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Balancing Efficiency and Volume in Paid Search

tabeling-jason
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So you've been running paid search for while and you think it's pretty cool. You can identify users who are deep in the purchase funnel and drive sales results for your business. You can optimize how much you pay for those results based on your sales and return goals.

A successful campaign is measured by the goals set forth prior to campaign launch. These goals should be focused around the needs of the business. A goal can be based on a variety of metrics, including revenue, orders, applications, ROI, or cost per lead.

But what happens when those goals change? This can happen due to a temporary need to get more exposure for a campaign or drive more short-term revenue, or a long-term shift to utilize paid search as more of a lead-generation tool, for example. A campaign's goals, and the metrics used to measure those goals, should be evaluated on an ongoing basis.

With paid search, evaluation of these goals is a key function and is often overlooked. For example; which would you rather have?

  1. $50K in revenue at a 10 ROI
  2. $100K in revenue at a 6 ROI

or

  1. 100 funded mortgage applications at a $200 cost per booked application
  2. 500 funded mortgage applications at a $600 cost per booked application

While these are very difficult business decisions that are not specific to paid search, there are very specific paid search implications of each. These decisions can also be fluid, as needs of the business change. Paid search is perfect to execute against these initiatives.

On a daily basis, paid search managers must balance efficiency and volume in an effort to meet the goals of the campaign. It's up to the paid search manager to evaluate the trade-offs of the various triggers.

Increasing bids or adding generic keywords to a campaign can boost volume, but will lower the return on investment (ROI) of the campaign. Adding negative keywords or geo-targeting can increase efficiency, but lower the volume.

It's important when planning your next move to think not only about the potential result of an action, but to be cognizant of the reaction of other variables. Like Newton's Third Law of Motion says, "for every action, there's an equal and opposite reaction."

There are ways to evaluate the trade-off, and forecast results. Here is an example of an analysis that is possible to determine the optimal mix of revenue and ROI. The data reveals a very clear trade-off between incremental revenue and a lower ROI.

The campaign levers described above can provide real impact to the bottom line. There is, in almost every situation, interplay between efficiency and volume. It is important to open that dialog with your search team and your business leaders to ensure the right mix is achieved.

There is no right or wrong decision; there is only what is right for your business at that time. The job of search marketing is to quickly adapt to those requirements and make the necessary campaign management decisions to exceed those goals.


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