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BizReport : Search Marketing : February 07, 2007

Keyword quality, not cost, is key

Following a sharp rise of 16.5 percent in Q3 2006, the average price for keywords rose by just 2 percent in Q4 2006. Such are the findings of Fathom Online in their Keyword Price Index.

by Helen Leggatt

It is a usual pattern. In the run up to the holiday season online advertisers make significant keyword purchases. The spend drops back after the holiday rush and continues to remain low in the post-holiday period.

In addition, notes Dean DeBiase, chairman and CEO of Fathom Online, advertisers are realizing discounts through better quality scores due to higher click-through rates. However, he added, only the most sophisticated marketers are maximizing this opportunity because of their use of technology and analytics.

"The quarter again showed why price doesn't always win," DeBiase said. "The quality of the keyword buy -- its effectiveness in drawing the interest of end users -- is clearly rising in importance. The good news is that, despite the long-term upward trend of keyword prices, advertisers can mitigate the price increases by managing their Search Marketing initiatives more aggressively through technology and analytics. The ability to monitor, measure and adjust is more important than ever to improve return on investment."

The quality versus price issue is gradually being addressed. Yahoo’s new ranking model, Panama, went live on Monday and all their search marketing ads in the U.S. will be ranked by quality in addition to keyword bid price. That means an advertisement more likely to be clicked on might receive better placement on a search results page than a sponsored result with a higher bid.

Tags: advertising spending, bid placement, keyword analytics, keywords, Yahoo

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