commit: 6b2ca8a - #414 (2014-03-05 12:54:44 -0500)
Interesting. Not at all surprised that it makes no difference to their branded traffic, but am a bit surprised that there seemed to be no impact on product specific keyword traffic.
If I get the time, I'd love to read this preliminary study for myself. To be honest, part of me agrees with one of the commenters on the HBR site, who points out the eBay are hardly a shining example of how to run AdWords campaigns - their ad copy is frequently completely off-topic, and often doesn't go to relevant landing pages.
But we all have to make sure we can justify the existence of our sacred cows, so I welcome studies like this.
Reader beware... eBay's business model is probably drastically different than yours, and their website has devolved into a digital flea market where you go to buy poorly made knock-off electronics. They're a middle man, and a mediocre one that's fallen into a strange gap between Amazon and Craigslist. Just my two cents - the marketers that did the study are probably very intelligent and correct in there findings but it'd be a huge mistake to extend the research to most other businesses. Even the authors note that "paid search may be more profitable for other companies than it's been for eBay."
Hat tip to the HBR writer for producing a click-worthy title, however...
Yet again, I wish Inbound offered a way to correct my spelling mistakes...
(Kane, totally agree. Thought about changing the title because it's too broad and sensational. Paid search is vital to many of my clients, mad a proven winner in many verticals.)
What I find fascinating about this study is how it examined the overall economic impact, and not just clicks and conversions, especially for branded paid ads.
Google has released studies and research telling marketers why they should spend more on branded paid search. Refreshing to see an argument on the other side, and a win for day driven decision making.
Yeah - I have little experience with bidding on exactly branded PPC terms, but my gut feeling is that it seems like a waste of money *if* you already own the organic results for that term. I watch other people use Google, particularly small business owners, and it astounds me how few have any clue what they click on as they browse. Many don't know where the ads are on search results, they just click on whatever is on top of the column. For an exact branded search, that free organic traffic just became a paid visit.
But, apparently testing has shown otherwise most of the time, so I have to believe the positive ROI must be there, at least for larger businesses.
For this eBay case, I think the issue is with eBay themselves, not branded PPC. To me it's no different than affiliates and resellers in some industries not being able to compete on PPC pricing with direct sellers because of diminished profit margins for the affiliate/reseller business model. It doesn't make sense for the affiliate to pay $XX per click, but those direct sellers have way larger lifetime value per customer acquisition and can outspend you all day long.
For SMBs with a smaller marketing budget, exact branded PPC is not the best use of budget because they typically own page 1 of those results anyways, so I've never dabbled with it. If they're going to spend any money on PPC I'd rather see it used on non-branded keywords and/or retargeting.
Agreeing with other commenters above -- this lesson (for a huge worldwide household name brand) is laughably inapplicable to most SMBs (or even most huge biz's!)
I ran a similar test for branded keywords and noticed an 80% drop in revenue from branded search terms.
Our business model is different from eBay's. We have third party re-sellers that bid on our brand name and will show up on top of our top organic position if we do not bid for the term.
I would expect this to be different if eBay had competitors' ads displaying for terms like eBay.
Uhh... note how the study says nothing about how bad eBay's ads are. Kudos to their methodology and all though, but they missed the point.
I would not agree with this report, I have worked in the largest PPC company in Australia. We deal with numerous businesses in the enterprise space who space a lot on brand. We have tested these methods time and time again. some brands do not yield the same results as eBay at all it is all about testing and finding what is going to drive the best ROI for your business from an SEO and PPC area.
Great post by Larry Kim on Wordstream today about this exact topic: http://www.wordstream.com/blog/ws/2013/03/13/dear-ebay-its-not-adwords-its-you
"There’s a story making the news this week about how eBay supposedly wasn’t able to make paid search work for them so they stopped using Google AdWords. Ray Fisman, who wrote up the study for Harvard Business Review, said 'Their findings suggest that many paid ads generate virtually no increase in sales, and even for ones that do, the sales benefits are far eclipsed by the cost of the ads themselves.'
I couldn’t help but laugh when I read this, and I’m sure many of you did as well, because it’s pretty well-known within the search engine marketing community that eBay is the butt of many jokes when it comes to adopting advertising best practices.
eBay is probably the world’s biggest abuser of an ad writing tactic in AdWords known as Dynamic Keyword Insertion or DKI. As its name suggests, DKI dynamically inserts the user’s query into the headline of your ad, as follows: IMAGE HERE.
When used correctly, DKI can be a highly effective ad writing technique. But when employed in the way that eBay uses it, the results are disastrous."
Click the first link to read the rest of the article.
I seriously doubt Larry Kim would do a better job to optimize eBay's paid search campaign. pretty lame to post screenshots from ~2006, where all systems were in an infant state.
I have never worked on the paid search campaigns of eBay, but was very close with the managers and the product & analytics teams building the infrastructure. Sure you can find ways to have criticism on those ads, but what nobody realizes is, that the team is responsible for a budget over $300 million dollar, is able to spend this on a ROI positive way (I will follow up with criticism on the report in a separate blog post), bidding on 120M keywords, while having 4 billion keywords in the KW datamart, and landing the budget spend within 1% of quarterly budgets.
It's very easy to stand on the sidelines as say how bad eBay is conducting Paid Search, while you have never had the responsibility of budgets like that.
No doubt that few (if any of us) have worked with budgets like eBay has, Dennis.
But the points I think stand out are:
1. This may be true for eBay, but it doesn't constitute a 'rule' for other businesses.
2. If eBay were to start using better techniques, especially in relation to their ad copy, they *might* find the results would be different.
I still haven't read the report, but I will. No doubt eBay do an impressive job, but even they could probably do it better. The results may or may not change.
I think the really important thing here is that they had the guts to test in a really meaningful way. I mean, not many of my clients would be happy switching off a third of an otherwise ROI-positive campaign for a month just for testing! So credit where credit is due - well done eBay for testing so aggressively, and then sharing the results with the rest of us.
Somehow I do suspect eBay has their own commercial motivations in spreading this propaganda... Might have something to do with Google switching its shopping system to a paid platform? It's sure hurt ebay, so maybe this is a form of cheap-shot payback.
The truth is that PPC works, if done right. Spreading this kind of disinformation can hurt businesses, and benefits no one.
Bingo! Barry, you're the only one who is hitting a nail on the head today...
Amen on all accounts Barry.
Wrote about more alternative motives of this study here: http://thenextcorner.net/ebay-ppc/
I second everything Kane has said in the comments and everything that Larry points out in his post.
It's almost as if different businesses have different needs. As others have said, eBay has huge natural visibility and do their SEO very, very well for a site that size. Their brand value also means that they are going to have a higher clickthrough rate than a lesser known site in the same position for any given SERP. Turning off PPC if you don't have that organic visibility would be devastating.
So, as much as this study makes us SEO Monkey's look good, there's some pretty major caveats to Ebay's experience to consider.
The thing to remember is that the marketing need differs business to business and even product to product. It's been my experience that a campaign is doomed to failure if the first question is 'How do we target Channel X' instead of 'What channels are right for this product'.
A VERY similar article could be written about sites like shopping.com and amazon.com that use AWFUL, OUTDATED ppc tactics that are incredibly unorganized and poorly targeted.