Is Search Advertising a Waste of Money?

In the ever changing world of internet advertising, search engine marketing (SEM) has been identified as one of the few major success stories. Though web users spend a mere 5 per cent of their online time engaged in search activities, the sector has captured over 46 per cent of the advertising revenues, making it a $15billion industry. Google is the market leader with its Adwords brand and various estimates put its share of the market at over 70 per cent. But is it possible that all this investment by marketers is actually a waste of money? A recent piece of research suggests that it might be.

 

Commissioned by eBay, the research involved a series of experiments to determine whether or not paying for keywords brought tangible benefits such as awareness and increased sales for the organisations buying them. The experiments were elegantly simple. In one case, eBay discontinued using keywords for its brand on Yahoo! and MSN while retaining them on Google as a control. The result was no drop in either traffic or sales through the former two search engines. What simply happened was that shutting down the paid search path simply diverted traffic to the next easiest path – natural search which is free to the advertiser. When the paid advertising path was revived, traffic returned to this route. This implies that well-known brands who buy their names as keywords are wasting their money – web searchers would have found them anyway via the natural route. If in doubt, test it and see what happens!   

But what about the case of non-branded searches where web users type in words like hotel or guitar? The eBay study examined this issue as well and found that, overall, paying for such keywords had a small and statistically insignificant effect on sales. It did however have a positive effect in instances where the consumer may not know that a given company stocks a particular product. In those cases, non-branded keywords are an important source of informative advertising for potentially new customers. But if the majority of paid search users are regular customers that would have found the company’s website through either natural search or other means, then the returns on this kind of keyword advertising overall, are also likely to be negative.

The research highlighted that one of the key issues with search and other forms of internet advertising is the prevalence of the pay-per-click model. Keyword owners only pay if a web user clicks on a sponsored ad. But the question is, would this web user have found your website anyway and if the answer is yes, your advertising expenditure is wasteful. While many of the advocates of digital marketing like to trumpet that the old adage that ‘half of my advertising money is wasted, I just don’t know which half’ is no longer relevant in the brave new world of the internet, this research suggests that it may not be quite that simple.

When To Change Your Logo!

If you are a start-up enterprise how much time and money should you invest in developing a corporate logo? If you already have a well-established logo should you devote some time to refreshing it or making it more contemporary? Let’s begin answering those questions by testing how aware you are of some major logo changes that have taken place in the past year. For example, did you spot Microsoft’s change of logo from,

to this,

The new logo was launched in August 2012 to coincide with the introduction of new products such as Windows 8 and the Surface tablet. The four coloured squares are intended to symbolise the company’s broad portfolio of products. Did you get that the first time you saw it? The change proved controversial - some saw the new logo as better and friendlier, others as boring or a missed opportunity. What we don’t know is how many people did not notice the change at all!

Of course some are much more subtle. I wonder how many fans of Twitter noticed this slight change made to Larry in June last year?

Old logo

New logo

Yes you weren’t the only one to miss that one. Or how about this one for Jaguar.

Old logo

New logo

This was touted as the most extensive change made to Jaguar’ visual identification in 40 years. Really? I suspect the majority of car owners missed it completely.

Some people get incredibly exercised about both about logo design and logo changes. Yet few things are more cringe worthy that listening to executives going on about how a logo change symbolises a brand’s brave move into new frontiers and markets. Any decision to change a logo should be carefully evaluated to see if there are substantive reasons for doing so. Too often it is a bad substitute for effective brand management as illustrated by farcical changes such as Gap’s new logo in 2011 which ultimately led to the departure of the executive responsible for the mess.

So if you are a start-up, it is worth putting some time into careful development of the logo. Try to make sure it is simple, different, visual and globally transferable. Nike, Apple, Facebook, Shell and Playboy are the templates. After that, keep the changes to a minimum. The quality of your brand management will have a much bigger impact on the global recognition of your logo than any aesthetic changes that might be deemed necessary from time to time.