How Audiences Have Changed Paid Search Auction Dynamics

Contributor Benny Blum explains why audience, rather than the keyword, is key to successful paid search campaigns. Learn how and save big.

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Throughout the evolution of paid search, there have been three distinct auction dynamics, each of which has influenced how we think about campaigns:

  1. The Open Auction Period
  2. The Blind Auction Period
  3. The Enhanced Period

Chances are you don’t remember The Open Auction Period (1998 – 2002). These were the good old days when Overture was King of the Hill, and you could see what your competitors were bidding.

Achieving top position was as easy as bidding the most. There were some obvious flaws with the model — notably, user experience was not of primary concern. (Newsflash: advertising does not work on the honor system.)

The overhaul and re-launch of Google AdWords in 2002 disrupted the market by introducing Click-Through Rate as a factor for ranking ads, along with a blind auction.

The concept of crowdsourcing relevance addressed user experience issues and, over time, simplistic ranking models were replaced with more subjective concepts including Quality Score and the Ad Rank algorithm. The blind auction has set the standard for any relevant ad exchange operating today.

In both the open and blind auction periods, the keyword was king. The issue with the keyword is that it’s just the means by which a marketer can bid on impressions; and a keyword can only have one of three forms of intent:

  1. Informational, in which the user is searching for information on a topic.
  2. Navigational, in which the user is searching for a specific website or web document.
  3. Transactional, in which the user intends to complete a transaction (make a purchase, download software, etc.).

By coupling search intent with some knowledge about the user, we can make a much more informed decision. As a result, campaigns have become segmented by all relevant user attributes — the real value indicators for search.

Geo location, browser, device, operating system… every meaningful signal became a segmented campaign. Account sizes skyrocketed as search marketers took control of their keywords to incorporate efficiency and scale through application of lifetime value models into direct traffic acquisition.

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All good things must come to an end. In 2013, AdWords introduced Enhanced Campaigns.

The most notable change in Enhanced Campaigns has been the removal of user attributes from the pool of available targeting criteria.

These former campaign-level settings were replaced with bid modifiers — the ability to augment a basis bid applied to a keyword by percentage points depending on various attributes of the user.

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Bid modifiers

This simplification of the search infrastructure landscape was a good thing for non-PPC experts, as it flattened the tool set that the experts can use. But along with Enhanced campaigns came RLSA — Remarketing Lists for Search Ads.

Remarketing Lists for Search Ads enable us to build lists of users and apply them to our search campaigns. This means we can now segment campaigns by lists of users: known high-value users, known low-value users, net new users, etc.

The result is that today, the audience is the new keyword. While bid modifiers enable us to establish preference by user attributes, the data is still siloed and aggregated into a keyword-base environment.

An audience is defined by intent, whereas intent is assumed by keywords. While keywords may remain the way we have to buy ads, the audience can determine the value of a given impression.

The single most important step to building a successful search marketing campaign is to study and understand your audience so you can respond to their intent. Building audiences based on known user attributes will enable you to serve each audience a unique ad and better understand the potential value of that user before showing them an ad.



Saving pennies on ads doesn’t sound like much, but even dropping CPCs by $0.02 on 1,000,000 clicks will save you $20,000. It adds up! If you haven’t build out your audiences, it’s time to step it up. It’s the future of search.


Contributing authors are invited to create content for MarTech and are chosen for their expertise and contribution to the martech community. Our contributors work under the oversight of the editorial staff and contributions are checked for quality and relevance to our readers. The opinions they express are their own.


About the author

Benny Blum
Contributor
Benny Blum is the Vice President of Performance Marketing & Analytics at sellpoints, the leading online sales orchestration platform, and is based in Emeryville, CA.

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