Paid-for search words a waster of money: eBay

Paid-for search words a waster of money: eBay

A study by eBay has found that paid search terms for it and other well-known brands is all but a complete waste of money.

Consumer Heterogeneity and Paid Search Effectiveness: A Large Scale Field Experiment concluded that “brand-keyword ads have no short-term beneÔ¨Åts, and that returns from all other keywords are a fraction of conventional estimates. We Ô¨Ånd that new and infrequent users are positively inÔ¨Çuenced by ads but that existing loyal users whose purchasing behavior is not inÔ¨Çuenced by paid search account for most of the advertising expenses, resulting in average returns that are negative.”

The study found that because companies with such household names as eBay fared so well in organic searches, paid for search results only tended to push them out of the road.

It concluded that “of the $31.7 billion that was spent in the US in 2011 on Internet advertising, the top 10 spenders in this channel account for about $2.36 billion. These companies generally use the same methods and the same consulting Ô¨Årms to design their ad campaigns and there are many reasons to think that the results we presented above would generalise to these large and well-known corporations.”

A spokesman for Google Australia said: “Google’s own studies, based on results from hundreds of advertisers, have found that more than 89% of search ad clicks were incremental and that 50% of the search ad clicks were incremental even when there was an organic search result for the advertiser in the top position.

“Since outcomes differ so much among advertisers and are influenced by many different factors, we encourage advertisers to experiment with their own campaigns.  We provide tools such as AdWords Campaign Experiments and Content Experiments and recommend a statistical method for advertisers to conduct their own geo-targeted experiments.”

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