Offline and On the Phone

It’s all very well to have a strong search engine marketing (SEM) effort. And a busy call center is good too. But what do you do if you don’t know how many calls to that center are coming from searchers who found your toll-free number in your online search ads?

Research has shown that the impact of a given search marketing campaign can’t (or at least shouldn’t) be measured solely by online conversions to a sale. A lot of searchers research their purchase online but then go offline to buy. A December 2004 study by comScore Networks and sponsored by Yahoo! found that consumer electronics and computer buyers who made a purchase after at least one search in Q1 2004 were far more likely to purchase offline than on. As much as 92% of the buying activity after an electronics or computer search happened away from the Internet, the study found.

That makes it difficult for marketers to keep track of the effect of their search engine marketing (SEM) campaigns, and thus difficult to calculate the return on investment (ROI) they’re getting from those efforts. Offline sales also make it difficult to find the best way to optimize SEM, since marketers may not be sure which keywords are converting the best into offline purchases.

Merchant Warehouse, a Boston-based company offering credit card processing services and equipment to merchants, has been a strong believer in search engine marketing since its founding in [??]. The company has also run an extensive in-house call center to turn sales leads into conversions; in fact, that call center produced the large majority of its sales.

“We’ve got a complex product, with too many details for a straight online transaction,” says Henry Helgeson, president of Merchant Warehouse, which processes $2 billion in credit card transactions annually. “You’ve just got to get on the phone with your merchant to sell our service. So on our Web site, we drive to a toll-free number, not to a pre-application form or an actual online sale. We want those people calling us.” Phone sales account for 75% to 80% of his company’s total sales.

Helgeson says the company knew in general its search marketing efforts were working—just not which campaigns were producing the most calls. “We’ve been big believers in search marketing for a long time,” he says. “But we couldn’t find a platform that would give us a good idea of which ads were driving calls and which we should cut. We couldn’t even see which search engines were providing the best conversions.”

About two years ago, the company was approached by ClickPath Media. The Kirkland WA-based company, formerly a straight search marketing firm, had noticed the same lack of offline phone tracking capability for search advertising and was working on an application to fill that need. ClickPath asked if Merchant Warehouse would like to serve as a test bed for the early version of its platform. “We weren’t even a beta tester—more like an alpha tester,” Helgeson says.

Under the ClickPath platform, any searcher who clicks through a sponsored listing to the Merchant Warehouse Web site sees a 1-800 phone number in the upper right that’s unique to that keyword and that search engine. That number persists all through the searcher’s session on the Web site, thanks to client-side Javascript code and HTML tags on the Web page. As a result, when that search moves to a phone call, Merchant Warehouse knows which search engine and which ad produced it.

Merchant Warehouse began operating on the ClickPath platform about 14 months ago and very quickly began to see the benefit. The new visibility into what worked and what didn’t allowed Merchant Warehouse to reallocate its SEM spending to the most productive keywords—crucial in a category such as Merchant’s, where cost per click (CPC)can run very high. “We had been paying for some high-priced, high-traffic words that we had assumed were performing because they were very targeted,” Helgeson says. “But we found out that some of these terms weren’t converting as expected; we weren’t getting calls from them.” Some of those terms have been cut; for others, Merchant Warehouse realized that it had to make the ads more compelling.

Prior to using ClickPath, Merchant Warehouse had been operating on the rough rule of thumb that for every online action on a keyword, the company probably received three or four offline calls. And when the first ClickPath tracking results came in, Helgeson says, he was initially concerned because that rule of thumb wasn’t proving out: Some terms were producing many more phone calls, and some many fewer.

“I was actually concerned at first with the ClickPath data, because some of it was so out of whack with what I expected,” he says. “But within a few days, we realized we were getting consistent results from ClickPath. So it wasn’t their system that was out of whack; it was our assumptions.”

Overall, Helgeson says, Merchant Warehouse’s CPC was driven down substantially—as much as 75% for some campaigns—by being able to sort the keyword sheep from the goats. Call conversions rates increased without those dog search terms to drive down results.

One trick to what ClickPath does is the ability to track large numbers of keywords on multiple engines using a relatively small handful of toll-free numbers, says Ted Carpenter, ClickPath CEO. Right now Merchant Warehouse manages a list of about 10,000 primary keywords, mostly on Google and Yahoo! (“We use other engines, but the incidence of click fraud is higher there, and our keywords are so expensive that we wind up sticking mostly to the Big Two,” Helgeson says.) It would be prohibitive and probably impossible to get hold of 20,000 toll-free numbers to give each keyword its unique identifier. But ClickPath’s algorithm is able to learn from past history which keywords prove most popular and is able to concentrate on dynamically generating numbers for the most heavily trafficked terms.

“For 100,000 keywords, we may be able to manage a portfolio with only 100 toll-free numbers assigned to each search engine,” Carpenter says. “By pooling those telephone numbers together, we can rotate through them as the system begins to measure the speed at which people click through from the search engine to the Web site, and starts to understand which terms are producing the majority of the traffic.”

ClickPath customers get regular reports that break out their search campaigns by engine and by term. The real value of these reports, says Carpenter, is that advertisers can inspect conversion activity in the keyword tail to find terms that have produced no online activity—in the case of Merchant Warehouse, no online applications submitted—but did produce a number of phone calls.

“These calls are in essence far more valuable than an online transaction, because you have a live person ready to take information and upsell as appropriate,” he says. “But because they don’t convert to any online activity, a merchant could miss them.”

Helgeson says that kind of visibility into its SEM campaign is one factor that will enable Merchant Warehouse to keep the management of its search marketing efforts in-house—something he thinks is important for running an effective campaign.

“I’m the president, and I’ve been handling the search marketing for seven years,” he says. “We feel we have such a good read on our industry and so much experience that we don’t need to outsource [SEM].”

One of those reads is a surprising seasonality in SEM by the card processing segment. As you might expect, Merchant Warehouse is moving into its busy sales season now and will stay there until Black Friday, the day after Thanksgiving. Ironically, the impact of that seasonal rhythm is to drive keyword prices up in the slack seasons, Helgeson says.

“Our smaller competitors don’t have the budget to sustain a big campaign,” he says. “In the busy season when click volumes go up, their campaigns run dry in a matter of a few days and they go away. That’s why we try to do SEM internally: because we’ve gained that type of knowledge over the last few years.

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