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Evaluating PPC Performance in a Down Economy

This was posted over at Search Engine Land this morning.

Is it time to fire your PPC managers?

Many online advertisers are seeing their first-ever Year-over-Year declines in PPC Performance. Because of this, and the general need to find something, anything that will generate more sales cost effectively, PPC programs are coming under serious scrutiny from corner offices. We welcome this scrutiny, and hope to provide some useful guidance on how to measure success in PPC in a tough economy.

Last week on RKGBlog, I argued that the wrong way to evaluate success is by the amount of management “activity”. Tail-chasing activities don’t help and in fact usually hurt performance. Productive work often looks like staring at a blinking cursor scratching one’s chin. So, if you can’t tell from the external appearances the difference between excellent work and day-dreaming, how can you tell whether you’re getting the most you can from your search program?

The answer is “in the details.” Here are 4 critical data elements to put under the magnifying glass:

  1. Keyword-level performance: the ultimate measure of execution is in the keyword-level costs and sales. We’ve written extensively on how to look at this data fairly, and how to identify the signatures of poor performance. Follow the methodology outlined in those posts.

    There are no valid reasons for the keyword-level performance to look bad. Within reason, the keyword level performance on the high traffic terms should be pretty close to your targets for those terms. Performance of the tail should make sense as well when clustered appropriately.

    The classic non-explanation for wide discrepancies in KW performance is: “Oh, those keywords that appear to be overspending are actually just early in the conversion funnel. Tail terms get credited for sales, but these terms play an important role in the consideration cycle.”

    Horse-Feathers! We’ve been trying to debunk this myth for years, but it has strong legs.

    Try this approach: “Oh, I see, so please show me the KW level performance data giving credit to the first click rather than the last. That should look nice and clean, right?!?” That should produce a great deal of coughing and sputtering. I suspect it won’t produce any data. When they say “we can’t pull that data”, ask them: “This consideration cycle seems to be a big deal. Why wouldn’t you keep track of All the clicks given that it seems to be critical to managing the program effectively?” Expect more coughing, the words “brand-building”, “best practice…” and reference to “other factors…” If they actually do produce the data, expect to find that the keywords that were overbid based on last-click credit were also overbid based on first-click credit.

  2. Keyword Coverage: The length of the list isn’t the only issue. It’s trivially easy to generate 100K+ keyword lists using automated tools, but these lists are chock full of holes when put to human scrutiny. Take a look at the keyword list, or just one product category as a sample. Look for obvious two and three word combinations that aren’t in the list. Oftentimes the bulk of these huge auto-generated lists are 4, 5 and 6 word keywords that simply don’t matter, while obvious and not-so-obvious industry specific synonyms are missed.
  3. Landing Pages: After the click, do you land on a page that shows the widest possible selection that responds to the search? Taking the users too deep is just as bad as landing them all on the homepage.
  4. Ad Copy: When you search for your products and categories, does the ad copy seem compelling and appropriately targeted? Remember that the goal of copy is to sell your store, not the product. Copy should answer the questions: “Why should I shop for widgets at your store?” You don’t need to sell them on widgets, they’re already looking for them. Copy is not a “game-changer” and many fall into the trap of focusing exclusively on it, but having targeted compelling copy does help.

If under this scrutiny the program looks good, does that mean you’re doing the best you can? Not necessarily. Ask your PPC managers:

  • Are we bidding based on margin-level information or just top line sales? The tighter your performance objectives are tied to the actual value of the traffic the better.
  • Do our efficiency targets make sense given the current climate? This is a big one! If the team isn’t hitting the current targets changing the targets won’t help, but assuming the program is hitting on all cylinders, what should we try to accomplish in search? Is it short-term profit maximization? Longer-term profit maximization (placing more value on new customers)? Top-line maximization at a neutral bottom line? These target decisions are the MOST important pieces of the puzzle if you have a PPC management team that can hit the targets.
  • Are we factoring in spillover to the phones intelligently? This usually impacts higher ticket purchases more than impulse purchases.
  • Are we dayparting, to take advantage of the fact that traffic value changes by time of day and day of week?
  • Have we tried out content advertising recently? Google Adsense can generate sales cost effectively these days for many advertisers. We haven’t seen it get to be more than 3% or 4% of Adwords, but who’s turning down 3% right now?
  • Have we tested separating exact match and broad match versions with higher bids on exact match? Same for Google.com only vs Network partners?

The economy is in the tank and consumer confidence is pretty close to zero. The time to look under the hood to find opportunities is now. If the current management team isn’t making the grade it’s a good time to move, but make sure you grade based on performance not bluster.

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Comments
6 Responses to “Evaluating PPC Performance in a Down Economy”
  1. Marc Adelman says:

    George,

    Great post! It’s time to bring things to center and get better at what we do. It’s time to tackle the big challenges in our PPC accounts head on. If someone were to improve on the points you mentioned above, they should be able to brave this storm, if not even overachieve!

    A huge focus of mine over the past 6 months has been Quality Score Centric Campaign/Adgroup/KW restructuring and Quality Score Centric optimization. This has been one of the strongest factors allowing us to brave this storm.

  2. Matteo Damo says:

    Really good advices. ;)

    Just one question: how is it possible to track first-click conversions? what web analytics solution can let me see that metric?
    Thanks!

    Matteo

  3. Marc,

    Thanks for your comment. It’s interesting, we’ve never found campaign restructuring useful from the standpoint of improving performance. This may be because we’ve always structured accounts well even though we do some things differently than the “Best Practice” mavens suggest.

    How has your QS-focused restructuring helped? Did it take overly general copy and make it more specific by creating tighter clusters? Did it improve your bidding because you’re using the account structure cluster performance data? Or, is it something more in the way QS aggregates that is helpful? We’ve always tied copy pretty tightly and grouped accordingly, and our systems don’t rely on the account structure at all for data aggregation — those attributes are stored on our side independent of the structure.

    I’m just trying to figure out the mechanics of how it helped you, since we’ve never found the oft suggested restructurings beneficial.

    Thanks!

  4. Matteo, thanks for your question.

    Unfortunately, I don’t know the answer. All analytics systems should have all the data to pull this thread, but whether they actually store it is another matter.

    What I find incredibly annoying is the folks (analytics providers like Google, and also SEMs) who say the “conversion funnel” is so important to understand and how you must treat keywords that are “early” in the “consideration cycle” differently from “late” KW, yet somehow these folks don’t actually have the data to prove their point. There’s no reason why they can’t capture the data, and if understanding this is so imperative to managing search why wouldn’t they track it?

    We track it and have found it to be hogwash. But we still track it.

  5. Marc Adelman says:

    George,

    We already had very relevant adtext. It didn’t affect or change our bid rules. We actually had a very small avg KWs per adgroup. It is more along the line of breaking things up to the most molecular structure. This exposed the limitations to Google’s Ad-serving Algorithm by giving KWs that we already had – just restructured in the most molecular way possible, and gave the KWs higher quality score, more impression share. This change was almost instantaneous and brought instant growth and return.

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  1. [...] Are your search efforts paying off? George Michie at Rimm-Kaufman offers excellent tips for evaluating PPC performance in a down economy. [...]