Advertising Strategy for Blu Homes
Makoto Kondo and Sinit Vitavasiri
Blu Homes, an innovative housing company based in the Boston, is looking forward to
having the opportunities to expand its customer base on the West Coast. The company
sells durable, energy-efficient prefabrication homes and has several million dollars of
revenue annually. Blu Homes has a concrete mission to build super-efficient
prefabrication green homes by leveraging their leading-edge technology.
Objectives
The primary purpose of Blu Homes for this Internet advertising campaign is to learn
about the market demographics on the West Coast, about in which specific areas in
California most people are interested in buying their products, and about the effective
advertising strategies that would attract potential customers’ attention, including what
type of keywords that they will be attracted by. Blu Homes would specify how they
should leverage their money as their investment strategy and how they implement their
marketing strategy for the upcoming 6-12 months, based on the advertising campaign
result.
There are two important metrics for the advertising campaign. The success of the
campaign depends on how much Blu Homes has learned about their potential customer
base in California. The number of people who fill out the contact form the overall traffic
of their website will also be taken into account.
Advertising Platforms
Why we choose Google and Yahoo!
Since almost all internet users over the world use search engine to access information
they need, we decide to spend all the assigned budget on the two top search engines,
Google and Yahoo!. These top two search engines have the market share of nearly 80%
in the United States [1]. Moreover, in the United States, the third-ranked search engine
managed by Microsoft, Bing, adopts Yahoo!’s advertisement platform. This gives us a
great opportunity to reach more than 90% of the internet user base in the United States.
Both Google AdWords and Yahoo! Advertising are keyword-driven advertising services.
The keyword-search feature enables us to directly reach the target group that potentially
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has a specific interest in Blu Homes’ products. Advertising on Google and Yahoo! search
pages also helps us collect statistics on keyword search in order to understand customers’
damand effectively. Moreover, both advertising platforms have great tracking system and
analytics tools, such as Google Analytics, to help us identify statistics on impressions and
clicks as well as visitors’ demographics. However, exposure of the ads depend on bidding
strategy. We need to devise an effective bidding strategy such that our ad campaign
effectively increase potential customers’ awareness of Blu Homes’ products.
Why we do not choose Facebook
Although social network websites, such as Facebook, are very popular such that an
advertisement on Facebook can reach more than 500 million users, it is difficult to to
identify people in our target group. An advertiser on Facebook could specify a target
group by static information such as user’s current location, home town, education
background, or age/sex demographics. However, a user’s profile on Facebook contains
the location information only if the user enters his or her current location in the profile.
[2] This factor makes it difficult for us to target potential home buyers in California.
Moreover, advertising on Google and Yahoo! has an advatange over advertising on
Facebook because on Google and Yahoo!, we could measure users’ explicit interest in
Blu Homes’ products directly by their queries. On the other hand, it is difficult to
evaluate each Facebook user’s interest in Blu Homes’ products directly. Facebook
advertising platform also frequently shows ads which are not relevant to a user’s status or
demographic information. Therefore, given a limited budget, we have decided to not run
the advertising campaign on social network websites.
http://siteanalytics.compete.com/google.com+yahoo.com+facebook.com/
Figure 1: Monthly traffic volume on Google, Yahoo!, and Facebook
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Why we do not choose housing search engines
We have also decided to not run the advertising campaign on housing search engines,
such as zillow.com or trulia.com, because these websites mainly focus on ready-made
houses for renting or selling. The target group for these housing search engines is thus
different from Blu Homes’ potential customer base.
The main advertising method on housing search engines is display advertising on the
right-hand side of the home search result pages. An advertiser have to pay about $500 or
above monthly to activate the campaign. Advertising on search engines is thus not
feasible given our budget. Furthermore, traffic volume on housing search engines is
significantly lower than that of Google and Yahoo!, as reported by Compete in Figures 2
and 3, respectively.
http://siteanalytics.compete.com/trulia.com+zillow.com+google.com/ Figure 2: Monthly traffic volume on Google, trulia.com, and zillow.com
http://siteanalytics.compete.com/trulia.com+zillow.com+yahoo.com/
Figure 3: Monthly traffic volume on Yahoo!, trulia.com, and zillow.com
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Why we do not choose display ads
Unlike sponsored search textual ads, display ads could achieve significantly lower
performances in terms of CTR. Since display ads would potentially not optimize our
advertisement strategy, we have decided not to use display ads in our advertising
campaign. Also, with our tight budget, it would not be feasible to run a display
advertising campaign for 6 weeks and achieve effective brand exposure and product
awareness.
