August 29, 2011

How Integrated QR Codes Will Disrupt Your PPC Strategy

(Read in entirety at Search Engine Land. Published 2011)

This summer, I dedicated my columns to exploring the disruptive effects QR codes will have on the core of search marketing – from SEO URL strategy, to the very notion of link building. Today, I’ll look at how QR disrupts the SEM game, and may force you to adopt a new strategy.

It’s In The Mail

If you’re a US resident, you’ve surely noticed the spike this summer in direct mail pieces featuring 2D barcodes (typically QR) – even curiously from firms that are typically late adopters, like non-profits. This was due to a brilliant (perhaps desperate) move by the US Postal Service to remain relevant in a mobile era, by positioning direct mail as a method of integrated mobile marketing.

So they offered to cut postage fees by 3% for any direct mailer that included a QR on promotional mailings sent during July and August 2011. (Depending when you read this, you may have a few days to benefit.)

At first, 3% may not seem like a lot. For large mailers, like catalogers, it adds up to tens of thousands of dollars in savings per campaign. For smaller mailers, it’s worth much less. But the cost of participating is so low, there was clear incentive to take advantage.

The QR code is free. So is the incremental ink. The only real cost is the change in printing process. (Interestingly: This helps explain why many of the summer QR codes link to desktop sites, not mobile sites. It may be a sub-optimal user experience, but the brand saved 3% in postage fees, and presumably gained data to quantify further mobile investment, so it’s a win for mobile.)

I think this was a defining moment in US QR adoption. The Postal Service’s offer may be over, but there is actually no incentive for any of these brands to now pull their QR codes from future mailings (it would just cost more in process-change).

Maybe USPS will offer a similar deal in the future, but even if they do not, the “bar” has been set. US consumers are now beginning to expect QR “mobile links” on their direct mail.

QR As Navigation

Just what does this have to do with your PPC program?

For years, direct marketers like catalogers and multichannel merchants, have seen correlation between sending a catalog, and the resulting increase in “search-as-navigation” brand queries. That makes sense: the catalog sparks interest.

But there are fewer keystrokes required to type a brand name into a search box than to type the brand URL directly. Search engines provided, and profited from, this shortcut.

Research over the last few years has shown how “search-as-navigation” brand queries make up more than 50% of keyword traffic volume for most large brands, often constituting the bulk of PPC spend.

QR makes that information retrieval process antiquated and laborious.

Why open your desktop browser, type a brand query, and have to click a link from the ads or SERPs? Instead, you get there directly in one click, old-timer.

Just open your QR reader app and scan. If you’ve got your smartphone handy (who doesn’t), it is certainly easier to scan than type a search query (or a URL for that matter) on your smartphone.

This increased simplicity offers at least a 75% reduction in steps, and nearly 100% time-savings versus typing a desktop query and waiting for websites to load. The point is this: Just like “search-as-navigation” offered a shortcut to typing URLs, “QR-as-navigation” offers an even faster, more efficient, direct route.

When consumers exploit the “QR as navigation” shortcut, it directly reduces the number of “search-as-navigation” brand queries they conduct. It’s a substitute.

By providing this new shortcut, marketers can drive those same users to the site, without the incremental ad cost of brand queries. Interestingly, with QR acting as a navigational shortcut for consumers, it doubles as an advertising shortcut for marketers.

QR As SEM Shortcut

How much of your PPC spend is driven by “search-as-navigation” brand queries? If a 3% postage reduction was enough to motivate marketers to adopt QR integration, imagine the cost savings of weaning those users off brand-query ads.

In essence, “QR-as-navigation” allows brands to take back what was theirs’ all along: It was only because search engines offered consumers a typing shortcut that brands eventually had to advertise on brand queries. Now with QR codes, brands can reclaim that traffic and greatly reduce ad costs.

But there are other inefficiencies to address. If your multichannel marketing induces head-term query traffic, the “QR as navigation” principle could reduce those expensive acquisition costs.

Perhaps by placing a QR in the catalog along-side product categories with high search demand, search-inclined consumers will have to decide whether to take the QR shortcut, or risk taking the longer “search” route.

Similarly, less expensive tail queries, like product names or SKU numbers, could be rerouted by placing QR next to each product within a catalog.

There is great incentive to adopt a QR integrated SEM strategy:

  • By year-end (four months away), there’s a 50% chance your US consumer will own a smartphone. (75% chance by this time next year.)
  • QR reading apps are and will be freely available for him/her to download.
  • QR codes effectively eliminate the time and effort required for him/her to access information.

By strategically integrating QR codes, you not only can reduce demand for “search-as-navigation” queries, but in process reduce your SEM spend, improve your SEM yield, and lift margins.

Of course, since there are no real cost barriers to QR integration, all competitors have this same advantage. And consumers will ultimately choose to do business with the brands that make it easiest.

Will QR eliminate search activity? No. Mobile users are still search-dominant.

But you have to ask why: The fact is, we’re search-dominant because the best we have been able to do, in most situations, is to search.

Every multichannel brand should be feverishly reconsidering their SEM strategy because choosing QR integration can make one of your biggest costs (“search-as-navigation” queries) an inefficient spend. There’s a big pile of free money there – your money – to be reclaimed.

QR is disruptive to SEM because it lets you as a brand compete with, and trump, the best shortcut consumers have had available until now: search engines.


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