Searching For PPC Success In A Down Economy

Looking back on a year marked by rising unemployment, increasingly thrifty shoppers and downsizing business, online marketing, in particular search engine marketing, has been a bright spot. With consumers pinching pennies, ecommerce is driving more business as shoppers opt out of driving to malls and shopping centers and increasingly buy online instead. As a result, while marketing budgets shrink, online marketing has been gaining momentum with all eyes on the most proven, ROI-driving, component of the online marketing portfolio—paid search advertising.

Despite all the positive momentum, online marketers still face the hurdles of convincing traditional advertisers that search advertising is a viable means of reaching customers. For example, such a traditional advertiser might take out the back page of the NY Times for $30k – $60k on a Sunday and not think twice—because historical campaigns have led to a subsequent increase in sales and the NY Times has a significant, national distribution. However, the truth is that there is no guarantee of views other than the circulation of the paper, there is no way to determine how many people actually purchased the product being advertised as a byproduct of viewing the ad, and there is no way to ensure a subsequent boost in sales is due to the advertisement or any other externality. So how do we, as a community of online marketers, effectively communicate to the traditional advertisers (or our managers) and drive their budgets online?

Opportunity is potential revenue—revenue that could have been but did not come to fruition—and this is the opportunity cost of not executing an effective paid search effort. Assuming that readers of this article are using paid search, here are a few tips for communicating this opportunity and to help your team understand the potential ROI of a PPC campaign:

The value of a conversion: Unless your company only sells one product or service that is a set cost, CPA is a difficult metric to use when trying to accurately determine profitability. If possible, use conversion tracking to pass the value of the conversion (a revenue figure per conversion) back to the search engines so you optimize to ROI or ROAS (Return on Ad Spend).

Granular optimization: The more granular of a level you can optimize to, the better. Many SEMs that I speak with are manually managing large accounts (in terms of keywords)—a daunting and overwhelming task. As a result, they are cutting corners by managing at an AdGroup level (for search, not content), aggregating match type data to manage a given keyword as a whole, or even worse, ignoring all but the most significant terms in their accounts. Every keyword in an account is significant, even if it’s not directly affecting the cost of the program (due to clicks), it is still affecting the cost of the account via account Quality Score, a secondary yet very significant metric in determining CPCs (for more information see How To Get More PPC Traffic For Less Money). To avoid this, try to avoid aggregating where possible, respect match types by analyzing each separately, and maximize Quality Score through effective use of Non-DKI (Dynamic Keyword Insertion) ads and strategically placed DKI ads to ensure ads are relevant.

Appeasing your business, not just the search engines: The engines rewards ads that have high CTRs with low CPCs [via high Quality Score/Index]. But having a high CTR does not always yield high conversion rates. Finding a balance between optimizing for CTR to get lower CPCs and having ad copy that better qualifies the user is an art and should be of primary importance in order to maximize ROI.

Having a quality internal tracking system is critical for a successful paid search effort. Without it, understanding incremental revenue opportunity is impossible and making a case for incremental budget to your management is no easier without the metrics to back it up. Here are a few simple analyses that anyone can put together to identify what’s working and where the opportunity lies:

Match-type analysis: Identify which match types are driving the most efficient, qualified clicks. Use tools such as Google’s Search Query Report to shift the balance of clicks to the most effective match types.

Priority analysis: Look at all the keywords in the account sorted from highest to lowest volume (in terms of clicks or cost) to see how they are performing (in terms of ROI). Starting from the top, identify the terms that need to be optimized and strengthen the relationships between keyword, ad copy, and landing page to increase CTR, Quality Score and conversion rates. Including average rank will be indicative of available impression share (as a rule of thumb, assume any match type with an average rank greater than 1.5 has a fairly significant amount of incremental volume opportunity achieved by increasing Quality Score and/or bids.

Putting them together:: Merging these analyses will yield a truly actionable data set. Consider grouping the keywords into different sets related to priority. Then pivot the data to include match type by priority rating. This data set can be used to present to management how much optimization can be done on the account and can given an indication of the value of this effort.

Impression share analysis:: While this report is only available at the campaign level for AdWords campaigns, it provides insight into the relative incremental volume opportunity for a set of terms (the campaign as a whole) and directional insight into how to garner more impressions (increase budget or rank).

