Online retail giant eBay (via Blake, Noska and Tadelis at Berkley) argues that paid search or ‘search engine marketing’ (SEM), the largest internet advertising channel by revenue, has had its benefits overstated.
Well, what it says is that ‘conventional methods used to measure the causal (incremental) impact of SEM vastly overstate its effect’. OK, that’s not quite the same thing. That’s related to crude measurement techniques that not all marketers use.
It also argues that:
…the effectiveness of SEM is small for a well-known company like eBay and that the channel has been ineffective on average.
This is coming closer to the bold assertion made by headline writers that eBay is wholly dismissive of the channel. But it’s not clear that a broad swipe has been taken at the whole channel; rather, the wording suggests that SEM simply hasn’t worked for eBay.
The authors also “find a detectable positive impact of SEM on new user acquisition and on influencing purchases by infrequent users.” In short, the report calls into question only certain elements of the search marketing channel, and the current methods of attribution – not the entire concept.
The report starts by talking about branded search, that is, consumers typing a company name into a search engine. These people are then served both a paid-for advert and the organic listing for the company.
The report found that turning off these brand-keyword paid search ads for eBay did not lead to a decline in traffic or indeed attributable sales. The report also argues that many customers who click on ads (and go on to purchase – score!) would have purchased anyway.
According to the report:
Advertising may appear to attract these customers, when in reality they would have found other channels to visit the company’s website.
It’s easy to see why and how this type of budget allocation could be discredited. A click on the paid ad is PPC budget down the drain, surely.
Well not necessarily! eBay is a massive brand, and would of course dominate the natural listings for ‘eBay’ terms. Not all companies rank highly for their own name.
Furthermore, similar studies have shown that turning off the paid ads for some brands, even when they do dominate the organic search results, leads to a (sometimes significant) decrease in sales revenue.
So what about generic product searches?
When people search for a generic term, do paid search ads facilitate product discovery and lead to sales? Maybe, but Google’s recent Clickstream Whitepaper shows that search behaviour, although constantly changing, tends to begin with a branded term, unless the search is for property (nearly 100% generic searches) or travel products.
In other words, generic product searches are on the decrease.
The beauty of paid search, of course, is that it is a lot more nuanced than the reports from Google and eBay may suggest.
Success in this channel will completely depend on your market, your products, the keywords you are looking to target and your approach to attribution. Ebay does say “our results show that for a well-known brand like eBay, the efficacy of SEM is limited at best.”
As Econsultancy pointed out when the initial findings were unveiled last year, the report is worth a read… but “the lesson is: find out what works for you and not what works for eBay.”