Passage 1 The Science of Managing Search Ads
管理搜索广告的科学 《纽约时报》

[00:04]The Science of Managing Search Ads
[00:07]For most people, Google and other search engines
[00:11]are essential tools on the Internet. But the workings of the text ads,
[00:16]the short introductions that promote goods
[00:20]and services on the search results pages, are largely hidden from Web users.
[00:27]For more than one million businesses,
[00:30]Google's search advertising system is like a hose Web sites with traffic.
[00:36]Managing it effectively, though, is as much art as it is science.
[00:41]It requires a mix of analytics and gamesmanship,
[00:45]a combination of skills that has become vitally important in the Internet age.
[00:51]"It is critical," said Ellen Siminoff,
[00:54]the chairwoman of Efficient Frontier,
[00:57]which helps companies manage their search advertising campaigns.
[01:01]"You have to have data and be able to analyze it.
[01:05]It's a bit like playing chess,
[01:07]but you are blind to what your competitors will do."
[01:10]Many industry insiders say that search engine marketing,
[01:15]which Google is good at, is one of the most effective forms of advertising.
[01:21]In just a decade, it has grown into an $11 billion business in the United States.
[01:28]It accounts for the vast majority of Google's $22 billion in annual global sales.
[01:36] Google's service, called AdWords,
[01:38]dominates so thoroughly that some advertisers have felt at the mercy of
[01:43]the company, and complained that they couldn't decide anything
[01:48]over the complex advertising system. One company, TradeComet,
[01:53]accuses Google of artificially increasing its advertising rates.
[01:59]But by and large, businesses find search advertising effective
[02:04]and continue to turn to it, at a slower rate than in previous years.
[02:09]As growth has reduced gradually over the last year,
[02:12]Google has stepped up its out-reach efforts to help midsize companies
[02:17]like Tiny Prints use its tools more effectively,
[02:22]hoping that will encourage those companies to spend more.
[02:26]"It's good for our business and it's good for their business,"
[02:30]said Claire Johnson, vice president for online sales and operations at Google.
[02:37]Like many other businesses,
[02:38]Tiny Prints also buys search ads on Yahoo and Microsoft's search engine, Bing.
[02:46]While results are "very attractive," the traffic coming from those sites
[02:51]is small compared to that from Google, Mr. Han said. As a result,
[02:56]Tiny Prints spends nearly 90 percent of its search marketing budget on Google,
[03:03]he said.
[03:05]Mr. Han said that Tiny Prints,
[03:07]which specializes in high-end custom-designed greeting cards,
[03:12]had been working at perfecting its search advertising for the last two years.
[03:18]Its three-person team, veterans of Walmart.com and eBay,
[03:23]has become expert at thinking over spreadsheets and selecting
[03:28]through the data about visitors and shoppers on the company's Web site.
[03:33]During the holiday season, they monitor ads and traffic patterns hourly,
[03:38]and meet daily with Mr. Han
[03:40]and other executives to adjust budgets and strategies.
[03:43]In one of the company's daily budget meetings in mid-November,
[03:48]Anna Fieler, the vice president for marketing, said,
[03:52]"We are overspending on search." She then added,
[03:55]"But we are delivering on revenue."
[03:58]Search ads are bought from Google through an auction,
[04:02]and businesses pay Google only when someone clicks on their ad.
[04:07]An ad's position on Google's search results pages depends on
[04:11]Google's secret formula derived from bid prices,
[04:15]the rate at which users previously clicked on the ad and a "quality score"
[04:19]determined by Google.
[04:22]Since not all clicks turn into purchases,
[04:25]the trick for advertisers is to make sure that the amount they bid,
[04:30]multiplied by the average number of clicks needed to make a sale
[04:34]the cost of acquiring a customer - does not exceed the profit derived
[04:38]from that sale. But that can be easier said than done.
[04:43]Early in the holiday season, for example, most people are window-shopping,
[04:49]so few clicks turn into sales.
[04:53]Tiny Prints is forced to pay more than $50 to acquire each customer,
[04:58]leaving little room for profits on an average order.
[05:02]Relying on spreadsheets of buying patterns from previous years,
[05:07]Tiny Prints search marketers make the case to Mr. Han
[05:11]that their cost of acquiring a customer is on track.
[05:15]"We are seeing day by day that it is starting to reduce,"
[05:19]said Isabelle Steiner, the director for search marketing said
[05:23]at the meeting in mid-November. "I'm projecting that by the end of month,
[05:28]we'll be spending $35."
[05:31]Based on those assurances, Mr. Han then gave the team the green light
[05:36]to increase spending on search ads. But Mr. Han brought up another point:
[05:42]competitors could disrupt the plans
[05:45]if they suddenly started bidding aggressively on the same keywords
[05:49]as Tiny Prints.
[05:51]"What if Hallmark comes in on Saturday?" Mr. Han asked,
[05:54]referring to the Thanksgiving weekend.
[05:57]"Do we have a plan to react to what competitors might do?"
[06:01]The plan, Ms. Steiner said, was to monitor the site around the clock.
[06:07]In a spot check squeezed between a birthday party
[06:10]and her own Christmas shopping, Ms. Fieler
[06:13]was welcomed by a screen of red alerts indicating
[06:17]that the Tiny Prints ads had fallen off the first page of Google search results
[06:23]for important keywords.
[06:25] "We were then forced to make and implement a new plan to react to
[06:30]the competitive environment real-time," Ms. Fieler said.
[06:34]"It was very tricky trying to balance not overpaying by participating in
[06:39]the craze with getting the impressions
[06:42]and clicks we needed to drive the business."
[06:45]By mid-December, with the main part of the holiday shopping season behind them,
[06:50]Mr. Han and his team were looking tired.
[06:53]In addition to late-night discussions of bidding strategies
[06:57]over instant messaging, they had to help wrap and ship orders.
[07:02]Mr. Han would not disclose the company's sales.
[07:06]But he said that by and large, the ad campaign on Google,
[07:10]which drove more than 20 percent of revenue, had been a success.
[07:14]"Of the eight most important days of the year, we got seven exactly right,
[07:19]" Mr. Han said. "On one of the days, by our standards, we fell down."