Communicating the benefits of search advertising is easy when data is available, but very difficult to explain to someone without much online marketing savvy. The most difficult situations I have found myself in have been facing relatively inexperienced clients deciding between paid search and SEO—why pay for clicks when you can get them for free? While I cannot refute any argument based solely on this logic—as organic clicks are free while paid clicks are not—I can make a case for paid search even when SEO is top-notch, which is certainly not the case for the majority of sites out there. The way I see it, there are three distinct advantages that paid listings has over organic listings, and as a result are the three of the strongest arguments for the integration of search advertising into any marketing scheme:

If you don’t use search advertising, your competition will poach your traffic. The competition has always been able to bid on your terms, but since AdWords changed its trademark policy in May 2009 to allow competitors to actually use these terms in their ad copy, it has never been more important to claim the real estate that is rightfully yours.

Consider the follow query for [iphone]. In the first instance, both AT&T and Apple are in premium positions:

Now imagine if AT&T owned the entire premium position, without Apple. A subsequent search:

In both cases Apple SEO is perfect, placing Apple.com at the top of the organic listing. However, in the second search, where there is no Apple ad, my eye is drawn to the AT&T ad, rather than the Apple organic result. If I’m specifically looking for the Apple website I will most likely click on the organic link, however, it’s inevitable that some people will click on the AT&T ad because it’s what they saw first.

Paid search allows for customized messaging, whereas the text for organic links is determined by the search engine. While several factors can help to control the text in the organic link, it’s a process and requires some technical knowledge. Ad copy can be changed almost instantly using paid ads, allowing marketers to create and rotate in unique messaging for sales, promotions, product launches, and so on. Furthermore, marketers can test which ads work the best, optimizing for CTR and conversion rates by optimizing landing pages.

Consider the following query for a Sony Bravia TV:

While the organic link is relevant, Sony is running a promo offering of a PS3 or BluRay player with a TV purchase. This efficient and enticing offer might sway a consumer who was intending on purchasing the TV from Best Buy to click on the Sony ad and purchase directly.

Building on the concept of ad customization, an ad can be tailored for more than just promotional purposes. This brings me to point 3:

Paid search can be optimized for the consumer buying cycle. In their highly regarded book, Search Engine Marketing Inc, Moran and Hunt preach that all search terms can be classified as: informational, navigational, or transactional. Informational queries are for research [best flat screen tv], navigational queries are for getting to a specific website [sony.com], and transactional queries show user intent to purchase [buy bravia xbr8 hdtv]. How is this relevant to search advertising? Because ads can be customized for different types of queries, SEMs can create ads that are tailored to users in different stages of the buying cycle.

A consumer typing in an informational query is researching a product, idea, service, etc. Calling out this notion in the ad copy and driving traffic to an informational page where the consumer can learn about the product(s) in question will build trust and allow them to make their own way down the sales funnel. Consider the query [plasma or LCD TV?]. This query indicates the consumer does not know which kind of television to purchase. Driving the consumer to a product page for a particular TV will not yield a sale, whereas driving the consumer to a page describing the benefits and drawbacks of plasma versus LCD may yield a sale. Whether or not the sale is made in that session, the consumer is likely to trust the source of unbiased information when moving forward and purchasing the TV.

Following the same logic, building ads that are relevant for navigational and transactional queries will have positive ramifications. Understanding and classifying various keywords as informational, navigational, or transactional is a significant step to understanding consumer behavior. Studying post-click consumer behavior using an analytics package (such as Google Analytics) will give insight into how effectively consumers can work their way through the sales funnel within your website—channeling those informational clicks into transactions.

Whether you’re just starting out in search advertising or looking to grow, building or optimizing a strong account from the ground up will set you up for success. The right ads can make or break a campaign while knowing how to manipulate to data to report on success will create visibility into your work and drive well deserved recognition.

The beauty of online marketing is transparency—there is no other medium in advertising within which a direct return on investment or cost per acquisition can be associated without questioning a slew of externalities. As the science of online marketing continues to unfold, it’s never been more important to understand the true value of tracking and use the (free) tools that are at your disposal to communicate opportunity, legitimize budgets, and convey the benefits that search advertising commands.