Last week the PPC Hero team attended a lecture by Jim Koehler, Senior Statistician for Google. The lecture was on the campus of Indiana University as part of their Statistics Symposium (we are about a 7 minute drive from campus!). We had no serious expectations on the topic or content. But when someone from Google speaks, you listen!

The content was geared toward the target audience of the symposium; graduate students who are enrolled in the Statistics Program. Mr. Koehler’s presentation provided some details on how his team executes their quantitative marketing research. There were graphs that displayed how they track logistical regression and conversion attribution.

Honestly, some of the scientific elements and methods of how they test were over our heads (we’re not grad students in statistics!). But we did find what Google is testing to be very interesting and perhaps telling.

Throughout the presentation Mr. Koehler focused his presentation on testing that Google has been doing at the DMA level (Designated Market Area). DMAs are defined by Nielsen Media Research, and are used to identify specific media markets for those interested in buying and selling television, advertising and programming. Basically, this means that Google is testing the success rates of local, geo-targeted campaigns.

Mr. Koehler mentioned that during a recession, big companies will often pull back on their advertising budgets. This can ease up the competition in the paid search marketing space. And during this time, small/mid-size companies can make big gains by locally targeting their PPC campaigns.

Is this the wave of the future? Does Google think that paid search marketing will evolve and be dominated by campaigns that are geo-targeted to specific areas? Numerous advertisers already use this method of delivery, but does Google feel that a shift in focus is coming?

Honestly, we don’t know (even though other blogs have mentioned that the number of local advertisers is growing). But we do know that Google is conducting a lot of testing with DMAs and how to create the best marketing mix for success.

Perhaps Google wants to attract more local advertisers to AdWords, rather than catering toward “big companies” that advertise nationally. And perhaps they want to get this formula right before making a big push toward these smaller/mid-size companies.

Or perhaps Google really does think that geo-targeted campaigns with a smaller, regional focus will be the face of paid search advertising.

Side note: as part of their DMA testing, Mr. Koehler discovered that even Google can’t make advertising on YouTube profitable. None of the their tests generated a positive ROI with YouTube. Was this a wise acquisition since even Google has trouble generating positive results?

Mr. Koehler also gave a brief overview of the AdWords Quality Score. But he didn’t shock us with any new revelations or insider information. This portion of the presentation didn’t shock our brains. And if you read PPC Hero, it probably wouldn’t have shocked yours either.

Normally, we prefer to make claims or speculations that we can back up with hard facts. However, this time we are interpreting Mr. Koehler’s presentation and looking for those hidden signals on what Google is thinking, or least testing.