Changing the Internet Advertising Game

Includes: GOOG, YHOO
by: Yankee Group

By Carl Howe

Tuesday’s New York Times has a terrific article talking about the challenges facing retailers in managing search advertising during the holidays. While I enjoyed reading the article over my holiday morning coffee, I came away from it thinking that the authors really missed the big story: the Anywhere revolution has fundamentally changed the art and tools of advertising from one done by people to one done by machines.

The paragraph that got me thinking that was this one:

Mr. Han said that Tiny Prints, which specializes in high-end custom-designed greeting cards, had been working at perfecting its search advertising for the last two years. Its three-person team, veterans of (NYSE:WMT) and eBay (NASDAQ:EBAY), has become expert at poring over spreadsheets and sifting through the data about visitors and shoppers on the company’s Web site. During the holiday season, they monitor ads and traffic patterns hourly, and meet daily with Mr. Han and other executives to adjust budgets and strategies.

Now frankly, that’s the way that I always thought companies managed Internet search advertising until I met with search campaign automation company Kenshoo in response to my 2009 Advertising Forecast report. I figured that companies sat down with a list of a few hundred keywords, came up with a budget on a spreadsheet, and adjusted their Google (NASDAQ:GOOG) and Yahoo (NASDAQ:YHOO) search buying on a weekly basis.

Boy, did Kenshoo convince me I was wrong.

I won’t give you Kenshoo’s entire pitch, but here are some bullet points that show just uncompetitive such an approach is:

  • Kenshoo currently manages no fewer than 90 million keywords for its clients. So much for managing a couple hundred words by hand.
  • Kenshoo’s average client comes to them with 1.2 million keywords which Kenshoo adjusts in real-time to get first or second rankings on search engines. Losing ranking for a day as the company in the Times article did just isn’t acceptable when you are selling national brands.
  • One case study Kenshoo noted was a company that came to it managing 10 million words with three people. Using Kenshoo’s platform, they now manage 18 million keywords with the same staff.

The rise of Google Adwords and systems like it have completely changed the game for advertisers. TV’s Mad Men have reminded all of us of the heyday of 1960’s Madison Avenue, when clever creative ruled advertising. Now, companies not using automated systems in managing Internet advertising are bringing knives to a gun fight. And worse, Kenshoo’s clients now have machine guns.