Conceptually, attribution is easy to understand.  Metrics are calculated based on allocation rules.  At its simplest, attribution is based on even allocation.

But taking a look ‘under the hood’ shows that even this basic attribution model can be quite complicated.   To do this, let’s isolate one order:

One product sold to Google Affiliate Network:

Two clicks in the path:

Exclusions (‘All But First’, meaning we exclude giving credit to that source unless it’s the first click in a path, so the first click (Direct) will get ½ the credit):

Correct Calculation: ($224.00 * .50) = $112.00 (Revenue)

Then, back out 50% of the total cost of goods sold and 100 % of Ad Spend to get to the total net profit, which in this case is negative.

It may seem confusing that the calculation shows ½ the revenue, then backs out ½ the cost of goods sold, yet backs out 100% of Ad Spend.  However, this is the only way to accurately value each advertising source.  Traditional web analytics tend to under-credit some sources and over-credit the last click sources.  Search engine reports can over-credit ads, especially when people cross search engines in their research.

In the example below, both Yahoo and Google would take credit for the sale:

Taking complete Ad Spend into consideration when calculating profit is crucial to accurately value each paid media source, but there is one other consideration.  What about the clicks that don’t cost anything?  That is where Exclusions come in to play.

If you exclude clicks that don’t cost anything, the story changes. If the exclusions had been set to exclude all non-cost clicks, the earlier example would tell a different story.

Correct Calculation: ($224.00 * .100) = $224.00 (Revenue)

Then, back out 100% of the total cost of goods sold and 100 % of Ad Spend to get to the total net profit.  In this case, the conversion would have been profitable.

Excluding giving credit to the clicks that do not cost you anything gives you the ability to analyze and optimize your total marketing budget.  It answers the questions, ‘Where is money being spent making the most money?’, and ‘Where is it losing money?’

The good news is that you can still see how the impact of the non-cost clicks affects the value of each ad source by switching the display option.

Tip of the Month:  Exclude your non-cost clicks to optimize your budget to your Ad Spend.  Then use the complete Purchase Path to see the impact of the non-cost clicks on the value of the different ad sources.  It is the best of both worlds.

It seems like just a few months ago we were getting ready for the 2008 holidays, which makes it even harder to imagine that the year 2009 is quickly coming to an end. If you’re like many marketers, you’re wrapping up 2009 and already planning ahead for 2010.  As you’re closing out your 2009 files and looking for ways to add some structure to your pre-holiday workdays, take a few moments to follow these 10 tips for marketing success.

1. Do Some Analytics Housekeeping

The end of the year provides you with a great time to do a little analytics housekeeping, taking a step back and making sure that you’re basing your decisions on good data-something that’s extremely important and can also be somewhat difficult.  The first thing to do is ensure that your analytics and other tracking tags are present on every page of your site, so that you don’t miss out on an ounce of good data.

Next, test your conversions to make sure they are tracking accurately.  Literally ‘do the math’ to ensure that your analytics program tells you the same thing as your back-end CRM and e-commerce systems.  This might take some time, but it’s an investment in your analytics for the future, while also forcing you to do a ‘gut-check’ of your checkout process (or other conversion event).  A likely bonus is that you may find usability improvements.

2. Set Goals with Timelines

Setting goals is great, but setting a goal without an attached timeline is a risky proposition that could cost valuable time and money. Set your performance goals for your campaigns and monitor their progress throughout the prescribed timeframe.   For example, set a goal to decrease your cost per lead by 30% before the end of 2010, then monitor throughout the year to see if you are on track to meet your goal.  If your campaigns don’t achieve the goal or make sufficient progress, revise them or reexamine your goals.   Make sure your time frames are reasonable and give the campaigns time enough to perform, but if you don’t see improvement, don’t be afraid to shift the spend.

3. Create a Maintenance Schedule

Speaking of setting goals with timelines, ensure that one of your first goals is to take the time to improve your marketing on a daily or weekly basis.  The fact is that most of your marketing can be improved if you just spend a little time finding and fixing the things that are not working.  Certainly, there never seem to be enough hours in the day, which makes it even more important to plan and make time for analyzing, optimizing, reporting, learning and communicating.  If you make the time to do a little preemptive marketing maintenance, you’ll save time in putting out fires later on.

4. Analyze and Optimize Your PPC

Not all campaigns are created equally, and this is especially true of pay-per-click ads.  Rather than letting your ads run on autopilot, breaking even or being somewhat profitable, now is the perfect time to take a closer look at your PPC program.  Reorganize or remove your campaigns that aren’t performing well, tighten up your ad groups, tweak your ad spend and weed out the keywords and campaigns that simply aren’t working for you.  Trimming the PPC fat now will save you from getting a PPC stomach ache in the future.

