September 12, 2012

Proprietary & Confidential2

Search Advertising Fundamentals

Proprietary & Confidential3

Search Ads

Paid Search AdsNatural search results

95% of Google

Revenues

From Search to Purchase

AdvertiserPlaces ad on Search Engine (ex. Google)

UserTypes keyword and find results on Search Engine

Clicks Ad and enters Web site Looks at

Products on siteExits from the

site – No purchase

Looks at Products on site

Makes aPurchase

Advertisergets Revenue

Return on Ad Spend (ROAS) can be ascertained

From Search to PurchaseSearcherSearches for

Relevant info.

www.NetElixir.com The NetElixir Presentation

Bill Gross – The Founder of Paid Search Advertising

www.NetElixir.com The NetElixir Presentation

World’s First Pay-Per-Click Advertising Engine. Later Changed its name to Overture.com

www.NetElixir.com The NetElixir Presentation

Yahoo to buy Overture for $1.63 billion

July 14, 2003 1:21 PM PDT

www.NetElixir.com The NetElixir Presentation

Salar KamangarIn early 2002, a Google employee, Salar Kamangar, now 28, convinced Mr. Schmidt and the founders to switch to an auction-based system like the one set up by Bill Gross, the head of IdeaLab. Mr. Gross had created Goto.com, a search engine made up entirely of ads, where advertisers paid only if their ad was clicked on, and the advertiser who bid the most per click was listed first.

He helped Google change the rules of the game

Proprietary & Confidential9

In 2003, US Paid Search Advertising Revenueswere $972 million.

In 2011, US Paid Search Advertising Revenueshit $14.8 Billion (up 27% over 2010 revenue).

Proprietary & Confidential10

Paid Search Advertising is..

• Measurable.

• ROI focused.

• Relatively in-expensive.

• Great source of consumer insights.

Best Practices in Search Engine Marketing

Build a Marketing Plan

13

70% of retail search advertisersdo not have a marketing planthat connects goals – strategicinitiatives and tactics.

The “GOST” Framework

Primary Goal

Secondary Goal

Strategic Initiative #1

Strategic Initiative #2

Strategic Initiative #3

- Tactic 1- Tactic 2

- Tactic 1- Tactic 2

- Tactic 1- Tactic 2

15

Primary Goal

Secondary Goal

16

Strategic Initiatives

17

Paid Search Tactics

The “GOST” Framework

Grow Sales Revenue by

120% to $xyz

Revenue/Cost > 8x

Promote “star” products

nationally.

Flank competitors

using Private Label

Gain 30%+ PPC SOV in top 5 states

- Expand Reach- Create

Differentiation

-Map Competitor Activity

- Include Price in ad copies.

- Track Impression

Share- Local buying

behavior

19

FY 2011: Y/Y SEM Results

• Y/Y Revenue Growth = 220%.

• Revenue/Cost = 11 x.

20

Deciding what products to promote via paid search

• Scrub your keyword list regularly• Time Bound promotions to boost sales• Experiment with ad copies and landing pages

• Focus on Efficiency and growth• Controlled Keyword list expansion• Identify new sources for keywords

Is Keyword Search AdvertisingRight for you?

•What’s your average order value? What is the order margin?

Velocity

Margin

Keyword Strategy and “Return on Investment”

Ink Cartridges

Gourmet Food (ex.

steak)

No-brand trinkets

High End Jewellery

22

Key Points

• Category level segmentation based on margin and velocity.• Unique paid search strategy for each segment.• Pre-Plan the keyword mix for each segment.• Treat trademark and non-trademark campaigns separately.• Treat each keyword as a “profit center”.

23

A Structured Approach to GrowingThe Paid Search Program

The Opportunity Matrix

Consumer Markets Competitors Occasion

Keyword Strategy

Ad Copy Strategy

Bidding Strategy

Landing Page Strategy

SE

M

E

lem

ents

Non-SEM Factors

• Provides a framework for targeted testing.• Combination tests can open up new opportunities.• Establishes a logical construct for testing causal relationships.

