Large brands can benefit from adjusting their online advertising spending on a cyclical basis between display advertising -- designed to build impressions and awareness -- and PPC (define) campaigns that focus on conversion and ROI (define). This cyclical approach improves overall ROI.
This nugget emerged while I was talking about the world of search engine marketing with Dustin Engel, director of consumer strategy and research of Range Online Media, an agency that manages these types of campaigns for many large brands.
Two-Phase Cycle: Display and PPC
In the first phase of a cycle, the brand should ramp up display advertising spending, and temporarily suspend the lower ROI keywords in their PPC campaign to fund that increased spending. During this phase, the display ads should help enhance user awareness and consciousness of a brand, creating a greater willingness to respond to PPC ads when the time is right.
In the second phase of the cycle, the brand ramps down the display advertising spending, and ramps their PPC campaign back up to full speed. The PPC campaign leverages the brand awareness of the display campaign to increase the overall CTR (define) and conversion rates of the campaign.
Benefits of the Cyclical Approach
This type of cyclical approach provides the highest total ROI. For example, if you instead kept your PPC spending at a constant level, and ran a lower-level display advertising campaign, most of the time you wouldn't achieve the same total ROI on your advertising investment.
In a related note, organic search is a stabilizer for your campaigns. Your spending on improving organic search results generally comes from the human and technology resources applied, as opposed to advertising money.
Timing of Cycles is Key
The next thing to focus on is the timing of the cycles. You want to be able to match phase two of your cycle with consumer buying cycles. This isn't necessarily that hard to do.
For example, with the Christmas season ramping into full gear here in November, we're entering one of the hottest buying seasons for many consumer-oriented businesses. If your customers go into a major buying cycle during this season, you'd want to have executed phase one of your cycle (the display advertising phase) in October and November.
You also need to be prepared to have a lower return on ad spending during phase one of the cycle. Your display advertising spending will run at a lower ROI. You reap the gains in phase two.
Impact and a Case Study
Engel analyzed the monthly spending of a group of automotive and pharmaceutical advertisers. The advertisers included major brands such as Cadillac, Toyota, Lipitor, and Viagra, as well as many others. For 75 percent of the advertisers, increased display advertising spending resulted in a significant increase in their Yahoo Buzz Index score.
While this doesn't prove the theory by itself, it provides some background indication that this tactic might work for many major brands. To support this column, Engel put together an analysis of an experience that Range had with a major consumer electronics vendor.
The firm ran a display advertising campaign that was significantly larger than they had in the past. The campaign was designed to revitalize consumer awareness of the brand, and was targeted to let the brand to shift to phase two of the cycle in March.
On a year over year basis, brand term impressions more than doubled (grew by 114 percent). In addition, brand related clicks were up by a phenomenal 393 percent year over year, and those clicks on branded search terms grew by 318 percent.
To put this in perspective, the brand search term related sales volume for March were just 4 percent shy of the brand term sales the company experienced during the prior December, in the heart of the Christmas rush.
Now wouldn't it be special if Christmas came multiple times per year for your business?
Of course, as always, the devil is in the details. How you can leverage this concept depends on the nature of your business and the potential buying cycles of your prospective customers.
In addition, the concept may not work well at all for weaker (or unknown) brands and you do need to be able to spend enough to move the needle. But, if these things are not issues for you, this can represent an opportunity for getting more out of your advertising spending.