Gord Hotchkiss has spoken and written on many occasions about internet speed and what this means for organizations trying to adapt to a rapidly changing competitive landscape. The question regarding internet speed is how fast are you willing to move to adapt to the changing online landscape, but the question also has to be asked; how fast are you willing to fail?

To determine the most effective marketing mix online, at some point a failure must be encountered. The question regarding optimization of paid search campaigns may come down to complacency. If everything is working well, ROAS is good, CTR is good, Quality Scores are good, then why mess with a good thing? Well, the quickest way to being overtaken by your competition is to stand still, and yet the problem is that when we optimize, we risk failure.

Not too fast, not too slow
Starting to optimize conservatively can lead to long, drawn out failures which can do longer-term damage, and yet going to the other extreme can lead to some very large disasters. It is more about balancing speed and risk with optimization testing. When starting testing it is important to define the scope of the test and determine what the acceptable rate of failure would be (i.e. negative impact to the bottom line) versus time needed to realize statistically relevant information. For example, when testing new ad copy or a new landing page, it is important to measure the volume of traffic you will direct to the landing page compared to the amount of potential loss of business due to that change. The margin of error associated with the test can also come down to the size of the change. The more significant the change, the faster you will see results (positive or negative).

Test markets
As with traditional marketing, definition of the test market will help to control the scope of the testing as well as the amount of volume exposed to the test. Limiting the scope of the test to selected ad groups or specific campaigns, or leveraging geo-targeting to isolate markets exposed to the test, can assist in balancing quick results and risk. The selection of test markets will also assist in providing a comparative bench mark for the test; although it is less of an issue with A/B testing.

Avoid the knee-jerk reaction. Testing and seeing results quickly is great, but ensure the statistical relevancy of those results is accurate. Before declaring a test a success, determine exactly what degree of data is required to see an effect from the test. Remember Statistics 101: what size of result is required to determine a 90 or 95% confidence interval with the test? The confidence intervals are going to be directly impacted by the amount of data; the more data, the smaller the interval required for statistical relevancy. There are two ways to increase the amount of data: time or scope. Increasing the duration of a test will assist in driving towards statistical relevancy or increasing the scope of impacted ad groups/campaigns will increase the amount of data.

Where do you want to go?
Testing in marketing is 70% science and 30% art. Even the most lackluster creative developer can design a highly successful campaign with enough iterations and testing. Before implementing a test, start with a hypothesis. I know, its high school science all over again, but without an idea of what the expected outcome of your testing could be, it’s going to be like going flying without a destination; you’re going to end up somewhere, just maybe not where you would like.

Knowing what works is only valuable if you know why something didn’t work and therefore failure is the only real way to drive success. Failure is only really a bad thing when nobody learns from it, which is why when implementing a testing framework, recording specifics about how each change affected the campaign’s performance is imperative to a successful testing strategy. Each test should be followed up with a detailed analysis as to how the test impacted the results. What was it about the test that caused the specific result?

The key to a successful optimization and testing program is designing successive tests and constantly challenging the status quo. Just remember you’re going to fail once in a while, but you can learn a lot from failure and take what you learn to help you succeed that much more next time.

While we are thinking about the question of whom do we accredit the quote to, now let’s think more close to home; how to we accredit revenue to individual marketing channels?

The double edged sword of PPC measurability is the ability to measure with a great deal of accuracy how paid search is performing and yet it is still easy measure impact wrong when looking at performance rather myopically. There are many different ways to attribute ROAS, such as first click, last click and a linear attribution model. Making decisions based on an individual attribution window could introduce significant error into your decision process and affect the total ROAS of your paid search campaign.

The problem with most analytics tools is that they attempt to apply linear modeling to explain a problem solved with bounded rationality. Business-to-business purchase behaviour is not a simple linear series of events, but more of an entanglement of communication touch points where a decision can be easily swayed by a chance encounter or incalculable externality. Most revenue attribution models ignore that paid search is only one marketing channel that is interrelated to all other marketing activities; which involve both online and offline company touch points.

With B2B marketing, many purchases involve multiple interactions with the vendor from multiple touch points prior to purchase. A study of a retailers, conducted by Coremetrics, indicates that all buyers had interacted with at least 3.9 campaigns prior to purchase; in a B2B environment it can easily be many more. This does not factor in many of the elements active within the B2B purchasing BuyerSphere. Enquiro’s Brand Lift of Search research also indicates that sponsored listings increase a prospective customer’s propensity to purchase by 8% and occupying the top sponsored position increased aided brand recall by 150%. These are all facts that a simple revenue attribution model can easily de-emphasize.