Budget Allocation
According to comScore’s statistics in October 2010 [1], Google has market share in the
online advertising industry of 66.3%, while the coalition of Yahoo! and Bing has market
share of 28%. This implies that competition in advertising on Google is abount 2.5 times
as much as competition on Yahoo!. We would like to show ads in similar ad rank
positions on Google and on Yahoo!. Our budget allocation for advertising on Google and
on Yahoo! would thus be determined by the relative level of competition. Hence, the ratio
of our budget on Google to budget on Yahoo! is 2.5 to 1.
Target Group
Blu Homes’ potential customers that we want to show our ads are mainly second-home or
holiday-home buyers who are interested in environmental-friendly (‘green’) or energyefficient houses. Since Blu Homes is looking to expand their customer base in northern
California, we would like to focus on potential customers in big cities such as San
Francisco, Sacramento, Sillicon Valley, or Napa Valley because there is a strong demand
for second or holiday homes in those cities. We decide to focus on potential home
location in Napa Valley, Lake Tahoe, or along the pacific coast since those locations are
not too far from big cities in northern California and, thus, would be attractive for
building second or holiday homes that are environmental-friendly.
Additionally, we would like to push Blu Homes’ products to potential customers who
look for second or holiday homes but are not aware of or not currently interested in
energy-efficient homes with innovative design. Therefore, our advertising campaign
would not only target potential customers for ‘green’ home buyers, but would also create
a new customer base for Blu Homes’ products by effectively leveraging our internet
sponsored search strategy.
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Keywords and Creatives
As described in the section above, we started to focus on potential customers who look
for ‘green’ homes. Our potential keywords would relate to the second- or holiday-home
characteristics (e.g. second home, holiday home, weekend home) and the environmentalfriendly feature (e.g. green, eco-friendly, cost-saving, energy-efficient, efficient design).
We have utilized Google AdWords keyword Tool [3] to identify related words and
phrases that are relevant to our advertising campaign. This powerful tool provides us with
the number of local monthly search and search trends. Our goal is to identify relevant
keywords with medium competition so that we can show our advertisement among the
top spots to effectively reach our target group with our tight budget. Moreover, we will
leverage on Google Suggest (now also called Autocomplete System) [4] to come up with
phrases that our potential customers may search for.
We have prepared multiple creatives in order to identify key messages that could attract
certain types of potential customers effectively. The four creatives used in the campaign
are the following:
1.
Green Homes in California
Best designed & energy efficient.
Save money & environment. Get info!
2.
Energy-efficient Homes in California
Best designed & energy efficient.
Save money & environment. Get info!
3.
Cost-saving Homes in California
Best designed & energy efficient.
Save money & environment. Get info!
4.
Best-designed Homes in California
Cost and energy efficient.
Save money & environment. Get info!
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Bidding Strategy
As discussed above, we plan to spend around 60-70% of our budget on Google
advertisement since Google has a bigger user base than Yahoo!. Moreover, we aim to
show our ads among the top of ad positions at any search result page in order for our
creatives to get highly exposed to our potential customers. Because of our limited budget,
it is important that we learn bidding behavior of other bidders without exhausting our
budget. We plan to start bidding in the medium range and then increase our bids so that
each of our ads can be among top four ads. We need to monitor our bids by continuously
adjusting our bids since other bidders may want to outbid our ads. This strategy is similar
to a greedy strategy, where we try to solve for an optimal dynamic bidding strategy with
limited information on other bidder’s valuation and tight budget constraint. Google
AdWords Traffic Estimator [3] would help estimate ad position, number of daily clicks,
and expected daily cost for each keyword. This tool helps us manage our budget
effectively.
Performance Metrics
We run the advertising campaign on Google and Yahoo! for about 6 weeks (from the
week of October 25th to the week of November 29th). We measure the click-through rate
(CTR), average ad position each day, and number of impressions shown to analyze the
performance of our marketing campaign. Both Google AdWords and Yahoo! Advertising
have their own tracking tools to monitor and measure access volume and user
demographics. We then analyze the performance data on booth Google and Yahoo! and
provide recommendations for Blu Homes’ future online marketing campaigns.
Overall Performances
Table 1 reports performances of our advertising campaign in a 2-week period when
creative 1 (which emphasizes the ‘green’ feature) is used. The click-through-rate and the
average position are similar on both Google and Yahoo! campaigns due to our budget
allocation strategy. The competition for keywords is more intense in Google than in
Yahoo!. The average CPM on Google is thus higher than that on Yahoo!.