5. Understand and Improve Your Creatives

The best way to understand and improve your creatives is by analyzing campaigns side by side across all search engines.  In this view, you’ll see consistencies among the top-performing creatives.  For example, is there a particular offer that does well, or is there a style of writing that seems to be resonating with the audience and drawing more clicks and conversions?  After reviewing these consistencies, optimize or rewrite any poorly-performing creatives.

6. Report on Measurable Actions

Sure, there is no shortage of metrics that you can report on, but just because it’s in a report doesn’t mean it has meaning to your marketing efforts.  Determine your business goals and then map them into measurable actions.  For example, if one of your business goals is to increase the number of interested clients on your mailing list, you’d want to track the number of people who sign up for your e-newsletter, the number of times your newsletter PPC ad is clicked on, and so on.

By mapping your goals to measurable actions, and then tracking the actions, you’ll have the information you need to determine if your programs and campaigns are on-track.  Use this information in your monthly and quarterly reports, as well as relying on it to help drive both daily and long-term marketing decisions.

7. Stay up to Speed

In case you haven’t noticed, in the world of online marketing, things change fast.  It is likely that social networking tools like Twitter and Facebook weren’t even on your radar (or were just on the edge of it) as you were planning for 2009.  Take the time to research the social networking resources, webinars, conferences and other offerings out there that may have an impact on your online marketing.  Ensuring that you’re plugged in and staying current will increase the chances of your marketing success.

8. Perform Regular Audits

On at least a quarterly basis, schedule time to step back and look at the big picture.  Review all of your marketing programs and how they fit together.  Are there additional opportunities to cross-promote a particular offer, or are your campaigns concentrating on one marketing message, but ignoring others?  Take the time to see what is working, what is not, and what has changed.  By reviewing and re-evaluating your goals, overall strategy and day-to-day tactics, you’ll be taking the right steps toward marketing success.

9. Accurately Attribute Credit

For many marketers, the thought of attribution is one that is overwhelming-marketers think that you must have the perfect attribution solution before you should even take the first step.  This simply isn’t true-some attribution is always better than no attribution.  Every day you postpone using some attribution model, whether it’s an even model, an even with exclusions model or a model that was custom-designed for your particular business-is a day that you are basing your marketing decisions on flawed data.  Don’t go another day without some sort of attribution model firmly in place.

10. Prove your Value

In this still-volatile economy, there’s a lot to be said for reminding your company of just how valuable you are to them and their bottom line.  As you’re making changes to your campaigns, shifting spend to save money and reworking creatives to increase conversions, make sure to take clear notes to share with your supervisors and other team members when the time is right.  By consistently improving your marketing and showing the results in clear business terms, you will easily be able to prove your value to your company.

Columbus, Ohio (PRWEB) November 5, 2009 — In the midst of the crucial holiday buying season, interactive agencies and online advertisers need to know which ads are the most profitable and be able to make quick adjustments to ad creatives across multiple search engines, in order to optimize conversions and profit. ClearSaleing, a technology and thought leader in attribution management and advertising analytics, today announced Release 4.4 of its attribution analytics platform, which allows marketers, for the first time, to make and schedule ad text changes across all search engines. This capability expands on ClearSaleing’s capability to analyze ads by profit, cost per acquisition (CPA), cost per lead (CPL) and many other metrics.

“While other analytics programs can show you top rankings, ClearSaleing moves far ahead by using our attribution platform to accurately assess an ad’s true performance by profit, revenue, and other appropriate metrics. And, since immediate action is so critical during a peak buying season, we enable the marketer to create and push ad changes out to all the search engines right from ClearSaleing’s platform,” says ClearSaleing Chief Innovation Officer and co-founder, Adam Goldberg.

For example, if a marketer or agency finds that a “15% discount” pay-per-click (PPC) ad is not pulling in profitable traffic, using ClearSaleing’s Release 4.4, they can make a universal switch across all search engines, rapidly changing and testing alternative ad text.

“What’s tremendously helpful is that the marketer or agency does not have to log on to each search engine to make these changes. They just have to log on to ClearSaleing and push these changes out to all the search engines,” adds Goldberg. “By using the many filters we provide, marketers or agencies can now manage their pay-per-click campaigns toward profit, and with our attribution technology, correctly attribute profit credit to each and every ad and creative variation.”

