The Evolution of Paid Search

Spotting & Staying Ahead of the Trend

Matt LawsonVP of MarketingMarin Software

About Marin

The leading platform for managingsearch, display, and social

The Leader In Paid Search Applications

But online still represents less than 15% of total advertising spend.

Advertisers spend 3x more on traditional media than the internet

(Yet consumers spend an equal amount of time on each.)

Online Ad Spend Can Double

Print Radio TV Internet

12%16%

31%28%

26%

9%

39%

13%

Media Time Ad Spend

% of Time Spent in Media vs. % of Advertising Spending, USA 2009

% o

f Tot

al C

onsu

mpt

ion

~$50BN Global

Opportunity

Note: Time spent data per NA Technographics (2009), ad spend data per VSS, Internet advertising opportunity assumes online ad spend share matches time spent share, per Yahoo!. Source: Yahoo! Investor Day, 5/10; Morgan Stanley.

About Marin SoftwareSpend is rising faster than query volume, putting pressure on costs-per-click

The Search Marketer’s Dilemma

• Increase spend while maintaining a constant ROI

9

This Creates a Problem for Search Engines

How to increasing volume without increasing click costs?

How are Search Engines responding?

Inventory (Improve

Performance)

Advertisers (Incentivize Efficiency)

Consumers(Expand Query

Volume)

THE IMPACT OF GOOGLE INSTANT ON PAID SEARCH

What is Google Instant?

12

Instant Represented a Paradigm Shift

Increased volumes & lower per click costs.

Instant Changed Consumer Behavior

Users complete searches with fewer words.

Smart Advertisers Were Rewarded

Instant allows advertisers to better capitalize on narrow match types.

The Impact of Google Instant

Engines (More Clicks)

Advertisers (Lower Cost Per Click)

Consumers(More searches)

The Yahoo-Bing Search Alliance

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More Volume with Less Effort

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94M Unique Searchers

11.7% Share

1.8B

Monthly Searches

110M Unique Searchers

16.9% Share

Monthly Searches

2.6B 154M Unique Searchers

28.6% Share

Monthly Searches4.4B

U.S. data shownSource: comScore Media Metrix March 2010

Market Share Impact

19

The alliance resulted in increased impressions and clicks at a lower overall cost to advertisers.

Favorable Cost Conditions

20

Post-transition advertisers saw improved cost-per-click

A Favorable Performance Environment

Resulting in higher conversion rates, at lower cost per acquisition

The Impact of the Search Alliance

Engines (More Clicks)

Advertisers (Increased Performance)

Consumers(?)

Incentivizing Advertisers

Quality as the Key Driver of ROI

Quality Score

Landing Page

Ad Copy

CTR

"Quality Score helps ensure that only the most relevant ads appear to users.

The AdWords system works best for everybody -- advertisers, users, publishers, and Google -- when the ads we display match our users' needs as closely as possible…

…In general, the higher your Quality Score, the lower your costs and the better your ad position.”

-- adwords.google.com

Large Advertisers Realizing Efficiency Gains

25

Trends by Match Types

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Click-through rates on exact match have improved…

…while cost-per-click on exact match have declined.

Resulting in a Shift by Advertisers

27

Advertisers increased their % of clicks on exact match by 7% last year, lowering costs.

The Impact of Quality Score Changes

Engines (More clicks)

Advertisers (Increased efficiency)

Consumers(Relevant ads)

Anticipate changes in volume

Don’t Limit Spend On Top Performing Campaigns

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Get More Impressions with Accelerated Delivery

Capitalize on Search Engine Innovation

Review & Maintain Engine Parity

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VS.

GroupA

GroupB

GroupC

GroupD

GroupA

GroupB

GroupC

CAMPAIGN A CAMPAIGN A

Maximize coverage in AdCenter, and benchmark spend levels against the competition.

Use Keywordless Ads to Mine the Tail

Actively Manage Quality

The search marketers goal is to tighten connections between search query, keyword, and ad copy.

Keyword Selection

CampaignStructure

CopyTesting

Shape Traffic to Favor Exact Terms

Increase Relevance with Tight Ad Groups

0 100 200 300 400 500 600 7000.00%

0.50%

1.00%

1.50%

2.00%

2.50%

Ad GroupsCTR vs. Number of Keywords by Cost

Number of Keywords

CTR

How Will Engines Shape the Future?

Download the Advanced Search Tips Whitepaper at www.marinsoftware.com!

Matt Lawsonmlawson@marinsoftware.com