AIAP Newsletter 05/28/04

Dear AIAP Member,

We are aware that many of you are using Google Adwords as part of your online marketing strategy.  We thought we'd pass along this news relating to the effectiveness of Adwords according to an outside study.  This story is by Chris Richardson, Senior search engine writer for WebProNews, and is copyrighted:

A study conducted by Vividence, a market research firm, examined how people interact with search engines. The study, which Vividence released the findings of yesterday, May 25, 2004, found that search engine use and search engine ad click through rates do not necessarily correlate.

Vividence's study is the first to examine how the customer's online experience affects perceptions of search results and advertising, as well as search engine brands. The company surveyed 2,000 customers as they interacted with leading search sites. 

The results revealed that Google is indeed the industry's leading search engine, in terms of visitors. However, these findings also indicated that while Google is the leader in terms of users, there are "potential liabilities that competitors such as Yahoo! and Ask Jeeves may be able to capitalize upon." 

Google owes its success, according to Peter Watkins, president and CEO of Vividence, "the strength of its brand and its clean and simple presentation of search results." 

The liabilities that Vividence's study mentions are the click through rates for ads that appear on SERPs. Watkins continued, "Google does not appear to benefit from any advantage based on actual search results returned, and places last in the index measuring overall ad activity and awareness. This clearly shows that the battle for leadership in the search industry is far from over." 

The study is broken down into two parts. The first being customer experience and the second being ad activity. Vividence provided a ranking of each category that it studied. The first is the customer satisfaction rankings: 

Vividence Customer Experience Rankings 
1. Google 
2. Yahoo! 
3. Ask Jeeves 
4. Lycos 
5. MSN 

According to the report, "Google is the run-away leader in terms of customer loyalty and satisfaction, with a vast majority of study participants indicating that Google is their primary search engine and 89% indicating they had a strongly positive experience with the site. Yahoo! was the clear number-two search site with 68% of users indicating a strongly positive experience." 

The study also determined that it is the Google brand which drives this user loyalty. Users perceived a higher search success rate when using Google. However, Vividence discovered that "actual search results returned by the leading five search engines do not differ substantially." The report went on to say that when measured objectively, Google users did not reach a higher level of search engine success when compared to the other engines. 

"Brand and presentation have a more direct correlation to a search engine's popularity than actual search results," said Peter Watkins, president and CEO of Vividence. "A technology barrier does not appear to exist in the search industry, but a rather large brand barrier currently does exist." 

The second part of the study dealt with which search engines collect the highest rate of ad click throughs. Vividence's findings concerning ad clicks were somewhat surprising. The following is a list of how each search engine ranked: 

Vividence Ad Activity Index 
1. Ask Jeeves 
2. Lycos 
3. MSN 
4. Yahoo! 
5. Google. 

The surprise comes from the fact that Google was the runaway leader in the customer satisfaction study. But, as the study shows, Google was dead last in ad activity. Vividence uses its Ad Activity Index to study ad performance, "including click-through rates to sponsored links and time spent on the sponsored site." 

The study found that while users stated they were more likely to click on Google sponsored links, although in practice, Ask Jeeves and Lycos received higher ad activity than either Google or Yahoo. 

"Google certainly benefits from a halo effect based on its brand position and reach. However, according to the study, Lycos and Ask Jeeves seem to do a much better job of delivering the goods when it comes to advertising awareness and click-through rates," said Mike Grehan, a search industry consultant and author of Search Engine Marketing. "Although it may appear that Google seems to be making a near-term decision to build customer loyalty at the expense of achieving higher ad click-through rates, its competitors could well be sacrificing customer loyalty for the sake of 'quick hit' ad revenues." 

Further findings showed that while getting a smaller amount of ad activity, Google received kudos for better labeling and separation of their search result ads. Activity leaders AskJeeves and Lycos frustrated their users by placing sponsored links within the main content. 

Taking a look at the ad activity rankings list, even though Google takes up the last place, they also indirectly garner the first position. AskJeeves, who ranks first, has their search engine result ads served and sponsored by Google. So, while Google is last in direct activity, they also should get consideration for first place, since the top spot is held by a search engine that employees Google's ads. 

One last item of interest goes back to user loyalty and customer experience that Vividence studied. Google's search satisfaction is reduced when users have to attempt complex searches. So much so, that it drops the site to "parity with its competitors." 

This is indicative of all search engines. The more difficult and obscure the search is, the more important keywords and parameters are in order to return a relevant result, regardless of what search engine you use. 

A quote by Safa Rashtchy, Senior Internet Analyst of Piper Jaffray & Co., sums up the findings of Vividence's report quite nicely: 

"This study shows how the search industry is not just driven by technological advantages but by strong brands and consumer perception. As the industry continues to grow, it is critical for search companies to focus on and leverage what drives consumer preferences - and how search destinations succeed."