AdCenter Pilot Yields High ROI, Calls for Expansion

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Ad campaigns are generating high conversion rates in MSN's pilot paid ad program, MSN AdCenter, but search marketers say they want Microsoft to expand the program faster.


Microsoft and search agencies testing the pilot have long waiting lists of advertisers who want to get involved. The volume is low because MSN is testing only a small portion of ads while it continues streaming Yahoo ads, as required by its contract with the search engine.


"We have been happy with the ROI so far, but the challenge has been how do they plan to increase volume? Until you run that volume, you don't know if you can scale," said Bryan Wiener, president of 360i, New York, which has a few large marketers involved in the test.


MSN's U.S. AdCenter test began in October with 500-600 advertisers and agencies. Now in the second phase, with 800 advertisers and agencies, MSN temporarily halted taking on more advertisers. The company is "hoping" to launch officially in the first half of 2006 and will release results of the test in the first quarter, a Microsoft official told DM News.


Search agencies are pleased with the performance of their campaigns on AdCenter as well as the unique features, including more flexible keyword bidding and demographic targeting.


"The ROI is very good because [keyword] prices are so low," said Danielle Leitch, vice president of marketing and analytics at More Visibility, Boca Raton, FL. "Some of the advertisers are the only ones on the keywords."


One advertiser's campaign generated $22,000 in sales in the week after Thanksgiving with just a $400 investment, said Noah Elkin, director of industry relations at iCrossing, New York, though he acknowledged that the campaign could have benefited from the holiday shopping season.


Despite the high ROI for iCrossing advertisers on this and other campaigns, Google and Yahoo have much higher traffic volumes, so it's difficult to measure MSN's effectiveness.


Still, marketers appreciate the ability to segment campaign performance between MSN and Yahoo, which accounts for many of the ads on MSN.


"It has given us greater transparency into the MSN portion now that it's separated from Yahoo," Wiener said.


AdCenter's behavioral and demographic targeting features -- the main differentiator between MSN and both Google and Yahoo's paid search programs -- also are helping advertisers. A large travel Web site is targeting holiday packages to consumers in certain areas of the country and targeting college students in an upcoming spring break promotion.


"What it means to them is very high conversion rates on those specific packages," said Samir Patel, president of SearchForce, Santa Clara, CA.


Advertisers can boost their bids in certain demographics, Leitch said. By adding one word to a search phrase, such as "free" to the name of a product, advertisers can target two very different demographic sets.


Demographic targeting will continue to differentiate MSN from its competitors as the program rolls out.


"You were not able to do this before," Patel said. "Google has [geo] targeting, but it limits you to specific Web sites to advertise on."


But those behavioral and demographic features can overwhelm some advertisers, Leitch said. Still, she tells marketers that they can run a basic campaign on MSN, then "layer in all these bells and whistles" if they wish.


"It will widen the gap between the haves and the have-nots in the search market," said Joshua Stylman, managing partner of Reprise Media, New York. "You can have some [advertisers] that will be really leveraging this new targeting criteria, and you've got others that are going to completely drown in it."


In addition, some advertisers will choose not to use the features.


"Some people have pretty broad products that appeal to a wide range of people," said Ben Perry, paid search manager at iProspect, Watertown, MA. "You might just be paying more and limiting yourself a bit."


Christine Blank covers online marketing and advertising, including e-mail marketing and paid search, for DM News and DMNews.com. To keep up with the latest developments in these areas, subscribe to our daily and weekly e-mail newsletters by visiting www.dmnews.com/newsletters


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