Article: 7-min Read
Q&A: Which search marketing approach is right for you?
Renee Doerre
Head of Strategy, Planning & Operations at Roundel
Head of Strategy, Planning & Operations at Roundel
Search marketing has come a long way since its launch in 1996, from Planet Oasis to Google to today. Many product searches now begin on retailer sites rather than a dedicated search engine. Target.com saw an overall 95% increase in searches in 2021—that’s on top of a 75%+ increase in 2020.1
As it follows, advertising budgets continue to chase shoppers, who now start their search on their favorite retailer website, in what eMarketer describes as “digital advertising’s third wave.”2 Brands are homing in on ways to drive awareness and conversions effectively through native placements on retail sites—one such method: sponsored product ads.
How should brands approach sponsored product ads to meet their ROAS goals? I sat down with Sean Cheyney from CitrusAd and Jordan Witmer from Johnson & Johnson Consumer Health to answer some common questions about search marketing.
Cheyney:
This is a big decision for brands: Are you going to run a keyword-first or product-first approach?
Keyword-first approach: You set bids on specific keywords and then place product ads from a listing. A keyword-first approach requires more effort, but it offers more control and space for optimization.
Product-first approach: You set bids at the product level and then allow the algorithm to determine where those ads serve. A product-first approach allows you to make sure your money gets spent regularly against a specific item or assortment (for those focused on supporting SKU-level P&Ls with merchants).
Witmer:
Advertisers are seeking control, transparency, and measurement. We need the ability to concentrate our investment against strategic priorities, which could be product-level P&Ls or strategic investments to win the digital shelf. We expect transparency on how that money is spent at a granular level. With our portfolio of iconic brands, we don’t want to pay for impressions delivered outside of our target audience, so we can’t justify spending against products or keywords we didn’t intend to support.
My take:
Brands want to see ROAS, how to measure incrementality, and how media can drive organic sales. For example, SKU popularity signals have a high impact on product rankings within Target.com search results. When products see a boost, it can occasionally help with organic rankings, and sponsored product ads can provide that near-real-time feedback on impact.
Witmer:
We believe conversions from category terms like ‘mouthwash’ prove to be more incremental for brands than conversions on branded terms like ‘Listerine.’ A consumer using such a generic term has yet to assign a brand priority, so brands have the opportunity to win share in these instances.
That raises the question: Should we really focus on branded terms? In my view, not by default. Marketers have been coached by retailers and partners for years that they need to prioritize ‘protecting’ their brand terms. But how often is someone searching for Listerine going to buy a different brand? Not often!
The roots of this come from return on ad spend [ROAS]—direct-click sales don’t discriminate between keyword types. But branded terms appear to outperform category terms, which is why many brands will dial up their spend on branded terms in order to drive performance.
Cheyney:
I would agree that brand terms aren’t necessarily appropriate by default. But brand terms are certainly not worthless. For example, they serve a role in NPI and line extensions or to encourage trade-ups to large pack sizes.
To that end, the way a platform works can allow for these types of specific strategies for branded terms and non-branded terms. When it comes to search marketing, there are generally two main types of platforms: one that is focused on the SKU or item and is automated using an algorithm, and the other focused on the keyword and has a more controllable approach.
Automated search marketing approach: Generally speaking, an automated advertising algorithm leverages an understanding of users and their interactions with products and like products to predict the likelihood of the desired outcome, using this data to bid. For example, if a brand is running a campaign for mac and cheese, the platform is likely to bid on a branded mac-and-cheese term because the logic and data say it is more likely to get a click and conversion than on a generic term. Manual keyword search marketing approach: Conversely, a manual [non-automated] keyword-first platform will bid on terms based on the parameters outlined by the advertiser through their campaign setup. So, if a brand wants to break out their top branded terms [where they know they will get a click] and assign a low CPC, and then break out their top non-branded terms with a high CPC, the platform will follow this rule-based structure accordingly.
My take:
Why would CPG brands choose one approach over the other? I think, like so many things, it depends on your goals, situation, and resources. Here are some scenarios:
Lower resources/investment: product-first approach. If search is a side hustle or part of a wider range of responsibility for your buying team, a product-first approach allows you to participate in the paid search marketplace.
Higher resources/investment: keyword-first approach. A keyword-first approach takes significantly more effort. If you’re prepared to invest in people, tech, and a plan to scale your investments accordingly, a keyword-first approach is beneficial, as it gives you more control and greater ROAS potential.
Investing to support SKU-level P&Ls: product-first approach. If you’re focused on supporting SKU-level P&Ls with your merchant to keep items live, a product-first approach allows you to make sure your money gets spent regularly against a specific item or assortment.
Investing for ROI and performance: both approaches. If you’re investing for ROAS and performance, you’ll need to be able to plan, optimize, and invest at the keyword and item level.
Witmer:
At Johnson & Johnson Consumer Health, we’re increasing our focus on retail search, so we’re pushing harder into the keyword-first approach. We see this as a growth engine.
On the other hand, if your consumer’s shopping behavior is split somewhat evenly between brand-first or category-first behavior, you could be generating significant waste by not controlling your allocation between branded versus category terms. In my view, most brands and categories benefit from a keyword-first approach, which unlocks your ability to manage your investment against both specific products and specific keywords.
It will also depend on your market position. If you’re a ‘Band-Aid’ type of brand that defines the category, you may not get the upside from granular keyword targeting that others do. In these cases, a product-first approach can get you both lean operating scale and quality performance.
Keyword-first vs. product-first search marketing. ‘Band-Aid’ brands vs. new brands. The world of search marketing offers many choices and nuances for brands looking to improve their advertising efforts.
At Roundel™, we see a future in giving advertisers greater flexibility and control. We listen and partner with CPG brands to learn what they need and then provide them with strategic investment options that make sense for their business. With Roundel’s sponsored product ads solution, Target Product Ads by Roundel™, you can choose the platform partners and approaches that meet your needs and help you reach your goals.
Head of Strategy, Planning & Operations at Roundel
Renee Doerre joined Target in 2016 and currently serves as Head of Strategy, Planning & Operations at Roundel, Target’s retail media network. In her current role, she leads several core functions, including Strategy & Planning, Learning & Development, Marketing, and Business Enablement. During her Target tenure, she has led teams responsible for product management and operations and has served as the Chief of Staff for the President of Roundel.
Renee has more than 8 years of experience in building and operating retail media networks, with 6 years at Target and 2 years at a retail-focused adtech company acquired by Valassis. Prior to joining Target, Renee spent more than 14 years in sales, marketing, and media functions, including senior leadership positions at Cars.com, Bankrate.com, and Electronic Arts (EA SPORTS).
Source
1Internal Target data pulled via Adobe Analytics for October 2019 to October 2021, accessed November 2021.
2Insider Intelligence, “US retail media ad spending will reach $31.49 billion in 2021, up 53.4% from 2020.” November 17, 2021, accessed September 6, 2022.
