"The Google Tax: The High Price of Free Search Marketing Tools," outlined some of the opportunity costs associated with common PPC techniques and tools, including:
Now we'll dive into three techniques you can apply in as little as three minutes to target the right prospects and understand how they buy.
Technique 1: Focus on ROI, Not Intermediary Metrics
The further away the metrics you use to manage your campaigns are from outcomes, the less likely it is you'll make decisions that will generate more profit.
Optimizing your PPC campaigns has to be about outcomes: donations, net profit, new blog subscribers -- whatever business purpose your website exists to serve.
Targeting a CPA is only an intermediary step towards optimizing for ROI. Here's an example where your target CPA would vary by product, but optimizing for a campaign level CPA prevents you from achieving maximum ROI.
For retailers, ROI includes the cost of advertising, as well as the cost of the products you sell. That means SKU level margin. For lead generators, it's about incorporating data on lead quality and ultimate conversion from lead to sale. Your business may layer on even more ways to properly value traffic, but you get the idea.
Put that way, the problem is pretty obvious. So why don't PPC managers optimize for outcomes?
In many cases, people stop short of outcomes because getting to some intermediary metric is easier. Often, that's a technology problem. The tools you have show you revenue, CPA, and ROAS. Another system has product profitability and customer information. And there's a wall between them.
To connect your optimization to outcomes, you have to break down that wall.
Either you have to invest in a system that connects that data for you or use a manual process to connect your front-end investment to the final result.
Start manually. The trick is to be able to use some unique key that will allow you to relate your PPC data (impressions, clicks, cost) with your outcomes data (ROI, lead conversion, etc.). That key has to be common to both systems, for example:
- Channel -- PPC vs. SEO vs. display
- Source -- Google vs. Yahoo vs. Bing
- Ad group
- Search query
Either the key already exists in both systems or you have to pass the key to one of them. For example, you might set up a lead form to pass a channel value into your CRM via a hidden field.
The more specific your key, the higher the level of granularity and actionability you can get. But if you're doing the process manually, that can increase the amount of work you have to do.
Start at a high level. It's better to get a small amount of data quickly than a large amount of data over a long period of time.
At the least, compare ROI by channel. With just that small amount of information you can begin to see the value of the analysis and determine what level of detail you really care about. You'll be in a better position to determine what level of investment is worth it to make the process simpler or automatic.
Of course, the ROI assigned to each channel is direct result of your choice of revenue attribution method, which brings me to my next point.
Technique 2: Question Last Click Attribution
Let's say you sell dog food. Imagine someone conducted multiple searches before they ultimately purchased. It might look something like this:
Which if those clicks deserve credit for the sale? That's revenue attribution.
Most PPC tools, including Google AdWords and Google Analytics, give all of the conversion credit to the last click. In the example above, all of the credit goes to "Doghouse Pet Supplies."
You may pause keywords, change campaign budgets or decrease your bids under the assumption those early words aren't delivering value to your account. That doesn't tell the whole story.
Wouldn't you rather make budget allocation choices among channels (PPC vs. display) and within channels (Ad Group A vs. B) based on how customers actually buy?
Choosing the right attribution method is a religious question and there's no one path to salvation. It depends a lot on what you sell and how your customers buy.
If you're a B2B marketer with a long sales cycle and a high consideration product, then your prospects are more likely to touch multiple marketing channels before they buy. If you sell highly impulsive consumer products that don't involve a lot of research, last click could be right for you.
Ideally, we'd all be able to see the performance of our paid search under multiple attribution types at once. That would allow you to understand the different scenarios and see first if attribution is even a problem for you and second which attribution type makes the most sense. That requires technology that supports side-by-side attribution analysis.
For example, here's the different performance of keywords under four attribution types:
Assuming you don't have a comparable tool, there are some free tools and tricks you can use today to get a better sense of your customers' purchase behavior.
- Analyze Days and Visits to Purchase: Many analytics packages, Google Analytics included, offer a Visits to Purchase and Days to Purchase report. These reports aren't perfectly analogous to how customers interact with multiple marketing channels. But, you can get a general sense of how considered the purchase is by starting here.
