PPC management agencies have gone back to the drawing board when it comes to keyword analysis. They are noticing a shift in the keywords that are driving consumer online spending habits.

Siddharth Shah of Efficient Frontier, for example, has noticed that loans and lending related keywords are not performing very well in the current economic climate, even though keywords such as “credit,” “lending” and “mortgage” have seen a huge jump in impression volume.

More searches and more traffic does not necessarily lead to more sales, of course – as we’re always telling our own clients! In fact, a large number of impressions and clicks without the subsequent conversions spell very bad news for organisations relying on PPC to drive enquiries and sales, because every ad that a user clicks on costs the organisation money. More consumers may be searching for financial information simply because the topic is high profile, rather than because they are interested – or qualified – to purchase a financial product.

So, which popular keywords are resulting in sales? According to Shah, the travel industry has seen a spike in search volumes for “cheap” and “discount” related keywords – these are increasing their impression volume and monetizing well. Keywords associated with more luxurious travel (e.g. “cruise” and “hotel”) are producing a lower conversion rate than they were last year. Furthermore, the “hotel” searches included several thousand combinations of hotel with location names and hotel brand names. Shah told Search Engine Land: “This indicates a shift in consumer thought patterns. People are less brand focused, and more value conscious. Clearly frugality is in.”

Two American professors have released the results of a study which challenges the notion that the top Google Adwords positions are necessarily the most profitable for the advertiser. Could the nature of keyword analysis be about to change?

Google Adwords works on the premise that advertisers who pay the most amount of money per click receive the largest volume of traffic through to their website. [It is not always so straightforward: the algorithm also takes into account factors such as CTR (click through rate)]. The research paper “An Empirical Analysis of Search Engine Advertising: Sponsored Search in Electronic Markets,” by NYU Stern Professors Anindya Ghose and Sha Yang has built a quantitative model which aims to help advertisers undertake more targeted keyword analysis to determine the most profitable keywords for their organisations.

Ghose and Yang are experts in Web 2.0, user-generated content, keyword analysis, online advertising and e-commerce; and understanding household purchase behaviour and market competition respectively. Their study is based on a six-month panel dataset of several hundred keywords collected from a large nationwide retailer that advertises on Google.

Amongst the key findings were:

• Even though the more prominent positions on the search engine results page experience higher click-through or conversion rates, they are not always the most profitable ones. In fact, profits are often lower in the top positions than those in the middle positions due to the aggressive nature of bidding that increases the total advertisement costs (given the high click-through rates).

• The value-per-click to an advertiser decreases with each position down the search engine results page, meaning that clicks from more prominent positions are more valuable than clicks from lower positions, because conversion rates also decrease.

• Search engines are accounting for both the current period’s bid price as well as prior click-through rates of the keywords before deciding the final rank of an advertisement in the current period, but the current bid price has a larger role to play in determining the final rank than ‘Quality Score’-related factors like prior click-through rates.

• An increase in the landing page quality score of the advertiser by one unit is associated with an increase in conversion rates by as much as 22.5% and a decrease in advertiser cost-per-click.

The American keyword analysis study is the first to quantify the impact of keyword type and length, position of the advertisement, and the landing page quality on consumer search and purchase behaviour as well as on advertiser’s cost-per-click and the search engine’s ranking decision for different ads.