The majority of companies are still solely relying of the last click attribution model, which attributes the entirety of the revenue to the last point of interaction with the site before purchase. The inherent risk with this type of attribution model is the emphasis on the conversion-oriented campaigns and gives no attribution to the campaigns that originally started the marketing conversation. By making bid management and investment decisions based on only this information, the risk of divesting into the acquisition or branding channels increases substantially; effectively reducing the overall effectiveness of the marketing efforts. This risk increases if the company has a relatively unknown brand in the marketplace. The same can be said for focusing only on the first click attribution where we are looking only at the value of the keywords at the beginning of the purchase decision cycle and can ignore the importance of the conversion keywords at the end of the purchase process.

The only answer to this analytics dilemma is to strike a balanced measure using multiple attribution windows. Coremetrics has recently released a great whitepaper on Appropriate Attribution models which is a great read for any marketer on how to better attribute revenue to your online marketing efforts. For quite some time Enquiro’s Sponsored Search Team has been using a similar model of revenue attribution within the confines of the abilities of existing analytics programs, which vary depending on the provider you are using. However, we have also found great success in determining how paid search integrates into the macro-level marketing equation by using a micro-conversion and correlation analysis.

Often Paid Search campaigns are evaluated based on the number of qualified leads they have brought in or the strict revenue they have generated, but there is a missing element of how this impacts the overall marketing efforts. Post click behavior is an important element to any revenue attribution analysis such as the subscription to an email newsletter, requesting a catalog, downloading a whitepaper or other important marketing collateral, calling the phone number listed on the site. Each of these interactions with the website is part of the marketing conversation and can be assigned a value based on historical conversion rates and average order values. These numbers can then be applied to the paid search campaign as part of the revenue attribution model to assist in determining the value of paid search.

Another important metric is to measure the correlation of paid search traffic with direct and branded site traffic. Paid search may be the gateway to starting the marketing conversation with the prospect, but may only be the initial touch point. Measuring the impact of paid search on the direct and branded traffic can indicate how paid search is acting to acquire customers and brand the company in the marketplace. A simple correlation analysis is effective in revealing whether paid search is having a positive impact on the overall traffic to the site. The user may not necessary complete the desired conversion in the same session, but may use a direct or branded search to navigate back to the site at a later time to continue the relationship building process. 

Unfortunately, analysis of the marketing efforts often collides with internal politics which often complicates issues and can even impact the distribution of budgets. However, knowing how your paid search campaigns interact with other marketing channels, drive revenue, and build relationships can assist in determining the total value of the marketing channel.

The key takeaway from this is to look at the impact of your paid search campaigns as holistically as possible to determine your total ROAS. What is the direct revenue from the campaign? Does the ROAS change when using an appropriate attribution model? How does your paid search campaign initiate the marketing conversation and act as a relationship development tool?

Over the past several months, in part due to increased economic pressures, we have seen an increase of importance placed on improving return on investment (ROI) from search-based activity, particularly from PPC campaigns. ROI attribution and measurement becomes especially important when justifying the cost of the online sponsored advertising and improving the return on advertising spend (ROAS). Here are some tips on improving your search performance and getting the best ROI possible.

1.      Know Your Analytics

This statement may seem fairly redundant, but all too often search marketers find themselves flying blind without proper analytics. Much of this article will focus on using analytics to optimize for ROI and knowing the limitations of your own analytics program is extremely important. Additionally, ensure that your ROI metrics are tied back to search-related key performance indicators (KPIs).

 ROI attribution can become more cumbersome in the business-to-business (B2B) market place as sales cycles can be extremely long as well as potential of the sale occurring offline. In cases such as this, ensuring lead sources can be captured into CRM systems can provide vital statistics to the health of your campaign. (Yes, pun intended) Several CRM programs, such as SalesForce and Oracle, offer integration with some of the leading Analytics software providers. Simple Access or Excel spreadsheets can also be used to tieback the sales, lead value, or other KPIs to your search activities.

 2.      Optimize Landing Page Performance

So you’ve paid for the click; what now? Your landing page and ad copy must work together to assist in the sale of your product and convince the user into taking your desired action and converting into a lead/sale. On average, you only have 8 seconds to reassure the prospect that you are what they are looking for and convince them to stick around.