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Table 1: Performances over a 2-week period
Metrics
Google
Yahoo!
81
33
# clicks
19,420
9,987
# impressions
0.42%
0.33%
CTR
$1.79
$0.77
Average CPC
$145.06
$25.38
Cost
4.9
4.64
Average position
$7.47
$2.54
Average CPM
Table 2 reports the competitive analysis of our advertising campaign over the 6-week
period. The market share for impressions for our keywords are 10.59%, indicating that
our campaign has significant market share for all keywords. The main reason that we
could not achieve higher market share is because we did not increase the ad rank by
bidding more. Increasing maximum bids on CPC will burn our budget per day too
quickly. We will investigate further on this issue in the later section.
Table 2: Competitive analysis of the advertising campaign
Metrics
Percentage
10.59%
Impression share
5.15%
Lost impression share
due to budget limit
84.26%
Lost impression share
due to low ad rank
Keyword Performances
Keyword performances in Google and Yahoo! are reported in Tables 3 and 4,
respectively. The key result from Table 3 is that “green home” is the best performing
keyword in terms of number of clicks and CTR. Moreover, “holiday home” and “holiday
houses” keywords have high number of impressions but receive almost no click. This
implies that most people who are looking to buy holiday homes are not interested in the
‘green’ home. Therefore, Blu Homes should not focus on advertising the ‘green’ aspect to
people who are looking for holiday homes in the sponsored search advertising campaign.
Keyword performances on Yahoo! (Table 4) are in line with keyword performances on
Google (Table 3). However, the number of clicks on Yahoo! are spread out across
keywords. This implies that Yahoo! users have slightly different click behavior than
Google users.
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Table 3: Keyword performances in Google in a 2-week period
Avg.
#
#
Avg.
Keyword
CTR
Cost
Posi
Clicks Impressions
CPC
-tion
62
6,321 0.98% $1.84 $113.95
4.7
Green Home
6
660 0.91% $1.62
$9.73
4.5
Eco Home
6
654 0.92% $1.93
$11.57
3.7
Eco House
4
554 0.72% $1.27
$5.09
6.1
Efficient Home
1
8,234 0.01% $1.30
$1.30
5.4
Holiday Home
1
337 0.30% $2.17
$2.17
4.1
Second Home
1
301 0.33% $1.25
$1.25
3.0
Second House
0
1,627 0.00% $0.00
$0.00
4.0
Holiday House
0
43 0.00% $0.00
$0.00
5.7
Energy efficient
House
0
254 0.00% $0.00
$0.00
6.3
Energy efficient
Home
0
179 0.00% $0.00
$0.00
4.5
Efficient House
0
14 0.00% $0.00
$0.00
5.0
Cost saving Home
Total
81
19,420
0.42%
$1.79
$145.06
4.9
Avg.
CPM
$18.03
$14.74
$17.69
$9.19
$0.16
$6.44
$4.15
$0.00
$0.00
$0.00
$0.00
$0.00
$7.47
Table 4: Keyword performances in Yahoo! in a 2-week period
#
#
Avg.
Avg.
Keyword
CTR
Cost
Clicks Impressions
CPC
Position
9
2,881
0.31%
$0.91
$8.20
7.42
Green Home
1
281
0.36%
$0.96
$0.96
4.43
Eco Home
1
475
0.21%
$0.79
$0.79
3.40
Eco House
5
605
0.83%
$0.66
$3.30
3.38
Efficient Home
2
850
0.24%
$1.01
$2.01
4.35
Holiday Home
4
1,455
0.27%
$0.59
$2.35
3.67
Second Home
1
487
0.21%
$0.23
$0.23
2.50
Second House
3
995
0.30%
$0.51
$1.54
2.56
Holiday House
0
84
0.00%
$0.00
$0.00
4.33
Energy efficient
House
4
278
1.44%
$0.89
$3.56
4.25
Energy efficient
Home
0
208
0.00%
$0.00
$0.00
2.30
Efficient House
Total
30
9,448
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0.32%
$0.76
$22.94
4.64
Click-through-rate Analysis
Figure 4 plots CTR against average position on Google and Yahoo!. Many keywords
have similar average position (in the range of 3 to 5) but have different CTR. Therefore,
CTR is determined mainly by quality of the keyword. Selecting high-quality keyword is,
therefore, important to run the advertising campaign optimally.
