search and performance display - better together - criteo - 2012

Search and Performance Display: Better Togetherby Thomas Volpi, Global Head of Marketing, Tom Burg, Head of Marketing and Communication US, and Patrick Wyatt, Head of Business Intelligence

Research Paper # 2 September 3rd, 2012

© Criteo — September 3rd, 2012 1 / 8

Search and Performance Display: Better together

How to take advantage of the synergies from combining Search and Performance DisplayAfter years of sustained growth, business driven by Search Engine Marketing (SEM) is slowing down. This Criteo research paper analyzes the convergence of Search Marketing and Performance Display. It demonstrates that advertisers can achieve signifi cant synergies by using both these channels simul-taneously, generating increased conversions and improved ROI.


2 / 8 © Criteo — September 3rd, 2012

Executive summary

Today, businesses face a wide array of digital marketing options in the quest for im-proved return on investment and greater sales volumes. Historically, Search Marketing has been the most reliable, cost-effective way for marketers to generate new custo-mers and sales, but fi fteen years of growth has created signifi cant market saturation, where additional investment often doesn’t create enough additional return. Though Search Marketing can be extraordinarily effective, it still faces the limitation that users spend only 5% of their time searching and only 13% of people perform a shopping-related query on any given day.

Fortunately, the emergence of Performance Display advertising – infusing online ban-ner advertising with real-time data and optimization capabilities – has given a real shot in the arm to the online advertising ecosystem. It has provided marketers with a way to engage users the 95% of the time they are not using search engines, reaching TV-like audiences, this time with one-to-one messages. By borrowing many of the strengths Search Marketing is famous for – measurement, scale, transparency, and driven by user intent – Performance Display has provided marketers with a dramatic new way to generate new customers and sales. But what is even more compelling is recent data suggesting that the convergence of Performance Display with Search has created a powerful, combined approach.

Criteo, in conjunction with The Nielsen Company, recently conducted research to in-vestigate the impact that performance display advertisements have on users’ search habits. The research demonstrated that marketers who successfully combine Search Marketing with Performance Display enjoy substantial business benefi t. That combi-nation, in fact, drives 4 tangible benefi ts :

1 — Extending Performance Display to the entire funnel. By leveraging interest, in-tent and engagement data, the combined performance of Search and Display allows marketers to address the entire funnel.

2 — Increased search Activity: According to Nielsen studies, when Performance Display is combined with Search, organic searches (SEO) increase by 28%.

3 — Lower paid search for advertisers: users exposed to performance display ads click on paid search results 5% less often than do non-exposed visitors.

4 — Enhanced branding effect. Exposed users make 50% more branded que-ries, and have a 25% higher brand awareness.



Introduction

It’s Simple – Search WorksSearch has been a dominant digital marketing chan-nel for years and it continues to play a vital role for marketers today. Simply, it’s where the audience is - last year, 63% of Internet users used search en-gines at least 5 days a week. 1 Hence, search adver-tising is a valuable approach when advertisers look to reach consumers who exhibit intent, with the ability to show relevant messages against the very keywords consumers are searching for. It is no surprise that advertisers generally prefer solutions offering at the same time scalability, a low risk management ap-proach - real time monitoring of Clicks, CTR and ROI, and the combined ability to optimize and perso-nalize their campaigns on any adjustable parame-ter that has a proven impact on campaign results.

Search LimitationsThough SEM provides advertisers with a low-risk marketing experience, there are still limitations. Satu-ration in the marketplace, coupled with declining ROI, has opened the door for other complementary solu-tions to break through. SEM limitations include:

Low Time Spent: Nielsen studies show that users spend only 5% of their time on search en-gines, as opposed to 95% on content-related sites 2. Advertisers must therefore complement their search marketing efforts with performance display banner advertising to ensure greater “targeted awareness.”

Few Shopping Queries Limiting Supply: Only 13% of internet users do daily shopping-related requests 3 . More than 77% of all search queries are for non-shopping-related topics. As a result, the ave-rage CPC has soared. According to Google’s Investor Relations Page, the average CPC on Google more than tripled in fi ve years, from $0.38 in 2005 to $1.24 in 2010. Unlike Search Marketing, Performance Dis-

play can reach a fully extendable audience, thanks to RTB solutions. In 2011, RTB granted access to 10% of the US display market, which counted 4,8 trillion display ads that year 4. In this case, the technology multiplies contact points with potential buyers for bet-ter conversion rates and more new clients.

Moderate Usage Frequency: Nielsen shows internet users use Google Search once every 2.4 days (Source: Mediametrie//NetRatings – 2012 home/offi ce) and all forms of search once every 2.5 days according to comScore (Qsearch, 2011).