ClearSaleing has also added enhancements to its Advertising Logic Builder in Release 4.4 so marketers can create bidding rules that include first page estimated bid and keyword quality score metrics.

Creative Management
During the holiday season, marketers or their agencies are faced with managing and revising a staggering number of ads. ClearSaleing’s Release 4.4 makes that complex process easier and more efficient. By allowing the agency or marketer to rapidly and efficiently test alternative ad text and determine the most profitable option, ClearSaleing provides its advertiser and agency customers with a huge strategic advantage over their competitors. With the new Release, marketers or their agencies can upload seasonal ads according to their planned schedule and ClearSaleing’s technology will push the ads out according to schedule. For scheduling and ad changes, ClearSaleing enables marketers to export files to Excel for ultimate flexibility. Marketers can also copy creatives to any other campaign or ad group, from one search engine to another.

Social Media Monitoring
In Release 4.4, ClearSaleing now incorporates social media tracking into its attribution analytics platform. Marketers can track over 3,000 social media sites, applying ClearSaleing’s profit attribution modeling to see whether or not social media traffic is contributing to conversions and profit.

“We know that marketers have a need for sharper insights into the influence of social media on buying behavior. ClearSaleing now shows where a customer visits a social media site along our purchase path. If a brand creates a fan page on Facebook, ClearSaleing shows the value of the traffic from that social media site and how customers are interacting with it, and their other advertising,” explains Luke Tuttle, ClearSaleing’s Chief Information Officer.

“ClearSaleing customers now have the combined firepower of attribution management to determine the true profit generated from each ad, efficient management of ads and bids across all search engines, and a means of capturing the impact of the growing number of social media sites,” says Tuttle.

About ClearSaleing
ClearSaleing has been recognized by Forrester Research, Inc. as an Interactive Attribution “Leader” in an independent report: “The Forrester Wave^TM: Interactive Attribution, Q4 2009″ (October 2009). Also named “Technology Platform Search Marketers Can’t Live Without” at the SES Awards, ClearSaleing’s advertising portfolio management platform helps marketers identify ways to more effectively and profitably allocate ad spend across a complex mix of online advertising investments.

ClearSaleing is a thought leader in the growing scientific field of attribution management and publishes www.AttributionManagement.com that provides a rich repository of ClearSaleing and externally published articles, white papers and other material focused exclusively on attribution management.

ClearSaleing’s unique ability to give marketers telescopic insight into their online ad investment is attracting major brand customers such as American Greetings and Nationwide Insurance. The company was founded in 2006 and is headquartered in Columbus, Ohio. For more information, please visit www.ClearSaleing.com.

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SAN JOSE, CA — Search Engine Strategies Conference, (PRWEB) August 11, 2009 — ClearSaleing, a technology and thought leader in attribution management, and Vetra Analytics, a marketing analytics provider, today announced an industry breakthrough: the launch of the first attribution management index, American Attribution Index (AAI). The AAI measures the relative effectiveness (purchase attribution) of each media source and influence factor on online consumer conversion.

In addition to the aggregate AAI that represents an overall average index for all companies and industries, ClearSaleing and Vetra are also releasing industry-specific versions of the AAI for target verticals. The vertical industry versions of the American Attribution Index serve as important industry-specific benchmarks for CMO’s and other marketing executives. The vertical AAI indices help executives make informed media selection and budget allocation decisions by pinpointing, on a relative basis, which media sources are working and which sources should be avoided. In essence, online advertising budgets should be allocated in proportion to each media source’s AAI for the respective vertical industry. The media selection and allocation process for large-spending advertisers should be repeated over regular intervals to keep budget allocation decisions synchronized with changes in the indices.

The ability to generate vertical industry attribution indices is the newest development from ClearSaleing’s leading advertising analytics and attribution management platform. The delivery of the indices is made possible through their partnership with Vetra Analytics, who has built the sophisticated attribution models that are the foundation of the indices. “We are incredibly pleased to be partnered with Vetra to fill this huge void that exists in the marketing intelligence and web analytics world. By delivering actionable, industry-specific versions of the American Attribution Index, we will help CMOs make better media selection and allocation decisions that will positively impact both their top and bottom lines,” says Randy Smith, ClearSaleing’s co-founder and President.

“ClearSaleing and Vetra Analytics will use the data generated by the ClearSaleing platform to measure how different advertising channels influence sales in a particular vertical industry,” says Dr. Purush Papatla, President of Vetra Analytics. “This report of attribution indices by vertical sector will be of great value to advertisers and agencies in determining what marketing channels are working within their particular industry, and what relative value each marketing element contributes to a conversion or sale,” Papatla adds.

