This post is part of the series eCommerce Café
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At the SMX West 2017 Conference in San Jose, we had the pleasure to chat with Brad Geddes, Founder and Director of AdAlysis, about the current and upcoming trends in all things SEM. Check out the full interview below.
Direct Youtube link.
To stay tuned with Brad, you can follow him on Twitter, @bgtheory.
We will be at SMX London, May 23-24…more chats to come!
Andreas Reiffen: –with often many different businesses. Can you give me an overview of what you’re doing exactly?
Brad Geddes: Sure. So our primary business is AdAlysis, which is an ad testing platform. We essentially take what all the data-crunching people do, automate it, and focus users on actions. I also teach paid search at Simplilearn, which is OMCP-certified.
Andreas Reiffen: I see you’re on the board at Boost, known formerly as BoostCTR. Is there any overlap between that and the business you’re running right now?
Brad Geddes: Great question! Boost is a services company, so if you want someone to come in and write all your ads for you and manage stuff, then Boost is fantastic. If you’re using agencies or doing it in-house with your own copywriters, then we’re a platform that analyzes the data and shows you how and where to make improvements. We don’t actually create ads. Boost is services-led, and AdAlysis is a self-service platform.
Andreas Reiffen: They seem to combine pretty well!
You’re actually one of the veterans in paid search, so I’d be interested to know how you got into the industry. How did you start off?
Brad Geddes: So, pre-search I was actually involved in mental health, closing down institutions, getting people in community living facilities, and helping them to be part of society. It was a good job, but I quit in ‘97 without knowing what I was going to do. Then I found affiliate marketing, where I could sit at home and make money. I’d been designing websites for four years as a hobby, so I started doing affiliate marketing and did quite well. It was organic at that point in time. Then three months afterward, GoTo.com – the first paid search engine – launched, and I called them up to make my first account because I thought “Well, I could be listed twice on the page”.
It started off doing very well. We had companies calling up, having tracked me as an affiliate, to ask if we’d run paid search for them. And we realized we could make a business from that. So then in 2001, I started an agency; 2002 started building software systems, which we sold to our largest clients; sold that agency, moved to Chicago, and joined Local Launch. We managed forty-two thousand PPC accounts, one hundred and ten thousand SEO clients, and six hundred and sixty thousand businesses, so big platform scale is what I really learned there over the next couple of years.
We sold Local Launch to a yellow page company. After hypergrowth, sometimes you just want to take it easy for a bit, so we spent a couple of years mostly training and doing some consulting. We had good revenue – we were backed by Google. Then I felt it was time to go and build something again. I built Certified Knowledge first, which is a training-based system designed to solve the problem of getting people to travel for training because there’s only so much traveling a person can do.
Then, a few years later, the question became: what’s the biggest headache in the marketplace? And it’s doing data-crunching, which wastes your day. People were doing the repeat thing, and we wanted to automate that process!
So we started with the ads, moved to keyword conflicts, Ngrams, and so forth, and that has remained our focus.
Andreas Reiffen: In 2003, you were an affiliate. You bought traffic at your own risk from Google, shifted it over to the merchants, and made your money. What’s changed since then?
Brad Geddes: So much! My first account was in 1998, amazingly enough. In 2003, a search result often delivered ads for a company. 80% were probably Amazon ads, no matter what you searched for because back then it was Amazon and their top seven affiliates. Or it was a brand and their affiliates. There was very little diversity in search results actually, so it was very easy to do well as an affiliate. You could do ‘dictionary buys’ as we call them, where you look up anything in a dictionary and serve an ad for it.
To the point that maybe in 2006, when Google said: “Hey, you’re only allowed one ad per domain”. They gave us a month’s notice, and though we knew some accounts would be lost, a few people were kept on, so we went and bought the letters. We broad-matched zero to nine, A to Z, single letter words, and just waited to see what would happen. We opened this up, and it was amazing. We should have done it earlier because you know, people like to shop!
Andreas Reiffen: Do you ever think how different things would have been if our technological capabilities had been around in 2003?
Brad Geddes: It would have been amazing! We would have cared much more about attribution and margin. Back then, you had to be really sophisticated to pull revenue back, and if you own the whole property you can. Affiliates are of course on the merchant’s property, so it was a little messy. You could pull some revenue, but there was no margin maximization, and nobody was asking “How many parts can you sell?”. The types of things search companies think about now, like “How does raising our lowest price affect what we sell” just weren’t possible back then. If we’d had all this technology back then, we might have considered becoming a drop shipper, and building our own brands.
Andreas Reiffen: I have a similar experience. I worked at a company called Clicks2Customers in South Africa, back in 2006. And I remember when I started, Google had changed so that only one ad per domain could be shown in the SERPs, which affected all the affiliates. But at that time, they used a redirect to capture all the search queries. Google still had them in the referrer data. Then they threw all the keywords into their accounts – hundreds of millions of keywords – and you could just bid on everything because there was no competition at all. They also used dictionary keywords for China.
