There is nothing too exciting about the functions they are introducing they are all available on either Google or MSN already, but they are the first to introduce them all in one place.  Google has geographic targeting and adscheduling, but no demographic.  MSN has the demographic targeting (for what it is worth).  But now Yahoo! will have them all in one place, and their additional volume over MSN should make their demographic targeting more useful than MSN’s has ever been.

Its nice to see Yahoo! pushing forward with releases like this to boost their search offering as towards the back end of 2009 it appeared they may have been giving up the battle in search engine marketing.  The functions arent yet available in Yahoo’s Search Marketing Center but it will be interesting to see how effective they are once they are launched.

Conversion attribution is something that I believe is at the heart of a truly integrated digital marketing programme.  The ability to allocate conversions and contribution to conversion across multiple digital channels will revolutionise the allocation of digital budgets once a truly accurate method of measurement is found.  It has been the principle of multi-channel digital campaigns for a long time, build brand awareness through display which will lead people to the search engines and conversion.  But very few, if any, tools exist which can effectively prove, more importantly, accurately report, the affect each channel has had on an individual conversion.

Automated bid management software analyses individual keywords in isolation and doesnt account for the impact a click on a non brand keyword might have on a brand keyword for example.  By managing each individual keyword at a set CPA you arent giving them the credit they may (or may not) deserve and you could be seriously limiting the volume of leads available through PPC.

Critical Mass and Sales Volume

Profitability and return on investment is great, and it is the main advantage digital channels and PPC have over our offline counterparts, but it is not everything!  Many businesses have a critical mass of leads or sales they need to keep themselves afloat, I deal with them all the time.  And whilst they buy in to the accountability and measurability of PPC if the phone stops ringing, or the leads stop coming in, this all goes out of the window as their business depends on a certain level of sales each day.  Rule based bidding is useless in this situation and you have to go after the volume.  This is especially prevalent in finite markets where a large research process isn’t undertaken.

Variable Conversion Value

Each conversion is not necessarily worth the same as another, and it is difficult to accurately provide an individual value for each PPC conversion.  In this way it would take a lot of human analysis and intervention outside of the software to manage and maintain profitability.  This often occurs when the online action is an enquiry which results in an offline sale.  One online enquiry might have a resulting sales value of £20 and another might be £2000, in this situation, how can you effectively provide a profitable CPA for these enquiries?

Offline Conversions

Offline conversions happen in every market, telephone numbers on site, visitors to a store, customer service question which result in sale.  Automated bid mangement software can never effectively account for these sales and so will managing the campaign with only half the information.

So what is the solution?

Firstly, I believe automated bid management software has a part to play in managing large and complex PPC and Adwords campaigns.  But there needs to be a large amount of human intervention and management which leads to the statement made in the title, human management can never be fully replaced by bid management software, so how is this best managed?

One option is to employ the 80/20 rule of bid management.  By allowing a software package to manage the 80% of keywords (the long tail) which generate 20% of sales you cand remove a large burden from campaigns with thousands of keywords and focus you attention on the important 20% of keywords.

Another is to use the human element to analyse the offline and supplemntary data which cannot be interpreted by the software and build complex and evolving rules for the software to follow.  I know some of the software providers are frustrated that many of their customers only us a small percentage of their tools functions and no-one really pushes the boundaries.  By using the human element to analyse the reams of offline data, plug it into the tool, or learn the most effective ways of managing things in an automated manor you can ensure that you:

1. get the most the software has to offer
2. fill in the gaps and analayse the data and factors the software is not aware of

In truth, I dont know the most effective solution.  I am sure software is going to play an increasingly important role in PPC and digital marketing but it can never replace the human touch.  So if you are planning to use one of the available tools, or your agency are going to do so, make sure you dont rely solely on technology, it will never know the full story.

At present agencies spending between £20,000 and £79,999 receive a rebate of 5% from Yahoo and anyone spending over £80,000 receives the maximum 10% commission on search spend.  The January changes will see agencies spending between £50,000 and £99,999 receive 4% rebate and anyone spending over £100,000 9%.  This means the removal of commissions for agencies spending less than £50,000 a month and a hit of 6% for those who fall between the £80,000-£100,000 monthly spend bracket.

The announcements come in the same week that Yahoo! has announced it will be closing six European offices in the coming 12 months in a bid to cut costs.  Potentially suggesting that the two decisions are linked in a company wide profitability drive.  After all, agencies will be so concerned with losing their Google BPF that they hardly notice the Yahoo change right?

Its a disappointing step from Yahoo who could have used the Google BPF removal as a tool to grow their market share.  Either by simply pushing agencies on the message that they are still offering 10% or even making the bold move of increasing the commissions to further incentivise search agencies to use their service.  After all, they still offer 15% on display advertising placements so why not search as well?

Yahoo has been failing to eat into Google’s market share for a long time and it has been becoming more and more apparent of late that a merger with Microsoft might be the only way we will see true competition in the paid search market.  But this was a prime opportunity to steal a few more ad dollars from Google and one, in the current economic environment, they probably couldn’t afford to miss.

If Yahoo had been brave and increased their commissions, I for one would have been looking for way to spend more pay per click budget with them but now they have reduced them, I certainly wont be increasing PPC spend with them in the New Year.  I think this can safely go down as an opportunity missed for Yahoo, and could even been seen as a signal of intent not to put up a significant fight against Google in the field of Pay Per Click.

So cue brands bidding on other brands, hiking the prices out of spite and affiliates of a field day.  But will this be the case?  No doubt initially companies will begin to bid on their competitors terms thus raising the price the brand owner has to pay.  But how will the quality score deal with this? Well you would like to think the competition will have to pay hefty minimum CPCs to even list in the first place given that their websites will have no relevancy at all to the keyword.  But will the big boys care about this?  They will probably be more concerned with stealing their competitors traffic and be willing to pay the price. 

Theoretically they wont be able to include the trademarked term in their creative but that doesn’t account for DKI which, no matter what Google suggest, isn’t going to change any time soon to combat this.  Therefore a clever search engine marketeer will get round this quite easily.

What do I think will happen?  Brand CPC’s increase, affiliates have a field day, the overall cost of PPC increases, and then when it all dies down it is back to business as usual and people forget the day brand protection was in place.  The trick is for companies to have a plan of action for May 5th, to know how they are going to deal with their affiliates, to develop and stance on competitors terms and closely monitor the first couple of weeks after this change comes into place.  Then to reassess and get on with the business of generating leads from paid search, after all we are all at the mercy of Google anyway, so why bother trying to fight it!