Risk Professional photo 1 30% – Scaling local, hyperlocal More RFI buttons 3 21% – Data exchanges Marketing voice, more 1 28% – Under ‐ monetized sites programs listed • Context Photos + Marketing voice, 1 50% more programs 6
10/29/2010 Summary • Conversions • Risk • Context • Testing 7
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