Driving new leads through paid search can and should be a profitable endeavor. However, it’s not an easy one. Incoming revenues may come weeks if not months down the road, without direct relation to the marketing touch that drove them. Secondary inquiries may lead to deep conversations with sales people, further muddying the waters of where marketing credit should be allocated.
How do you ensure that you’re driving the most leads for your paid search marketing dollars? Here are some tips to help you get the most bang for your buck.
Determine the Target Value of Leads
Determining the value of a lead and refining that assessment over time are essential to ensuring your ad dollars are being spent effectively on paid search, or any other marketing channel. For a PPC program that’s just getting off the ground, the amount you’re willing to spend per lead (typically referred to as cost per lead or CPL) should be based on known success rates for turning leads into acquisitions and the ultimate value of those acquisitions.
For example, if you know that roughly 10% of all leads are eventually converted and the value of those acquisitions are $5000 each, you will break even with a CPL target of $500 (Break even CPL = Value/Acquisition * Acquisitions/Lead). From there you can build in margin by reducing your CPL target to a percentage of break even that suits your profitability needs and takes into account other cost considerations.
Refine Efficiency Targets and Strategy
Whether you’re running a new paid search program or you’re testing changes to an existing one, it’s not necessary to wait until your full sales cycle has completed to find learnings and make adjustments. While it may take 6 months for half of your leads to convert, experience will tell you that some fraction can be expected to close at various time intervals along the way.
If there is a statistically significant difference between your cost per acquisition expectations and actual performance or between two landing pages you are testing, acting on that information sooner rather than later will reap greater benefits down the road.
Ensure Tracking is Granular
Tying a converted lead back to a specific paid search keyword or even the channel that initially generated the lead presents a set of challenges not faced by other advertisers, but achieving a high level of granularity in your tracking is worth the effort.
When a lead is generated it should be tagged with the channel, and better yet, a unique identifier that can be referenced as leads convert. That information should be provided to your paid search team or agency, typically via a daily feed, for analysis.
Having a total paid search acquisition count is very useful for assessing whether your program is meeting your goals in aggregate, but in order to find anomalies and opportunities at a deeper level, you’ll need to be able to tie acquisitions back to keywords. You're likely to find that some terms may be heroes for generating leads, but those leads may be of poor quality. Alternatively, some terms may generate very few leads, but every lead may be of high quality
Granularity in tracking will also make tests more valuable, and anyone in the lead gen space should be testing all the time.
Test, Test, Test
Testing is a major part of any paid search program, but it is particularly important in the lead gen space. While a retailer may sell 50,000 different SKUs with hundreds turning over monthly, lead gen advertisers typically have only a handful of offerings or even just a single one. The retailer may find it easier to grow traffic through keyword build-outs than to improve their ad click-through or conversion rates, but the lead generator will find their returns from keyword build-outs diminish relatively quickly.
Because a lead gen program is concentrated in fewer keywords with fewer copy variations and landing pages, each test also has a greater potential to impact the overall program. Improving the CTR of a single core piece of copy by even a few tenths of a percent can yield major benefits from increased traffic levels to lower click costs.
As with other facets of lead generation, test data is best viewed when tied as closely as possible to lead conversions. For instance, you may find that a landing page is generating leads too easily by requiring little of the potential customer. Filtering out less committed leads with say, a longer application form, may increase cost per lead, but actually improve cost per acquisition.
Looking to take your program to the next level? Here are a few considerations and tips for the advanced paid search manager:
Leverage Bid-Simulator Data: Lead gen advertisers often see huge gaps between their bids and the CPCs they actually pay, but those gaps aren’t consistent from keyword to keyword. Evaluating previous bid auctions via the Google Bid Simulator and incorporating learning into bidding logic will help you ensure that you’re getting all of the traffic you can afford, without falling victim to irrational bidding.
Evaluate Dayparting and Weekparting Analyses: The rate at which leads convert varies intra-dayand throughout the week, particularly for B2B advertisers. Assess Cost-Per-Lead and Cost-Per- Acquisition by the time of day and/or the day of week that the ad was clicked and adjust bids accordingly.
Beware Duplicate Leads: Because leads generally don’t require a financial cost to the submitter, lead forms are more likely to see duplicate leads than an ecommerce page (eg: user submits application multiple times). Be sure that duplicate lead captures aren’t skewing your CPLs downward, but be careful to avoid de-duping legitimate leads.
Paying careful attention to the details of your paid search campaign can drive profitable, incremental leads for your marketing program.
For more discussion of lead generation, the RKG team will be hosting a booth at this year's LeadsCon East, August 24-25, 2011. Please drop by, if you'll be attending.