Limited Branding Effect: For product-related marketers interested in driving brand awareness, search advertising provides very little branding effect. Typical brand marketing KPIs like awareness, inte-rest and demand generation are diffi cult to measure through search, a purely performance-driven chan-nel. On the other hand, display solutions allow for a greater branding effect as consumers are more likely to do a branded search after they have been exposed to a display ad 5.

Inability to Cross Sell: With search marketing, advertisers are also limited in what they can recom-mend to consumers. Indeed, within a simple text ad, it is not possible to dynamically suggest a range of complementary products or services, the likes of which can be done with Performance Display solu-tions, as the approach allows for greater variety than simple text.

1. Source : Deloitte, May 2012 “Vox Populi : State of The Media Democracy Survey” 2 . Forrester Research, “Interactive Marketing Forecasts, 2011 to 2016”, August 20113. Deloitte, May 2012 “Vox Populi : State of The Media Democracy Survey”4. Source : comScore, USA, 2012. 4.8 trillion display ads were delivered in 2011 in the US alone.5. Source : Nielsen, USA, September 2011



Performance Display andSearch Together Result in Win-Wins

Performance display and Search should no longer be seen as different beasts. The two channels share the same DNA:

Together, they make an even more powerful combi-nation. Studies run by Nielsen for Criteo have shown four main synergies between Search and Performan-ce Display that marketers should consider:

Win-Win #1Enhanced performance across the entire purchase funnel

It’s all about the data.Over the last few years, the online advertising industry has focused on leveraging and injecting into ads all different types of data. It has been, in essence, a giant and collective R&D effort, all to make Display “smarter” by exploiting what is now known as “Big Data.” Far beyond Search data, it is the aggregation of all user-centric information. It now allows adver-tisers to measure the impact of targeting the upper funnel with smart key performance indicators (KPIs): keywords, intent-based metrics, browsing interest, demographic fi gures, and social preferences. Intelligently injected into Display, these complemen-tary sources of data allow a much broader approach than SEM’s solely intent-based solution. Marketers can now speak to and engage with new customers on a performance basis, all related to different levels of intent, interest and engagement. Thanks to this large amount of data, advertisers can then set the most ap-propriate and relevant levels of investment, necessary to address new, dormant and active customers. To leverage this massive dataset, Performance Dis-play vendors have created different tools such as retargeting, targeting, search-retargeting, look-alike, and others, that can be used separately or bundled to offer the best performance. Search and Performance Display are highly complementary and both are required to address the entire purchase funnel.

Upper Funnel > Display ads help drive awareness and then interest

Only Performance Display can drive initial interest from the upper funnel. C3 Metrics’ recent study has shown that Display originates 44% of advertisers’ transactions 6. Marketers understand that upper-fun-nel advertising campaigns are best suited to drive awareness and interest and without them, revenue is diffi cult to generate longer-term.

SEM does not detect or initiate interest at the upper funnel; awareness is best generated by Display ads. With the right data, ads will deli-ver relevant, timely messages, and the most ad-vanced will include a product recommendation.

• Bidded CPC Model• Dynamic Personalisation• Real-Time Campaign Management and Optimisation

1 Enhanced performance across the entire purchase funnel

2 Increased Search activity

3 Lower paid search for advertisers

4 Enhanced Branding Effect

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© Criteo — September 3rd, 2012

> Illustration #1 The right data to uncover the right customer

This graphic represents the full range of interest, intent and engagement data across the entire purchase funnel – in order to properly reach new, active and dormant customers with the most rele-vant and accurate messaging. From top to bottom, we believe there are 3 primary types of data involved in the buying pro-cess across the funnel:

1 — Interest (1st-party data): demogra-phics, behavioral data from publishers, and behavioral data .2 — Intent (1st-party data): high-intent data collected from social platforms (I like/I want), generic keywords (product category) and specific keywords (pro-ducts, retailers)3 — Engagement (3rd party-data): spe-cifi c searches on in-site engines, beha-vioral browsing and buying statistics to fuel product engine recommendations.

SEM is purely intent-based marketing and is 100% fueled by intent data – com-prising only the queries entered by users on search channels. Performance display, by leveraging the most appropriate data, can now be considered a “full purchase funnel” advertising channel.