Brad Geddes: Well, we did the same thing here. We’d grab the dictionary, and that would be our keyword list. It just didn’t matter. This goes back to what I said – people like to shop. You’re reminding them by saying “Hey, go shop here!”. And in many ways, some of the brands really did leverage their affiliates well in building a brand, because it wasn’t their money at risk.
Andreas Reiffen: Today, the world is a bit different. We have Google, but we have other players as well – luckily, I would say; it would be bad just having Google around. I think it’s an interesting space right now because we have Google going more and more in Amazon’s direction, building a kind of marketplace model with Google Shopping. We have Amazon, copying the Google Shopping system, with its sponsored products. Google at the same time is going more and more into audience targeting, trying to leverage the data, but Facebook is clearly the leader in that area because of course, they have all the information needed to do this properly. And now Facebook has started running its dynamic ads, even though we heard they forgot to delete the column headers, which come from Google.
We see these three competing against each other, so what do you think will happen in the long-run? Who’s going to make it?
Brad Geddes: I actually think all three companies will make it. I don’t doubt this. Amazon is very interesting, in that if you’re an eCommerce system, and you decide you want to put ads on your eCommerce site…well, that’s a terrible, terrible idea, but Amazon makes it work, because they’re a marketplace that uses reviews, and they power a large percentage of the web with AWS (Amazon Web Services). Then with Prime, they’re now competing with Spotify, Pandora, Netflix, and Hulu. Amazon is a large-scale, low-margin ‘compete with anybody’ company. What they don’t tend to do is introduce any interesting technological development to their targeting. The way they do inventory management is amazing. They’re an incredible logistics company, but still just a logistics company. Last year, most of their acquisitions were in robotics and logistics – not eCommerce.
Andreas Reiffen: Which is, of course, another overlap between Amazon and Google.
Brad Geddes: It is. And I would never bet against Amazon because they understand diversification of revenue streams. When my developers think of Amazon, they don’t think of shopping, they’re thinking about whether or not we need to set up another Amazon server. When my daughter thinks of it, she thinks of movies and television shows. They’re going to make it, maybe not as an ad platform, but they’ll do well with everything else that they do.
Let me add something more to our conversation. So back in 2004, when Google was going to IPO, their investors looked at Larry Page and said “Okay, we know you have search, and you’re good at it. How do you monetize that?” And Google’s reply was that they didn’t know, but what they did know was that with search you have someone’s complete, undivided attention. And if you have that, you can monetize that moment. And that’s where search can’t be beaten – you can’t beat that moment. Branding is amazing, audience targeting is amazing, but they’re not search.
Andreas Reiffen: They lack user intent, whereas with search there’s a motivation to buy something right now. No matter if it’s a young boy or an elderly woman, people buy what they search for, so the conversion rate is amazing.
Brad Geddes: It is, and as Google will get more into your data. Think of Google Maps or Gmail, Google has more than seven products with one billion installations. We also have pre-search in Google now, so before you even ask the question in your search it bubbles up information. This means not only do they have the moment of search to monetize, they’re going to figure out how to monetize pre-search. They’ll know what users are going to search for, and give them the answer before they’ve even asked. It’s amazing, but it’s not brand awareness. I mean, Google’s display network is good for brand building, but it’s an intent.
Facebook is an audience. It’s a social commerce and social experience, and you don’t even have to be able to search.
Andreas Reiffen: Can you imagine what would happen if you combined both businesses if you took Google’s user intent, and coupled it with Facebook’s audience data?
Brad Geddes: Well, that’s what Google is trying to do. They’re adding Customer Match and Remarketing Lists for Search Ads. But they’re very protective of their data, in that they use very explicit signals. With Facebook, you go and like random things, which means they can use more impulsive signals because they have so many of them. To get even close to Facebook’s audience targeting level – and they could do it well – Google would have to use implicit-based data.
So I think all three companies are going to exist actually. I would never bet against Amazon – they just get how to compete on twenty fronts at once. Microsoft was like that. They’re the number two company in the world, they wait and they wait, someone makes a mistake, and they’re number one again. Microsoft is amazing at this. I just think Amazon, Google, and Facebook will exist together as three different players in the future.
Andreas Reiffen: You just mentioned that Google has the user intent, Facebook has audience data, Amazon basically has both now, because they know their customers, they own all their data, and they get their user intent from user searches. And they get more commercially-motivated searches than Google does. It’s an interesting race.
Brad Geddes: It is. The difference is that Amazon doesn’t have the non-eCommerce, so we’re not going to be going to Amazon to compare car insurance anytime soon. People spend a lot of money on products, and that’s Amazon’s main thing. They tried to do phone plans, and that didn’t work out, so I think it’ll be a while until we see them branch out into non-physical products, outside of their AWS and other B2B-type services.
Andreas Reiffen: I think the only area that’s been left where Amazon is not strong is luxury, high-end fashion where the efficiency of the platform doesn’t really help because those products are sold through emotion – not like a laptop or something.
Brad Geddes: I totally agree.
Andreas Reiffen: Thanks, Brad, that was a great conversation. Thanks for your time.
Continue reading this series:
Crealytics eCommerce Café: Matt Van Wagner