Search advertising is big business. Last year, digital marketers dug deep and splashed out a whopping $171 billion on search ads.
As it stands, five tech companies now earn almost half of all advertising revenue, with the biggest of those companies being a search engine (no prizes for guessing who).
So, why are marketers so keen to throw their money at search advertising? For the most part, the answer is targeting.
Search engines promise a glimpse inside consumer’s minds. Unlike social media, where individuals typically portray a glossy public-facing image of themselves, what people type into their search bars offers a far more accurate and telling glimpse of what they are really interested in. This highly personal insight has helped turn search engine advertising into a multibillion-dollar industry and the world’s search services into the kings of big data targeting.
At least, that’s what we were told…
How accurate is search targeting?
A new 2021 study has shown that search engine advertising may not be the hyper-targeted solution that marketers hoped for. In fact, it suggests that billions of dollars of marketing budget could be going to waste as a result of misplaced targeting.
Bango’s study, which traced over 65,000 search advertising impressions, found that 35% of all search ads fail to reach the expected target audience. If it turns out that this ratio applies across all search ad spend, it means that one in every three ad dollars spent on search goes down the drain, equivalent to $60bn in wasted spend every single year.
And the “mis-firing” of search ads gets worse. Of the ads in our trial that did reach their target category, more than a quarter still failed to find someone with either the potential or propensity to purchase, which was specifically requested. This would all be worrying enough, but for search advertisers the wastage doesn’t stop here. Estimates suggest that 14% of all search clicks come from bots, and that less than 1% of search ads ultimately convert.
Back to targeting users with search ads. Before a campaign even begins, one third of all ads may be sent to the wrong audience due to poor targeting. That’s a massive figure when big marketing budgets are at stake.
This poor targeting is increasingly coming to light, with marketers – and their bosses – now beginning to question the return on ad spend (ROAS) they achieve through search.
In a 2021 study of over 200 CEOs, 60% said that they would no longer endorse an increase in spending on search adverts. Three quarters (77%) also felt that marketing needs to have more of a measurable impact on their business’ bottom lines.
What’s the alternative?
With ever more pressure to deliver meaningful business impact, marketers need to be more deliberate in their approach. It’s not enough to rely on what people search for – or even what they share on social media – as an accurate basis for targeting.
If marketers want to sell, they need to target people based specifically on what they want to buy. That’s the problem with search engine advertising; what people casually search for cannot confidently be linked to purchase intent.
So, what’s the alternative? If marketers are going to find buyers, they need to target the handful of consumers that are actually in the market to make a purchase. That means targeting based on purchase behavior, not just search history, and this is precisely where new technologies like purchase behavior targeting (PBT) are proving so effective.
Purchase behavior targeting is an emerging digital advertising method which calls upon data from payment platforms and providers to target ads based on what customers have previously bought. PBT doesn’t rely on assumptions or speculation, but on tangible evidence of prior purchases.
While this is still an emergent technology, platforms like Facebook, TikTok and Instagram are now all providing the option to import PBT data to target campaigns. This data can be provided by payment companies analysing billions of dollars of consumer spending.
Marketers can then use this purchase data to target their campaigns at those who have bought similar products or services in the past. In short, it’s the difference between targeting your advert for vegan food towards someone who’s Googled the term, versus someone who actually frequents vegan restaurants. It’s a no-brainer who’s more likely to be interested in buying.
Digital marketing is broken
Purchase behavior targeting is a great example of a new technology fixing the problems of search advertising – and “first generation” digital marketing as a whole.
Obviously search engines and social media platforms aren’t going anywhere, and they’ll continue to form a key part of every marketer’s arsenal. The problem is targeting. Likes, shares and searches alone aren’t an accurate enough reflection of what customers want to buy.
Now, in an age where marketers (and CEOs) need their activities to tie directly to the business’ bottom line, broad brush targeting methods simply aren’t going to cut it. Brands need to look at those metrics that can be tied directly to customer spending. That’s the only way that marketers will be able to deliver measurable results against core business KPIs like revenue growth, new customers won and return on investment.