Cyber Monday had gone swimmingly for Tiny Prints. Despite the economic downturn and problem in medical coding training courses, customers streamed into the Tiny Prints online store on the Monday after Thanksgiving, called Cyber Monday because it is one of the busiest days of the year for Web retailers. They snapped up the company’s custom holiday cards at roughly twice the rate of a year ago. But in the following days, Ed Han, the chief executive, and his team made a risky bet in search of higher profits. Hoping that traffic and sales would stay up, they pulled back on the Google search ads that had helped drive visitors to Tiny Prints.
The gamble backfired. Just as Tiny Prints pulled back, competitors appeared to spend more aggressively to display their ads when people typed “holiday cards” or “photo cards” into Google. By the middle of the week, sales growth began to taper off and a bright holiday season suddenly appeared a bit less rosy. “We knew we had made a bad decision,” Han said. Tiny Prints reversed course, but it took the company, which is privately held, more than a day to recover—a critical amount of time during the heavy shopping season.
For most people, Google and other search engines are essential tools to navigate the Web. But the workings of the text ads, the blurbs that peddle goods and services on the search results pages, are largely hidden from Web users. For more than one million businesses, Google’s search advertising system is like a hose inundating Web sites with traffic. Managing it effectively, though, is as much art as it is science. It requires a mix of analytics and gamesmanship, a combination of skills that has become vitally important in the Internet age.
“It is critical,” said Ellen Siminoff, the chairwoman of Efficient Frontier, which helps companies manage their search advertising campaigns. “You have to have data and be able to analyse it. It’s a bit like playing chess, but you are blind to what your competitors will do.” Many industry insiders say search engine marketing, as the practice is known, is one of the most effective forms of advertising ever devised. In just a decade, it has grown into an $11 billion business in the US. It accounts for the vast majority of Google’s $22 billion in annual global sales.
Google’s service, called AdWords, dominates so thoroughly that some advertisers have felt at the mercy of the company, and complained that they had little control over the complex advertising system. One company, TradeComet, filed an antitrust lawsuit accusing Google of artificially increasing its advertising rates.