1.20%
1.00%
CTR
CTR
0.80%
0.60%
0.40%
0.20%
0.00%
0
2
4
6
1.60%
1.40%
1.20%
1.00%
0.80%
0.60%
0.40%
0.20%
0.00%
8
0
Average position
2
4
6
8
Average position
Figure 4: CTR vs Average Position on Google (blue) and Yahoo! (green)
Figure 5 plots CTR against average cost-per-click (CPC) on Google and Yahoo!. A
higher CPC cannot guarantee a higher CTR. This result strengthens the claim that quality
of the keyword is the main determinant of CTR.
1.20%
1.00%
CTR
CTR
0.80%
0.60%
0.40%
0.20%
0.00%
0
1
2
3
1.60%
1.40%
1.20%
1.00%
0.80%
0.60%
0.40%
0.20%
0.00%
0
Average CPC
0.5
1
1.5
Average CPC
Figure 5: CTR vs Average CPC on Google (blue) and Yahoo! (green)
Figure 6 plots CTR against number of impressions shown for each keyword on Google
and Yahoo!. The CTR and the number of impressions have weak positive correlation.
This feature is good for keywords with high number of impressions because those
keywords can achieve high CTR and can also increase customer awareness of the product.
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1.20%
1.00%
CTR
CTR
0.80%
0.60%
0.40%
0.20%
0.00%
0
1.60%
1.40%
1.20%
1.00%
0.80%
0.60%
0.40%
0.20%
0.00%
2000 4000 6000 8000 10000
0
Number of Impressions
1000
2000
3000
4000
Number of Impressions
Figure 6: CTR vs number of impressions on Google (blue) and Yahoo! (green)
Day-of-week Analysis
Performances of the overall campaign on Google and Yahoo! for each day of week are
reported in Tables 5 and 6, respectively. According to Table 5, competition for keywords
on Google increases on Fridays and weekends such that the average position on those
days is worse than on other days. So if we have a limited budget to advertise on Google,
we should avoid advertising on Fridays and weekends and focus more on advertising on
Mondays to Thursdays to achieve high CTR. Figure 7 supports this recommendation.
In Yahoo!, competition for keywords do not seem to increase on weekends since our
average position does not significantly increase on weekends. Therefore, we should focus
on advertising on Fridays and weekends since there is higher traffic volume on those days
such that we could achieve high CTR without sacrificing on average position.
Table 5: Day-of-week Analysis on Google
Day
Monday
Tuesday
Wednesday
Thursday
Friday
Saturday
Sunday
# impressions
# clicks
CTR
1,704
2,368
790
1,153
1,127
1,045
1,524
5.0
6.5
7.5
6.0
5.0
5.0
5.5
0.29%
0.27%
0.95%
0.52%
0.44%
0.48%
0.36%
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Avg. CPC
$2.08
$1.82
$1.61
$1.69
$1.76
$1.76
$1.91
Cost
$10.38
$11.86
$12.07
$10.12
$8.82
$8.82
$10.48
Avg.
Position
4.78
4.65
4.76
5.19
5.30
5.07
5.07
Table 6: Day-of-week Analysis on Yahoo!
Day
# impressions
# clicks
975
818
812
499
692
409
791
3.0
2.5
2.0
0.5
2.5
4.0
2.0
Avg. CPC
0.31%
0.31%
0.25%
0.10%
0.36%
0.98%
0.25%
1.00%
0.90%
0.80%
0.70%
0.60%
0.50%
0.40%
0.30%
0.20%
0.10%
0.00%
CTR
CTR
Monday
Tuesday
Wednesday
Thursday
Friday
Saturday
Sunday
CTR
$0.63
$0.63
$1.06
$0.06
$0.80
$0.77
$0.99
Cost
$1.90
$1.57
$2.13
$0.03
$1.99
$3.09
$1.99
Avg.
Position
4.40
4.41
4.58
6.06
4.46
4.82
4.41
1.00%
0.90%
0.80%
0.70%
0.60%
0.50%
0.40%
0.30%
0.20%
0.10%
0.00%
Figure 7: Average CTR different days of week on Google (blue) and Yahoo! (green)
Analysis on bids
We experiment with changing bids and measure performances. Increasing max imum
CPC bid decreases average position and increases CTR for a keyword. This is because
we show impressions less often and users are more likely to click the ads since it is in a
higher position. On the other hand, decreasing maximum CPC bid increases average
position and decreases CTR for a keyword. We would like to show our ads on the
average position of less than 5 because we think that increasing bid would have a
negative marketing impact on product and brand awareness, since we would then show
ads less frequently with higher bids subject to daily budget limit. Decreasing bids would
also have negative impact on product awareness since our ads will be shown in low-rank
positions with poor exposure.
