Ad Age Digital: Explain the impetus for your search study.
Jeffrey Glueck: We were eager to make all of our advertising work harder, both online and offline, and drive profitable growth. We think search is a wonderful channel, and in no way are we saying that smart marketers should avoid generic terms on search. You should be playing in nonbrand search, and if you're not, you're making a mistake.
We noticed several things that made us want to dig deeper. All was not as it seemed. When we did modeling across all our offline and online channels, we found DRTV seemed to be driving more transactions and search fewer transactions than we thought by direct measurement. We then figured out that a lot of the search transactions are brand terms, and the model could identify that TV was driving people to Google and Yahoo to search for our brands.
The second curious fact came from how the profits on generic terms seemed to be lower than the profits from brand search. Well, when we dug into the numbers, we were surprised that around 80% of the search bookings came from brand and misspellings, even though brand terms were a small percentage of our spend. ... We wanted to question our assumption, and that led us to study the portfolio theory.
Ad Age Digital: Explain the portfolio theory.
Jeffrey Glueck: The pure portfolio theory states that you should mix all your brand- and nonbrand-term profits together and increase your spend on search until the marginal profit hits zero across all your search terms. Our concern was that approach lets profits from brand [terms] subsidize losses from nonbrand terms.
We then studied whether people are starting on a nonbrand term like Hawaii vacation deals and, through multiple searches on a search engine, narrowing down to their favorite brands through multiple paid clicks and then, in some magical way, always going to the brand name and clicking on the paid link before buying. That is the funnel theory. If that were the majority of purchases, then the portfolio theory would make sense. We'd be OK to lose money on Hawaii vacation deals and make money on branded search terms.
This January we got the first detailed web analytics study from Travelocity.com about multiple clicks. Last-click measurement is very popular, and it's what has for the last few years allowed search engines to say they're the most measurable form of media in history. Travelocity's point was that you should do the research on your own brand and nonbrand click behavior and don't let brand profits fool you into overbidding on nonbrand terms. ... Every advertiser sets their own threshold based on their conversion and profit level. We weren't saying search wasn't measurable. We're saying advertisers should get more sophisticated and accurate about how they measure it.
Ad Age Digital: When it comes to bookings from search, how were nonbrand terms affecting your brand search results?
Jeffrey Glueck: About 4% of the bookings that occurred on brand terms should actually be credited to an earlier search on a generic term like Hawaii vacation. That 4% was less than the 12% that other companies had reported in a 360i study last year. Every company will have a different number, but the point is, we didn't see any evidence that the funnel theory was the majority of bookings. Most people who bought with us only clicked one paid search ad in the 45 days before booking. About 76% of bookings from search were based on a brand search. ... Thanks to that 4% funnel, we could lose a couple dollars on each booking from nonbrand phrases and still feel good about our spend.
All of these figures apply to Travelocity in a given period of time. Other marketers should do their own research in the same way. You have to calculate an accurate "assist percentage" for your business. Every business is different. ... Small companies without a strong brand will probably gain more exposure through generic searches. But they still have to do the math and decide if they're getting profitable business or not.
Ad Age Digital: What drives people to search for brand names?
Jeffrey Glueck: It's everything you do that causes someone to go to the computer and choose to type your name into the blank box. It's e-mail, offline advertising, your word-of-mouth reputation. And, to a small extent, about 4%, it's that they discovered you through a generic search.
Ad Age Digital: What's the big picture here for marketers?
Jeffrey Glueck: There are three lessons. Marketers should apply rigorous measurement to their offline and online media alike in a unified way. They have to understand the relationships between their offline and online media at the root-cause level. In other words, if your TV or radio spot causes someone to type your name into a search engine, you need to understand that relationship. No search engine can get people to type your brand name into a blank box -- only you can. Third, they need to get more rigorous about measuring search, not letting brand profits subsidize nonbrand phrases and not forgetting their variable profit margins when they bid.