“Industry benchmarking of the relative influence of each media source on a customer purchase fits neatly with ClearSaleing’s main objective, which is to help marketers more accurately determine which marketing investments are delivering a profitable return. Vertical industry benchmarking will provide more insight into ROI and help marketers more profitably allocate media budgets across available online options,” says Smith.

ClearSaleing and Vetra will publish the general American Attribution Index (AAI) on a quarterly basis using a widget application. They will also publish relevant attribution management news and items of interest along with the Indices. Subscriptions will be available beginning in the 4th quarter to select industry versions of the AAI, where the subscription will provide an initial set of indices and quarterly updates thereafter. Having regular, ongoing access to the AAI is critical as the indices are dynamic due to several key factors: (1) the continual addition of more and more data from the new companies who join the AAI membership, (2) changes that occur in macroeconomic environmental factors, and (3) changes that occur in media options and measurement technology.

ClearSaleing and Vetra would like to encourage advertisers to become members of the AAI group and are offering special charter member subscription rates through October 31, 2009. The more advertisers that participate in the AAI from select verticals, the more accurate and beneficial the AAI becomes over time.

ClearSaleing Attribution Management Platform
ClearSaleing’s attribution management platform technology allows marketers to design and input their own attribution management model to fit their industry’s needs, precisely mapping the Purchase PathTM from a customer’s first action to their conversion and attributing a relative value to each marketing element along the way that contributed to that conversion. Company representatives will be providing demonstrations of ClearSaleing’s attribution management platform at the ClearSaleing booth, # 822 throughout the conference.

Vertical marketers in Financial Services, Insurance, Professional Services, Travel, Pharmaceutical, Automotive and Retail industries can use ClearSaleing’s customized attribution feature to assign a value of relative influence for each ad, ad source, or organic referrer that contributes to a purchase. For example, one ClearSaleing client is tying applicant credit scores from online loan applications to the ads that drove the application in the first place. ClearSaleing’s ability to integrate all of this standalone data makes these types of measurements and insights possible.

“It is the natural evolution in our development of the industry-leading attribution management platform that allows marketers to see each and every ad that influences a conversion and attribute an accurate ROI and profit value to each ad,” adds Smith.

Leading interactive agencies such as Range Online Media, an iProspect company, are incorporating ClearSaleing’s attribution management platform into their client service portfolio. “We have been working with our clients to track campaign investments through attribution modeling for over two years, and are excited to see enhancements of this kind in the industry. It’s a critical element to helping us create what we call Accountable Brand Advertising. With attribution tools of this kind in our arsenal, we have the ability to create and measure more profitable and growing campaigns utilizing the proper mix of activities across the entire customer conversation – not just the last ad,” says Dustin Engel, Vice President, Strategy and Media, Range Online Media.

Advertisers using ClearSaleing’s advertising analytics and attribution management technology include American Greetings, OfficeMax, Goodyear Tire Company, Allegro Medical, Harry & David, Stanley Steemer, Nationwide Insurance, Safe Auto and many others.

Beyond the Last Click
ClearSaleing eliminates the “last click” way of thinking that leads to faulty investment decisions. Through its cross-media profit tracking, Purchase Path attribution technology, easy-to-use UI and comprehensive report library, ClearSaleing is able to uncover and track rich, detailed, and complex consumer behavior that is required to accurately measure and optimize advertising investment performance–unlike the limited and inadequate “last click” method.

While other vendors may say that they provide attribution management solutions or that they calculate ROI, ClearSaleing actually delivers. Unlike others, ClearSaleing integrates with a marketer’s back-end system to provide accurate profit calculations that account for cost of goods sold and shipping costs, in addition to advertising costs and ClearSaleing’s own fees. This means that ClearSaleing’s profit reports are actually accurate for each sale, each product sold, each ad source, each campaign and even each individual ad.

About Vetra Analytics
Vetra Analytics is a marketing analytics consulting firm that specializes in analytics R&D, dashboards and customer data-based models. Created by Dr. Purush Papatla, Ph.D., the Vetra team brings years of global consulting and publishing experience to its clients. With this leadership, Vetra has the ability to dig deep into your data repositories and locate key insights that can optimize your marketing decisions, enhance your customer satisfaction and increase ROI on marketing efforts. For more information, please visit www.VetraAnalytics.com.

