Tag: search advertising

In 2016, Facebook bypassed Google in ads. Here’s why.

In 2016, Facebook bypassed Google in ads. Here’s why.

Published by Joni on March 30, 2017

Introduction The gone 2016 was the first year I thought Facebook ends up beating Google in the ad race, despite the fact Google still dominates in revenue ($67Bn vs. $17Bn in 2015). I’ll explain why. First, consider that Google’s growth is restricted by three things: natural demand keyword volumes, and approach of perfect market. More demand than supply First, at…

Keyword optimization routine for search-engine advertising (AdWords)

Published by Joni on March 30, 2017

In this post, I’m sharing a simple optimization process for search-engine advertising. I’ll also try to explain its rationale, i.e. explanation of why it should work. The process is particularly applicable to Google AdWords due to availability of metrics, but for the most parts it applies to Bing Ads as well. First, take a list of your keywords along with…

Controlling ad quality in programmatic buying

Published by Joni on March 30, 2017

Highway to ad quality. Ad quality is an issue in programmatic buying where ad exchange takes place via computer systems. In traditional ad exchange, there’s a human supervising the quality of advertising, but in a programmatic system it’s possible to receive spammy, illegal, or otherwise undesirable advertising without publishers (ad sellers) being aware of it. Likewise, the quality of performance…

Facebook’s Incentive to Reward Precise Targeting

Facebook’s Incentive to Reward Precise Targeting

Published by Joni on March 30, 2017

Facebook has an incentive to lower the advertising cost for more precise targeting by advertisers. What, why? Because by definition, the more precise targeting is the more relevant it its for end users. Knowing the standard nature of ads (as in: negative indirect network effect vis-à-vis users), the more relevant they are, the less unsatisfied the users. What’s more, their…

Example of Google’s Moral Hazard: Pooling in Ad Auctions

Published by Joni on March 29, 2017

Google has an incentive to group advertisers in ad auction even when this conflicts with the goals of an individual advertiser. For example, you’d like to bid on ‘term x‘ and would not like be included in auctions ‘term x+n‘ due to e.g. lower relevance, your ad might still participate in the auction. This relates to two features: use of…

A Quick Note on Bidding Theory of Online Ad Auctions

Published by Joni on March 29, 2017

Introduction This is a simple post about some commonly known features of online ad auctions. Generalized second-price auction (GSP) is a mechanism in which the advertiser pays a marginally higher bid than the advertiser losing to him. It encourages the bidder to place a truthful bid, i.e. one where the price level is such that marginal returns equal marginal cost.…

A major change in AdWords – How to react?

Published by Joni on March 29, 2017

Introduction Google has made a major change in AdWords. Ads are now shown only in the main column, no longer in the right column. Previously, there were generally speaking eight ads per SERP. For some queries, Google didn’t show ads at all, and additionally they’ve been constantly testing the limit, e.g. running up to 16 product listing ads per results page. But…

The correct way to calculate ROI for online marketing

Published by Joni on March 29, 2017

Introduction This is a short post explaining the correct way to calculate ROI for online marketing. I got the idea earlier today while renewing my Google AdWords certificate and seeing this question in the exam: Now, here’s the trap – I’m arguing most advertisers would choose the option C, although the correct one is option A. Let me elaborate on this.…

The Digital Marketing Brief – four things to ask your client

Published by Joni on March 29, 2017

Recently I had an email correspondence with one my brightest digital marketing students. He asked for advice on creating an AdWords campaign plan. I told him the plan should include certain elements, and only them (it’s easy to make a long and useless plan, and difficult to do it short and useful). Anyway, in the process I also told him…

Assessing the scalability of AdWords campaigns

Published by Joni on March 29, 2017

Introduction Startups, and why not bigger companies, too, often test marketing channels by allocating a small budget to each channel, and then analyzing the results (e.g. CPA, cost per action) per channel. This is done to determine a) business potential and b) channel potential. The former refers to how lucrative it is to acquire customers given their lifetime value, and…