Time is Money in SEM

For direct marketers, PPC costs need to be in line with PPC revenue. That same logic should be applied to how your team allocates its time.

A company can feed as many analysts as it wants to into the maw of Search Engine Marketing. There is an infinite amount of work to be done. However, the amount of work that is valuable enough to cover the cost of having someone do it is limited.

Paying someone to do work that produces little or no incremental value is bad business. Paying someone to do work that is worth less than other work s/he could be doing is also unprofitable.

Understanding the relative importance of different components of your PPC campaign may help retailers to allocate management resources more appropriately.

In catalog marketing we talk about: list, offer, package. “List” meaning the mailing lists; “offer” meaning the products and price points; and “package” meaning the catalog itself: cover art, layout, copy, paper, etc. As any good direct mailer knows the relative value of each of these pieces is something like: List 75%, Offer 20%, Package 5%.

The search analogy is:

1. The Term List: 50%
2. The Bidding Logic: 30%
3. Landing Pages/Selection/Offer: 15%
4. Ad Copy
   1. Getting Offer Copy out when appropriate: 3%
   2. Getting “Why Shop Message” right: 2%
   3. Tweaking the wording: 0%
   4. “Refreshing” the copy: 0%

By far the most important component of success in either venture is marketing to the right people. In search the term list and bidding logic determine whether you’re spending money appropriately to get your message in front of the right people. You’re willing to spend more to market to the best folks, less for the folks who are less likely to buy.

Having the right selection of products at the right price is next most important in each. Merchandising and pricing the catalog correctly is a science. In PPC making sure the landing pages show the widest relevant selection for each search is crucial. It’s important to provide an easy shopping experience and that goes to both site design and landing page selection.

Least important in cataloging is the catalog itself. It needs to look good, it needs to be brand-appropriate, but we all know that the performance of books on cheap, thin paper is dollar for dollar better than the same catalog on nice, expensive paper. The look and layout matter, but not nearly so much as getting the book into the right hands with the right selection and price points.

Similarly, while there is a measurable difference between poorly targeted copy and well targeted copy, somewhat amplified by “quality scores”, the difference between good copy and perfect copy is rarely measurable. This is true for three reasons:

1. You’re not selling a product, you’re selling your brand. You don’t need to convince someone that they need a pasta cooker. They searched for one. You just need to convince them that your store is best place to shop for it.
2. By and large, people don’t read the copy. The average user spends less than 6 seconds on a SERP before clicking a link.
3. We’ve done thousands of copy tests which bear this out. Offers raise the CTR, getting the write “why shop” message matters, but beyond that it’s hard to raise the bar materially.

Yet many retailers focus the bulk of their attention on the ad copy. Possibly because it’s visible, possibly because the CEO sees it; possibly because it’s the only thing they know how to play with.

Whatever the case, the opportunity costs associated with this misdirected attention are staggering. Pouring that same attention into fleshing out the term lists where needed, adjusting match types, studying the referrer strings for terms to add and negative associations, analyzing the data and feeding those findings into the bidding algorithm generate a much greater return on investment when done well.

This “under the hood” work may not generate demonstrable work product, however, it will generate more cash. Focusing attention on the “dough” rather than the “show” is good business.

The next post: PPC Projects that are worth more time