The more visits and days to purchase, the more likely you need something other than last click attribution. In Google Analytics, look in the Ecommerce section for these two reports.
- Run First Click Analysis in Google Analytics (without Losing Last Click Data): Google Analytics offers last click attribution by default. You can switch permanently to first click attribution, but it involves extra URL tagging. Making that switch means you lose your last click data.
Will Critchlow and the folks at Distilled have come up with another method that uses GA's custom variables to store the first click data. It's not for the technically faint of heart, but it provides you with the ability to see first click attribution without throwing away your last click data. There are no solutions in Google Analytics to display linear or weighted attribution.
- Explore AdWords Search Funnels: Earlier this year, Google introduced their AdWords Search Funnels tool. Essentially, the tool allows you to see the campaigns, ad groups, and keywords whose clicks and impressions played a role in generating conversions. Here's an example:
It's a useful place for many people to play with the idea of attribution and get a better sense of how customers buy. It doesn't include ROI data or search queries and it relies on Google AdWords conversion tracking (which some people may not want to implement).
The tools and techniques above will help you gauge how much of an issue attribution is to your business. Ultimately, attribution is a technology and analysis problem. You have to be able to store multiple touchpoints, relate them to business outcomes and make sense of the data for better decision making.
If you want to move past last click attribution, you'll have to bring it in house with smart analysts and tools like ClearSaleing and ClickEquations or outsource it with help from agencies like Clix Marketing and The Rimm-Kauffman Group. Regardless of which attribution type you choose, you can improve results by focusing on more than just bid management.
Technique 3: Stop Obsessing (Only) About Bids
Bidding helps you value the traffic you're purchasing. It influences when your ads show up and where. Those are important tools in effective paid search campaigns.
However, bidding often gets more attention than it deserves. It's easy to want to believe that you can find the perfect bid and unlock the perfect profit of your campaigns. That's wishful thinking.
Rather than obsessing on bids, focus on a process that covers all of the aspects of your account.
- Test Text Ads: Text ads play an enormous role in attracting searchers, filtering out the wrong prospects, and improving your Quality Score. One recent test increased clicks 21 percent and decreased costs 66 percent. Text ad testing can do get you the same lift you're looking for without having to bid more. It may even decrease costs.
- Tweak Account Structure: It's critically important that you design ad groups around text ads, not keywords. That's an issue of account structure. It's not a sexy topic, but it directly influences which search queries you get, your CTR, quality score and profitability. Sounds worth a little time, right?
- Mine Search Queries: Search queries, the actual phrase someone types vs. the keyword/match type you buy, are the closest indicator of your prospects' intent. They're an excellent source for negatives and keyword research.
- Rearrange Match Types: Fine tuning your match type from Broad to Phrase to Exact can help you filter out unprofitable clicks and fine tune what you pay for the clicks you want. I recommend a process called the Match Type Keyword Trap.
These four things can improve your performance without paying more. They'll also get your account ready for better bidding.
The 3 Technique, 3 Minute, 3 Week Challenge
Go try one of these techniques. Right now. Seriously.
You can do all of these techniques to some degree in 3 minutes to 3 weeks. I'm issuing a challenge to Search Engine Watch readers: Put at least one of these techniques into practice and come back and tell us what you learned in the comments, a blog, or tweet.
If you have Google Analytics, check the visits or days to purchase. If you have AdWords and conversion tracking, check out Search Funnels. At the least, go mine your search queries.
I look forward to hearing what works and hearing your own techniques.
Join us for SES San Francisco August 16-20, 2010 during ClickZ's Connected Marketing Week. The festival is packed with sessions covering PPC management, keyword research, search engine optimization (SEO), social media, ad networks and exchanges, e-mail marketing, the real time web, local search, mobile, duplicate content, multiple site issues, video optimization, site optimization and usability, while offering high-level strategy, keynotes, an expo floor with 100+ companies, networking events, parties and more!
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