Overture Tested

MARKETING TRACK – Step 1

Topic: Overture

Test Number: #060102-SE

Word Count: 4040+

Focus: 6 Questions

1. Is it (really) becoming more difficult to purchase affordable search terms on Overture?
2. Can you still generate revenue with Overture even if you aren’t in the top three (premium positions)?
3. How can you select the most effective terms for an Overture campaign?
4. How do you determine the best price to bid for your key search terms?
5. How can you increase the amount of money you can afford to pay for a given term?
6. How can you increase the conversion ratio of your Overture traffic?

Credits:

1. Editor – Flint McGlaughlin
2. HTML Designer – Cliff Rainer
3. Contributors – Rob Cross

Note: This is the FIRST report in our new MEC MARKETING TRACK. The Marketing Track is a series of experiments designed to help you grow your website over the next six months.

MARKETING TRACK – Step 2

We test Google and the other pay search engines. How can you maximize your ROI? What is the most effective way to balance you budget between Overture and Google

MARKETING TRACK – Step 3

We test traditional search engines. Is Yahoo worth the express submission fees? How can you get high rankings? What about Alta Vista, MSN, and others? On what engines do you really need to be listed?

OTHER REPORTS

We are finally wrapping up our 10 month study of award sites. Can you submit you site for awards, create effective press releases, and then parlay the attention into major traffic?

Why pay $1.52 per click for a favored search term when you can pay .25 for a lesser search term and still earn forty times your original investment?

Unless you consider Overture a worthy beneficiary of marketing philanthropy, you may want to carefully study this next report.

Researchers at Marketing Experiments have been conducting a series of tests (yet again) on the “Pay Search Engine formerly Known As GoTo”. Their goal was to answer a simple question:

How can you generate revenue without paying the excessive costs of Overture’s most popular terms?

The Roy White Story

Roy White is a net-weary emerchant who traffics in telephone accessories. Roy recently contacted the research staff of the Journal seeking help with an all too common emerchant’s dilemma…

1. He needed (way) more traffic.
2. Overture was one of his strongest options.
3. The bids for his key search terms were (WAY) more than he could afford to pay.

The top three positions on GoTo were priced as follows:

POSITION 1 $1.52
POSITION 2 $1.52
POSITION 3 $1.49

Roy had carefully calculated his conversion ratio, then factored in his retail margins. The most that he could afford to pay was $0.25.

What could he do? How could he bid competitively? Was it even possible to use Overture, or was Roy just completely out of the game?

The research staff at MEC has just completed a six month study of Overture. We adopted Roy’s site as a test model. Later in this article we’ll examine what we discovered, but first, let’s examine the problem itself.

Is it (really) becoming more difficult to purchase affordable search terms on Overture?

Twelve months ago our lab released a report on Overture (GoTo) which referenced these terms and costs:

ecommerce software cost per click = $2.61
ecommerce consultant cost per click = $0.45

Today, the same terms cost as follows:

ecommerce software cost per click = $3.42
ecommerce consultant cost per click = $1.11

What you need to UNDERSTAND: Our first term increased in cost by 131% our second term increased in cost by 247%.

You can read the original report by clicking here.

In the meantime, here are three facts to consider.

1. Overture serves more than 150 million searches per month.
2. Overture serves more than 60,000 advertisers
3. The average bid on Overture has gone from .11 to .22 cents. (*1)

Can you still generate revenue with Overture even if you aren’t in the top three (premium) positions?

Roy White preferred search terms were expensive. Here is a copy of their listing in Overture.

Payphone Direct – Business Solutions
PayphoneDirect.Com supplies Bell Style payphone equipment, payphone accessories and expert payphone support nationwide. Business owners welcome.
(Cost to advertiser: $1.52)

Midwest Payphone Supply-Bell Style $289
Desktop payphone, $89. One to two-year warranty.
(Cost to advertiser: $1.51)

Payphone.com – One Stop Payphone Shop
Payphone.com has everything related to pay phones. You can find Bell style payphones and desktop payphones, pay telephone parts and accessories.
(Cost to advertiser: $1.49)

Working with one of the Journal’s search engine partners, Rob Cross
(For information on Rob’s Book, Click here.), our researchers rejected Roy’s handful of “hot” terms in favor of 170 less popular terms.

Could these lesser terms generate enough traffic to justify the tedious work involved with the listing process?

Here is a summary of Roy’s results with the 170 secondary search terms: (*2)

SECONDARY SEARCH TERMS
Start Date	May 01 2002
End Date	June 01 2002
Total Clicks	1964
Total Cost	$ 233.44
Cost Per Click	$ 0.12

What you need to UNDERSTAND: Roy’s competitors spent 12 times more on their cost per search term.

At first glance, Roy’s new strategy seems far superior. But was it really? What is the value of an inexpensive search term that gets little to no clicks? Were Roy’s terms truly productive? How much money did he actually generate? What was his true ROI?

We carefully evaluated the new terms. Here are a few observations:

1. 20 terms did not get any traffic at all.
2. 102 terms received less than 10 click a piece
3. 31 terms received less than 50 clicks a piece
4. The most popular term represents 26% of the combined clicks.
5. The four most popular terms represent 45% of the combined clicks.
6. One term was so popular we are creating a URL around it and building a new website to serve the associated demand.

But how targeted was this traffic? How well could we convert it from clicks to customers?

By focusing on just three of Roy’s terms we were able to determine how much revenue this little experiment generated.

REVENUE GENERATED
Total Clicks	534
Average Cost Per Click	$0.25
Total Cost	$134.00
Number of Items sold	99
Total Revenue	$5450.00
Total Revenue Per Click	$10.21

What you need to UNDERSTAND: Roy’s (basic) ROI was over 4067%, or 40 times his original investment.

How did this impact Roy’s overall business? Here is an excerpt from a generous thank you letter sent by Roy:

“…My web sales have more than tripled (combination of online and offline sales) within the last two (2) months, this is not only exciting but rewarding.”

NOTE TO READERS: If you need help developing a search engine strategy, just visit the link below. Our Team of researchers can analyze your site and create a detailed, step-by-step blueprint. We don’t have all the answers, but we have learned a lot; perhaps we can help just click here.

For Roy White, this strategy did more than generate data… it generated a welcome boost in much needed revenue. It also demonstrates three key points:

1. Overture remains a viable tool for the net-savvy marketer.
2. It is becoming increasingly difficult to maximize the Overture opportunity.
3. To truly achieve success with Overture, the marketer needs to carefully develop (and closely) monitor a deliberate strategy.

In Section 2 of this report, we report on what we learned from this research.

Section 2 (Continue…)