6. Source: C3 Metrics, Q1 2011. C3 Metrics examined 50,000 transactions across a subset of its client data collected in Q1, 2011. C3 Metrics’ proprietary decision engine provides full-funnel attribution modelling, capturing all online media sources from the top of the funnel, where sales are originated, to the conversion at the bottom of the funnel. Across all 50,000 transactions analysed, C3 Metrics determined originators, assists and converters for each transaction at a granular level.7 . Source : Criteo, “Value of Clickers”, research paper written by Patrick Wyatt, Head of Business Intelligence, released in July 2012

OFF SITE DATA3rd party data

ON SITE DATA1st party Data

UPPER FUNNELNew Customers

LOWER FUNNELActive Customers

"WHAT I’M INTERESTED IN" Cookies

"WHAT I‘VE DONE" Cookies

"WHAT I LIKE" Social & Check-in

"EARLY SEARCH" Keywords

"WHAT I’M LOOKING FOR" Keywords

Strength of Data

Socio demo

Surf

Social

Generic Keywords

Specifi c Keywords

Specifi c Keywords

Behavioral surf

"WHO I AM" Demographic Data

Inte

rest

Inte

ntE

ngag

emen

t

SE

M

Pe

rfo

rma

nc

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isp

lay

Criteo © 2012

Mid-Funnel > Display can exploit generic interests and intent

Performance Display provides an effective way to leverage users’ queries done outside search chan-nels in order to engage high-potential customers through product-level personalised banners. The technology most used to do this is called Search Retargeting.

Lower Funnel > Making Display perform like Search

At the bottom of the funnel, user behaviour data is highly intent-based. Both SEM and Display can leverage specific queries and keywords from the search channel and from data providers and in-site search engines. Of course, the quality, accuracy and freshness of this data impact the performance.

Most intent data comes from active customer on-site behaviours.

When SEM and Performance Display both utilise high-quality, intent-based data, they often earn a comparable level of performance.

When the two channels operate in sync, adverti-sers enjoy a higher overall ROI. In July 2012, a Criteo research paper, “Value Of Clickers” 7 proved that when enough intelligence is introduced into the ads themselves, buyers do click on Display ads. Accor-ding to the study :• “Clickers buy 3 times more frequently than non-clickers”• “43% of regular buyers click on Criteo Ads Alone”• “50% of browsers are responsible for 80% of clicks and sales”.



"Visitors to advertiser sites, exposed to Criteo ads, make 28% more SEO clicks than do unexposed visitors."

SEM only with

Win-Win #2 Increased Search Activity

+ 28% SEO clicks from exposed visitorsAccording to Nielsen, users who have seen such ads click on natural (non-paid) branded search results 28% 8 more frequently than do non-exposed visitors. It can be said that Search and Display are highly complementary to users in the middle of a shopping experience. Users start with a generic search, then a more specifi c search, before visiting a site to investi-gate products and being shown ads that correlate to those products

Win-Win #3Lower Paid Search for Advertisers

- 5% SEM clicks Interestingly, the same Nielsen research also revea-led that those exposed to personalised messages click on paid search results 5% less often than do non-exposed visitors. This can result in signifi cant sa-vings for the marketer. It also demonstrates that ex-posed visitors are more directed towards purchases of specifi c branded products.

Win-Win #4 Enhanced Branding Effect

+50% more branded queriesAccording to Nielsen, when advertisers display per-sonalised, graphic ads to potential buyers, including the very product the consumer is looking for, users demonstrate higher purchase intent as they click on branded search ads 50% more frequently 9.

Non Exposed Visitors

Exposed Visitors

75

80

85

90

95

100

105

8, 9 . Source : Nielsen, France, August 2011, Research Study on Major European retailers.



10 . See note 8.

+25 pts of brand awarenessAccording to the same Nielsen Studies, Brand awa-reness increases by 25% for exposed users. For pro-duct-related marketers interested in driving brand awareness, search advertising provides very little branding effect. Typical brand marketing KPIs like awareness, interest and demand can hardly be in-creased through Search, a purely performance-dri-ven channel. On the other hand, Display solutions allow for a greater branding effect as consumers are more likely to do a branded search after they have been exposed to a display ad 10.

ConclusionThe convergence of Search and Display comes at the right time for the online advertising industry. The slowdown in growth of the Search Marketing space, with market saturation, higher prices and lower mar-gins, has enabled the rise of Performance Display. The combined effect – marrying the best elements of Search Marketing (keyword-based, biddable, sca-lable, measurable and driven by user intent) with Dis-play advertising – has created a powerful new set of strategies for direct marketers. Performance Display, when combined with Search Marketing, has driven tangible benefi ts to advertisers:

Extending Performance Display to the Entire Funnel. By leveraging interest, intent and engagement data, the combined performance of Search and Display allows marketers to address the entire funnel.

Increased Search Activity: According to Niel-sen studies, when Performance Display is combined with Search, organic searches (SEO) increase by 28%.

Lower Paid Search for Advertisers: users exposed to performance display ads click on paid search results 5% less often than do non-exposed visitors.

Non-Exposed Users

Exposed Users

Enhanced Branding Effect. Exposed users make 50% more branded queries, and have a 25% higher brand awareness.

This is all proof that the combination of Search and targeted Display delivers great results, at scale, for direct marketers.

