Why CPG Brands Better Buy Paid Search

Yahoo/MediaVest Study: Sponsored Text Ads Increased Awareness 160%

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BATAVIA, Ohio (AdAge.com) -- Package-goods and fast-food marketers: Ignore paid-search advertising at your own peril. That seems to be the message of new research by Publicis Groupe's MediaVest and Yahoo that finds search ads have a huge impact on brand awareness, perception and purchase intent -- even among consumers who never click on them.
Yahoo Search
Yahoo's motivation for funding the study is obvious: It wants to sell more search ads, particularly to package-goods players that don't typically spend that much on the medium.
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Lifting Awareness

A study of more than 6,000 consumers for the companies by ComScore found that brands generated an average 160% increase in unaided awareness by being present in standard sponsored-text search results compared with when consumers weren't exposed to their search ads.

It also found that consumers were 20% more likely to have positive perceptions of brands in the top paid-search position than those in second or third positions and 30% more likely to consider purchasing a product when the brand was at the top of paid-search results.

Yahoo's motivation for funding the study is obvious: It wants to sell more search ads, particularly to package-goods players that don't typically spend that much on the medium. MediaVest participated because it represents several top package-goods players, including Procter & Gamble Co., Kraft Foods, Coca-Cola Co. and Mars as well as fast-feeder Wendy's, a spokeswoman said.

Substantial penalty
In something of a media seller's dream, the research also found a substantial penalty for brands that don't buy paid-search ads. For example, in the baby-care category, unaided awareness for competitive brands grew an average of 45% when a test brand's search ad wasn't present but a competitor's was.

The study aims to answer questions raised by another study last year from Yahoo, ComScore and P&G showing widespread consumer use of search even for seemingly low-interest package-goods categories. It doesn't take the final step of showing whether paid-search ads increase offline sales, but that's the subject of an upcoming third phase of the research.

Based on the brand-equity scores in the current study, however, Yaakov Kimelfeld, senior VP-analytics for MediaVest, said he suspects paid search does have a significant impact on offline sales in addition to an already well-documented impact on online sales.

"What this study actually proves is that search moves the branding needle for CPG," Mr. Kimelfeld said. "It's really good news for brand marketers, because there are really strong efficiencies they can find in search marketing. ... The price for this branding value is zero, because it's being served anyway [and marketers pay for clicks, not number of impressions]. At this point, the cost per click in these categories is very low."

How much they spend on search
EMarketer estimates that consumer-package-goods companies allocated only about $140 million to $180 million, or 15% to 20% of their total online spending, to search last year. Package goods as a category makes up only about 2% of eMarketer's estimated U.S. search spending, compared with the 11% of other media spending the category accounts for as measured by TNS Media Intelligence. And TNS figures show package-goods marketers' search outlay amounts to only about 1% of the $16.4 billion the industry spent on other media last year.

The study covered seven broad categories, including pet, baby, beauty, oral and home care, food (covered broadly via recipe searches) and quick-service restaurants. And while results varied by category, search ads produced substantial brand-equity improvement in all of them, Mr. Kimelfeld said.

ComScore identified more than 6,000 consumers in its U.S. panel who made searches on terms in the target categories. Those consumers then were recruited to participate in a study in which they were exposed to simulated search results.

Big impact
The brand-equity impact of search ads was stronger than what Mr. Kimelfeld said he's used to seeing in research on other types of media, including online display, but he noted that the simulated setting also meant less ad clutter than real-world media studies typically involve.

One way search appears to work differently than other media, Mr. Kimelfeld said, is that brands can be hurt as much by their own absence as by their competitors' presence. "The implication is if you're present, your awareness goes up, and if you're not present, your awareness goes down," said Matt Wilburn, senior category director for CPG at Yahoo.

One factor not tested was whether strong rankings in natural or organic search results compensate for or overcome the effect of paid search, Mr. Wilburn said. The study did find, however, that "challenger" brands benefit more than category leaders from being at the top of both paid and natural search results.

'Digital shelf' analogy
Mr. Wilburn said the results extend the "digital shelf" analogy made in the study last year -- that making a brand visible in search is much like, and in some ways as important as, making it visible on the retail shelf. He likened not being in paid search to being out of stock on the shelf.

One difference, of course, is that it's still cheaper and easier for a brand to buy its way onto the shelf in search than retail. For challenger brands in particular, search ads appear to present considerable opportunity and risk, MediaVest's Mr. Kimelfeld said.

"It seems like from the results that the punishment for a challenger brand is very high [for not being in the paid listings]. So they really should be there," he said. "And it's also cost-effective for them. It's probably cheaper than a TV campaign, and it's much easier to raise the brand perception."

At the same time, however, Mr. Wilburn said the study showed leading brands also could increase their awareness substantially by being present in search listings. Unaided awareness for a category-leading quick-service restaurant, for example, was 31% among consumers exposed to search ads in the study vs. only 19% for those not exposed, and unaided awareness for a leading home-cleaning brand increased to 19% from 4% through search-ad exposure.

In first place
To Randy Peterson, internet innovation manager for P&G, the major insight from the Yahoo/MediaVest study is the importance of first position in search advertising, but he's not yet convinced that the return on investment justifies the potential added cost. "I think our brands have such a strong presence that it's nice to be in the first position, but I don't think we have to be there," he said. "I'm not convinced it's worth paying the extra money or the extra effort to get there yet."

Mr. Wilburn noted, however, that first position was actually less expensive than second or third in five of the seven categories in the study. That's because quality scoring -- which takes into account the number of clicks and the quality of user experience on the destination web page -- overcomes the impact of bidding for position in a system similar to that used by Google and MSN as well.

At least for now. But MediaVest's Mr. Kimelfeld said that's because bidding for keywords is relatively light today in the tested categories. The return-on-investment trade-off isn't a factor yet, but it could become one, particularly if marketers heed the study. "It's kind of like the Klondike before the gold rush," he said. "If all branding clients go and do search for branding, it will change."

The executives at Yahoo are still dreaming of that day. "Yes, it's growing, and we have helped drive a lot of growth," said Brian Zeug, category-development officer for CPG at Yahoo. "But CPG is still a laggard."

Lifting Awareness

Unaided awareness of category-leading brands
Category Consumers exposed to one search ad Consumers not exposed
Food (recipe search) 37% 23%
Home Cleaning 19% 4%
Beauty 20% 7%
Quick-service restuarant 31% 19%
Oral Care 18% 15%
Pet food 26% 15%
Baby care 30% 18%
Source: Yahoo! and MediaVest

Unaided awareness of beauty brands vs. competition
Category When all brands have search ads present When no brands have search ads
Leading brand 33% 15%
No. 2 brand 1% 7%
No. 3 brand 6% 9%
Other 52% 60%
Source: Yahoo! and MediaVest

Change in unaided brand awareness from one search ad exposure, vs. control group not exposed to ad
Food (recipe search) 88%
Home Cleaning 333%
Personal Beauty 344%
Quick-service restaurants 121%
Oral care 59%
Pet food 79%
Baby care 92%
Source: Yahoo! and MediaVest
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