Traffick - The Business of Search Engines & Web Portals
Blog Categories (aka Tags) Archive of Traffick Articles Our Internet Marketing Consulting Services Contact the Traffickers Traffick RSS Feed

Why Google Loves Remarketing

Posted January 31st, 2013 by Andrew Goodman

Today, I’ve been going through all of our client AdWords data, looking at the aggregate CPM rates Google is commanding for both Search and Display advertising. CPM (cost per thousand impressions) is a lesser-used metric in our field today, but it can provide additional perspective as a benchmark.

That exercise reminded me that many of the dominant forms of “display” advertising in client accounts today are in the various types of remarketing. That makes aggregate figures misleading, because remarketing pulls the average CPM pricing up.

The more these higher-value forms of display advertising crowd out the lower-value stuff, the happier Google is, financially. Could it be that this will also help the publisher ecosystem? One hopes.

Just a back of the envelope calculation, but here is roughly what I’m seeing:

  • The strongest forms of remarketing are priced at 10X (or more) what display advertising is typically selling for in the case of advertisers not being particularly performance-focused on the latter
  • For less valued forms of remarketing, the ratio is stillĀ 5X
  • Even when advertisers are managing tightly to some performance metric (not as demanding as search, but tight) in display advertising, remarketing typically goes for 3X the price of the other display advertising, and at least 2X

Here’s where advertisers need to be careful. Remarketing is harvesting existing demand, leveraging past investments, and speaking to certain kinds of audiences. It’s “low hanging fruit.” That’s why it’s worth spending the money. But it shouldn’t be confused with a serious effort to build out display advertising. Many of us believe that advertisers under-invest in display advertising compared with peers who do it well. Remarketing isn’t really the same thing. It’s good, but it also shouldn’t be an excuse to get complacent. If you can find great prices on the regular display inventory, then there may indeed be a benefit.

As for Google, and publishers, this must be good for profit margins. There is too much near-worthless display inventory out there. Getting some of those clicks to shift over to audience-based targeting is a better way to monetize user attention… financially speaking only, of course.



2 Responses to “Why Google Loves Remarketing”

  1. Right on the money, Andrew.

    When you add up the cost of the initial marketing + remarketing + customers who get spooked to see your ads following them all around, I seriously doubt the lift from remarketing is more than a few percentage points for most advertisers. Marginal at best, in spite of what the AdWords remarketing stats columns suggest.

    Since Google knows when a click is a remarketing click, it also must know (or could extract) the clicks and cost of clicks that preceeded the remarketing click, and then assign a true cost per click – even if it is a modeled value and not directly attributable.

    The vaporous apparition called view-through conversions is another contributes to the overly optimistic accounting for CPA on remarketing campaigns and resulting higher bids. View-throughs tempt campaign managers to show ‘results’ when results really don’t exist. A view-through conversion is a conversion that some other activity is already claiming 100% credit for. Sure it is interesting to know that your ads were seen by people who ordered your stuff. But it is also mostly useless.

  2. Andrew G says:

    Matt,

    Nice points!

    Another way to put it I guess is that people are still overpaying for all “easy to get” last clicks, if those clicks are attributed and other influences are (in fact, though difficult to measure) much stronger.

    And they are potentially underpaying for inventory that is in fact relatively valuable, but not showing as much last-click attribution.

    I happen to think that some forms of remarketing are very effective, but there is definitely a breaking point.

    Responsible companies need to look at both sides.

    And there is now an increased activity in remarketing using multiple channels by folks who are experts in the more spammy side of marketing. So site visitors are hammered with messages, and the folks (affiliates, say) doing it don’t stand to lose any goodwill. But the pool of user goodwill shrinks and the user’s attention is stretched once more. Same cycle as we saw with what began as permission marketing in the email inbox.


 


Traffick - The Business of Search Engines & Web Portals

 


Home | Categories | Archive | About Us | Internet Marketing Consulting | Contact Us
© 1999 - 2013, Traffick.com. All Rights Reserved