Automotive Display Advertising: Driving Cost Efficiencies in Search http://tier10lab.com/2012/07/24/automotive-display-advertising-driving-cost-efficiencies-search/ July 24, 2012

By Tim Schmidt

Utilizing a multi-faceted digital approach is key to running an efficient digital advertising strategy. We all know this to be true, but to what extent can we attribute the efficiency gains of running both Search Advertising and Display Advertising simultaneously? We took the liberty of taking a close look at the cost efficiency gains for one of our clients running the “whole package” and the results were enlightening to say the least.

Let’s take a step back and put ourselves in the shoes of a consumer looking to purchase a new vehicle. Most likely they will begin their car buying process by researching applicable makes and models via consumer research reports, automotive forums, asking their friends and family, etc. That being said, at the top of the purchasing funnel consumers are in the research phase. Communicating with these potential customers during this portion of the car buying process is extremely important at the Tier 3 level, as they likely have not decided on a specific dealership to do business with. This type of display advertising targeting is referred to as behavioral targeting, and is based on targeting users who have shown interest in your makes/models via their Internet activity for up to 30 days. In addition to behavioral targeting, display advertising can target consumers based on the content of the website the ad is served on, and is referred to as “contextual targeting”. Both types of targeting play a vital role in a successful display advertising campaign.

So the consumer has been researching the makes and models they are interested in, and has seen your Display Ad boasting your low-priced lease offer on the model of interest “following them around the Internet”. This type of display advertising targeting is based on “Re-Targeting” consumers by IP address if they have seen your ad previously, or have visited your website. Re-targeting plays a vital role in reaching the correct frequency of ad impressions, and is crucial in driving more branded search. Once the consumer has gotten past the research stage and has moved into the purchase intent stage, these impressions should prove to be extremely valuable “assists” in driving leads and ultimately sales via Search Advertising. Assuming your offer has stood out to the consumer, chances are they will recall the name of your dealership and search for it by name via search engines once they are ready to purchase.

 

This is where your conversion tool (Paid Search Advertising) comes into the equation via capturing the consumer’s click, conversion, and ultimately the sale. Now that we have touched on how Display Advertising drives more branded search, let’s take a look at the metrics showing the cost efficiencies we have seen within our branded search campaigns through running Display and Search simultaneously, as well as the reasons behind these cost efficiencies.

The metrics shown above and below are from a Tier10 client that started their Display Advertising campaign in April of 2012. The data shows the month prior to running a display campaign, and the three months following where display and search were run together. (All other advertising held constant.)

Over this three-month period, we saw a 26% reduction in Average Cost Per Click, shown above in Exhibit A. This reduction in CPC can be explained through simple supply and demand. As the Display Advertising campaign began driving additional branded search in April, the amount of times the dealership was searched for by name had increased significantly. During this same period, no additional advertisers were bidding on the dealership’s branded keywords. Because of this, Google lowered the price point for each click, as they want to continue to serve our branded ads each time our branded keywords are searched. This is the primary reason why we have seen such efficiencies. Additionally, a large portion of the branded keyword searches in April, May, and June were “assisted” by display ads, the click-thru-rate on our brand campaign increased. Due to this increase in CTR, Google rewarded us by

assigning higher quality scores to the keywords with increasing CTRs, which as we all know leads to a lower CPC at a higher position.

We also saw an 18% increase in click volume, and a 14% reduction in Total Cost from the branded campaign over this three-month period. These efficiency gains stemmed from the increased CTR and reduced CPC due to the addition of the Display Advertising campaign in Q2. As the CTR increased each month, we began seeing increases in the amount of clicks received. If CPC had remained constant, we would’ve seen a higher

CTR, but no increase in the actual volume of clicks. Since we were rewarded with a lower CPC, we saw both a substantial increase in clicks and a substantial reduction in total cost. (See Exhibit B)

The take-away from this article is as follows: Display and Search work best when run simultaneously with consistent messaging. Follow this simple principle and you will be extremely pleased with the results. Happy optimizing folks!

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