About ClearSaleing
ClearSaleing’s advertising portfolio management platform helps marketers identify ways to more effectively and profitably allocate ad spend across a complex mix of online advertising investments. ClearSaleing’s technology enables attribution management through its patent-pending Purchase Path technology. Purchase Path accurately attributes profit (ROI) across the multiple marketing touch points that contribute to and influence a sale.

ClearSaleing is a thought leader in the growing scientific field of attribution management and founder of the Attribution Management Forum, the profession’s e-community for interactive marketers. The Company also publishes AttributinManagement.com that provides a rich repository of ClearSaleing and externally published articles, white papers and other material focused exclusively on attribution management.

ClearSaleing’s unique ability to give marketers telescopic insight into their online ad investment is attracting major brand customers such as American Greetings and Nationwide Insurance. The company was founded in 2006 and is headquartered in Columbus, Ohio. For more information, please visit www.ClearSaleing.com.

What is Twitter?  You could ask 100 Tweeters that question and end up with 100 different answers.  Some might say it is micro blogging.  Others say it is a way to keep your ‘followers’ up to date on your comings and goings.  Another group might say it is a waste of time.

As an online marketer, I want to know if Twitter is a bona fide advertising source.  Sure I know I could tweet about events going on at my company or clients in hope that those Tweets drive my followers to take certain action.  But is it really an advertising source that deserves to receive credit for conversion if I can tie the conversion to the fact that the consumer read the tweet?

During the Attribution Management Forum 2.0 (AMF) on Jan 29^th, 2009, we posed that question to an audience of hundreds of senior online marketers by presenting the following two scenarios, and we asked them to vote on how they would attribute conversion credit if they knew a tweet was involved in that consumers buying process.

Scenario 1:

In Scenario 1, a consumer received a tweet that alerted them to the fact that they could save 20% on Nike Shox if they bought them from the Finish Line by 12am tomorrow night.  The consumer clicked on the link in the tweet, but did not buy the Nike Shox at that moment.  Later on they went to a search engine and searched for “Woman’s Nike Shox,” clicked on an ad for the Finish Line and bought a pair of Nike Shox before the 12am deadline and saved the 20% that was tweeted about on Twitter.

We asked the audience to select the best attribution rule out of the following options:

Over 67% in both groups we polled, according to their indicated level of experience with attribution management, believe option “A” is the best rule.  This vote shows that these senior online marketers do indeed believe that Twitter is a bona fide advertising source as they are willing to give half of the credit for this conversion to Twitter.

Less than 8% in any group we polled voted for option “C”, which totally excluded Twitter from receiving any credit for the conversion.  This is further proof that senior online marketers do value Twitter as an advertising source worthy of conversion credit.

Scenario 2:

In scenario 2, the tweet was exactly the same as the tweet in scenario 1.  In scenario 2, the consumer clicked on the link in the tweet, but did not convert at that moment.  Later on they used their address bar to navigate directly back to the Finish Line’s website, purchased a pair of Nike Shox and received the 20% discount because they bought before the deadline.

We asked the audience to select the best attribution rule out of the following options:

Over 66% in both groups we polled, according to their indicated level of experience with attribution management, believe option “B” is the best rule.  This vote shows once again that these senior online marketers do indeed believe that Twitter is a bona fide advertising source as they are willing to give 100% of the credit for this conversion to Twitter and 0% of the conversion credit to the address bar.

Less than 7% in any group we polled voted for option “C”, which totally excluded Twitter from receiving any credit for the conversion.  This is further proof that senior online marketers do value Twitter as an advertising source worthy of conversion credit.

These types of scenarios and rules are why we continue to strive to generate some consensus around Attribution Management.  If you would like to learn more about these scenarios or the scenarios from the previous Forum, please visit www.AttributionManagement.com.  Additionally, we love to hear from our audience, so please fill us in on what your thoughts about this scenario may be.

Newly discovered secrets about how the engines serve your ads

By Adam Goldberg

Each search engine allows you to select a variety of match types for your keywords. Google and MSN provide three match type options: Exact, Phrase, and Broad; whereas Yahoo offers Standard and Advanced match. Most search marketers equate Yahoo’s advanced match to be a combination of Google and MSN’s phrase and broad match.

We believe that depending on their campaign objectives and goals, search engine marketers should make use of all available match types the engines provide. However, if you use phrase, broad, or advanced matching options, you open yourself up to several potential risks, some that are apparent and others that are not.

