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The Science of Managing Search Ads
(By MIGUEL HELFT published in
Cyber Monday had gone swimmingly for Tiny Prints.
Despite the economic downturn, customers streamed into
the Tiny Prints online store
on the
Monday after
, 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
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,” Mr. 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 Effic
ient Frontier, which helps companies
manage their search advertising campaigns.
“You have to have data and be able to analyze 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 United States. 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

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