Thanks Danny for the post and link to one of my columns on portfolios. I'm not as frequent a participant in the forums as I should be and will try to jump in more frequently. Some folks like to sell portfolios or a portfolio-style campaign management technique as mystical or magical. It's math. All decisions made about bids (individually and in groups or portfolios) are based on some kind of formula. Yahoo's Panama will even bid manage if you want it to.
In the end, results matter, some formulas will work well; some will be killer (especially when combined with a smart team and sound strategies). Others will fail to reach the highest efficiency. Just like in the stock market historical data does not always predict future behavior or results. Some formulas don't adequately take the unpredictability and volatility of certain keywords into account. There can be smarter portfolios and simple (dumber) ones. The addition of non-bid parameters into the equation (CTR and fuzzy quality scores) make it more challenging for the developers of formulas to build the best formula or AI.
So, buzz-words aside (such as portfolios, smart portfolios, predictive models, etc.) are really just marketing speak that attempts to name a formula, a methodology or a philosophy.
I've found that one formula doesn't fit all. A flexible AI that can test different formulas and a team of analysts that can adjust formulas and campaigns will often outperform a "one-size-fits-all" formula (not that anyone out there is using such an inflexible formula).
As the engines continue to change the way they calculate predicted CTR, predicted Ad Relevance and predicted eCPM (yield), those of us tuning and tweaking formulas will have to keep on our toes. None of us will have the opportunity to peek behind the curtain of all the campaign management systems to see how smart or how dumb they are.
This complexity doesn't make it easy for advertisers to choose among the formulas, SEMs and technologies. It is interesting to read the latest Jupiter
SEM Constellation Report (if you subscribe to Jupiter Research or can look over the shoulder of someone who does), just as interesting are the companies in the 2004 report that either chose not to participate in the 2006 report or perhaps were not selected by Jupiter to participate (Jupiter won’t say).
Regardless of what technology you choose to use to run your campaign, make sure that the math makes sense to you, for you, for your business and within your industry sector. Make sure you or the team using the technology is smart and understands your objectives. A smart Search Professional with the most rudimentary technology can probably beat the best technology implemented by a moron
