Two of the main advantages that PPC has over other forms of advertising are transparency and control.
You can see exactly where you are advertising, and control the amount that you pay per conversion with great precision. If you know your conversion rate then you can adjust your cost per click to get any CPA that you want.
When advertisers use Google’s Display Network, it’s inevitable that many apply the same logic to it. They have a target CPA, they know the conversion rate, and so they set the bids accordingly.
But is this the right way to go about it? Many advertisers advertise using banner networks, and it appears that the psychology is very different outside the AdWords environment.
Billing is often based on cost per thousand impressions, which makes the click through rate as important as the conversion rate. This is a totally different model to a CPC model in Adwords.
The lack of transparency and control that you frequently get if you advertise on banner networks encourages advertisers to think about such campaigns as a branding exercise, but this does raise a question.
For a lot of advertisers on AdWords, the display network doesn’t generate an acceptable CPA, and so they don’t use it. Yet at the same time, they are happy to run banner campaigns in order to raise their brand profiles, knowing that the numbers don’t stack up in terms of a direct return on investment (or not knowing whether they do or not).
Google has been quite keen to change the perception of advertisers, you can bid per thousand impressions and they report on View-through conversions. But the message doesn’t seem to be getting across. Or is it?
I think that the main problem is the transparency of the AdWords account performance. As an agency, we send weekly reports to clients showing the performance of the account week on week, and in some cases, our management fee is connected to the performance of the account.
Certainly it’s something that comes up in the discussion when it gets to contract renewal time!
It’s the same for most (all?) agencies – they are judged based on the performance of the account, and even when accounts are managed internally, the account manager is often under similar pressures to deliver good performance (in terms of the objective).
How can a branding campaign that isn’t cost-effective fit into such an account?
Simply put, because it’s easy to assess the performance of the AdWords account, advertisers are reluctant to include ineffective campaigns, such as display network campaigns used for branding purposes.
Yet at the same time, the same advertisers are plunging large amounts of money into banner advertising, where they have far less control or visibility.
So what’s the answer? I believe that advertisers should consider using an AdWords Display Network campaign in the same way that they currently advertise using banners. By ring-fencing a budget for a branding campaign, and assessing its performance separately, using a separate objective, this shouldn’t cause any difficulties.
When you think about it, AdWords has a reach far exceeding many banner networks. Who else can display your adverts on Google Mail or YouTube?
And by giving you visibility on exactly which websites you appear on, allowing you to bid differently on each website (and even each page), block certain sites, or show different adverts on different websites, and test different adverts to see which delivers the best click through rates, Google allows you to deliver a far more refined campaign than almost anywhere else.
So perhaps the question that any advertiser advertising on a banner network is, why wouldn’t you want to advertise on the AdWords Display Network?