Managing a Search Advertising Budget

You want top search result positions now, and you're willing to pay for them. But is your paid listing launch on hold until you can justify a budget and demonstrate ROI goals?

A special report from the Search Engine Strategies 2004 Conference, March 1-4, New York.

Perhaps you are already spending money, but without a budgeting strategy in place. How do you know if your campaign is providing sufficient return to justify the amount of ad spend? In the "Setting and Managing Your Ad Budget" session, a panel of experts shared tips on getting the budget you need and making it work more efficiently for you.

Let's start with getting budget approval for paid listings. In-house search engine marketers, or marketing agencies, often find themselves competing for part of the company's marketing budget. Mike Moran, manager of IBM.com site architecture and design, began with a pivotal argument marketers can use in budget negotiations, "If consumers can't find our product, they can't buy it." Moran then recommended that marketers prepare the following data as a persuasive case for budget allocation and increases:

  • Show competitors' ads running on your company's keywords

  • Explain the missed business opportunity in terms of expected revenue from paid listings

  • Quote statistics on search engine advertising effectiveness from well-known resources

  • If applicable, show how your company's affiliates are already savvy in this area, or are causing profit loss by bidding against your company for the same keywords

Some marketers don't have budget battles. The company executives have followed the media's stories of search engine marketing success and have already embraced budget allocation for paid listings. Business owners who manage their own campaigns are the decision-makers.

However, Harrison Magun, managing director of eonMedia, asserted that most companies that are spending money are still working with no formal budget -- essentially flying blind. "They're spending until the cows come home," he explained.

Magun strongly recommended that marketers set a budget based on a set of statistical assumptions. According to Magun, it's not about spending money on top positions; it's about setting cost-per-order goals then using realistic click-through rates to determine what you should be spending per click to get a sale. Set a budget based on performance, not positions.

Kevin Lee, CEO of Did-it.com, drilled even further into managing a paid listing budget based on return on investment (ROI) criteria. He reminded marketers to not overlook low-volume keyword phrases. Typically, they yield an impressively-high ROI because they're targeted phrases used by consumers who are in the later stages of the buying cycle. Grouped together, Lee said those low-volume phrases can add an extra 5%-20% lift to a campaign.

Are you managing the paid listing campaigns of a specific division, or business unit, within a company? If so, a company-wide search engine marketing (SEM) strategy is becoming increasingly important to avoid overlap and accidental competition.

"There is now a very high probably for duplication of keyword buys," according to Bill Hunt, SEM strategist for Global Strategies International, which manages IBM.com's global search marketing strategy. Moran discovered that several divisions of IBM were bidding against each other, which of course increased clicks fees.

Hunt worked with Moran to create a keyword management database that all divisions and business units must clear their keywords through. The assigned keyword owners have first right to those keywords in paid search, and if executed, are required to implement an optimization strategy to rank well for those keywords too. Surprise keyword attacks from members of the same corporate team have been eliminated.

The Search Engine Strategies sessions are always entertaining as well as educational. A particularly memorable exchange occurred during the Q&A portion of this session, when an audience member asked about managing paid listing campaigns for politicians:

Question: "How much is a vote worth?"
Answer: "That depends on who the candidate is!"

Fortunately, most companies know the value of what they're marketing. By setting a realistic budget based on initial ROI assumptions, marketers can then modify their paid listing campaign to achieve new profitability goals. The overall budget will then become a supporting piece in the marketing plan, not a primary obstacle.

Catherine Seda, owner of the Internet marketing and training company Seda Communication, is author of the new book Search Engine Advertising.

Search Headlines

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