Pay-per-click (PPC) remains a leading online marketing strategy despite ever-increasing competition and rising click costs. Why? Paid search works extremely well when you’ve established an accurate estimate of your cost per acquisition (CPA) and return on investment (ROI). However, not everyone is properly measuring their CPA and maximizing their ROI. To get optimal results from your paid search campaign, you need to consider a number of different factors, carefully weighing the pros and cons of spending time and money on each, with the result being a carefully crafted campaign that maximizes results. Here are some important factors to consider in this process:
Saturation as a strategy: Obvious benefits, hidden dangersWhen your client commits to providing whatever budget is necessary to maximize visibility in the paid and organic search engine listings, it is tempting to saturate the entire PPC keyword inventory with budget and optimize organic listings across the board. There’s no doubt traffic stats would rise. On the other hand, site conversion rates will likely drop. Once you reach budget saturation for your top-converting keywords, you start spending budget buying traffic that is progressively worse in quality. If you have achieved top organic rankings for your client, PPC saturation can also cause lift and/or cannibalization, which tends to skew estimations of the average CPA. Consequently, saturating your keyword inventory without careful measurement and optimization can result in unnecessary inefficiencies, leaving client profits on the table.
Optimization: Ad copy, landing page testing, keyword management. The best way to combat slipping conversion rates is to optimize the PPC campaign beyond bid management. Tactics like ad copy optimization and landing page optimization allow you to increase your average conversion rate; in some cases, even during steep budget increases. As a nice side benefit, your quality scores should improve and your average cost-per-click should decrease.
Careful scrutiny of your keyword list is also important. Manually managing the bids for your most important terms will ensure that you’re not reducing your bids on important brand visibility terms (brand name and generic, but relevant, non-brand keywords that drive a lot of traffic). Another best practice is to look at your search query performance report in AdWords. You can generate useful keyword reports from your analytics software as well. Using this information, an analyst can extract any terms that are irrelevant and add them to the negative keywords list. You should also cross-reference the top converting terms from your organic and paid campaigns. Make sure to optimize for top-ranking paid keywords that have poor organic rankings and bid on top-converting organic keywords that aren’t currently being purchased. Beware though, because PPC can cannibalize your organic efforts.
Measurement: Latency, lift and cannibalization. Integrating the measurement of PPC, SEO, email, and online advertising campaigns creates a holistic view of the traffic acquisition strategy. With this perspective, you can get a better outlook on the subtle (or not so subtle) interactions between the various traffic drivers. You can also attempt to estimate ROI and CPA for each channel. But unless you’ve invested in highly sophisticated analytics software, you won’t be able to understand the latent effects that one channel has on another.
For instance, visitors to an electronics supply web site could take the following path to conversion. First, they click on a banner ad they see on a niche site. They do not convert. Later, they go to a portal site and see a “behaviorally retargeted” ad, but they do not click through. Next, they view/click your top paid listing in Google for a broad term like “electronic supplies,” but they still do not convert. There was too much “noise” in the first set of query results, so the searchers get more specific with their queries, searching for “speaker wire suppliers.” They see both your top ranked PPC ad and your top ranked organic listing. But they don’t click on either. However, all of your branding starts to sink in and these people are eventually compelled to search on Google for a phrase like “Acme Electronics Speaker Wire,” which includes your brand name in combination with a specific product. This time, they see both your paid and organic listings, click on the paid listing, and eventually buy on your web site.
In this example, it’s obvious the impressions and clicks that didn’t create conversions still had value in leading to a conversion. This example also highlights the fact that PPC listings can cannibalize highly-ranked organic listings. So the question is, how much lift or cannibalization does each campaign create and at what additional cost?
The best way to find out is through testing. Simple A/B testing would involve turning off each paid-traffic driver (PPC, email, display ads) one at a time, while keeping the other traffic drivers (online and offline) constant. This can be painful because you are likely to see some reduction in traffic, but the data these tests provide is invaluable. By measuring the lift and cannibalization, you can obtain a more accurate representation of ROI and CPA. With a better understanding of these metrics, you can determine the best budget allocation for each channel, and optimize the marketing mix.
John Faris is Senior Search Analyst at Red Door Interactive. He helps plan, implement, test, measure, and optimize traffic acquisition strategies and tactics for Red Door’s clients. The Paid Search column appears Tuesdays at Search Engine Land.
Opinions expressed in the article are those of the guest author and not necessarily Search Engine Land.