The Danger of Marketing by the Averages

We kicked off our SEM Top Ten with a look at how to effectively Grow Your Phrase List. We recommended testing between two and ten phrases for each page on your site.

With as many as 20,000 unique phrases for a 2,000 product site, tracking is key. To manage your program with precision, you’ll need a unique tracking code for each one of your paid search ads.

While averages and aggregates are useful indicators of the overall success of your marketing efforts, they can be deceptive.

Driving programs by the averages without the appropriate drill-down can hide opportunity, mask poor performance and lead to unwise investments. Just as no Circulation Director would manage the next mailing based on the aggregate performance of the last book, segmentation is central to maximizing sales and profitability in SEM.

Let’s say that as chief marketer at WidgetWorld you’ve set the target advertising to sales ratio (A/S) for paid search at 20%. Your most recent reports show that your overall program is hitting that number. Do you thank your online advertising manager (or search provider) for a job well done and move on?

Well, maybe. The answer depends on how you hit your target, on how precisely you can read and respond to the economics of each ad you are running.

Assign a Unique Code to Each Ad You Run

Suppose WidgetWorld sells widgets, wombles and wodgets. And suppose wombles have a higher selling price than your other two product categories. Maybe they also offer more favorable margins.

If the A/S for wombles is at 15%, you’ll leave money on the table if you’re complacent about your program’s overall A/S of 20%. Worse, what if the overall 20% is achieved not only by under-investing in the winners but also by over-investing in the losers?

You need to monitor the ROI of each ad. That starts with precise tracking.

Assign a unique tracking code to each distinct ad you run. The code should uniquely describe a distinct combination of phrase, search engine, destination url, and ad copy.

Never recycle your codes. To do so ignores the shelf-life of your cookies as well as the multiple visits a prospect may make to your site before placing an order.

Integrate with Your Site Analytics Program

A complete search marketing program includes precise matching of landing pages to ad copy and search phrases. Targeting and tracking these elements separately allows you to profit from the comprehensive and accurate A/B testing that is the core of direct marketing.

Make sure your SEM tracking integrates with your website analytics program. If two product categories show identical clickthrough rate but markedly dissimilar conversion, your site analytics program can reveal how successfully each category’s landing page passes visitors to your shopping cart.

While setting up and maintaining a comprehensive set of tracking codes can be laborious, these codes provide the detailed atomic data you need to “slice-and-dice” your performance reports: by brand, product category, ad copy, destination page, special offers - and any other variables significant to your profitability.

It’s this detailed analysis that allows savvy marketers to optimize their campaigns and run search programs that meet their economic goals.