The past 2 years have seen explosive growth of a new online advertising channel called sponsored search or paid search. The rapid acceptance of this new form of advertising has been due to two substantial benefits that this offered to the online advertiser, viz. an ability to connect the sales return and the investment (normally considered an impossible option in the world of conventional advertising) and a possibility of reaching out to a vast number of online population who have "opted in" to visit the advertiser's site (again unlike other forms of advertising that are normally imposed on the audience without their always wanting the same).
PPC advertising qualifies as an effective advertising form that can be very well classified as direct marketing and sales and also conventional advertising. Indeed, it is currently the only advertising form to have this unique distinction.
Needless to mention, the benefit set offered by paid search has made it the "most desired" form of online advertising today. The number of advertisers for all categories has increased at an astronomical pace leading to heightened competition intensity that in turn has led to often a three to four fold increase in the cost per click (the basic unit in the paid search program) in a span of one year. The advertisers who had rushed in hoping for a high ROI are struggling to break-even on their investments. A seemingly un-sophisticated form of advertising that had looked like the panacea for all the online advertising performance woes, suddenly was proving to be too complex even for the sophisticated advertiser.
This article tries to unravel the complexities of paid search and suggest best practices that would help advertisers to run an "improved campaign".
A holistic view to paid search campaign optimization:
We at NetElixir divide a paid search campaign into six sub parts.
1. Optimization Strategy
2. Execution1: Objective Oriented Keyword Selection
3. Execution 2: Creative Development and Landing Page Testing
4. Execution 3: Optimal profile maintenance
5. Execution 4: Security
6. Execution 5: Real Time Performance Analysis and Optimization
Formulation of an effective campaign optimization strategy that takes into account the overall business objectives, external environmental factors including competition strategy, industry scenario, other situational elements, share of voice of paid search in the total online advertising mix and short term campaign objectives and timelines. The outcome of this stage is document that details out the optimization strategy and also drills it down to an operational plan with clear goals (long term as well as short term), allocated resources and pre-set performance checkpoints. The strategy stage lays down the frame work for a "system oriented approach" to paid search campaign optimization. We have found that the vastly superior performance that NetElixir is able to deliver for their clients is a result of a systemic approach rather than random – gut feel approach.
Any strategy note is just a wonderful piece of document that's of no practical use till it is executed. The key to achieving success in paid search advertising is an ability to effectively and efficiently convert strategy into an executable plan.
NetElixir sub-divides the execution stage into 5 sub parts (mentioned above).
Execution stage # 1: Objective oriented keyword selection
You or your competitor has a finite budget at your disposal to invest on paid search advertising. The challenge here is to utilize the budget in a manner that generates maximum returns. Selection of an optimal set of keywords to place your advertisement on in a manner that optimal reach and return are achieved within the finite budgetary constraint, is indeed a complex task.
The complexity arises due to the following reasons (not an exhaustive list):
1. Each website is different. The best visitors for your competitor's website need not be the best for your website. This uniqueness has to be accounted for during the keyword selection phase.
2. The number of keywords that exist for any category is huge. Due to the obvious budgetary reasons (that is inextricably linked with achievement of an adequate ROI), it does not make sense to advertise on all keywords. It simply increases spend and pulls down the ROI because traffic from all keywords do not convert into sales in the same proportion. To identify the optimal set of keywords – to put the set into a live campaign – to continuously test how the keywords are performing and to take appropriate actions that increases the "net return per keyword" can "only be" performed with the help of advanced data mining, warehousing and modeling techniques that assimilates keyword data from the various search engines, tests the keywords against the set objectives, compresses the number of keywords so that it fits the budgetary requirements and scrubs the keywords on the basis of their assumed position on the conversion funnel. A word about the conversion funnel and keyword scrub. Conversion funnel is a simple inverted funnel that depicts the conversions as we move down from generic keywords to specific keywords.
An example: For the category "hotel", keyword "hotel" would be on the top of the funnel being a generic term and the keyword "cheap hotel room in Torrance" would be at the bottom of the funnel. The keyword that's at the top of the funnel – "hotel" would get many more searches than the keyword that's lower down the funnel like "cheap hotel room in Torrance". Also, the% conversion (number of visitors that convert into customers / total number of visitors) is higher for "cheap hotel room in Torrance" than the keyword "hotel". (The tacit assumption here is the website being advertised belongs to a hotelier in Torrance).
3. A match of the selected keywords with the set objectives is another important point to take note of. Marriott can not afford to be absent on the keyword "hotel" (because reach and additional customers are what it is advertising for other than the profile visibility), but a small time hotel in Dallas need not advertise on the keyword "hotel" (because that would be wasting money). The objectives for the aforementioned hotels are different and so must be the keyword selection.
4. Done in an unorganized manner – manually, selection of the optimal set of keywords (assuming it is possible to generate an optimal set) would take a long time. Example: selecting the most optimal 500 keywords out of a consideration set of 50,000 keywords might take over 60 hours if done manually by two persons. Technology and experience saves this time that otherwise can be used in getting the campaign to go live quickly. Also the level of optimality is vastly superior having been powered by past data trends.
Keyword selection was not considered to be very important till about 2004. Till 2004 paid search campaign management was considered bid management. It was only sometime in mid-2004 (I would even go ahead and say that Search Engine Strategies Conference, San Jose in August 2004, for the first time emphasized the importance of keyword selection) that advertisers and agencies started assigning importance to this critical stage of campaign management. However, there is always a gap between "realization" and "implementation". Very few search marketers have been able to develop technology that can perform this stage in an efficient and intelligent manner.
