Efficient Frontier and Optimizing Your Advertising
We signed up with Efficient Frontier today to help one of our clients manage their advertising. They do online, AI-based bidding on Keyword advertising on Google, Yahoo, and Miva. Here's some of the theory:- You bid to show an ad on Google (as an example) for a certain keyword. Example: You want searches for the keyword 'bibliography' to trigger your ad: 'Automatically Generates Bibs, Free Unlimited Usage, Generates Bibs and Footnotes', which should point to your website, www.SpoonFedBib.com, and you want to pay no more than $3.00 per click. (This is a PPC model, Google also has CPM advertising).
- Google then puts your ad onto their site (it is, after all, how they make money), so that when someone else searches for the keyword 'bibliography', the above ad is shown.
- Google will use a variety of metrics to determine what PLACE to show the ad. Placement starts at the top of the page (positions 1, 2, and 3), and then work around to the right-hand side of the page (positions 4 through 8).
- Google's metrics include Click Thru Ratios (CTR's), relevancy, keyword frequency, and a host of other items. They haven't revealed their exact secrets, but we know from past experience that there are quite a few ingredients.
- Once a web user clicks on the ad, your account is charged some fee. The fee is based on those same metrics (ie, being in the #1 spot doesn't always mean that you are paying the most -- it may be that your ad is the most relevant). They call their mathematics a "company IP issue", and don't really reveal what clicks you've been billed. Once you've been billed, the user is forwarded to the URL you defined (above, www.SpoonFedBib.com).
- The user then ends up on your website, and you need to figure out how to collect their information, or sell them something, or whatever your goal was for spending money to get them to your site. If you're smart about it, your landing page (the first page the user sees) should be developed to maximize the users experience for the keyword they searched for (in this case, 'bibliography').
However, to actually use this system to the maximum effectiveness, you will need a way to track what clicks convert into sales/leads/information requests, what keywords convert, what days / times convert, what the user was searching for when they clicked on your link, etc...
Once you've started collecting some of this information, it becomes obvious that certain clicks never (or rarely) convert. For instance, you may find out that users who click on your ad, when they search for 'bibliography' at 4am on Monday, never buy anything. But, Google will run the ad, and collect the clicks, even though it never translates into any dollars for your site. What about a more complex case? Clicks when your ad is in position #3 may actually convert more than clicks received when your ad is in position #1. Again, Google is more worried about their bottom line, not yours. They aren't going to drop your ad to position #3 to make sure that you optimize your advertising.
This is where Efficient Frontier comes into play. They have built an Artificial Intelligence based back-end which monitors dates / times / keywords / bids / Click Thru Ratios / Conversion Ratios / positions, and can then bid for you to ensure the most bang for the buck. Their system learns from itself, updating itself with the latest and greatest statistics, to ensure that you get the conversions / leads / branding that you are paying Google for.
There are a lot of other competitors on the market, but most of them use "rule" based bidding. Probably the most prominent is Atlas One Point, which is a self-serve system of rule based bidding (ie, you go online and setup a rule to bid no more than $X between 1pm and 5pm for keyword A - you are billed based on the number of rules that you have).
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