The Pay Per Click Package Deal – part 3: Means to an End
If you missed part two, that’s because it was a guest post here as a special on prepping your landing pages before you get into the nuts and bolts of launching a paid ad campaign. I split that part out because so many of the PPC accounts I’ve worked with in the past are put together without any thought whatsoever to what’s going to happen after they finally succeed in getting a click on an ad, that it seemed like a worthwhile break out for an Intelligent PPC segment.
But there’s an even more important part to paid online advertising that is overlooked by practicallyeveryone but the most sophisticated advertisers… ROI. Sure, everyone san say it. Everyone knows what it stands for. Everyone knows it’s a benchmark for paid ad performance. But almost no one knows what goes into the mathematics of making sure you actually earn a Return On your Investment in that paid click.
It’s surprising to me how much news there’s been in the online ad world lately about “post click” optimization. It’s as though it never occurred to anyone that the transaction doesn’t end on the landing page. If you aren’t tracking user behavior, watching the paths your visitors take through your site after the click, you’re missing a huge chunk of the story here. You might beat everyone else’s price on widgets by $200 but if your cart gets the hiccups in the middle of a transaction and frustrated users leave, you won’t see any return on that investment in the click.
And even then, assuming you make the sale, are you tracking ads, clicks and conversions in enough detail to be able to match up the cost of the click with the sale totals? How will you know if you’re actually making any profit on your sales if you aren’t able to relate the individual sale back to the search term that started the process?
When PPC analysts start talking to business owners about advanced analytics to enable bidding to economics, their eyes glaze over. I don’t really blame them – I don’t know too many business owners who like Algebra. But if you really want to optimize your campaigns, you need to be able to prove that keyword A has a cost of $n per click but has produced $r dollars in sales of item B – then you need to know the margin on item B so you can see if there’s any profit there after deducting the cost of $n from the earnings. If not, then your keyword is not profitable and you’re bidding to high for the markup – you either need to bid lower, raise the price on the item, or figure out how to target items with higher profit margins to begin with… if you can’t find the relationship between sales and clicks, you’re up a creek without the right paddle.
Alan Rimm-Kaufman of the Rimm-Kaufman group has a most excellent 3-minute explanation of using economic factors to control bidding.
What it all boils down to is this: if you are not using the proper tracking techniques that allow you to match up the keyword with the items purchased at checkout, you will never know the answer to “what’s my ROI?”
Sorry, ouija has no special extra insight.
If you enjoyed this post, please consider leaving a comment or subscribe to the feed and get future articles delivered to your feed reader.
