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Web Search & Marketing Newsletter - June 2012

Welcome to the latest monthly edition of our newsletter, which covers news, tips and advice on effective website marketing techniques and trends.

Last month was dominated by Facebook's IPO and the subsequent fallout from the share price dropping almost immediately. We look at the reasons why this happened and the challenges Facebook now faces. We also report on a new AdWords report just launched by Google - the Auction Insights provides more indepth information on competitor activity around individual keywords in a campaign. Finally this month we report on some rebranding by Microsoft to integrate their advertising network into the Bing search brand.

In addition to our newsletter content this month, we also have a PDF report from Google which summarises their recent research into mobile usage in Australia. This provides a fascinating insight into the increasing dominance of smartphones and how people are using them to search and buy products online. For a copy of the report, please contact us directly by email or through the website.

You can read more below, or you can also browse through previous editions of the newsletter, either by month or by subject. You can also follow us on Twitter for the latest developments during the month, or follow our Facebook page for updates.

On to this month's edition...

Facebook's IPO and the aftermath

Did you buy Facebook shares in May? Last month saw the long awaited Facebook IPO (Initial Public Offering) on Nasdaq, which was launched with much fanfare and anticipation that also made founder Mark Zuckerberg a multi-billionaire. However, the outcome was not so expected, with a fall in the share price on the first day which has since continued. The fallout from this has generated much comment and finger-pointing, leaving Facebook and their advisors looking embarrassed. So what went wrong?

Facebook launched with a share price of $38, but despite a short initial gain, this price has since dropped to a current price of below $30, which is nearly a 25% reduction in value within the first few weeks. For investors, this is not a good start, particularly compared to Google's launch in 2004 and the more recent IPO for LinkedIn. Although they should be looking at long term value, it appears that the share price was overvalued based on the business model and current revenue levels.

The main issue revolves around their advertising revenue and future business strategy to increase this. With access to a massive user base around the world, Facebook has an attractive, captive market for many advertisers. However, there are questions about the model. Just prior to the IPO, General Motors decided to pull its $10 million ad campaign from Facebook because they were getting a poor return compared to other ads such as on Google. Many have seen the move as a sign that Facebook's ad offering may not be as robust as the company would like it to be.

Facebook's advertising offering is essential to grow their revenue, yet the basic model is very different to Google's highly successful AdWords system. Advertising works differently on Facebook because users are not searching for something, as with Google, but interacting with friends and online content. Therefore ads need to be distracting and engaging, plus they may work better for branding rather than immediate response. For advertisers, who may well be comparing the cost per click and ROI against Google, Facebook's results will not compare favourably and therefore it's not going to be the 'must-have' network to use.

In addition to this, there are concerns about how the advertising model will work on mobiles and this is one of the key issues from the IPO process, and many investors say that a key report was not made public before the sale. As more and more people access the web, and Facebook, through their phones, the advertising opportunities are reduced since Facebook's current model does not transfer well to phones. These concerns have impacted the share price and it's something Facebook needs to address - only this week, they announced plans to launch their own branded mobile phone in response to this.

Market analysts also say that one of Facebook's big problems is that its advertising technology, although powerful, is far too complicated for most marketers to figure out. Firms that can't afford the ad software have been turning to specialized ad agencies to update their ads and run multivariate tests. The Return on Investment (ROI) of these ads is also poor for many companies so that although Facebook can attract large audiences, the question is whether the advertising system is effective and sustainable in the long term.

For the time being, the share price is languishing well below the launch price. Facebook now needs to start performing ahead of expectation, to satisfy investors and to develop systems and strategies that drive new and higher revenues. Being a public company, there will also be more scrutiny and the start of a new challenging period for the leading social network.

If you'd like more information about the Facebook IPO or their advertising options, please contact us for details.


Google Adwords introduces new Auction Insights report

Google has recently introduced a new analysis tool in Adwords that helps advertisers understand market activity and plan better bid strategies. Called the "Auction Insights Tool", it can be accessed at keyword level and shows competitor information and potential missed opportunities for search rankings. By revealing more information from the underlying AdWords system, Google is now giving advertising a real insight into the complex ad auction system.

This new Auction Insights tool can be found under a new 'Keyword Details' button in the Adwords interface when looking at Keywords reports. However, not all keywords are eligible and require a minimum volume of impressions, so you can only access this report if search terms are attracting at least 200 impressions or more for the selected time period. In addition, the report can only be viewed at an individual keyword level, so each term may need to be analysed separately.

So what sort of data does the Insights tool provide? Previously, Google just provides impression share data at campaign and adgroup level, which tell the advertiser how many times the ads were displayed out of the total possible times that the ads could have been shown for relevant searches. Now, however, the new Insights report gives valuable information on competitor activity and missed opportunities at the keyword level so that deeper analysis can be made an advertiser's performance, including:

Therefore you can now assess which keywords some of your major competitors are putting a heavy focus on. When you see that a competitor has a "high impression share" or "top of Page Rate", it raises questions about their possible strategy for those terms and whether it should be countered. It might indicate a good converting term or perhaps a higher bid rate or better Quality Score than your campaign is achieving. The tool won't tell you how much your competitors are spending but it does tell you how often they appear on Google for specific keywords.

If you find a particular competitor is gaining close to 100% impression share for a lot of keywords and also appearing at the top of the page most of the time, then this might suggest they have a large budget allocated to AdWords or a bigger budget than any of their other competitors. This could also present an opportunity to increase your own spend to compete for that space, although of course there will be other factors involved in determining the eventual ROI and you still need to manage your advertising to meet your own targets.

For more information about the new Auction Insights tool, please contact us now.


Microsoft Advertising rebrands as Bing

During May, Microsoft announced that their Microsoft Advertising brand is to renamed as Bing to bring it in line with the main search engine brand. However, there remains inconsistency and confusion as the search advertising service merges with Yahoo.

Small and Medium Businesses (SMBs) have become the core market for search engines and social media advertising. Small businesses are a particularly important audience for Microsoft, given the strength of Google Adwords among smaller advertisers, and so Microsoft has rebranded its Microsoft Advertising brand as 'Bing', although the PPC service remains known as Microsoft adCenter, at least for the time being.

Microsoft are hoping this rebranding will boost sales by giving advertisers a clue that they are buying traffic on Microsoft's search engine, and Microsoft also believe that making things easier to understand will lower some of the existing barriers. When customers now access Microsoft adCenter they will see a page that looks like Microsoft's Bing search engine, thus making the experience for customers more intuitive path through the Microsoft search experience.

Microsoft has also recently completed the transition of the Yahoo Search Marketing service into the Microsoft adCenter system in the UK, but Australia remains one of the last countries still using the Yahoo PPC tool to buy paid ads on Yahoo and Bing / NineMSN.

The latest figures from Hitwise show that around 6% of search activity goes through Bing or Yahoo sites in Australia, compared to over 85% of searches through Google. This is in contrast to the US market, where Bing / Yahoo have a bigger share of search, with 20% of all activity compared to Google's 67% share.

For more information about search marketing on Bing, please contact us.



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We hope you've found this month's newsletter useful. Please contact us if you need any more information on the items covered, or our advice on any aspect of your website's performance. Also, if there are any issues you would like to see in future editions of this newsletter, please submit your suggestions to us.