Click Streams, Complexity, and Contribution...Click values vacation 550k imps $1.02 cpc hawaiian...

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Click Streams, Complexity, and Contribution: Modeling Searcher Behavior Using Markov Models Search Engine Strategies February 27, 2006, NYC Alan Rimm-Kaufman, PhD Rimm-Kaufman Group LLC www.rimmkaufman.com

Transcript of Click Streams, Complexity, and Contribution...Click values vacation 550k imps $1.02 cpc hawaiian...

Page 1: Click Streams, Complexity, and Contribution...Click values vacation 550k imps $1.02 cpc hawaiian flight 225 imps $0.62 cpc mauii 584 imps $0.16 cpc maui 110k imps $2.14 cpc grand wailea

Click Streams, Complexity,

and Contribution:Modeling Searcher Behavior

Using Markov Models

Search Engine Strategies

February 27, 2006, NYC

Alan Rimm-Kaufman, PhD

Rimm-Kaufman Group LLC

www.rimmkaufman.com

Page 2: Click Streams, Complexity, and Contribution...Click values vacation 550k imps $1.02 cpc hawaiian flight 225 imps $0.62 cpc mauii 584 imps $0.16 cpc maui 110k imps $2.14 cpc grand wailea

Vacation ►

hawaiian flight ►

Mauii ► Maui ►

grand wailea resort ►

surf shop lahaina longboard

Click streams

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Click values

vacation 550k imps $1.02 cpchawaiian flight 225 imps $0.62 cpcmauii 584 imps $0.16 cpcmaui 110k imps $2.14 cpcgrand wailea resort 3335 imps $1.22 cpcsurf shop lahaina longboard 0 imps $0.10 cpc

Monthly impression counts and #1 CPCs from Yahoo!, Feb 2006

Page 4: Click Streams, Complexity, and Contribution...Click values vacation 550k imps $1.02 cpc hawaiian flight 225 imps $0.62 cpc mauii 584 imps $0.16 cpc maui 110k imps $2.14 cpc grand wailea

Conventional wisdom

awareness

interest

desire

action

…more generic search phrasesindicate a searcher is higher up in the conversion funnel…generic phrases lay the

groundwork for more specificsearches…

thus, even if the economics of more general phrases don’t meet an advertiser’s ROI target, general phrases play an essential

role in a search portfolio…

vacation ► hawaiian flight ► mauii ► maui ► grand wailea resort

camcorder ► digital camcorder ► samsung SC-DC 164

safe car ► volvo ► volvo s80 ► volvo s80 atlanta dealer

Page 5: Click Streams, Complexity, and Contribution...Click values vacation 550k imps $1.02 cpc hawaiian flight 225 imps $0.62 cpc mauii 584 imps $0.16 cpc maui 110k imps $2.14 cpc grand wailea

True?

Often the data say:

NO.

Let’s build a mathematical model to see.

three matrix formulas ahead!

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Markov model

discrete state, discrete time Markov chain

states i=1..n

transition probabilities Pij

“memoryless” property

stationary distribution from eigenvectors

most important for us: limiting distribution of random walk

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Toy example

0.00.10.0

0.70.40.6

0.30.50.4

Pij

Πij

.050

.505

.445

1no

waves

2good

waves

3dangerous

huge waves

.4

.6 .5

.4

.1

.7

.3

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?@#?!

…what the heck does this math gibberish have anything

to do with SEO / SEM?

Page 9: Click Streams, Complexity, and Contribution...Click values vacation 550k imps $1.02 cpc hawaiian flight 225 imps $0.62 cpc mauii 584 imps $0.16 cpc maui 110k imps $2.14 cpc grand wailea

SEO / SEM implications

SEO: Google uses markov models for…

PageRank v1

detection of paid links

bad neighborhoods

SEM: RKG uses markov models for…

click stream analysis

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SEM click stream complexity

Step 1: Characterize search phrases

1 word phrases

2 word phrases

3 word phrases

4+ word phrases

client brand phrase

SKU

non-dictionary

Page 11: Click Streams, Complexity, and Contribution...Click values vacation 550k imps $1.02 cpc hawaiian flight 225 imps $0.62 cpc mauii 584 imps $0.16 cpc maui 110k imps $2.14 cpc grand wailea

SEM click stream complexity

Step 2: Characterize click streams

vacation ► hawaiian flight ► mauii ► maui ► grand wailea resort

1 ► 2 ► ND ► BP ► BP

camcorder ► digital camcorder ► samsung SC-DC 164

1 ► 2 ► SKU

safe car ► volvo ► volvo s80 ► volvo s80 atlanta dealer

2 ► BP ► SKU ► SKU

Repeat 500,000 times

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SEM click stream complexity

Step 3: Estimate transition probabilities, pij

Dataset:

random sample of 500K clickstreams (695,446 clicks) across 2005

Google and Yahoo paid search only

50+ typical retailers (highly specialized niche retailers excluded)

B2C only

order conversions only30 day cookie windowclickstreams by searcher by retailer

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SEM click stream complexity

Step 4: compute stationary probabilities

order stop

client brand phrase

SKU

non-dictionary

Other,1 word

Other,2 word

Other,3 word

Other,4+ word

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4 conclusions

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1. Many click streams are short.mean length = 1.4 clicks

significant long tail, however

Marketing significance:

Economics, optimization, & biddingby phrase (rather than by click stream)is an extremely good approximation.Can safely ignore pundits who claim otherwise.

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2. Many click-stream are redundant.

Pij heavily loaded on the diagonal.12% of click streams with >1 clickhave duplicates.

Marketing significance:

Browser auto-completion plays a large role in click-streams and navigation.Good copy and good landing pages,tailored to the ad, are critically important.

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3. Your brand matters. Alot.

Conversion typically 200% to 300% higher on brand phrases.

Marketing significance:

Break out results for phrases involving your brand. Evaluate your in-house team or your SEM agency on their success driving non-brand sales.

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4. Brand for brand, not ROI.

The “funnel benefit” of generic keywords is, for many advertisers,quite small.

Marketing significance:

Choosing to spend large sums on branding through generic keyword buys is a valid strategy. Realize, however, that such ad buys are about branding, not conversion.

Page 19: Click Streams, Complexity, and Contribution...Click values vacation 550k imps $1.02 cpc hawaiian flight 225 imps $0.62 cpc mauii 584 imps $0.16 cpc maui 110k imps $2.14 cpc grand wailea

Mahalo!

Want to learn more? rimmkaufman.com/ses-feb-06

• this powerpoint presentation

• links to academic research papers for background

• link to free software for markov analysis

Alan Rimm-Kaufman ([email protected])


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