Execution stage # 2: Creative Development and Landing Page Testing
To break out from the competitive ad clutter such that the target traffic clicks on the advertisement, attractive and unique ad copies are needed. I would not delve much on this topic as its pretty much devoid of any technology influence and needs creativity, patience and consistency.
Creativity: The search engines limit the number of characters you can use in the copy. Hence, in a limited number of words the selling proposition or the benefit has to be effectively conveyed in a manner that it stands out from the competitor advertisements.
Patience: We have validated over multiple campaigns the fact that customized ad copy works better than a standard ad copy being applied for all keywords. However, it can be a challenge to write 1000 different ads – to test the performance of the same and to rewrite the ones that are not performing up to expectations. It calls for enormous amount of patience and is a time consuming manual task.
Consistency: Search engines follow rather stringent editorial guidelines to evaluate which ad can be displayed. Therefore, a certain degree of consistency in the ad copy is often necessary.
An important task- I would say that it is almost critical – is assigning of the "right landing page" where the visitor is taken to. We have done studies on over 20 live campaigns – and this also has been studied extensively on a larger scale by various agencies – that show that assigning of the right landing page that minimizes the number of subsequent clicks increases the chances of conversion by at least 15 %. Again, this remains mostly a manual task and often be quite time consuming. Example would be assigning specific landing pages for a site that sells over 15,000 different items.
Execution Stage # 3: Optimal profile maintenance
This is often called bid management. At NetElixir we prefer to call this process "profile placement" primarily because bid management is restrictive and focuses on the action rather than the outcome. Also, those of you familiar with Google AdWords would know that Google lists the ads on the basis of CTR and CPC multiplier therefore placing an equal importance on the relevance and content of the ad along with the bid amount. Finally, and most importantly, our research has shown that to ensure an optimal outcome, much more than random – reactive bid changes is required. We call this the keyword optimization process. This process involves a constant review and update of bids (and also ad copy for Google) for the keywords an advertiser is advertising on. However, the activity and outcome for one keyword is linked to that for the other keywords. Random bid management is replaced with data based – pro-active profile placement that is aligned with the set objectives. Moreover, campaign management is not at an individual keyword level but at a campaign level. The advantage of this system is an effective "resource – return" distribution between the keywords. To put this is simple terms lets consider an example.
Let's assume, that an advertiser spends $ 20,000 / month on Overture / Yahoo advertising on 100 keywords. In the conventional bid management process, the bids for some keywords are raised or lowered (mostly in reaction to competitive pressures) without considering what's happening or should happen to the listing position of the other keywords. Also, the distribution of allocated budget between keywords is random. However, in the process we use at NetElixir, a change in the listing position of one keyword immediately affects all the other keywords. Also, the resource / budget allocation is determined by performance. This is because in our system, we optimize the entire campaign – 24/7 and not individual keywords. Our system is pro-active and not reactive like the current bid management systems.
The net difference is almost a 10% improvement in the overall campaign performance – maybe more in some cases, compared to what the available bid management tools are able to deliver.
Execution Stage # 4: Security
An inherent risk – arguably the biggest – of the paid search model is the threat of click fraud and impression fraud (on Google). With the explosive growth of paid search, the fraud issues have become threats to reckon with.
100% security from the various types of fraud is a myth. No systems exist today that can guarantee this.
The easiest and the most commonly used method to track fraudulent clicks is to track the ip from which the clicks originate and establish the possible suspicious patterns. Also, clicks originating from "unwanted geographies" can be easily tracked back through ip.
The problem in detecting the occurrence of click fraud occurs when no distinct pattern can be established in the ip's. This can be caused due to reasons like cyclical clicking by a team of hired fraudulent clickers with different ips – in one or more geographies.
Other than the ip based click fraud detection tool that NetElixir uses, our clients have gained because of our "preventive approach" (rather than a post mortem approach) that keeps a track of real time click activity (keeping a check for volume surges more than 50% of the standard, etc) and takes an immediate action to control / prevent any potential damage.
Execution Stage # 5: Real Time Performance Analysis and Optimization
An ability to efficiently assimilate, measure, analyze and "make sense" of the real time performance data is a key requirement for running an optimized campaign. This is often easier said than done. This needs an advanced analytics and data management and interpretation system plus active intellectual horsepower -working almost 24/7 – that tries to derive sense from the data and use the same for refining the campaign performance.
Unfortunately, a majority of the advertisers ignore or are oblivious of the importance of real time performance analysis and optimization. Ignoring this stage is almost like buying hara kiri.
Just by conducting this stage in the desired manner, a performance improvement of almost 15-20% can be achieved.
The discussion above and the points raised therein can perplex an un-sophisticated search advertiser. However, the intention of this article is not to overwhelm the advertisers and make them think that paid search advertising is "not for them". The points mentioned can be treated as some of the many best practices applicable for paid search advertising. We have validated these over campaigns ranging from $ 5000 / month to $ 500,000 / month and 50 keywords to 10,000 keywords.
Indeed, paid search advertising is "not simple". However, by following the best practices mentioned in this article a search advertiser can reap substantial benefits and mostly generate a positive ROI from their campaign spend.
For a free consultation on the Best Practices in PPC Advertising contact us on 877.283.2631 or write to us on [email protected]