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Evaluating a Paid Search Program

It’s 2010 and the time of year when many advertisers take a good hard look at their marketing efforts to identify opportunities for the new year.

Today we describe a layered approach to evaluating a paid search program. The top level view might be the right view for the C-level execs who can’t get too deep in the weeds. The day-to-day management team should reflect on the high-level view, but also needs to roll up their sleeves and get dirty to make sure they’re getting the most out of the channel.

It’s ALL about the Competitive (“non-brand”) Search Keywords

The clear and actionable view of paid search at any level of detail comes from studying the performance of the competitive search program separated entirely from trademark/brand search. People searching for the advertiser by name aren’t driven by search, and paid search ads on those brand terms, already at the top of the page, can neither create more brand traffic, nor materially create incremental business from that cohort. “Brand” ads primarily cannibalize organic and affiliate links and managing those brand terms takes little effort. The real effort and the real incremental value of paid search is in the competitive (aka “non-brand”) side of the game, hence that is where the focus needs to be in the evaluation at every level.

The 10,000 Foot View

  1. Is Competitive Paid Search hitting efficiency targets? If not, go no farther, the program is wasting money and heads should roll. Spending the budgeted amount for media regardless of the ROI is the wrong way to approach search.
  2. Is the Competitive Paid Search program (herein after referred to as “the program”) growing in sales volume? If the efficiency targets are being hit and the program is getting bigger, that’s a positive sign. It isn’t a definitive sign one way or the other. The recession shrunk many well-managed programs; and programs can grow simply from channel shift without being particularly well handled.
  3. Is the program growing as a percentage of total site sales? Much more telling than #2, growth as a percentage of the whole site shows that paid search is an increasingly important marketing channel which speaks well of its management. Again, shrinkage in this regard doesn’t necessarily mean the program is run poorly; as I discussed with Ken Cassar of Nielson: having a huge percentage of site sales coming through paid advertising isn’t necessarily healthy in the long run. Repeat customers are key to profitability, and they don’t typically come through competitive paid search ads.
  4. Is the program growing relative to competitive natural search? One probably shouldn’t pit the SEO team against the paid search team as though they’re rivals, since great progress by one doesn’t necessarily imply the other isn’t doing well too, but it’s a metric to watch.

The Ten Foot View

Take a Keyword level performance report from Google for the last 2 or 3 months. (Whether this is first touch data, last touch data or some allocation doesn’t make much difference as we and others have shown time and time again.)

  1. Do the high traffic terms each meet the efficiency objectives within reasonable tolerance for statistical noise?
  2. In category/subcategory groupings do the lower traffic KW meet their efficiency targets in aggregate?
  3. In other groupings meaningful to your business do the lower traffic KW meet the efficiency objectives?
  4. Clustering by traffic volume, do the aggregates still make sense efficiency wise?

Bid management and analysis is half the battle, and the most complex half by far. This view will reveal the most damning evidence of problems if there are problems with the program. Do not accept “Buying cycle” arguments as an excuse for poor efficiency.

If the program looks good from each of the perspectives above then your paid search managers are handling at least the fundamentals of bid management well.

The Ten Inch View

  1. How large is the list of active Keywords on Google? There exceptions to every rule, including this one, but 5 to 10 KW per product on the site is a pretty good benchmark. The Long Tail is valuable for almost every program, and broad match is no replacement for a comprehensive list.
  2. What’s the quality of the KW coverage? Spot check some random sub-categories to see if all the obvious and not so obvious permutations are covered.
  3. Are the Keywords machine generated gibberish? Machines do a lousy job of generating lists: leaving gaping holes, creating dangerous untargeted and inappropriate phrases and generating thousands of valueless phrases of more than 4 words. When evaluating the length of the list these should be ignored.
  4. Are the landing pages appropriate? Placing visitors on a page equal in depth to their search improves conversion rates. Linking more general phrases to product pages leaves opportunity on the table. Only SKU specific Keywords should land on product pages. Ask for a KW – Ad Copy – Landing Page spreadsheet ranked by traffic volume descending. Check the landing pages for the highest traffic KW, and spot check others down the list.
  5. Is the ad copy compelling and sufficiently specific? The goal is to sell the advertiser’s website, not the product. The user has already expressed interest in the product via their search, the goal is to convince them that your site is the best place to shop for it.

The Microscopic View

If the first three successively closer inspections reveals a healthy program, congratulations, you’re in the minority! Your program is healthy, but not necessarily in peak condition.

Peak fitness comes from applying the most sophisticated techniques in paid search, and executing them at the highest levels.

  • Smart use of negative associations developed from user search strings. Proper databasing of referrer data and use of Google’s research tools should reveal opportunities to trim fat and raise bids on broad matched KW.
  • Creating separate campaigns for exact matched and broad matched KW and bidding more on the exact match versions based on calculated performance differentials makes a material difference in performance.
  • Placing the exact match version referenced above on Google.com only and pushing those bids more based on the syndication effects researched previously also produces positive returns on the effort. Using syndication partner exclusions on Yahoo while we wait with baited breath for their bidding differential option to go live will achieve the same effect.
  • Anticipatory bidding based on seasonal shifts and shorter term promotions helps take the most advantage of those hot periods.
  • Day parting done smartly (using the time of the click, not the time of the order) to exploit intra-day variance in performance values requires good analysis and superb tools.
  • These fine tuning mechanisms create the competitive advantages needed in a tough market place.

Still passed the test? Fantastic! Your paid search program is ripped!

But the fact that the program is managed beautifully doesn’t mean your business is getting all it can out of paid search.

If you don’t know the answers it’s time to start asking why and when. Paid search remains the number 1 mechanism for generating incremental business online; the fact that it’s no longer new and sexy doesn’t mean it can be safely ignored.

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Comments
12 Responses to “Evaluating a Paid Search Program”
  1. Adam Audette says:

    This is an excellent post, George. Love the way you broke it down by perspective, too.

  2. Jeremy Brown says:

    George, are you often breaking exact and broad into their own campaigns? I tend to find ad groups sufficient for this purpose.

  3. TraiaN says:

    Great post George. However branded terms (the ones containing advertiser’s name) are not expensive (I usually see $0.1-$0.5 costs) and are driving conversions like crazy at extreme low CPA.

  4. I agree with Adam. The post is very good and helpful.

  5. George,

    I love your increasingly closer look at the world of search marketing. This adds a ton to the knowledge I am gaining in this industry. Thanks a ton.

  6. Thanks for the kind words, folks.

    Traia, most of our clients have us manage their branded KW’s too, and yes they’re cheap and the conversion rates are off-the-charts. Almost all of those sales would be captured by natural links or affiliate links in the absence of the paid search ads, so very few of those sales add incremental revenue. I’m not advising folks against running those ads, I’m just making the point that when evaluating the program those costs and sales should be taken out of the equation.

    Jeremy, we usually do put the exact in a separate campaign that also excludes the syndication networks. The reason is that there is no exact match in syndication. The ads set to exact match are served as broad matched on the syndication network, therefore polluting the pool.

  7. Jeremy, interestingly, our Google rep tells us now that the syndication networks do honor match-types. Certainly, that hasn’t always been the case. This is one of those questions we press them on every time we can, and we get a different answer every time.

    Since we probably don’t have any exact match campaigns running on syndication, we’ll have to turn a few on, gather some data and see whether or not the search strings are always exact matches.

    Sorry for the confused message!

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