Does eBay’s Research Reflect The Effectiveness Of Paid Search?

4 comments

eBayshutterstock_28388293The paid search medium has long been a cornerstone of successful media campaigns, typically driving highly relevant traffic at a fraction of the cost of awareness tactics.  As a “pull” channel, search capitalizes on strong user intent in translating clicks into cost-effective conversions.

However, the efficacy of this channel has been recently called into question in a research study conducted by eBay and presented at a National Bureau of Economic Research conference in March 2013. In that study, eBay insists that their PPC efforts are ineffective in driving a positive ROI, arguing that their paid clicks are replaced by organic clicks when pausing such initiatives.  These findings, while undoubtedly accurate from a data collection perspective, may not correctly portray the entire story behind the value of the paid search channel – if it is used effectively.

In a study of their own, Google determined that 89% of paid search clicks are “incremental,” while roughly 66% of all ad clicks occur in the absence of an associated organic search result.  Simply put, search advertising offers a substantial lift in traffic that organic search is unable to recompense; and as we all know, lost site traffic is lost business.  Furthermore, market research has shown that 93% of users have used search during the purchase process and that on average, overall sales increase by a roughly 5% when activating paid search.

As this data is in clear contrast with eBay’s results, advertisers have been searching for an explanation.  And as is the case with most complex questions, the simplest answer is the usually the correct one.  While by nature, paid search is a highly efficient channel, performance is heavily dependent on strategic vision, consistent optimizations, testing and innovation.  Simply buying every possible keyword on Google Adwords – as it has been the case with eBay – will not guarantee success without best practices in place, such as:

  1. Close alignment between the keyword, ad copy and landing page;
  2. Effective use of negative keywords and various match types; and
  3. A comprehensive bidding strategy … just to name a few.

Although eBay’s research methodologies appear robust, their paid search tactics may be less so.  In fact, eBay has been frequently and consistently criticized by top marketers on leading industry blogs for their low keyword relevance, overdependence on dynamic keyword insertion (DKI), poor use of negative keywords, and other practices.  Therefore, what may seem like a problem with search engine marketing’s performance may in fact be an issue with campaign management, as many have pointed out.

Notwithstanding the incrementality of its traffic, paid search offers what organic listings cannot — marketing.  As customizable ads, paid search allows for control over specific messaging as well as control over landing page destination.  In addition, Google has provided (and continues to provide) advertisers with an array of performance-boosting ad extensions such as:  sitelinks, seller ratings, product extensions, call extensions, location extensions, etc.  Furthermore, keyword bidding (particularly across branded terms) serves to defend marketshare from competitive activity. Thus, while performance may indeed vary across brands, when one adheres to search best practices, PPC is a tried-and-true method of attracting and engaging targeted customers.

Nonetheless, eBay’s case study highlights the importance for brands of thinking holistically in terms of their search marketing strategy. While the paid search channel works well and is one of the most effective marketing channels available to businesses, it needs to be complemented by a synergistic organic search strategy, especially when it comes to the type of upper-funnel keywords that eBay was struggling with. SEO strategy needs to be aligned with the right content and a vision that encompasses multiple KPIs aligned across the consumer journey, including audience development.

* This article was written in collaboration with Dan Kastalsky and Rohit Ekheliker from Profero.

Image:  eBay in San Jose by Denis Radovanovic / Shutterstock.com

 

 

About the Author

Matthew Capala (@SearchDecoder) is a global search strategist, author and speaker. By day, Matthew is the Head of Search at Profero, a global digital ad agency, and Adjunct Professor at NYU, where he teaches a graduate course on search marketing. By night, he is an Internet addict, decoding insider PPC and SEO strategies via SearchDecoder.com.

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4 Comments

  1. So basically it's cannibalistic. That might be true for eBay, which ranks like God would, but what if you don't have organic rankings? I'm less of a PPC guy, but I've reckoned that it's always somewhat cannibalistic to bid on something you rank for, except perhaps your brand. Or, yeah, like you say, they simply can't scale that number of ads effectively and their reliance on DKI is killing them. Google, after all, is much better at scaling the process in reverse. Hm.

  2. Keep in mind also that eBay always has a bigger scalability problem in that it sells inventory, not SKUs. eBay is going in that direction by trying to get listers to specify SKUs. Even then, the SKU may not be active because there is no inventory. Unfortunately, many categories aren't really so SKU'd at all — either because sellers don't comply, or they can't require it. And even a hand-tweaked page for an ad may totally flop based on market decisions and effectively random events. So for other reasons, I wouldn't trust this study 100% either

  3. hi Jaime - Thanks for your comment. Paid and organic search work well together - the click split between natural and sponsored search listings on average fall between 70% (organic) and 30% (paid). Variations occur based on the type of search query (informational, transactional, navigational, etc) and whether paid search ads appear above organic or to the right. That said, even if a brand dominates first page organic search through site listings, videos, images and etc, the total available traffic inventory will be around 70%. If you are not engaging in paid search, you are leaving the 30% on the table for your competitors. Hope it answers your questions.

  4. Really interesting article, I'm rating on page 1 in a lot of Google searches for a general overall search for the site ie bushfood, bushtucker, but am struggling to get my site on page 1 for specific items such as lemon myrtle, wattleseed etc. Would a paid ad work, I've put in a lot of time on SEO, but just cant crack it there.