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1.30%
5.5
1.20%
1.10%
5
CTR
Average Position
6
4.5
4
1.00%
0.90%
0.80%
3.5
0.70%
3
0.60%
Normal Increasing Decreasing condition max CPC by max CPC by 25%
25%
Normal Increasing Decreasing condition max CPC by max CPC by 25%
25%
Figure 8: Average position for “green home” in different bidding conditions
Analysis on Creatives
We also experiment with changing creatives and measure performances of the
campaign. We run campaign on the four creatives that emphasizes four different
aspects of Blu Homes products: ‘green’, ‘energy efficient’, ‘cost saving’, and ‘best
design’. Click distributions for each creative on Google and Yahoo! are similar,
according to Tables 7 and 8.
The main take-away from the results is that different keyword attracts different type of
customers. If Blu Homes want to target people who are interested in the ‘green’ feature
rather than people who look to buy second or holiday homes in general, advertising with
creative 1 would draw most attention for this target group. Moreover, holiday-home
buyers mostly look for the cost-saving and the design aspects rather than the ‘green’
aspect. Creative 2, which highlights the energy-efficient feature, draws more clicks on the
energy-efficient related keywords than other creatives do.
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Table 7: Number of clicks over 4 days with different creatives on Google
Keyword
Creative 1 Creative 2 Creative 3 Creative 4
‘energy
‘cost
‘best
‘green’
Key message of creative
efficient’
saving’
design’
4
16
14
Green Home
2
Eco Home
2
1
2
Eco House
1
1
Efficient Home
1
Holiday Home
Second Home
Second House
5
Holiday House
1
Energy efficient House
1
Energy efficient Home
Efficient House
Cost saving Home
Total
14
18
19
Table 8: Number of clicks over 4 days with different creatives on Yahoo!
Keyword
Creative 1 Creative 2 Creative 3 Creative 4
‘energy
‘cost
‘best
‘green’
Key message of creative
efficient’
saving’
design’
6
Green Home
1
Eco Home
1
1
Eco House
1
1
1
Efficient Home
1
2
1
Holiday Home
2
3
1
Second Home
2
1
Second House
Holiday House
Energy efficient House
Energy efficient Home
1
Efficient House
Cost saving Home
Total
7
8
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5
6
Recommendations
From running the sponsored search advertising campaingn in both Google and Yahoo!
for 6 weeks, we have learned some important features in advertising Blu Homes’ product.
We, thus, would like to recommend the following for Blu Homes’ future advertising
campaign:
1. Optimize keyword selection since the keyword quality is the main determinant of
CTR .
2. If budget is limited, show ads on Mondays to Thursdays in Google, and on
Fridays and weekends in Yahoo! to achieve high CTR.
3. Use creative that advertises on the ‘green’ feature to achieve high CTR from our
target group (i.e. people in California who is interested in buying ‘green’ homes).
This is because different aspects on the ads would attract different customer
groups.
4. If budget is limited, bid moderately such that ads are among the top four or five
positions to achieve good CTR while having good exposure to potential
customers to increase product awareness.
5. Understand the nature of websites that Blu Homes advertises on because people
who use different websites may have different purposes of using it; this leads to
different click behavior for each sponsored search website.
Future work
If Google Analytics for the landing page is accessible, we would like to calculate
conversion ratio and CPA for each keyword. Moreover, we would like to use
demographic data from Google Analytics on the landing page to identify the potential
customer base in California for Blu Homes.
Summary
Sponsored search advertising campaign on Google and Yahoo! provides good
performances in terms of click-through-rate and in terms of increasing product awareness
for potential customers. The Google AdWords and the Yahoo! Advertising platforms
facilitate the implementation of our bidding strategy and the data collection process. We
hope that the analysis on our online advertising campaign would be useful for Blu Homes’
future advertising campaign.
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References
[1] comScore Releases October 2010 U.S. Search Engine Rankings http://www.comscore.com/Press_Events/Press_Releases/2010/11/comScore_Releases_Octobe
r_2010_U.S._Search_Engine_Rankings
[2] Reach and Targeting : Facebook Ads http://www.facebook.com/adsmarketing/index.php?sk=targeting
[3] Google AdWords Keyword Tool / Google AdWords Traffic Estimator https://adwords.google.com/o/Targeting/Explorer [4] Features: Autocomplete (Google Suggest) http://www.google.com/support/websearch/bin/answer.py?hl=en&answer=106230
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