“En toute chose il faut considérer la fin.” (In everything one must consider the end)

-    Jean de La Fontaine, 1668

It seems that every initial conversation with a prospect, or a new client, seems to start out as follows:

Me: “What are your business goals?” Client: “I want more {clicks, actions, conversions} at a lower cost”.

Well, of course, this barely even needs articulation, everyone wants those things. Actually, those “goals” are really a means to an end, not the end itself – marketing goals if you will, not business goals. These goals are universally focused on of course; the trick is in how one goes about it.

However, of all three (clicks, actions, and conversions) if your strategy is to optimize for clicks or actions, your primary goal should be to move towards the third metric: tracking conversions.

The Natural Progression Of Sophistication

There is a progression in online marketing in terms of sophistication of tracking business goals (the “ends” as opposed to the “means”), depending on what you can track and tie back to your marketing efforts.

In Paid Search or its cousin Display Advertising, the progression of “ends” and “means” usually falls along these lines:

Click to enlarge

Flying Blind

If you’re doing paid search and are optimizing keywords to a cost-per-click basis, I have news for you; the key question you should be asking is not “should I invest in a bid optimization platform so I can take my campaigns to the next level?”.

The correct question is instead: “why am I flying blind in a bunch of fog?”

Perhaps you should invest in an altimeter prior to installing a jet engine!

What Can You Reasonably Do If You’re Only Optimizing CPC?

If you’re optimizing to a CPC standpoint, then the following is all you can reasonably do from an optimization standpoint:

  1. Make sure you have done thorough keyword research
  2. Structure your campaigns well
  3. Set your bids based on what you can afford
  4. Do some creative testing, and
  5. Make sure you put negatives in place that make sense to you based on your knowledge of the business and the output of your search query reports.

Ultimately, you will still have no idea which keywords are really working for you other than using your intuition and knowledge of the business.

Benefits Of Shifting To Optimize For Actions Or Conversions

By all means, spend some time on the basics, but taking your tracking to the next level should be at the top of your list.

It could be, for instance, that one keyword has a very high conversion rate and should be bid way up over your average CPC, while others that convert poorly should be bid way down because they’re really not worth that much to you. You will never know this if you don’t get proper tracking in place.

Plus, knowing which keywords are converting well will guide keyword expansion efforts, isolation of top performers into their own ad groups, and so on. There are many things you can do to take your campaigns to the next level, but all of them require actually measuring results in order to have data-driven improvements.

Tracking Is Boring & Hard, But Is The Key To Success

Tracking is: difficult, annoying, technical, easy to mess up, boring, and very uninteresting to the brain of a marketer. However, having your tracking properly set up and aligning your tracking with your business goals, is the most critical success factor for paid search campaign improvement.

I don’t have sophisticated study I can quote to you to prove this, but I have seen this over – and over  - and over – and over, so take my experience as anecdotal or “clinical” evidence (others with supporting or contrary experience, please comment).

Most Web developers and marketers are not adept at setting up tracking. If you sell products through an e-commerce platform that you’ve integrated with, ask your e-commerce platform vendor for some help on tracking – it may be as simple as paying them for a few consulting hours. If you have Web developers on staff, have them slog through all the available documentation from Google, they can probably figure it out.

Some marketers use Adwords tracking pixels, some use Google Analytics tracking pixels, some use both (one credits conversions to the last click, the other credits conversions to the first click).  There are advantages and disadvantages to both – see the following help guide for a comparison.

Whatever you do, pick at least one approach and implement it, and start tracking either actions or conversions (i.e. track and optimize *at least* on a Cost-per-Action basis).

Tracking “Actions” Instead Of “Conversions”

If you can’t track product sales, but are tracking signups, registrations, or downloads, then you’ll have to put a value on each type of action.

You might analyze your funnel for instance and determine that 3 out of 100 signups result in a conversion. Well, you could for instance, value those signups at 3/100 of the average value of a conversion. It’s not an exact science, but it’s a start.

Think of actions as being fractional conversions. In fact, if you’re selling products on an e-commerce basis but also have signups occurring, you can track both actual conversions and fractional conversions for the other types of actions.

This way, you can ensure that you’re giving some attention to keywords earlier in your sales funnel, rather than spending only on final converters.

Taking Your Game To The Next Level

If you can, try to track actual dollar amounts of sales being driven by each keyword; then you can optimize your paid search keywords to a Return on Ad Spend (ROAS) goal.

If you can break out the dollar amounts of each sale by product, then you can actually tie it back to net margin dollars earned and understand that certain keywords drive more net margin than others.

This may be challenging, in that you have to get tweak your e-commerce cart solution to pass the sale amount as part of the tracking, but the effort is well worth it.

The Ultimate In Sophistication

Don’t forget that the advertiser with the highest lifetime value per customer ultimately sets the CPCs in the auction.

If one advertiser is shooting for a one-product sale, while another is taking into account that they are acquiring customers who will later buy associated products, or will make in-app purchases, or will renew a subscription again in another 12 months with a certain probability, the advertiser taking more into account will typically be able to “afford” a keyword more than the less sophisticated one.

Are your competitors involved in a subscription-based business, where your business model is a one-time sale? Are your competitors selling higher-ASP or luxury products, where your products are lower end?

If all of your competitors are using Paid Search advertising, and the keywords are just “too expensive” for you, the problem is one of the following:

  1. Whoever did your paid search campaign did not know what they are doing
  2. Your competitors have a different business model (for instance, subsidizing one business with leads from another, such as airlines selling vacations in order to drive plane utilization up)
  3. Your business’ cost structure or product pricing is misaligned with your competitors
  4. Your competitors are thinking in terms of net margin dollars or LTV and you are not

I can tell you this – if all of your competitors are bidding on a keyword and you find it too expensive, it’s not that your competitors are idiots – there is some disconnect you need to ferret out.

More sophisticated marketers could be driving you out of the market for certain keywords that you could otherwise afford, if you only truly knew how valuable they really are to you.

Also, if you are relying on a trusted partner doing your paid search for you, all on a pure CPC basis, who is not suggesting you take your game to the next level but is simply happy to continue spending money on your behalf …you need to have a conversation with them about tracking cost-per-action or cost-per-conversion, or find another partner.

You can’t attain any ends without employing the right means, so consider the end and get moving!

Opinions expressed in the article are those of the guest author and not necessarily Search Engine Land.

Related Topics: Channel: SEM | Paid Search Column

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About The Author: helps enterprises to scale up online marketing efforts through custom engagements tailored to their unique situations. Ted blogs on a variety of online marketing topics with a special emphasis on SEO at Coconut Headphones. You can find him on Twitter @tedives.

Connect with the author via: Email | Twitter



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  • MrAdamWatkins

    I run a few different campaigns, and there is definitely some helpful info here. Thanks a bunch!

 

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