Targeting Search Ads by Demographics & User Behavior

A recent study conducted by MarketSherpa, Search Marketing: Players and Problems, revealed that the overall cost per click (CPC) for search marketing campaigns has risen from an average of $1.29 in 2004 to $1.61 in 2005 on Google AdWords.  This 24.8% increase trails behind Yahoo!’s average CPC jump of 30.1%, from $1.03 to $1.34 within the same time span.  The largest price increase occurred in shopping search engines, which grew by 36.9% in average CPC.  And it seems as if there is no end in sight to this rapid growth.  The Search Engine Marketing Professional Organization (SEMPO) projects that prices for some top keywords and positions will continue to escalate at 20-30% per year.

Due in part to the rapid growth of search engine users, higher keyword costs has forced marketers to seek marketing tools that will enable them to reap the most ROI from their campaigns.  The sole strategy of targeting searchers via keywords no longer suffices.  As search engines roll out new demographics and behavior analysis marketing tools, marketers are empowered with greater abilities to manage better targeted ads.  The technologies enable marketers to attract those searchers most interested in a product/service, and who will most likely take “action,” whether it be to make a purchase or download software.

Strategy #1: Know your Customer Base

The first step is to know your customer base.  To find out who is seeking your products, a marketer must learn about their customers, and then refine the campaign accordingly. What are the dominant traits: gender, age, income, lifestyle, and geography? 

Google, Yahoo!, and MSN all offer some sort of demographics or geo-targeting services for advertisers, which should be taken advantage of.  Both Yahoo! and Google currently offer local search and geo-targeting services.  And Google Adwords recently launched Demographic Site Selection, which allows advertisers to target their campaigns by gender, age, and income, among other factors.  The new service can also create a targeted campaign consisting of multiple demographics, such as 13-21 year old males living in New York. The service though, is currently available only for Good Adwords Content (AdSense).

Another development is the recently introduced MSN adCenter, a demographics-data driven service specifically for search campaigns, which allows marketers to analyze conversion rates by geography, the time of day the conversion was made, and the age and gender of the user (if the user opts to provide such information).  Trends and cycles can be derived from this detailed data to expand and optimize the search engine campaign.

By taking advantage of these types of marketing tools, marketers can reach the right audience at the right time, and provide them with the information that they need.

Strategy #2: Meet Consumers’ Needs at Each Search Stage

Yahoo! categorizes online search behavior into three stages: Research, Shop, and Purchase.  Each phase requires keywords, titles, and descriptions within sponsored Listings. 

At the Research Phase, the buyer is simply gathering information about a product, service, and retailers.  This searcher will enter broad keywords of product categories, such as “computer game.” The search volume of such keywords is high, but the likelihood of a purchase or any action is low.  Hence, the advertiser’s opportunity at this point is to establish credibility for the company, brand, or products/services.  A sponsored listing then, may link to the home page of a site for general information, giving the online searcher a chance to become familiarized with a company or its products/services. 

At the Shop Phase, a searcher enters more detailed keywords, and is tracking and comparing purchasing criteria.  The searcher has already completed research, or has narrowed his/her choices to particular brands or type of products.  They are now looking for “Nintendo video games” or “PS2 video games.”  At this stage, the searcher has established interest in a brand or product, and the chance of a conversion/purchase has increased.  Advertisers can take this opportunity to capitalize on consumer preferences as competition is narrowed to more specific criteria, and sponsored listings should direct a searcher to interior pages with details of such specific products/services instead of a general home page. 

At the final Purchase Phase, a searcher knows what s/he is looking for.  The searcher is in a position with greater likelihood of making a purchase, and will enter detailed phrases and keywords such as “Nintendo Mario brothers games” or “PS2 US Socom 3.”  The chance of conversions is high as this is the greatest opportunity for advertisers to acquire a consumer who is ready to buy, and a searcher should be directed to the appropriate web page that would give the user information about the product as well as allow the user to easily purchase or download a product online, or information on how to purchase it offline. 

Strategy #3: Diversify Paid Search

There is a reason why shopping search engines saw the greatest increase in average CPC this past year.  According to a recent Jupiter Research study, approximately 40% of marketers are “missing the boat” in online visibility by focusing only on Google and Yahoo! for paid search campaigns. Though specialized search engines are secondary engines (in comparison to the “Big Three” of Google, Yahoo!, and MSN), secondary search engines geared towards shopping do reach a specific group of consumers that may meet a company’s target consumer criteria.  Furthermore, these consumers are actively looking for products and ready to make purchases.

Marketers are slow to test and try out newer search providers, overlooking advertising opportunities due to low traffic volume from these smaller search engines.  However, with over 180 search engines operating world wide, concentrating only on the big three is a risky move.  As the competitive search engine market continues to grow, marketers would be wise to implement strategies which include diversification of incoming traffic through newer and more viable search opportunities. Using secondary search engines such as business.com or froogle.com may not reap as many impressions and clicks as the more popular search engines, but they provide a more targeted audience and can increase ROI by obtaining greater conversions from the target consumer group. 

When marketers include demographics and behavioral data into their search engine marketing strategies, they will be able to allocate their budget to the best prospects.  Ads are then shown to those who will most likely find the information relevant, and thereby make a transaction.  Companies will be able to gain a higher yield from their search campaigns through better conversions and higher immediate value.