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April 26, 2007

Pay Per Click Strategies

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It’s time to learn about pay per click. I’m excited, really, I am. Don’t I look sound excited? I heart pay per click campaigns.

Dana Todd (SiteLab, SEMPO) is moderating this afternoon’s session which features speakers Daina Middleton (Hewlett-Packard) and Mike Solomon (CJ Search). I have to admit. It’s very nice to see Dana Todd. It helps me feel like I’m at home hanging with the search folk instead of being surrounded by all these neurotic fast-talking advertising crazies. There’s not nearly enough geek in this room or at this conference.

Dana starts off by saying we’re only talking about paid search in here so if you want to know about organic, that’s a different session. Why, yes, Dana, it is a different session. In fact, it’s Bruce’s SEO Q&A session that’s coming up later today. Keep an eye out for the session recap. Huzzah!

Up first is Daina to talk about paid search in a large company.

[Heh. Daina thanks everyone for coming and says it’s hard to talk after lunch because people are typically in food comas. When she said that, the guy in front of me practically fell off his chair and freaked out thinking he missed the free grub. Don’t worry, weird friend. Lunch hasn’t actually happened yet. It’s coming up right after this session.]

Daina focused on where HP’s pay per click campaign started out about 18 months ago. Apparently, it wasn’t in such good shape. The campaigns weren’t tied to overall business objectives, there were too many stakeholders, campaigns didn’t have an investment level for minimum thresholds, the activity was invisible to management, there was no standard tracking or measuring in place, and there was no integration into marketing communications mix. I love that just 1.5 years even huge brands were pay per click retarded. (I mean that in a good way).

Daina outlines four pay per click pillars and best practices:

  • Positioning – Ensure your company is achieving an adequate spend level.
  • Test & Learn – Leave room to make mistakes and learn. Testing is important.
  • Standards – You need standards to benchmark where you started, where you are, and where you’re going.
  • Integration – Pull the pieces together to show the leverage and the results about what’s happening across the board.

Once HP revamped their pay per click efforts Daina’s proud to say that HPs campaigns now appear in 11 countries. They’re all tied into one another so they’re reaching business objectives and not trying to outbid another. The global, regional and country teams meet weekly to fine tune their campaigns. Their increasing coverage and keyword position, as well as direct sales to HP stores. They’ve integrated their pay per click campaigns with other company functions.

Up next is Mike from CJ Search to talk about outsourcing pay per click campaigns.

Michael says there’s a life cycle in search. When advertisers are first launching into the pay per click space they’re typically very happy to keep things inhouse. They have small keyword lists and they don’t know what they don’t know. That’s stage one. In stage two, advertisers find that their pay per click campaigns end up growing beyond their means and they decide to outsource them. They’ll stay with that for awhile and then they’ll decide to bring them back inhouse and adopt tools to help run and manage them. The last stage is that the advertisers make the choice to either continue running them inhouse or, more commonly, they see that pay per click isn’t as easy as they thought and they’ll choose to again outsource it.

There are some key decision points when you’re deciding if you should outsource your PPC or not. Ask yourself if you have the right people with the right experience. Can your team build out the campaigns? What tools do you need and how much do they cost? (Mike says you’ll need at least a suite of analytics, bid management, and keyword discovery tools). Decide if this is your core competency. Are you willing to dedicate your time to this?

To make outsourcing work you need to stay engaged – don’t just write checks. Educate your agency on your business model. Clearly outline your goals. Keep your agency aware of changes and new initiatives – What are you new products? What promotions are you running? What products are out of stock? Are you using TV, print and radio? If they are, work those into your pay per click campaigns and leverage those efforts.

When it comes to metrics you have to determine what your key business drivers are. Are you into sales, lead generation, brand and awareness, some incestuous combo? Tie that into your goals. Ultimately, you probably want to reach a combination of conversions and ROAS. Benchmark your competition. Know what a good conversion rate is and what a good clickthrough rate is. Communicate that to your agency.
How much should you allocate to search? Size the opportunity based on metrics. Determine the amount require to be up 24/7 on all engines (crazy!). Mike says if ROAS is positive, why limit your budget? (Mike must not have a boss…) Allocate a percentage of your budget to testing. The goal here is to learn about and explore additional opportunities. Set up different metrics for this campaign than for your core campaign since the objectives are very different. If you’re on a limited budget, look at search affiliates.

Use tools to help you increase the efficiency of your pay per click campaigns, Optimize your landing pages.

During the question and answer segment, an audience member asked how you go about tracking clickfraud.

Daina says she has key relationships with the top search providers and that they watch it very carefully. She’s certain that it happens but she doesn’t know what the direct impact to her business is yet.

Mike echoes Daina’s remarks and says for the most part advertisers are very dependant on the search engines. You have to work closely with them to watch it. There’s also software that can help you with the process, but Mike admits he’s not actually using software. He’s just relying on the search engines.

Another audience member asks, if you’re a traditional agency thinking about pay per click, where do you start?

Mike says it depends on what kind of service you want to provide. Are you going to be heavy technology or heavy service? Mike (obviously) recommends falling somewhere in the middle. From there it’s a matter of having the experience. You need to have trained search experts. Search is too complex at this point to accept anything else.

Amen, brother.

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One response to “Pay Per Click Strategies”

  1. Doug Winenger writes:

    How many of you are Seinfeld fans? Do you remember the Soup Nazi? “No soup for you!”
    The patrons of the soup shop only visited for one reason, the soup! It was really, really good. They were willing to dance through all the hoops (all except Elaine of course) to get their dose of “liquid heaven”.
    Imagine if the soup was terrible? Do you think the people would tolerate the poor service, the rules, etc? I don’t think anyone would go through all that for “no return” or even a “poor return”.
    That’s why it always surprises me when people measure their paid advertising based on anything other than profit. That would be like jumping through all the hoops and not getting your soup at the end (or worse, not knowing if you got your soup or not, or, if you could have gotten more, etc).
    In the post above, I agree with Mike’s comments regarding budget limitation. However, if at all possible, I would recommend using profit rather than ROAS to determine the success of advertising .
    Using ROAS, it is possible to overvalue the performance on an ad if it sold items that were below your average margin. Or, you might undervalue an ad if it sold items that were above your average profit margin.
    Using profit based optimization allows advertisers to target ads that are producing the most profit. This is accomplished by identifying the products sold, applying the unique profit margins for each product, and factoring in the ad cost of the ad that generated the sale. Then, advertisers can follow Mike’s advice and pump their ad budgets up to maximize the profits generated!

    PS – If you don’t know who the Soup Nazi is, do a Google-search on “The Soup Nazi” and click on the “video” tab. It’s classic TV!



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