25

Paid Search Revenue Has Dropped.I don’t know why?

26

x x x =Impressions Click through

RateConversionRate

AverageOrder Value

SalesRevenue

• Precise Problem Statement. • Which of the elements below has dropped. How much?• Since when has the drop been observed?• List Possible Causes for drop in specified element.• Test results to establish the Most Probable Cause.

5 Step Problem Analysis

27

Are All Paid Search Clicks Equal?

Proprietary & Confidential28

Tracking Revenue/Click across geos for Lenovo.com

Proprietary & Confidential29

What does this mean for the search marketer?

• Geo-targeted customer acquisition strategies.

• Deeper shopping cart analysis for different geo’s.

• De-code geo-specific customer purchase patterns

to create more precisely targeted campaigns.

30

Summary

1. Use the GOST Framework to structure your Marketing Plan.2. Know what products to advertise via Paid Search.3. Use the Opportunity Matrix to Grow Paid Search Program.4. When Paid Search revenue drop happens, use 5 step Problem Analysis process.5. Evaluate the Quality of Paid Search Clicks by Geos. to create targeted campaigns.

31

Questions Please

32

dŚŝƐE ĞƚůŝdžŝƌƌĞƉŽƌƚŝƐŝŶƚĞŶĚĞĚĨŽƌŐĞŶĞƌĂůŝŶĨŽƌŵĂƚŝŽŶĂŶĚŝƐďĂƐĞĚŽŶƉƵďůŝĐůLJĂǀ ĂŝůĂďůĞĚĂƚĂĂǀ ĂŝůĂďůĞŽŶƚŚĞ/ŶƚĞƌŶĞƚĂ ƚĂƉĂƌƚŝĐƵůĂƌƉŽŝŶƚŝŶƚŝŵ E ĞƚůŝdžŝƌŐŝǀ ĞƐŶŽŐƵĂƌĂŶƚĞĞƌĞŐĂƌĚŝŶŐƚŚŝƐŝŶĨŽƌŵĂƚŝŽŶĂŶĚĂĐĐĞƉƚƐŶŽůŝĂďŝůŝƚLJĨŽƌĂŶLJŝŶĐŽŶǀ ĞŶŝĞĞ͘- ŶĐĞd ŽƌĂŶLJĚŝƌĞĐƚŽƌĐŽŶƐĞƋƵĞŶƚŝĂůůŽƐƐd ĂƌŝƐŝŶŐĨƌŽŵƌĞůŝĂŶĐĞƵƉŽŶƚŚŝƐŝŶĨŽƌŵĂƚŝŽ Ŷ͘- E ŽƉĂƌƚŽĨƚŚŝƐƌĞƉŽƌƚŵĂLJďĞƌĞƉƌŽĚƵĐĞĚd ƐƚŽƌĞĚŝŶĂƌĞƚƌŝĞǀ ĂůƐLJƐƚĞŵŽƌƚƌĂŶƐŵŝƚƚĞĚŝŶĂŶLJĨŽƌŵďLJĂŶLJŵĞĂŶƐd ĞůĞĐƚƌŽŶŝĐdŵĞĐŚĂŶŝĐĂůdƉŚŽƚŽĐŽƉLJŝŶŐŽƌŽƚŚĞƌǁ ŝƐĞǁ ŝƚŚŽƵƚƚŚĞƉĞƌŵŝƐƐŝŽŶŽĨ E Ğƚůŝdžŝƌd/Ŷ Đ͘- Ξ ϮϬϭϮE Ğƚůŝdžŝƌd/Ŷ ůůƌŝŐŚƚƐƌĞƐĞƌǀ ĞĐ͘- Ě͘-

NetElixir Inc.

Email: info@netelixir.comWebsite: www.netelixir.comPhone: 609.356.5112