In the Oscar-nominated film ‘Moneyball’, Brad Pitt plays Billy Beane, the real-life General Manager of the Oakland A’s. Facing severe budget constraints, Brad’s character looks to develop a niche strategy to compete against his deep-pocketed peers (I’m looking at you, New York Yankees). This is the same situation facing many small-to-medium sized tech companies trying to grow with online advertising. It’d be great to run the full gambit of online tactics, with broad paid search campaigns and massive media buys. But the large players in your industry can out-budget you in those respects. Like Mr. Beane, you have to think niche, identify your competitive advantage, and stick to it.
I handle media buys for eBridge and I often help clients in this situation. In this post, I’d like to focus on the differences between paid search and media buys to help you get a better understanding of the channels that will work best for you and your business goals.
The number of large firms competing in your industry will have a significant impact on your chosen marketing tactics. With paid search, many large firms competing will drive up the required bidding prices.
Large firms have a different advantage when it comes to media buys. Typically, large competitors will make larger buys that are easier to manage. Sure, they may have access to some sites and ad inventory that you don’t. But they’re also likely overlooking high-value opportunities with smaller websites. As a smaller company, you can compete by capturing a large share-of-voice on smaller sites that speak to your target market.
Up until recently, paid search has been considered a better way to reach those with purchasing intent. Indeed, someone searching “Buy Tennis Ball” is more likely to buy a tennis ball than someone who just sees a banner ad. With paid search, you can get very granular by targeting based on factors like geography, language, device type, and browser (companies with tech-savvy users might want to consider excluding Internet Explorer for instance).
With media buys, it’s historically been at the website’s discretion as to the targeting options available. Larger sites may have many options, including geography, day-parting, and even contextual targeting where users are categorized based on their onsite behavior. Smaller sites may not have any targeting options at all; you either buy their run-of-site impressions or you don’t.
A new wave of highly targeted display advertising known as programmatic buying is gaining popularity. Programmatic buying brings the benefits of paid search to banner ads. You set a wide variety of criteria, a maximum bid price, and a budget. Then you are automatically entered into auctions for ad space as the impressions become available. The entire process happens in an instant while the web page loads.
Does your audience tend to congregate on a specific site, such as a popular blog or a news site or industry forum perhaps? When you know that the visitors to a particular website will be your target market, media buys are a great option. But if your audience is niche and hard to track down online, paid search or programmatic buying is a better alternative.
Paid search rates vary widely depending on the industry you are working in. In some competitive industries, paying north of $100 per click isn’t unheard of. Contrast this with a less mature industry, with fewer large competitors, where clicks could be less than a dollar each.
As a rule of thumb for media buys, for impulse B2B purchases it will be very hard to see any ROI with CPMs over $10. For research based B2B purchases, with accompanying longer buying cycles, CPMs can go up to $30 or more. Weigh these costs against the rates you can expect in paid search to determine financial feasibility.
Optimally running paid search campaigns requires expertise. Creating ads goes well beyond drafting some copy and selecting a few keywords. Managing campaigns is challenging and requires someone who has been trained in the nuances of paid search. In order to maximize your returns, all aspects of your campaign must be fully optimized. You might think that the only budget you need to concern yourself with is what Google will charge you per click or impression, but a poorly set up campaign will carry with it hidden costs, like going after the wrong keywords.
On the media buying side, it takes time and know-how to identify relevant sites, manage campaigns, handle the administrative side of things, and get the best pricing. Some trial-and-error will most likely be needed to figure out the best strategy for your business and which publishers and outlets offer your business the best ROI. The extent to which you can effectively identify which sites to consider and then screen those sites based on expected performance and other targeting criteria will directly impact your ROI.
In Moneyball, Brad Pitt’s character became obsessed with one stat: On Base Percentage. His entire strategy was to acquire players who get on base, contrary to traditional baseball pundits who placed value on silly things like fitness and defensive play.
Marketers too are well served by identifying key-performance-indicators (KPIs) that vibe with their overall strategy. Paid search tends to be more of a low-funnel tactic, because the idea is usually to target those with buying intent. The most common KPIs are clicks and direct sales. And it is very easy to incorporate data from AdWords into Google Analytics for detailed analysis.
Media buys tend to be higher funnel, where the goal is to generate awareness more-so than drive direct sales. KPIs such as clicks and sales are not as relevant, and relying on them could lead to misinformed decisions. Instead, KPIs like time-on-site, pages-per-visit, and assisted-conversions can help determine campaign effectiveness. This is especially true for companies with tech-savvy customers who tend not to be clickers of ads, and for companies with long sales cycles where many brand interactions are necessary prior to a purchase.
So to sum up…
Paid Search is great if…
Media buys are great if…
The Oakland A’s didn’t win the World Series with Billy Beane running the team. But they did go on the longest win streak in MLB history. I’ve done my best to outline some of the most important considerations for your business when deciding between media buys and paid search, however things will always depend on your particular situation and your industry.
If you’d like to discuss further how you can put your budget to best use, please don’t hesitate to contact us to discuss further. We’ve been working with online media for years and we’d love to help you achieve your online advertising goals.
Or leave a comment below with your thoughts and questions or to share the online advertising strategy that has worked for you.