Mar 102014

Microconversions: A Critical Piece in the PPC Bidding Puzzle

It has long been a struggle for online marketers to quantify the full value of paid search initiatives to internal stakeholders unfamiliar with the industry. Today, there are a number of excellent tools and services out there that can easily track revenue dollars from paid search clicks; however, this represents only a portion of the value your paid search keywords are driving.

What do we do when a keyword facilitates an intermediate step in the selling process? How do we credit the keyword for indirectly driving revenue down the line?

Defining Relevant Microconversions

RKG defines a microconversion as any action a user might take on your site, outside of a direct sale, that delivers some value to you.  These events, while not resulting in immediate sales revenue, carry inherent value that should be attributed to the keywords that drove them. RKG clients determine which events are worthy of tracking on an individual basis. Some of the most commonly tracked microconversion events include email/newsletter subscriptions, store locators, user account creation, catalog requests, social media follows, and interactions with tools like gift registries or trial downloads.

At RKG, we believe that microconversions play an important role in realizing the full potential of any keyword in your account. For most companies, there are user behaviors outside of traditional e-commerce purchases that are considered valuable, indicating or leading to a higher lifetime value for customers who follow them. These events should be tracked, reported, and used to inform the bidding strategy of your paid search initiatives.

Assigning Value to Microconversion Events

Assigning the proper value to a microconversion event can seem like a daunting task initially, given the difficulty of predicting a user’s future behavior. Fortunately, this process can be adapted to fit the individual needs of each advertiser based on some simple analysis. Ideally, the advertiser already has an idea of what value the microconversion drives based on internal records of historical performance. If no data is available, however, RKG can analyze the performance of these microconversion events to determine the appropriate value with which to attribute them. We have the option of launching microconversions on a tracking-only basis at first with a static value of zero; as data is accumulated, an appropriate value can be determined based on user behavior.

As with all things, RKG believes microconversion values should be data-driven; rather than a “set and forget” value, periodic reviews should be undertaken, analyzing historical performance to ensure the proper value is being credited for each successful microconversion event. This microconversion “revenue” is recorded and maintained separately from direct revenue dollars for each keyword in the account.

Incorporating Microconversions into your Bidding Strategy

Microconversions play an integral role in properly attributing the full value of paid search to the correct channel, and can have significant implications on keyword-level bidding strategy. A paid search keyword may be responsible for driving thousands of dollars in revenue indirectly by informing users’ decisions at various points in their purchase path. If you aren’t tracking microconversions, however, you may be steering your program away from valuable opportunities because of incomplete reporting.

To illustrate, consider the following scenario:

Imagine you are an office supply reseller. You notice there are two keywords in your newest campaign that have not converted well – office supplies in bulk and bulk order office supplies. Each keyword has accrued 800 clicks and $650 in cost, but only a handful of conversions, leading to a return on ad spend (ROAS) below your $2.50 target. If the buck stops there, you would likely bid these terms down in an effort to come in line with your efficiency target.

Now assume you are also tracking microconversion events, and notice that bulk order office supplies has also generated 30 requests for your latest product catalog. You know from past analyses that your catalog is very persuasive – customers who specifically request a catalog convert 20% of the time - and leads to an average order value 15% larger than orders from customers who haven’t read it. Despite apparently poor efficiency, it would be wise to maintain traffic to bulk order office supplies because of the indirect revenue the keyword is driving in the form of catalog orders.

Even further, let’s assume that one such user clicks on an ad and requests a catalog. Pleased with the deals she finds, she decides to like your brand on Facebook. Not only does this keep the customer better connected to your brand the next time she is looking for office supplies (improving the chances she’ll come back to shop again), but your name may also appear on the walls of friends in her social network. This free brand exposure and loyalty building is worth something, and should be credited as such.

Using Microconversions to Realize the Full Value of Paid Search

Microconversions represent one more layer in the complex task of properly valuing paid search as a marketing channel. While they are an important piece of the puzzle and should not be disregarded, the weight that microconversions play in determining paid search bidding will inevitably vary for each advertiser. Working with the data to determine this level of interaction properly gives you a more robust, comprehensive view of paid search’s impact as a marketing channel.

By looking beyond direct revenue dollars to the interactions that users can undertake with your site that will sway future purchasing decisions, the smart marketer is able to take into account every keyword’s contribution to the overall program, and use this information to optimize bids towards growing overall revenue for both the channel and the company.


8 Responses to "Microconversions: A Critical Piece in the PPC Bidding Puzzle"
Ross, my 135 physician,single specialty group is beginning to do marketing in this manner. Your algorithm to track the value of non-revenue "clicks" will be very valuable as we look at the success of our new on-line marketing.We offer online pediatric specific medical information and watching those may help us better track the value of our outreach effort.
Austin Lance Butler says:
Great article. I've employed similar optimization strategies using Goals in Google Analytics to fill the gap betweens sales (or other terminal goals) and site usage activity. Just never had a good word for it. Microconversions it is.
rkoon's picture
Ross Koon says:
Thanks for taking the time to read the article, Austin! I'm happy it helped put a name to what can prove a murky, but important, subject.
Ross Plotkin says:
Great piece (from one Ross to another)! We have a similar execution philosophy in place for microconverions. Another great microconversion point for measurement and attribution in bid strategy are inbound phone calls made prior to actual ecommerce sale or other final conversion event. Powerful tool to find value in keywords that may not appear to be pulling their weight in terms of search ROAS.
rkoon's picture
Ross Koon says:
Ross, Thank you for your comment! You bring up an excellent point. Fortunately, RKG has tools that allow the advertiser to link phone orders back to the ad that was clicked whenever a customer goes through paid search to reach your call centers, so much of the revenue driven from click-to-call purchases can be directly reported. That being said, setting up a microconversion event on any 'Contact Us' type interaction on your site, including phone numbers, can provide additional insight into the customer's purchase path that is useful in valuing a keyword's performance.


Check out what others are saying...
[...] Microconversions: A Critical Piece in the PPC Bidding Puzzle, Rimm-Kaufman Group [...]
[...] are not to be confused with microconversions, or the interaction events that occur outside of the shopping cart which could lead to sales down [...]
[…] pixel on the site. The conversion pixels allow marketers to track a variety of conversions and microconversions: checkouts, registrations, leads, key page views, adds to cart, or other website conversions. A […]

Leave A Comment