SEM Firm Treats Keywords Like Stocks

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A new search engine marketing company hopes to take a page from Wall Street by using technology to manage increasingly large and complicated campaigns as if they were stock portfolios.


Efficient Frontier, Palo Alto, CA, already is serving two top online retailers. It uses an algorithm and other analytics to dynamically allocate keyword spending to maximize return. On Monday, it plans to officially launch its search service for managing paid search campaigns on Google, Yahoo's Overture Services and FindWhat.com.


Efficient Frontier's heavily data-driven approach is necessary for large marketers to cope with the thousands of keywords they must bid on and manage across different search providers, president/CEO Ellen Siminoff said.


"The search engine space is growing, and it's proving very valuable," she said. "The big issue is how to capture that value and do it the right way."


The former Yahoo executive said Efficient Frontier's strategy relies on analytics to gauge how a marketer's portfolio of keyword ads is performing based on its rate of return. By analyzing the search market's fluctuations and using techniques like regression analysis, the company's technology places keyword bids predicated on future performance, mimicking a Wall Street trader managing equity investments.


"Most people want to spend more in the space but it's gotten very complex," she said of the search marketplace.


According to Jupiter Research, 22 percent of marketers now manage over 1,000 keywords in their search campaigns.


By relying on a technological approach, Efficient Frontier boasts that it can handle hundreds of thousands of keywords, constantly generating new keywords to test against their potential return. Siminoff said a tech-driven system also reduces the overhead of keyword specialists monitoring changes in the bidding market.


The company was founded in January 2003 and shares its name with a finance term for the portfolio of securities that returns the highest rate of return for a given level of risk. In December, it closed a first round of funding that Siminoff estimated at $3 million to $5 million. Its financial backers are Redpoint Ventures and Cambrian Ventures.


Online ad giant DoubleClick highlighted the importance of bid management last month when it paid $65 million for Performics. DoubleClick executives said the main rationale for the deal was to acquire a tool to let advertisers maximize their return by automatically adjusting bids based on each keyword's performance. DoubleClick followed in the footsteps of rival Atlas DMT, which acquired bid manager Go Toast in December.


DoubleClick and Atlas DMT see advantages in advertisers having their search management integrated with their other online ad management platform. Siminoff said Efficient Frontier could offer greater sophistication and ultimately better return for marketers.


Siminoff said Efficient Frontier's clients wish to remain nameless for competitive reasons. She estimates that the company already handles bidding on about 2 million keywords. The system is best for marketers spending more than $50,000 monthly on paid search, she said.


One area in which Efficient Frontier does not help marketers is keyword ad copy. Siminoff said the company would focus exclusively on maximizing returns through technology.


"That is not our expertise," she said. "We help people be better marketers, but we want to let marketers be marketers."


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