SEM: Measuring Up
Welcome 2007—a year sure to bring the continued growth and maturation of digital advertising. New forms of online advertising have emerged from their infancy stages and now offer advanced measurement capabilities. Marketers can track ad spending down to the penny. Pay-per-click (PPC) search engine advertising, one of the more effective online advertising methods, offers real-time tracking for marketers.
But all this doesn’t mean potatoes unless you have a clear performance measurement program in place, helping you to measure the long-term value of your PPC program.
Defining Measurement Needs
When beginning a pay-per-click campaign, the amount of available data, statistics and tracking information can seem overwhelming. However, there are a few key areas that are important to measure. It’s vital to measure clickthroughs—every time someone clicks on your PPC ad. Many PPC providers offer click detail reports that allow you to view real-time click activity by date, time, cost and even keyword rank.
Some additional “must haves” when it comes to campaign measurement:
Impressions – Impressions are key when you’re first starting out. Say you’re getting a million impressions per month, but you’re not getting any clicks. You might want to improve your ad copy or increase your bid price to get better results for the long haul.
Cost per click – This figure represents what you’re spending each time someone clicks on your listing. Knowing this number for each term you bid on can help you tie certain values to keywords through the lifetime of your campaign.
Conversions – When you’re first starting out, you also should clearly define what you are going to consider a conversion. Is it a newsletter sign-up or is it the sale of a product? It could be a more complex measurement if you are following a B-to-B model, rather than a B-to-C model. Determine what you need to measure depending on your business model. Then consistently track this figure through the lifetime of the campaign.
Please note that these aren’t the only figures to measure. They are just some “must haves” often looked at as secondary data, when they really should be in the forefront, since they can provide great insight.
Tools of the Trade
Once you know what you need to measure, how are you going to pull together and make sense of all that data? Fortunately, there are many tools offered for campaign measurement and management. Simply put, these tools are designed to help you buy more of the traffic that works and less of the traffic that doesn’t. Using these types of tools, you can access reports and detailed analyses of which keywords are driving the right visitors to your site and which keywords are less productive, warranting removal from your campaign. Most programs are easy to use and only require copying and pasting a code to activate the software. Once installed, you can start to identify those clicks that are converting to leads and subsequent sales. You also can measure and compare revenue, conversions and keyword data.
With any PPC provider you can at least track conversions, even if extensive tools are not available. A simple way to do this is to create keyword “buckets.” Put similar keywords in a bucket to track the conversions of those keyword groups on the whole. For example, if you are a clothing retailer, one keyword bucket can be “shirts” and another “pants.” This can provide easy tracking of product groups, and can make campaign management easier. If you’re revising ad copy, you can do it for an entire bucket and not have to revise per keyword.
You can use some third-party services as an ROI measurement tool or as a complete Web analytics software package. For example, Adwatcher is a service that provides detailed information on various PPC accounts, including those you might have with Google, Yahoo! Search Marketing, MIVA and Searchfeed.com. If you’re working with many providers, this might be a good option so you can compare and contrast campaign results through one interface. Using these additional services is also where URL and campaign tracking services come into play; this allows marketers to better determine the conversion rates on each of their campaigns.
The most important thing to remember is to find a reputable third-party provider. If you’re putting irrelevant data into your measurement systems, you’ll get irrelevant data back out. This can hinder the results of all tracking in the future.
In-house vs. Outsourcing
There’s no clear line in the sand when choosing between handling your PPC campaign measurement in-house or outsourcing to a third party. However, deciding whether you should use an in-house resource or outsource can be determined by a number of factors. Keeping SEM management in-house might be the right choice if:
•Your company has never used PPC to promote its services. Keeping the knowledge in-house is a good way to learn and grow.
•You’re looking to optimize your costs. Look at the charges and costs associated with using the provider. Most of the time these firms will charge you a percent of the search. It’s hard to save money when you’re tacking on a 15 percent service charge.
•You’re looking to increase the volume. Many PPC advertisers have found that when using a bid optimizer, the volume of the campaign is affected negatively.
And remember, if you initially decide to keep your resources in-house, you always can look for more outside services to boost results in the future.
Determining Your ROI
Whether you outsource to a third-party provider or keep measurement in-house using PPC provider tools, you should still keep an eye on what your online advertising dollars are getting you. One important figure you should know is your ROI.
Here’s a quick example using a basic formula to determine ROI. First, figure out the following numbers: your amount spent, conversions and the average revenue generated by each visitor. After gathering this information, you can use the following formula to determine your ROI:
Average Revenue x Conversions - Amount Spent = ROI
The average ROI can vary from industry to industry, but you always should be in the positive. For example, if the average revenue generated by each visitor is $10, your conversions are approximately five and the amount spent for your advertising campaign is $25, this yields an effective and ideal ROI of 100 percent.
Refining Additional Campaign Factors
If you notice that your ROI is not on par with desired levels, give your campaign a check-up in three key areas to spark instant improvements.
1. First, in terms of budgeting, keep in mind you don’t need to have an extensive budget to start or run a PPC campaign. To determine if you are bidding appropriate amounts for each keyword, ask your PPC provider to provide you with its network stats as they relate to your industry. This type of information will help to determine what to bid for keywords. After initial bids are set and analyzed, increase bid prices on performing keywords only.
2. Create and track keyword buckets. Keywords included in these buckets should be very specific and extremely relevant to your product or service. Many common mistakes related to relevancy occur when choosing keywords. For example, marketers often submit keywords that could encourage a high volume of users to click on their ad(s)—such as “mortgage”—instead of choosing keywords that specifically target users interested in purchasing their product(s) and/or service(s)—such as “mortgage refinancing calculator.”
Continually update your keyword buckets, and if a bucket or individual terms are not relevant or not performing, remove them.
3. Consider revising your offer or unique selling point (USP). Many marketers make the mistake of initially creating great copy for their ad campaign, but then never updating or changing it. If you notice clickthroughs or conversions dropping, try updating the offer and/or USP in your copy. You need to keep it fresh, just like you would for any other form of advertising, such as banners or print.
For the Long Run
The most vital piece of information I can leave you with is to always keep track of conversions and to know your ROI. When it comes to PPC measurement, don’t operate in a silo. Take your data and use it across other marketing methods. If you find that one product offering converts better than another, incorporate this information into specific landing pages, as well as other types of online and offline campaigns. There is a relationship between search and buying behavior, so it’s important to fully align your efforts to ensure long-term success.
Tiffany Guarnaccia is marketing and communications manager for MIVA Inc., a Fort Myers, Fla.-based provider of performance marketing services. She can be reached at (239) 454-6988.