Search Performance and Pricing Extends to Display and Social Media

Marketers that buy impressions by the thousand do themselves a disservice and make life too easy for their competitors. Although some valuable ad buys impose requirements for marketers to pay for impressions by the thousand, many display advertising opportunities can now be purchased on a per click or performance basis—and pricing is not their only similarity to search.

A number of other benefits born from the paid search channel have also permeated display and social media. Many of these opportunities provide the laser beam-like micro-targeting marketers have come to expect from search, coupled with an auction-based bidding environment that empowers advertisers to control spend and optimize against ROI goals. By extension, these features enable marketers to manage display and social ad campaigns to hard metric objectives.

Search meets display media

Display ad campaigns can leverage these and other search-born advantages to deliver impressive returns. Like search marketers, for example, display advertisers now have access to a large distribution marketplace. They may buy highly targeted audiences at scale across multiple ad exchange platforms, essentially limiting reach to their target market while accessing about 98% of all Internet users. Display also leverages the same dynamic supply and demand pricing model used in search. As a result, advertisers don’t incur network or publisher premiums and they may use variable budgets with daily caps.

Early adopters of these performance-based approaches to display in the retail sector have experienced great results. In some instances, retailers have seen their display campaigns perform at the same or better levels than some of their PPC search and contextual advertising campaigns.

Search meets social media

Performance-based social media campaigns offer advertisers many similar benefits, including the abilities to target the audiences most likely to convert and drive sales at an optimal ROI. Facebook and other cost per click (CPC) opportunities can also produce low or no cost brand exposure to these highly targeted audiences.

Marketers can tap social media to target audience segments that are most responsive to a particular brand, various offers, or different types and tones of messaging. They may also micro-target their core audiences for optimal ROI; Facebook offers tremendous opportunities for this that will likely show up in other social properties going forward. Like.com, for example, targets bridal apparel to women that have self identified as being engaged. Clearwater Lodge Schools takes it a step further to advertise its women-only fly fishing schools to females that list fly-fishing as one of their interests.

Social pricing models also offer similar benefits. Advertisers can manage bids and budgets within social media channels based on individual ad performance, increasing bids and pushing more budget dollars toward ads that deliver the best ROI.

Although impressions don’t provide the best pricing model for marketers, impressions accumulated for no or low cost, like those incurred within a CPC campaign, provide some icing on the cake. In 2009, unique impressions on social sites grew at a very rapid pace, and advertisers can reach large audiences at relatively low effective CPM through these sites, in some instances for no cost within CPC campaigns.

Some questions to ask:

CMOs that are unsure of how their teams incorporate performance into their online ad buys should consider the following questions as a starting point with their teams:
1. What are we doing to emphasize performance in our ad buys?
2. What percentage of our display ad buys are based on impressions? Clicks? Actions?
3. Are we taking advantage of CPC and auction pricing in social? Other areas?
4. How is micro-targeting being used to boost results and control costs?

While it is a newer trend, ignoring the move towards performance-based display and social advertising will only aide your competition and unnecessarily drive up media costs in the year ahead.

Michael Kahn ([email protected]) is senior vice president, marketing at Performics and a monthly contributor to Chief Marketer.