Looking ahead, it will be data, properly captured and integrated, that will enable the correct segmentation of audiences based on intent. Channel proliferation will require advertisers to develop effective marketing strategies wherever the customers are – be it online, offline, or on a mobile device. The way to achieve this will be with a completely user-centric approach.



Main sources & related studies

— Deloitte, international study called “Vox Populi : State of The Media Democracy Survey” published in May 2012— Emarketer and ZenithOptimedia, March 14 2012, worldwide forecast for Display and Search.— comScore US, panel and research fi gures collec-ted since June 2011— Nielsen US, panel and research fi gures collected since September 2011— Forrester Research, “Interactive Marketing Fore-casts, 2011 to 2016”, August 2011— Benchmark Search based on Kenshoo Data – 2011 – Comparison of Search and Performance dis-plays for Top retailers.

Criteo Sources:— Ad Effectiveness Studies: Nielsen measured the impact of Criteo on different steps of the conversion funnel through 2 studies: These were two “Ad Ef-fectiveness Studies” (Nielsen Médiamétrie referent studies) conducted by Nielsen/Médiamétrie and CRI-TEO during a 1-month campaign. — Value of Clickers: A common belief persists among marketers: very few people click on online display ads, and those who do are not the kind of people worth advertising to anyway. This leads to the conclu-sion that the effi ciency of Display campaigns should be measured not with clicks, but rather by whether an ad was displayed (so-called “view-through”).This Criteo research paper aims to show that the bias against clicks is misguided. We have reviewed over $10B of e-commerce sales and have learnt that the audience that clicks on timely, relevant ads is ex-tremely valuable.

Nielsen Methodology - Branding effect of Performance Display

Ad effectiveness is a study combining observed data (médiamétrie/NetRatings) and post-test results based on questionnaires (access panel Research Now) which allows advertisers to check if they have the right balance between exposure campaigns and user experience and brand image

Two campaigns ran for 2 of the European online lea-ders in electronics, clothing and house decoration. Campaign periods: August 2010 and June 2011.Ad Effectiveness, how does that work?

Combination: • Observed data: Panel of Médiamétrie // NetRating• Released data - 2 post-tests “Access panel Re-search Now”: 1600 users interviewed (4x400)

Nielsen measured the impact of Criteo on different steps of the conversion funnel through 2 studies: These were two “Ad Effectiveness Studies“ (Nielsen Médiamétrie referent studies) conducted by Nielsen/Médiamétrie and CRITEO during a 1-month cam-paign. PROTOCOL / Impacts measuring of a Criteo cam-paign in 2 steps: Step 1 – Measurement calculated through a repre-sentative panel of 25000 internet users (panellists have a Nielsen tracker on their Web browser). It al-lows to track visted urls by the panellists. Step 2 – Question Poll a.k.a. “Post-Test” on 2 inter-net users samples exposed vs non-exposed to Criteo banners (2x800 persons). It allows the collection of declarative data such as banners, brand perception, buying intentions…

Presented data came from 2 aggregated studies conducted with a total of 8.2 million internet users exposed to Criteo. Post-tests are conducted online over 1600 internet users (800 exposed / 800 non-ex-posed).1 – Brand awareness (Calculated through step 2 – Post-test questionnaire). Following this questionnaire, Nielsen observed a positive impact (+25 points) on the advertisers’ brand awareness amongst internet users exposed to Criteo banners. 3 – SPECIFIC BRANDED CLICKS (Calculated through step 1 - Observed Data): Nielsen observes that internet users exposed to Criteo banners are 1.5 times more likely to have made a click on a request containing the advertiser’s name.

© Criteo — September 3rd, 2012

About CriteoCriteo is the global leader in Performance Display. Thanks to Criteo, advertisers can reach more customers with the same return- on- investment as they get from search marketing. Every day Criteo generates millions of high- quality leads through dynamically generated ads which are personalized with the products and services that consumers are searching for.

Criteo is measured purely on its post- click performance and offers a turnkey pay- per- click model including extensive real- time bidding tools, category and product level optimization and an in- house creative studio.

Criteo partners with over 3,000 leading ecommerce brands and operates in 30 countries across America, Europe and Asia. For more information, please visit http://www.criteo.com

About Nielsen Nielsen is a global marketing and advertising research company, and one of the world’s leading suppliers of marketing information (Nielsen Consumer, formerly ACNielsen), media information and TV ratings (Nielsen Media Research), online intelligence (Nielsen Online) and mobile measurement (Nielsen Mobile). Nielsen is active in over 100 countries, and employs some 32,000 people worldwide. On the global scale, Nielsen online Audience ratings and research solutions compete mostly with comScore. For more information: www.nielsen.com

search and performance display - better together - criteo - 2012

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