The most obvious risk is that the search engines can show your ads when they deem that a search is related closely enough to your keyword(s).  Search engines are not perfect and sometimes end up showing ads for searches that may or may not be relevant to the keyword in the pay-per-click account.  In order to combat this, search engine marketers use negative keywords.  For example, a company that sells windows for a home or business and has the keyword “windows” as a phrase, broad, or advanced match, would likely negative the word ‘Microsoft’ so their ads do not show up when someone is looking for Microsoft Windows.

Another possible risk of using broad, phrase or advanced match keywords occurs when a user’s search phase can possibly trigger more than one keyword and advertisement in more than one ad group or campaign. Due to this competition between campaigns, advertisers lose control of the landing experience they want to provide for a potential customer.  This is what one of my colleagues at ClearSaleing coined “Ad Group Purity.”

Here’s an example:  Consider an online retailer selling apparel and gear made by the Columbia brand. This retailer might have three different ad groups which contain broad match keywords, each with their own landing page experience, for “Columbia,” “Columbia Clothing,” and “Columbia Backpacks.”  The “Columbia” ad group directs users to a landing page featuring a wide variety of Columbia’s products, the “Columbia Clothing” ad group directs users to a page featuring only apparel made by Columbia, and the “Columbia Backpacks” ad group directs users to a page featuring the different models of backpacks made by Columbia. Each ad group is intended to direct specific searches to specific landing pages with the goal of improving user experience and ultimately increasing profitability for the retailer.

Let’s say a customer now visits their favorite search engine and enters a search for “Columbia Backpack.”  Because all three groups contain broad match keywords, the engine can theoretically match this search with a keyword within any of the three ad groups mentioned above, serving three different ads and three different landing page experiences. But is this just theory? The search engine should know that because this person specified ‘backpack’ in their search, it needs to trigger an ad from the backpack ad group, right?

Not always.

Using our technology, advertisers are able to see the exact search term a user entered into the search engine and pair it with the keyword and ad the engine ended up serving for the query. With this reporting, we have seen the keyword “Columbia Backpack” does indeed trigger keywords in all three of the ad groups above.  Once we discovered this, we realized that in order to keep our ad groups ‘pure’, and thus more profitable, we had to use negative keywords in another way.

For this example, our retailer should attempt to filter out the more specific “clothing and “backpack” traffic from the “Columbia” branded ad group (since they have more targeted ads in other groups) by inserting negative keywords such as “clothing” and “backpacks”.  In the “Columbia Clothing” campaign they should insert the negative keyword word “backpack”, and in the “Columbia Backpack” ad group they should insert the negative keyword “clothing.”  This use of negatives will ensure that the keyword, advertisement, and landing page shown to the customer all line up with their intentions as dictated by their search phrase, increasing the ROI of this marketing campaign.

While we don’t claim to understand the complexity of a search engine’s algorithm and its pay-per-click ad serving engine, we do know that leaving broad match keywords in their hands does not always produce results which are in the advertiser’s best interest. Knowing this and protecting your ad group purity through proper negative keyword usage will help improve your business’s profitability.

We live in an automated world. Automation makes things easier, but easier does not always mean better. An automatic car wash is great, but doesn’t your car look much better when detailed by hand? Microwaves speed up the time it takes to cook food, but everyone agrees that the quality of the food suffers. Customer service centers have been automated through call trees and voice recognition, but if you have an unusual problem, the automated system can’t handle it.

In this blog, we are going to take a look at Automated Bid Managers (ABMs). Many ABMs ask you to choose a target metric and to set a goal for the ABM to achieve. It then utilizes its own logic to achieve the goal you have specified. So, do ABMs make things easier and better, or just easier, which isn’t necessarily better?

One Metric in Spite of Another

With most ABMs, you set a cost per acquisition (CPA) or an ROI goal for the ABM to achieve. Let’s assume you asked the ABM to achieve a $20 CPA, and you are currently paying $1 per click. An ABM has some built-in logic that will tell it when to change your bids. After it determines it has enough data to make a decision and no sales have occurred, the ABM will reduce the bid and will keep reducing the bid the closer it gets to spending your target CPA with no sales to show for.

The problem with this bidding method is that you often end up achieving one metric in spite of another. The ABM has one objective in mind and that is to achieve your CPA. It is not worried that in order to achieve your desired CPA, it might only produce one sale. Will your CEO be happy if you achieve your CPA goal if that means you do not achieve your sales goals?

Latency

There are a couple delays that occur in the world of PPC advertising that need to be considered when making bid changes:

• The search engine’s reporting is delayed by at least 3 hours, or
• A conversion may occur days or weeks after the last ad was clicked.

