In recent years, the largest digital advertising companies have made a push to attract more small businesses. If you’re a business owner, you’ve probably received postcards in the mail with a twenty-five-dollar credit for Google advertising or been advised to “boost” your Facebook post to maximize performance. The adtech giants have made advertising on their sites and within their networks extremely accessible. Advertisers can set up and purchase advertising with self-serve platforms available for Google, Bing, Facebook, SnapChat, Twitter, LinkedIn, and others.
These platforms have become powerful systems for advertising. From the Fortune 500 to the dry cleaners on Main Street, Google and Facebook give companies an opportunity to directly reach and engage current and prospective customers.
With this power comes an increasing level of sophistication. With every update, new features are added, furthering the complexity and the level of understanding needed to create optimal advertising programs. Google’s advertising platform is one of the most sophisticated systems ever developed. The real-time bidding mechanism has been expertly developed and refined over the past two decades.
Every time a search is performed on Google, there is an auction to determine which ads appear and where they appear on the search engine results page. Which advertisers will appear is first determined by factors involving the search query itself. What keywords were typed into the search box? Where is the person who is searching located? What type of device is she using? What time of day is it? What has she searched for and clicked on in the past?
After these and many other factors are determined, Google makes the ad space available to every advertiser interested in appearing for that search query. Which ads show up and where they show up are a result of two factors – the amount the advertiser is willing to pay for the click (the bid) and the quality score the advertiser has been given for that specific search query. These two numbers are multiplied together; the ads are placed in order of highest to lowest (with the 8th ad representing the cut-off for appearing on the first page).
Quality score is a number between 1 and 10 that is assigned to each keyword an advertiser chooses to bid on. This score is determined by analyzing three key factors – the quality of the ad copy, the quality of the landing page, and the historical click-through rate for that keyword. Advertisers who don’t understand how this bidding system works are susceptible to over-paying for clicks. Google will call out how much you need to bid to appear on the first page, but it doesn’t call out the role that quality score plays in this.
Facebook has a similar scoring system that determines how much an advertiser will pay for advertising. Ads with low scores are charged a premium or might not run at all. While the system is set up similarly, the way the quality score is calculated is completely different.
How quality scores are calculated and how they factor into the cost of advertising in these systems is just one example of the complexity involved. Both platforms have been evolving for years to increase the functionality and opportunities available to advertisers. With each update, another level of complexity is added to the system.
Even advertisers who are highly skilled and experienced setting up and running ad campaigns likely don’t have the ability to effectively analyze the data that these systems provide. Statistical analysis is a highly technical skill and analyzing marketing data is a specialty within this skillset. The biggest problem is that there’s too much data. Advertisers who lack digital marketing experience and sophistication will often focus on metrics that aren’t important in achieving their marketing and business objectives. In a previous column, I examined the misguided practice of optimizing digital marketing campaigns based on click-through rate (CTR). Also, measuring metrics that matter (like conversion rate or cost per conversion) requires technical set-up that in many cases isn’t available “out of the box.”
While small businesses control a growing percentage of the dollars spent on digital advertising, the major adtech companies are doing their customers a disservice by promoting their self-serve options. I’ve had numerous conversations with new clients who have told me that they tried paid search or social media advertising and that it “didn’t work.” Not all digital advertising campaigns are created equal. Companies interested in taking full advantage of the opportunities to reach and engage prospective customers online should either commit to extensive training or work with a partner well versed in the strategy and technical know-how needed to be successful. Even with the twenty-five-dollar credit, trying to run your own free advertising could prove costly.
Originally published by the Rochester Business Journal