Digital Marketing

Does paid search work?

Photo by Launchpresso on Unsplash

A paper by Thomas Blake, Chris Nosko and Steven Tadelis, published March 6th, 2013

This paper entitled – “Consumer Heterogeneity and Paid Search Effectiveness: A Large Scale Field Experiment”, is a study that a team, with eBay, learnt 3 main lessons about the efficacy of paid search advertising.

Lesson 1
Bidding on your own brand name or asset, may not be an effective use of budget. This is because the people you may attract, with this, would have found you anyway directly, by typing your brand name in search. This is particularly the case, for large, well known corporations and brands.

Lesson 2
If you perform Search Engine Marketing (SEM) with non-branded keywords, the returns are not worth it, if you are a well known brand such as eBay.

Lesson 3
The best tone to use, for your paid search advertising, is an informative, punchy, that targets an uninformed user. This user would be searching for a term, for which your brand, is one option that appears. If you answer their question informatively, in your description, you’ll most likely be objectively relevant, to the user first. The algorithm will take care of the exponential growth of that relevance.

What do we think?

I can describe my opinion on this topic, with 1 adage and then add retailer, John Wannamaker’s comment on advertising. The authors Thomas Blake, Chris Nosko and Steven Tadelis, aptly added his comment in the introduction :

1. Not performing paid search ads on your own brand name, is like leaving your watch at home, because your phone tells you the time.

2. I know half of the money I spend on advertising is wasted, but I can never find out which half.

I love an introduction that gives a succinct summary of a paper. Kudos to the authors. Many boardroom rangers will be grateful 😊

Read the full paper on whether paid search ads work below, or here

Consumer Heterogeneity and Paid Search EFFectiveness: A Large Scale Field Experiment von PhoneTrack

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