An Investigation of Pay Per Click Search Engine Advertising: Modeling the PPC Paradigm to lower Cost per Action By Alexandre Douzet Co-Founder & CEO, TheLadders.com Presented By: Neeraj Narang

Apr Analyze PPC paradigm Analyzing differences in bidding and valuation between vendors like Google & Overture Delivery methods like content or search listings Analyze it from the advertiser’s perspective Overview Investigating PPC Advertising

Apr Lecture: Search Engine Advertising Search Engine Marketing and Optimization  i.e Getting to the first position Banner Advertising Using PPC advertising for your business  Creating PPC campaigns  Ads on search and content networks  Tracking the campaigns Where it fits in with the course? Investigating PPC Advertising

The 'Auction' -The most apparent feature of the PPC advertising marketplace -Implementation differs across search engines Primary auctions: -Sealed Envelope or sealed bid -English auction Apr The Terms Investigating PPC Advertising

Other industries have the same business paradigm Apr It’s Not Rocket Science Investigating PPC Advertising Natural Resource Industry PPC Arena ResourceIron oreImpressions ConversionRaw resource processed before use Conversion from impressions to clicks ManufacturingProduce steelClickers into paying customers

-Emerged in 1998, introduced by GoTo.com -In 2000, GoTo provided service to Inktomi, yahoo, AltaVista, alltheweb.com, etc , renamed to Overture: controlled nearly entire PPC market -Yahoo purchased Overture in 2003 Apr The History Investigating PPC Advertising

Advertising first appeared on Google.com in January 2000 — text ads were sold on a CPM(cost per impression) basis. (Yes, that’s right, there was no pay-per-click, no self-serve, no bidding) In 2002, Google switched to a model similar to Overture and offered paid results to Earthlink, AskJeeves, and America Online Apr Google Ad Model Investigating PPC Advertising

By 2005, Google and Overture were the giants of search engine marketing Both offered a second model, in the form of content networks i.e. allow websites to offer ads based on their content. In this model, the ads relate directly to the content being viewed. Apr Investigating PPC Advertising 2005: Enter Content Networks

Apr Investigating PPC Advertising Search based Clicks are out of a need to find something. 20 or 30 words that will be auctioned in a search auction Clicks that come from the content side of the PPC networks are out of curiosity There are fewer than five spaces for ads on a content page making it more costly to be seen on a content page SEARCH Vs CONTENT NETWORKS

Apr Investigating PPC Advertising Position and efficiency of content and search TheLadders.com conducted a test  They used thousands of keywords  They used different types of matching like exact, phrase, broad Each keyword was then given an average position

Apr Investigating PPC Advertising Position and efficiency of content and search Observation  Search and content should be treated as separate things

Apr Investigating PPC Advertising Auction Types Where do keywords get their prices from? A new auction is held every single time a search happens. -A Second Price, Multiple Round, Sealed Bid Auction-Google -A second Price, Multiple Round, English Auction-Overture Difference between Keyword Auctions and Other Auctions?

Apr Investigating PPC Advertising A Study of the Creative Ad  Minor changes in creative can have major impacts  Better creative can increase performance of the same position  Optimize creative on a cost per action basis Can make your second position keyword act like it’s on the first position

Apr Investigating PPC Advertising Pros  The paper gives exhaustive explanation of the different types of auctions  Compared search and content delivery models very well Quality of tests performed is high  Does not really tell what delivery model is suitable for a particular business  Focuses more on advertising with Google Cons