The Top 3 Reasons PPC Lead Gen Campaigns Miss Volume Targets - Part 2

By Eric Enge , May 7, 2008

Two weeks ago, I wrote about the "Top 3 Reasons PPC Lead Gen Campaigns Miss Volume Targets." The short summary is that you may be position-capped (in position one or two already), bid-capped (keywords are already at the max price you said you were willing to pay), or simply reacting slowly to shifts in the market.

This week, we'll expand on that discussion by looking at some sample customer data, and outline next steps in more detail.

Keyword Waterfall Analysis

To start, let's take a look at the plot of some data from a real campaign for a customer who is willing to spend $150 on a conversion:

click to enlarge

Courtesy Marin Software

This chart helps diagnose the issues above – it can help tell us which keywords are maxed out and what we should do about it. Let's explain the chart and analyze the data it provides.

The chart shows a cumulative distribution of spending and conversions. Each point is a keyword. Keywords that consume spending but have no conversions will be directly right of the keyword that comes before. This is common and expected, since this data covers only a single week.

1. The keywords represented in dark red are bid-capped at $2. Collectively they represent about 26 percent of the conversions, and 16 percent of spend. These keywords are converting at a cost of $45 per conversion (way under the target). The action here is to see if raising the bid cap on these keywords will bring you additional conversions while maintaining a target under $150 per conversion. There could be a real opportunity with these keywords.
2. The keywords in green are at position two or higher in the results. They're profitable, but in the quest for volume, there isn't much room to bid more and get more traffic in exchange. They represent 55 percent of conversions and 43 percent of the spend, and have a cost per conversion of $57.
3. The blue group represents the freely moving keywords; keywords which aren't at the top of their auctions or bids. You could potentially bid more for these and get more traffic. Eighteen percent of the conversions come from the blue keywords, but they represent 41 percent of the cost, so their performance isn't as good, and perhaps as a result their bids have been lowered so they're south of position two. The cost per conversion for these keywords is $166 – much closer to our $150 target.

Summarizing the Opportunities

Depending on their position, the bid-capped words could provide additional traffic at a higher cost. There isn't much you can do with the position-capped keywords, at least from a bidding perspective. You could try to find more keywords like them, and expand the keyword set. The best approach could be to work on your landing pages, which would have an immediate and direct result on conversion volume.

For the keywords subject to market bidding, this advertiser is at the target price (just for those keywords) at $150. There is the ability to raise bids and capture more market share here, but you need to be comfortable with evaluating your overall campaign on a blended average basis (this is generally an accepted approach for large-scale advertisers and agencies). Smaller direct marketers, for whom a penny saved is a penny earned, are more likely to just keep the additional profit from the keywords on the left, and not funnel that profit to the keywords on the right.

Conclusion

Understanding how to analyze keywords using a waterfall analysis can give you a great deal of insight into what's happening with your campaign, and bring a sharp focus to the nature of the opportunities available to you.

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