What Anil and I talked about is how a portfolio based approach provides better results than the classic approach of measuring and acting on the ROI on a keyword by keyword basis. Our conversation went into detail on how a rules based keyword based approach is limited, and why a portfolio based approach is better.
One of the biggest problems with trying to measure results on a keyword by keyword level is that most likely only a small percentage of the keywords in your campaign will ever have enough data for a bid management tool to draw a conclusion. For example, if you have 2000 keywords in your campaign, odds are that the great majority of these are terms focused on the long tail.
To illustrate, if you have a 2% conversion rate on your PPC campaign, and if you need at least 10 conversions for a rules based approach to work, then you need 500 clicks per keyword before a valid decision can be made. In large campaigns, many of your keywords may not get 500 clicks in a year, and you just don't want to wait that long to get results from your bid management tool.
Meet Your Favorite Search Engine Watch Contributors
Many of SEW's leading expert contributors will be at ClickZ Live, the new online and digital marketing event kicking off in New York (March 31-April 3). Hear from the likes of: Thom Craver, Josh Braaten, Lisa Barone, Simon Heseltine, Josh McCoy, Lisa Raehsler, Greg Jarboe, Dan Cristo, Joseph Kerschbaum, John Gagnon, Eric Enge and more!