Why Yahoo Likes Newspapers November 28, 2006
Posted by Bill in Behaviorial Marketing, online marketing, Search Marketing, traditional advertising, Yahoo Search Marketing.add a comment
November ‘06 will go down as the month the search giants got serious about newspaper plays. Google has unveiled plans to enter ad management for newspaper classifieds across 50 papers; last week, Yahoo countered by entering strategic partnerships–starting with collaboration on job classifieds, but set to expand into Yahoo help with newspapers’ maps and search presences–for 176 newspapers’ online divisions.
When you think about it, the Yahoo move seems surprising. Newspaper moves make sense for Google, which has long expressed plans for expanding into traditional media; and which, besides, goes for over $500 a share and has money to burn on new initiatives. But Yahoo’s poor Q3 performance, probable eminent downsizing, and “Peanut Butter Manifesto” that looks to streamline Yahoo’s activities, rather than expand them, makes a sudden shift into newspapers seems odd. It’s especially odd in light of the tough times that newspapers currently face, making Yahoo’s move into newspapers a change of course right into an ailing industry.
So my question for this week is: What does a troubled Yahoo see in a beleaguered newspaper business? The answer to that question, of course, lies in local advertising.
It’s not surprising that Yahoo would feel itself lagging in local. From its roots, Yahoo has been a leader in the general online world, from search to e-mail to online content. But leadership in general online services is very different from leadership in the local markets. Consider search: while Google nearly doubles Yahoo’s share of overall search (Google has roughly 50% of all searches, to Yahoo’s 25%), Google leads Yahoo by only a slim lead in share of local searches (according to an e-Marketer study from earlier this year, Google holds about 29.8% of all local searches to Yahoo’s 29.2%).
That general search/local search split makes a good deal of sense, as broader channels operate in nearly opposite ways from local media. Most of the Internet–including search–is used to bring a wide, unknown world a little bit closer to you. That includes finding the Web site you don’t know about through search; it also includes letting you e-mail a friend you can’t speak to because you’re not in front of her. Services for the general Web focus on building better, smarter communication pathways to make a big world smaller.
Local advertising is something entirely different. Local channels focus on enhancing audiences’ participation in a corner of the world that’s already, quite literally, very close to home. Local media isn’t about making a big world small; it’s about entrenching people’s relationships with a world that already is very small. And so while winning in most Internet services relies on excelling at bridge-building across different locations and types of information, winning in local channels relies on becoming an extension of your particular locale. Google’s a powerhouse in global information-bridging, allowing it to take the lead in general search; but it’s Yahoo, which offers rich local information on its portal, that becomes a portion of users’ local experience, thereby reaping the rewards in share of online searches.
Yahoo understands this. And it also seems to understand that, at the end of the day, it’s newspapers that have the infrastructure to make themselves a part of the local scene in a way that globally-focused online players–including Yahoo itself–simply can’t. Newspapers have what Dean Singleton, CEO of MediaNews Group (which is partnering with Yahoo), refers to as “a huge sales force involving thousands of sales professionals”; they also have lots of local reporters creating enormous amounts of online locally-focused content. By tapping into those thousands of ad salespeople, Yahoo is able to capture local advertising markets it’s not built to capture on its own; meanwhile, by helping with the search presence of newspapers’ online content, it’s able to enhance the local results on Yahoo search (where that local content is now more likely to appear), without needing to create its own small army of local beat reporters.
In other words, Yahoo understands that it’s got two choices for expanding its local reach. It can either deliver more of its own local offerings–which will mean defying the Peanut Butter Manifesto by building a workforce to create more local content–or it can outsource its local workforce to the local experts (the newspapers), while doing what it does best as a global online service: serving as the network that takes information from the world’s many locations, and delivers that information to its users. By opting for the second choice, Yahoo’s managing to expand its local reach, while working less. Which is why Yahoo’s move into newspapers may look like it’s taking on more; but it’s actually a way to become more efficient by honing in on its core competencies. Far from being a dangerous expansion, that’s smart business.
To Recoup Click-through Losses, Redirect June 5, 2006
Posted by Bill in Behaviorial Marketing, Search Marketing.1 comment so far
While the problem of non-converting visitors exists in all of online marketing, it’s particularly troubling in search. That’s because search is pay-per-click; and so every searcher who comes in carries a cost–and every non-converting searcher wastes your spend. While the loss is certainly reducible (you can sharpen your keyword list; improve your ad copy; and improve your demographic segmenting, to name a few solutions), loss is never completely avoidable. And when it happens, you have to recoup that loss somehow.
Typically, recouping losses means bringing in new searchers: once enough new searchers convert, they compensate for the non-converting ones. But even when coupled with overall improvements in your conversion path (like getting better ad copy, landing pages, and customer segmenting), the strategy is still inefficient. First, click-throughs are expensive; and so paying for more of them isn’t the cheapest way to make up for poor performance the first time. Second, your new wave of searchers will also include non-converting visitors–which means that, by trying to solve this problem, you’re creating the same issue all over again.
A much better bet stems from the basic efficiency principle that, often, it’s easier to improve what you have than it is to start from scratch. Which is why, rather than starting over, it’s cheaper to get those “lost” searchers to finally convert.
That’s the theory behind behavioral search retargeting, a new search method. (disclosure: my company is among those offering this service.) The premise goes like this: once a searcher has left your site without converting, you use display ads (banners, skyscrapers and the like) to follow her around the Internet, until she clicks on your ad and comes back to you. Since she’s entered your site before, she’s probably interested in the kinds of things that you sell; she’s also likely to recognize your brand. So even if she didn’t convert the first time around, she’s likely to click on your display ad at some point–and studies show that lost visitors who revisit within 72 hours are very likely to convert the second time.
(The name “behavioral search retargeting,” by the way, means that you’re retargeting your advertising to lost viewers in a new form, based on past search behaviors–like their clicking on your ad in the search results page.)
Not only is behavioral search retargeting strategically efficient, it’s also cheap. That’s because display ads, on the whole, cost a lot less than search ads do. To give one example: if a keyword costs $1 a click (which is on the lower end of prices for best positions), and you’ve got a 2.8 percent click-through rate (which is average), you’ll pay $28 for 1,000 impressions. Compare that with the very upper end of the display ad scale, in which you might pay $15 per 1,000 impressions. And since you’re advertising to people who are already likely to recognize your brand and your product type, you can get your ads to pop at much less coveted–and much cheaper–areas of a given site page.
In other words, you get to recoup a lot of your losses, at a much lower price; meanwhile, you’re assured that, sooner or later, a much higher percentage of the clicks that come in will ultimately convert.
A final, somewhat philosophical word. While all of this might sound like a bold new move for search, retargeting is really the logical next step in a broader evolution. Search began as a field about engines alone, but it’s becoming a field that’s as much about conversion architecture as it is about keywords. That’s only natural: search is the bridge that ties initial interest with final conversion, on nearly every conversion path. It includes the tasks of picking up traffic driven by TV spots, word of mouth, and generic needs; and driving that traffic to convert through Web sites, call centers, and bricks-and-mortar stores. And so search success is determined by how well you’re able to coordinate your traffic, at every step of the way.
Which is why getting the most out of search is as much a matter of overall conversion paths as it is a matter of bid changes; and why addressing the ways search impacts post-site behavior is a logical next step in where search takes advertising next.
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