Some ABMs can change bids in real time. They don’t know, however, what the bid price was in the previous 3-hour interval, so they have to guess at the bid price, position, etc., in that interval.

It is quite common for conversions to happen one or more days after an ad is clicked. For some of our clients, 25% or more of their conversions happen days or weeks after the last ad click. If the bid manager does not have the ability to recognize this, it will assume that conversions that occur today are from ads that get clicked on today. If this latency is not taken into account, then poor bidding decisions will be made since it may take some time before a keyword starts to generate conversions if the buying behavior involves consideration that delays the time to purchase.

Purchase Path

Almost all of the ABMs on the market today are focused on the last ad clicked and ignore that several ads may have been involved in the conversion. The team of ads that leads to a conversion is what is known as the Purchase Path^TM.

So if an ABM is unable to track and make bid decisions by looking beyond the last keyword click, it is making flawed bid decisions. It is allocating too much credit to the keyword at the end of the path and ignoring giving credit to other ads that made the conversion possible.

We often find that users will start their path by searching on a general term, then clicking on an ad that introduces them to a website. Later, the user will then search on that site’s branded term, click on the ad and convert. So, in this path, you would not want to give all credit to the last ad (the branded ad) because the user was introduced to the site by a different ad.

Offline Sales

Do you receive any of your orders over the phone? Is your ABM incorporating offline sales into its bidding strategies?

In order for an ABM to be most effective, it needs to track all of the conversions from your online ads, not just the conversions that occur online. If your business has offline orders and the ABM you use or are considering using does not account for them, your chances for improved performance will be greatly hampered.

Keywords that don’t receive enough clicks

Most PPC campaigns follow the 80/20 rule; 20% of your keywords are responsible for 80% of your conversions. The other 80% of your keywords are likely to be considered long tail keywords. What does the ABM do in the event there is not enough click data on a keyword to make a statistically sound decision? We know several ABMs say their tool groups ’similar’ keywords together in the event there are not enough clicks, so they optimize according to the group versus that one specific word.

How do they know which keywords to group? Is this really an effective strategy?

It may be if done with appropriate methods and care but if not, it may well not be an effective strategy. If you are looking to utilize an ABM that groups keywords together, you should try to get an understanding of how it decides which keywords to group. You should also see if you are given the ability to customize the groupings yourself.

Black box

The secret sauce behind many ABMs is its bid changing algorithms. Many ABMs keep their bid changing algorithms secret, hence the black box. They keep them secret for the same reason Coca-Cola doesn’t publish its recipe. If everyone knew exactly how it worked, then it would be easy to recreate. Are you comfortable having a technology make decisions about how your ad dollars are spent when you do not have a detailed, comprehensive understanding on how it makes its decisions? In addition, if these algorithms are not based on accurate metrics (latency, purchase path and profit), is the secret sauce useful or effective?

Don’t accurately solve for profit

Any business optimization should do one thing – increase profit. If an ABM is focused on any other metric outside of profit, you have no guarantee that your ultimate goal will be achieved.

Usually CEOs are not going to applaud their marketing team for hitting CPA and ROI goals if profit goals are clearly compromised in the process. Most CEOs would almost certainly applaud their marketing team if their profit levels were increased substantially even though they had a higher CPA or lower ROI than was originally desired. Ask yourself this question, ‘Would I be happier if I have a 100% ROI on profit of $1,000 or having a 10% ROI on profit of $100,000?’ Profit is king.

There are many potential issues that must be carefully considered when using ABMs. If properly implemented and not used blindly, an ABM can produce reasonable results, but they are not going to solve every problem with your online campaigns. If you do not have time in your day to make bid changes, then perhaps an ABM can do better than you are able to today. However, bid strategy is just one component to your success. You need to also focus on components, such as landing pages to increase conversions, increase average order size and getting customers to repeat, and creating new keywords and campaigns.

Success across all of the important elements of online marketing can never be accomplished solely by an ABM in isolation. Using an ABM to manage some of your lower impact, long tail keywords while using a more interactive bid management tool to manage your high value keyword set probably is the best way to leverage the productivity gains of an ABM, while not losing the benefit of an experienced, knowledgeable search marketing professional.

There are many other factors that need to be considered when making bid changes that most ABMs do not consider today, but a knowledgeable search marketing professional can. Things like lifetime value, competition, offline media, the economy, and seasonality should be considered as part of your overall bidding strategies.

