Monday, January 27, 2014

The True ROI of Search and Display Advertising

Paid and organic search can work together

In Internet Marketing class this week we are talking about paid and organic search.  I have noted in the past that paid and organic search work together.  In classes, we have seen that overall interest in a company increases when they start running paid advertisements.  Phone and other inquiries increase after a few weeks and then stop when the paid search campaign ends.  I have also seen information on this effect presented at practitioner conferences.  While I have not seen a good study that is able to measure the offline impact of search, there is also some academic evidence that paid and organic search work together.

From Harvard Working Paper, Do Display Ads Influence Search, by Kireyev, Pauwels and Gupta 2/9/13

Paid and display ads can influence each other

This graphic from a Harvard Working Paper indicates that the paid search and display ad budgets can also work together to create results. I found this reference to a recent academic study in a Search Engine Land blog post by +Greg Sterling.  The authors are Pavel Kireyev, Koen Pauwels and Sunil Gupta.  These academics found some interesting results using data from a U. S. bank that used display advertising to obtain new checking account customers.

Appropriate metrics are complex, indicate high ROI

The display advertising generated more search volume, clicks and conversions but the effect took about two weeks.  The authors were also able to make some attributions regarding budgeting decision.  According to these calculations, a dollar invested in display ads returns $1.24 and a dollar invested in search ads returns $1.74, which would suggest a far larger investment (36% increase) in search advertising in this context.

As the authors note, standard measurements such as Click-through rate CTR and Cost per acquisition (CPA) are static measures that don't take into account what may happen over time.  This study suggests that managers need to step up their game in terms of metrics in order to capture these search effects accurately. The metrics are beyond those normally used in practice.

By Debra Zahay-Blatz.
You can find Debra on  and Twitter as well as LinkedIn.

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