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Web Search & Marketing Newsletter: October 2011

Welcome to the latest issue of our monthly newsletter, which covers some of the recent trends and developments in the field of web search and online marketing.

In this month's issue you can read about the latest IAB figures for online advertising expenditure in Australia and how search marketing continues to take a large share of this market. We also explain the Google AdWords auction system that determines the ranking positions for adverts based on relevancy. Finally, we take a look at Google Doodles, the often changing and increasingly more creative designs for the Google logo that are used to mark anniversaries or events throughout the year.

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.

On to this month's edition...

Australia's online advertising spend up by 20% in 2010-11

The latest figures published by the Internet Advertising Bureau (IAB) in Australia show that in the April-June quarter, there was a total spend of AU$655m which represented a 19% growth over the same period in 2010. Overall for the 2010-11 financial year, the online advertising market grew by another impressive amount, up 20% year-on-year to reach AU$2.45b.

The Search & Directories sector for the last financial year accounted for 51.5% (AU$1264m) of overall online advertising, which is mostly comprised of Google AdWords expenditure, but remains an estimate. Google still doesn't release their advertiser expenditure figures and, since most of this expenditure is hidden within Google's overseas billing centres in Eire and Singapore, the estimate is based on the same formula used by PWC in their previous surveys.

The spend on online Classifieds advertising accounted for 23.6% (AU$579m) of the total market, with Display Advertising now accounting for a 24.9% share (AU$612m). There has been particularly strong growth in online advertising for the retail sector, despite the reported challenges facing the industry, but this still represents a small proportion of the total sector, at just 6% of all display advertising.

Fast moving consumer goods (FMCG) advertising comes in at just 5.5% of the display advertising total (actually dropping 0.5% on the previous year), and remains a minimal online market compared to international results such as those in the UK, which rose by 30%. Therefore the IAB reports that this sector, along with Government expenditure in online advertising in Australia, continues to disappoint.

Video advertising continued to increase well, up 53% year-on-year to reach almost AU$40m annually, representing just 6.5% of online display advertising, (compared with 14% in the US). This increase is expected to continue, with the 2011 PwC Entertainment and Media forecast predicting at least 95%% broadband penetration and over 80% mobile penetration by 2015.

The general display advertising category's most dominant industry sectors were: automotive; finance; computers and communication; with the former comprising a sizable 11.5% proportion of the General Display spending for the year.

The Real Estate sector continued its large spend in Classified advertising from the first quarter and was the leading sector in that category for the 2011 financial year, followed by Recruitment then Automotive, which is the same order of sectors as in 2010.

If you'd like to know more about these figures please visit the IAB website, or please contact us now to find out more about online advertising and how it can be used for your business.


Explaining the Google AdWords advert auction system

Have you ever wondered how Google calculates how much you pay for a click on AdWords? And how your advert ranking position is determined? Here we explain this often misunderstood element of AdWords advertising, namely the relationship between Quality Score and cost-per-click.

Ad quality is a very important element for Google's advertising - users want to see relevant ads; advertisers want to present relevant ads to users; and Google wants both users and advertisers to have a good experience so they come back and continue to use the system. So Google is mainly concerned with ensuring that the ads shown to users have a high ad quality, which is represented by a Quality Score.

There are 3 components to the Quality Score which is allocated to each search term, with the most important one by far being clickthrough rate. This essentially allows users to vote with their clicks and gives Google good feedback upon which to make its decision to determine which ads are the most popular for a particular search query / keyword.

Relevancy is the second largest factor in determining Quality Score. Google determines relevancy by analysing the language and context of an ad or query and determining how well it relates to a keyword. Google uses relevance to ensure that only useful ads are displayed to users.

The final Quality Score component is landing page quality. An ad is only useful to a user if the ad they click upon goes to a landing page that helps them find the information they're looking for. A high quality landing page should have relevant, original content, be easily navigable with quick load times, no pop-ups (or pop-unders) and be transparent about the nature of the business.

Quality Score then affects the way in which the auctions are run, through the concept of Ad-Rank. This is the bid price set by the advertiser, multiplied by the Quality Score of the ad. These two numbers multiplied together results in the Ad-Rank figure (N.B. not to be confused with the advert position).

The adverts are then positioned in descending order of that resulting Ad-Rank figure. This is done so that advertisers cannot simply buy the top advert position if their Ad-Rank figure and hence, relevancy to the user's search, is lower than their competitors. So Google's priority for the user's experience comes before the amount an advertiser is willing to pay.

The amount paid per click is then only the minimal amount that is necessary to retain the advert position above the next competitor. This amount is calculated by the Ad-Rank figure of the advertiser directly below (in the advert positions on the results page), divided by your Quality Score.

The main point to remember is that by increasing Quality Score, it's possible to reduce the amount that is paid per click. So adverts that are more popular with users and more relevant, that land on decent pages, cost less for a higher position than competitors' adverts that don't score so well on these factors.

This is a useful video where these concepts are clearly explained and demonstrated by Hal Varian, Google's Chief Economist.

If you'd like more information about how our professional Google AdWords management can help increase your Quality Score and reduce your average cost-per-click, contact us now.


Google Doodles become increasingly intricate and popular

Google "doodles" have long been part of Google's history and are the drawings that are often designed on, around and through Google's logo on its home page. These doodles have attained cult status and are a combination of technology and art, created by a passionate in-house team. They illustrate the creative and innovative personality of Google and like the company, use advances in technology to demonstrate their capabilities.

The Google doodles are used to celebrate famous birthdays, anniversaries, worldwide events or holidays, specific to particular countries. There are competitions held for the best designs and some examples of these are imaginative ones designed for Australia Day; Albert Einstein's birthday; and Valentine's Day.

The idea for doodles originated in 1998, when the Google founders Larry Page and Sergey Brin played with the corporate logo to indicate they were "out of office". A stick figure drawing was placed behind the 2nd "o" in the word 'Google' and the revised logo was intended as a comical message to Google users. While the first doodle was relatively simple, the idea of decorating the company logo to celebrate notable events was well received by its users.

More recently, interactive versions such as the highly popular and humorous global one created for Jim Henson's 75th birthday, have been created with Sprite Image technology and javascripts. Examples of how this was created can be found here or here.

There have been over 300 doodles created by the doodle team for Google.com in the United States and over 700 have been designed internationally. It's possible to see all the doodles that have been designed here.

If you'd like more information about Google Doodles, please contact us now.


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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.