High Priced Keywords Drive Holiday Search Campaigns

December 18, 2006

CHICAGO, In the third quarter of 2006, the majority of marketers within the Performics 50 increased their overall search spend an average of 38 percent. The Performics 50, an index designed to track the evolution of well-managed search campaigns within a dynamic market, indicates much of this growth is due to online marketers’ increased knowledge and the sophistication of search engine marketing.

This holiday season, marketers should use Cost per Keyword (CPK) to evaluate the overall performance of their campaigns. With an average CPK growth of 20 percent from June to September, the Performics 50 indicates that pre-holiday increases in advertiser spending may have arrived earlier than usual this year. The improved visibility of critical search terms on the search engines has led conversion rates and total clicks to increase over the second quarter, up 4 percent and 3 percent respectively.

“The efficacy of search continues to drive marketers to invest more funding and effort in their search campaign management,” said Cam Balzer, vice president of strategic planning at Performics. “Performics encourages marketers to examine the quality of their programs, including their CPK, as a stable CPK denotes balanced growth in a search program. If that growth is unbalanced, understanding why helps monitor a campaign. For example, a marketer might see that costs are going up but that revenue is tracking accordingly.”

The Performics 50 showed an increase in aggressive bidding for higher-priced keywords in the prior quarter as well as marketers utilizing the ‘long tail’ of lower priced key terms to achieve a balance between broad reach terms and those with a narrower scope. Marketers should expect an increase in campaigns’ CPK this month but monitor the metric closely; if it fails to grow by at least 15 percent sales could be lost. Conversely, if the average CPK rises over previous quarters by 50 percent, it may indicate the need to balance a campaign with less expensive ‘tail terms.’

Please go to www.performics.com to download a complete copy of the Performics 50.

Methodology

The Performics 50 represents 50 actual paid search campaigns managed by Performics’ SEM experts using our proprietary DART Search platform.  It was established in April 2004 as a means of providing industry benchmarks among search engine marketing campaigns, based on the average number of clicks for the first three months of 2004.  Each month after that, new campaigns are added only when campaigns previously in the index deviate significantly in traffic, again based on the average for the three months prior to that month.

Performics manages approximately 280 active campaigns across a wide range of industry categories.  The Performics 50, while composed exclusively of Performics campaigns, is therefore intended to reflect the larger universe of marketers engaged in paid search engine advertising.

About Performics

Performics is the performance marketing division of DoubleClick, which provides technology and services that empower marketers, agencies and web publishers to work together successfully and profit from their digital marketing investments. Our focus on innovation, reliability and insight enables clients to improve productivity and results.