Columbus, OH (PRWEB) August 25, 2008 — Columbus, Ohio, August 25, 2008- ClearSaleing Inc. (http://www.clearsaleing.com), an online advertising analytics and technology company, today announced the release of version 3.6 to their online advertising analytics application.

The release is highlighted by several new features, an upgrade to Microsoft’s .NET 3.5 Framework and a user interface overhaul that delivers improved attribution management and the ability to “white label”its application for both interactive and traditional advertising agencies. ClearSaleing has enhanced its application to provide a more user friendly application experience for its clients and its advertising agency partners. All aspects of the application were enhanced to improve the look and feel, and data visualization components of the application.

“ClearSaleing is committed to providing the most advanced Advertising Analytics application on the market and to maintaining our leadership position in attribution management technology through our Purchase Pathâ„¢ technology,”said Luke Tuttle, CTO of ClearSaleing.

“We engaged an external interactive design agency who are experts in the visual design of applications. The new user interface will provide an improved visual framework for the application features that are in development for release later this year,”Tuttle said.

About ClearSaleing

ClearSaleing is a leading technology provider to the online advertising market. Based on a strategic, portfolio management approach to online advertising investment, the ClearSaleing solution represents the next generation in advertising analytics technology. ClearSaleing’s portfolio management software delivers an improved, more profitable allocation of a company’s spend across a complex mix of online advertising options. At the foundation of the ClearSaleing solution is its patent-pending Purchase Pathâ„¢ technology that accurately attributes profit (ROI) across the multiple ads that contribute to and influence the ultimate purchase.

There were four speakers on the panel, the Director of Marketing at the Rimm-Kauffman Group, the Director of Search Marketing at ZAAZ, the President at KeyRelevance, and the Senior Internet Marketing Manager from Unica.

The panel discussion was good. Below are some of the key points that were made:
- Rimm-Kauffman- you should be managing at the keyword level, but preferably at the ad text level. Ultimately, the program goal is to drive profit. And, there is a difference between brand and non-brand terms.
- ZAAZ- “Models aren’t perfect, they are assumptions based on the most data possible. Models provide direction.”He then went on to describe how they used a model to “score”soft conversions for Ford Motor Company.
- KeyRelevance- you need to track offline conversions because they are “the missing metric”.
- Unica- Search is not alone, you need to be looking at all forms of advertising you’re involved in (online ads, offline ads, relationship marketing, direct marketing, social media) and how they are impacting conversions.

Given that the panelists only had ten minutes to present, they were unable to get beyond the introduction of problems to the point of actually providing tangible solutions. After a Q and A with audience members, no real solutions were given to the issues addressed during their presentations. This was evidenced by two questions left unanswered that centered on the topic of Purchase Pathâ„¢ (also known as attribution management or engagement management). The questions, and ClearSaleing’s answers to these questions, are:

Question 1: If two ads were involved in a sale, which ad gets the credit?

Both of the ads. Most of the time that is the correct answer – the team of ads that’s responsible for a sale deserves credit, assuming that both those ads are clicked in an acceptable time frame (which I’ll define in question 2). However, there are some exceptions to this rule. If the first ad was a non-branded term and the second a branded term, we would give 100% to the first ad. Our Purchase Path technology has proven that the most paths start with non-branded terms and finish with a branded term. Our research shows that consumers enter the branded term as a keyword simply to navigate back to the site they want to buy the product from (navigational keyword). The decision of where they wanted to buy the product from was made after the first ad, therefore, we give sales, revenue and profit to the ads that did the selling, not to navigational keywords.

Question 2: How much time should be allowed for an “assist”to count?

The ideal way to do this is to use a technology that has a way to track Purchase Path. With that in place, you can then plot your sales on a spreadsheet from the time of first visit to close. We recommend looking at 80/20 rule and figuring out which period of time (first visit to last) is responsible for closing 80% of your deals. This is an analytical approach to answering this question.

All in all, I thought it was a good session and the panelists definitely introduced some new concepts to the audience. I do wish that all four panelists would have agreed with ClearSaleing’s perspective that profit is the absolute best metric for evaluating the performance of online advertising. The overall goal for any marketing initiative is to increase the company’s profits directly or indirectly. If you agree with that statement then you should also agree that the best metric to use with that goal in mind is profit (Profit = Revenue & COGS & Ad Spend). All of the other metrics at an online marketer’s disposal (CTR, sales, revenue, conversion rate, ROAS, CPA) can all appear to be trending in the right direction, but that does not guarantee that profit is heading in the right direction, therefore, the only guarantee to making sure you are working towards your ultimate goal is to use profit as the guiding metric.