“USERS ARE REBELLING AGAINST ADS THEY FIND IRRELEVANT”

If you type “Mexican restaurant” into Yelp’s search field, the results will include the highest-rated and the closest options – but the first two listings will show restaurants that paid to appear at the top (labelled “ad”). Those are examples of search ads, which are gaining ground on other forms of digital advertising. Matt Halprin, Yelp’s Senior Vice President for business operations, spoke with HBR about the effectiveness of search and other ads. Edited excerpts follow.

Q: Why are advertisers migrating from display ads to search ads?

A: Display ads are a terrible user experience. Search ads are far more relevant to consumers. Even though they delivered significant revenue, we eliminated display ads from Yelp at the end of 2015.

What have you learned about search ads’ effectiveness?

Not surprisingly, search ads work better the more relevant they are to the user’s query. Firms that focus relentlessly on making their ad delivery systems absolutely relevant to the searcher do best over the long run, because they put the consumer experience first.

What mistakes do companies selling search ads make?

They should resist the temptation to show marginally less-relevant ads for the sake of short-term revenue – such ads can undermine user retention. Similarly, showing too many ads at the expense of natural results is a poor trade-off. Users are rebelling against ads they find irrelevant. They will tolerate a few highly relevant ads, but they come to search sites for information, not ads.

What are the takeaways for businesses from this new research on search ad effectiveness?

Don’t shy away from having your product or service scrutinised by third-party research or review sites. If some of the results are poor, you’ve done your company a favour by drawing attention to a problem your team can now tackle. For companies that sell search ads, focus relentlessly on the consumer experience, deliver highly relevant ads, and the rest will follow.