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Feb 21, 2005

aQuantive's CEO Shares His Search & Rich Media Ad Tips

SUMMARY: Are you planning to attend the AD:TECH online ad conference in SF this April? Here's our sneak peek at the advice speaker Brian McAndrews plans to give in his keynote address. As CEO of aQuantive (NASDAQ: AQNT) McAndrews oversees Avenue A/Razorfish, Atlas DMT, and DRIVEpm, three companies responsible for creating, placing, and tracking billions of online ad units each year. So, his advice is based on solid experience.
"Search went from a few hundred million a few years ago to four plus billion today. So, why did that happen? It's not because everybody looked at a text link and said, 'I'd rather do that than a 30-second television commercial.' It happened because search works -- and, because of measurability, people could see that it works," says Brian McAndrews.

However, McAndrews, President and CEO of aQuantive (the parent company behind Atlas DMT and Avenue A/Razorfish), agrees with MarketingSherpa's predictions that search advertising growth will slow in the next year.

His pick for the next hot ad medium is rich media. McAndrews explains, "Companies now aren't saying, 'Should I be advertising online?' but 'How should I be advertising online?'"

We asked McAndrews for his overview tips on making the most of two tactics -- search and rich media.

Search advertising: four tips

The search industry has been maturing, with more companies bidding and prices rising. To stay in the game, McAndrews suggests these strategies:

o Look at lifetime value

Advertisers who have been in the search field for a while, finding that new companies are bidding their keywords up, have a decision to make.

They can say, "I'm only willing to bid X dollars because the transaction will only bring in Y." Or, they can look at the lifetime value of the customer and say, "They may eventually bring in 3Y."

That may or may not make sense, says McAndrews, depending on your product and buying cycle. Do customers buy only one product and that's it, or do they return often? Is it a long purchase cycle or a quick fix?

o First rank isn't always the best

McAndrews cites an Atlas DMT study on how search engine rank impacts conversion, which found that, while the volume of traffic falls according to the rank of paid search listings, conversions may actually be higher for lower rankings, depending on the product.

"If a customer is interested in price, they might click through eight paid listings," McAndrews says.

So pay a little extra for higher rank on your higher volume keywords, the study suggests, but test lower ranks for lower volume keywords to see if conversions increase. (And yes, this is true of both Google and Overture.)

o Continue to monitor for click fraud

If anything, the click fraud topic will heat up this year. Advertisers should monitor campaigns closely: if click volume spikes while conversions stay within a normal range, you may be dealing with fraudulent clicks from affiliates or your competition.

o Search is just part of the mix

One company we spoke to recently saw their business triple through search alone -- but the pace has let up. Now, they're searching for ways to keep that momentum going. Search alone can no longer grow companies the way it did just a year ago.

Three ways to maximize rich media success

The wave of rich media is rising, as more appealing formats are available and broadband penetration has increased. Loosely defined as motion in an ad, rich media includes floating ads and expanding banners.

o Engage, not show off

The premise still stands: rich media for the sake of rich media will only annoy users -- and waste precious ad dollars to boot.

A basic example of using rich media to engage would be an automotive company showing the inside of a car in detail or serving video of the car performing in a test drive.

But rich media can be used for brands you might not think of at first. For example, says McAndrews, Kraft is doing a campaign for Post Cereals called Postopia. It's a rich media site where kids can -- what else? -- play games.

"First they get you there through television advertising, but once you get to the site, it encourages you to buy more cereal and get more clues so you can keep playing," McAndrews explains. "That's a great example of a product that you wouldn't think would benefit from rich media, but games without rich media would be a lot less compelling."

o Test a mixture of rich media and banner display ads

Rich media tends to be more effective but also more expensive. "We find that if you open a campaign with rich media to create awareness and then follow it up with less expensive display ads, you get more bang for your buck."

o Insist on tracking

How does a high-impact rich media campaign impact the number of search queries for a product? In one campaign, McAndrews says, among searchers who clicked through to a client's site, those who were also exposed to display media ads had a 23% higher conversion rate.

Campaigns do not exist in a vacuum and should not be measured as such. (Hint: Watch Yahoo!, which the Avenue A|Razorfish 2005 Online Media Outlook claims is in the best position to capitalize on the convergence of search and display media, with an impressive combination of brand advertising, performance media, and paid search.)

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