PPC and ROI

Return on Investment (ROI) is one of those fancy terms for a simple concept: How much are you getting back compared to what you’re putting in? Everyone wants a Now: Design your new site map or shape up your existing site map using the preceding guidelines.Deliver your requested changes to your web developer or make the changes yourself.

Low Conversion Rate Keywords

Much more worrisome than the keyword that isn’t bringing in traffic is the one that actually is bringing in traffic but not resulting in conversions. You’re going to hold these terms to a much higher standard than the low-click-through performers because every one of these clicks is costing you cash. But you may wish to give these underachievers a second chance before you dump them. Here are some questions you should ask: Is the landing page a good match for the keyword? You may be about to drop a keyword when you should instead be planning to add a new page to your website to better accommodate it. At the very least, consider pointing a keyword to a more appropriate landing page that already exists. Exploring different landing page options with a multivariate test (described later this week) may also be in order.

Did I get caught in a word-matching snafu? If you are using a broad matching option, is it possible there’s a broad match to your term that’s drawing in the wrong audience? You can fix this with a negative match, a type of matching that excludes words you specify so that your ad doesn’t show up for those terms. For example, you may want to sponsor the term “shredder” for your snowboarding site, but you probably don’t want to pay for clicks from people who are looking for those paper-eating office supplies. In this case, you’d want to exclude the words “paper” and “document” for this keyword. Am I inadvertently using bait-and-switch tactics? If you owned a bike shop in Santa Cruz, California, you might think it’s perfectly reasonable to sponsor the search terms “santa cruz bikes.” Unfortunately, this is also the name of a popular brand of mountain bikes! Many of those click-throughs are going to be disappointed by your site. If you’re in a situation like this, you’ll need to review your ad text to eliminate ambiguity. Make sure your ads clearly represent your offering.

Keywords with High Conversion Costs

Don’t overlook the simple but important step of sorting your keywords by conversion cost. Keywords with high conversion costs can be easy to miss: They’re not in the zero conversion pile, and they might not be in the low click-through pile. But there’s nothing more depressing than seeing a $90 conversion cost for a keyword that you’re using to sell a $45 product.

High conversion costs can be caused by any combination of the factors we listed for low click-through rates and low conversion rates. Although our suggested efforts earlier today will also help bring down the high-cost conversions, lowering your bid is the most direct fix for this problem. If you discover that more than a few of your keywords are running at an unacceptable conversion cost, it’s time to pause those keywords until you figure out what’s going wrong.

What’s a Conversion Worth?

Determining the value of a conversion is anything but straightforward.The Left Brain and Right Brain share their perspectives.

The Left Brain says, “If you’re paying for advertising, you need to have a way to determine if it’s worth the cost.That means giving a numeric value to your conversions! For larger organizations, your marketing department probably already has a concept of the lifetime value of a new customer or client. For example, the PPC visitor who buys a digital camera online today may come back in a year for spare parts, and then recommend you to a business partner for a large purchase three years down the road.”

The Right Brain says, “If your type of conversion is less tangible for example, a visit to your Map and Directions page or downloading a white paper you’ll probably be hard-pressed to place a numerical value on it.This may be a case of ‘I know it when I see it’ your gut will tell you that $10 per conversion feels like too much but $5 feels OK. If you can’t place an exact value on your conversion, the best approach is to manage your campaign diligently so that you stay within your paid search budget and strive for the lowest cost per conversion possible.”

The Right Brain says, “A little knowledge is a wonderful thing. But a limitless supply of raw data which PPC services are very good at delivering is difficult to wrap your mind around. An average do-it-yourself SEO may have a very hard time tackling this data, much less arriving at a meaningful take-away.

“So don’t expect perfection, either in your campaign or in your ability to assess it! It’s all about evolving toward a better ROI. Start simple, with the broad-brush, trust-your-gut-instinct ways that help determine if your SEO campaign is on the right track. If you’re not comfortable with your method of assessment, keep your budget small until you find the method that’s manageable for you and that offers data you feel you can trust. Remember, the ROI loop is a circle, not a straight line.” The Left Brain says, “I agree that some degree of instinct-based approach is needed for difficultto- track conversions. But for more straightforward e-commerce sites, or anyone with a clear method of measuring profit per conversion, PPC offers the opportunity to be more empirical in your approach.You know what your conversions are worth, so you can set your bids as high as possible while still delivering a comfortable profit margin.

“Of course, bids are not the only factor in PPC ranking, and they may not even be the most important one. After all, even a top-ranked ad is worthless to you if your ad copy is no good. Ongoing testing can help you improve both your ads and your ROI. And there are even automated PPC campaign management solutions, such as Atlas Search or Efficient Frontier, that will help track and analyze your PPC campaign for you.They’re pricey, but if you’re ready to invest in closing the loop in a more sophisticated way, these solutions might be a good match for you.”