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You Can't (NOT) Afford to Invest in SEM Analytics

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Last time, I wrote about refreshing your organic SEO strategy, which is particularly important in tougher economic times. That was one of the overarching themes of last week's annual Omniture Summit -- do more with less. Something many search marketers already know well.

But to what extent do you invest in tools to help you save money on SEM? Or to focus on more meaningful metrics -- revenue per booking, look-to-book ratio, reservation dates and (increased) stay duration -- all of which could translate to additional revenue per customer, if you're attracting the right prospects. It's a tough balance to strike for many companies, particularly those with smaller annual revenues.

Before the Summit event in Salt Lake City, I sat down with Chris Zaharias, Omniture's resident SEM guru, to talk about a recently released case study in which Intrawest Ski Resorts boasts about doubling their return on ad spend (ROAS) while slashing PPC expenditures on non-performing phrases and reinvesting in the best-converting ones as part of their campaign optimization strategy, using programs such as SearchCenter and SiteCatalyst.

Zaharias said that implementing the two together allows companies like Intrawest to look at leading indicators of campaign stacking and tracking through multiple channels, but mainly allows for the simple "cutting of fat in spend" when it comes to broad match types. Of course, the common practice is to reinvest those savings into other campaigns to look for winners. Taking just 10 percent of an SEM campaign, Zaharias said, would be enough data for multivariate testing, to draw conclusions on a variety of conversion points.

And a company like Intrawest will have several conversion opportunities. First, they're running SearchCenter and SiteCatalyst across 12 different properties (central reservations Web sites for 12 destination resorts), which makes managing campaigns of this size both challenging and simplistic. It's challenging in the sense that each individual resort has its own metrics and different audiences to target, as well as 12 separate marketing budgets to combine.

Shifting to an internal system, with a key person to manage the data just made more sense compared to using a third party agency, which historically was more expensive, and was even effective as far as maximizing ROAS, said Rob Morrow, director of Web marketing and analytics for Intrawest. But more importantly, they could "save information" from flying out the door, and share the proprietary knowledge they were acquiring. In an industry where everyone fights for every customer, it creates a competitive advantage, particularly if going after a smaller local market.

One of the advantages Intrawest has, however, is the ability to share not just data, but insights about how consumers find, look for, and book ski vacations. The end result is the same: a complex e-commerce transaction, with so many variables -- such as rates, availability, dynamic packaging, and ski rentals -- or rather a series of microconversions, which may start online, but close offline.

Keeping the user engaged throughout the entire process is critical to one-stop shops, because the customer may otherwise look elsewhere, to try to put their own budget vacation together. The advertiser has more to gain in potential revenue by making it simple for the customer to do everything in one fell swoop.

In the early season, ski vacation booking is a pretty fast-moving business, as customer response changes week over week, and the ability to manage these campaigns efficiently (daily, even hourly) means they can shift tactics at any time, and increase efforts for better returns right up to the last minute, which obviously can't be done as well offline. And while weekly review meetings may help make quick adjustments, the seasonality data will prove invaluable longer term.

The booking window in the ski industry is reasonably tight, and of course weather-dependent as well. To that end, Zaharias stressed the importance of behavioral targeting and using near real-time data to take advantage of traffic spikes and weather patterns.

If you're wondering, Zaharias commented on the recent data issues at Omniture, noting in seven years, he's seen his fair share of data issues across many platforms. But what it comes down to is an (understandable) "emotional angst" -- power users are so tied to the data, they can't remember what it was like not to have it.

Rightly so, when it's so critically important to watch every penny so carefully. But more importantly, Zaharias noted that events like this could push providers toward industry-wide SEM service level agreements, which of course would be a positive for advertisers.

And just as today's economic conditions have affected advertisers, they've led search engines to become more aggressive in terms of monetizing ad impressions as they experience a slow decline. This puts advertisers and search engines at odds with diverging interests, and it only forces advertisers to find more efficient ways of managing campaigns.

In Intrawest's case, it was investing in Omniture products. Although that's not necessarily financially feasible for every travel search marketer, at some point you have to ask if you can afford not to invest in better analytics. And that also goes for any free to lower cost analytics tools. Sure, they're great for small budgets, but without spending additional time (and money) to maximize their value, are you really getting your money's worth?

Editor's Note: This article has been modified since its original publication, as figures originally stated for ROAS were incorrect.

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