 Landing page testing is incredibly important to the success of a paid search campaign and to improving ROI. With a landing page the simple combination of titles, copy, images, and call-to-action can make sweeping differences in the performance of the page. The difficult question is which combination? Unfortunately; other than best practices there is a limited supply of instructions and guidelines to assist search marketers in developing the perfect landing page, but there are testing tools that can help us along the way. Testing tools can range in abilities and cost, but one of the better landing page testing tools on the market is Google Website Optimizer. It is fairly intuitive, easy to implement, and provides clear results analysis, best part is that it’s FREE.

 Your landing pages are perhaps one of the most important factors influencing the ROAS for Paid Campaigns. Simple landing page testing can be an easy quick win for any paid search campaign.

 3.      Optimize Conversion Paths 

Conversion path optimization is the next important aspect of ROI optimization. We all know that attrition occurs at each stage of the conversion path, the key to optimizing ROI is mitigating the loss at these key stages.

 Many of the analytics tools on the market do offer conversion funnel analysis which will allow you to dive deeper into the ‘fall out’ that occurs at each stage in the process. The key objective in this analysis is to determine at which stage in the funnel you are getting the largest amount of abandonment. Once you know where the users are leaving the funnel, you can then focus in on the potential problems with that page; what barrier exists, hindering final conversion?

 Enquiro’s has used funnel analysis to optimize conversion funnels for its clients and has improved the conversion rates by up to 150%.

 4.      Leverage your SEO & SEM Together

Enquiro’s research has proven a significant branding advantage can be achieved by having a top paid ranking and top organic ranking above the fold. However, budgets can be saved by lowering paid ad exposure for those key phrases also occupying top organic position; allowing for more focus in other key opportunities.

 With your SEM campaign, you are able to quickly test the traffic volumes and conversion rates for many keywords as well as determine what the best messaging is for communicating with your market. This knowledge can then be applied to your SEO efforts to help mitigate the costs of PPC. Although organic rankings take time to take achieve, there is significant benefit the can be attained by gaining organic rankings for your top search phrases.

 Additionally, through landing page testing and ad testing, it’s possible to determine what messaging resonates with your target audience and which calls-to-actions are most effective.

 5.      Trim the Fat

We all have heard of the 80/20 rule, but in paid search campaigns it’s more like the 95/5 rule. Ninety-Five percent of your revenue will come from 5% of your keywords. Using your analytics and appropriately tagging your conversions to indicate, on the keyword-level, the source information can assist you in finding those 5% of the keywords and truly optimizing those ad groups. On the flipside this source can also indicate which keywords are simply driving up costs without producing results.

 This should not be confused with eliminating long-tail keywords because they simply have not collected significant click volumes, but more so, finding those head and torso keywords that are costing a lot of money without driving conversions. Don’t be afraid to lose the dead weight in your campaigns.

 6.      Use Testing Budgets

When looking at paid search campaigns, once you feel you have developed a winning formula, there is a hesitancy to not want to mess with it. I know this feeling all to well, if it’s not broken, don’t fix it; but the truth of the matter is, if you don’t break it once in a while innovation cannot occur. To work around the hesitancy of making changes for fear of losing ground or ROI, assign a certain percentage of your budget that can be used for testing. Depending on how risk adverse you are, will determine how much you will assign.

 Using a testing budget (in a separate campaign or even account) will allow you to perform keyword analysis, landing page testing, A/B ad copy testing, as well as experiment with different bidding strategies without affecting the performance of the main account. Once a winning strategy has been proven it can be migrated over to the main account to improve its performance overall.

 One important caveat about testing to remember: one experiment = one independent variable. That is to say only make one change at a time; otherwise you will have difficulty in attributing positive or negative results to the correct changes.

7.      Leverage Quality Score

Although I  normally encourage focus be placed on optimizing based on conversions, optimizing  on the basis of quality score has its advantages, there is nothing detrimental from using quality score to enhance your ROI. So what do I mean with that seeming contradiction in terms? Simple, look at the quality score suggestions and your campaign goals. Make the changes to your quality score that will not adversely affect your campaign. For example, using your ads to pre-qualify visitors may decrease your CTR; in turn negatively affecting the quality score. However, pre-qualifying visitors prior to their click will achieve a stronger Conversion rate, thereby increasing your ROI. Using keywords in the ad copy and landing page can boost the quality score without losing the pre-qualifying messaging.

 8.      Use Micro Conversions as an ROI Indicator

Sometimes it’s not always easy to attribute ROI to your paid search campaigns, in fact in most cases its down right difficult. There is hope, however, in using micro conversions. Micro conversions are those actions that a user will take on the path to conversion. For example sites using a demo can calculate the conversion rates from demos to leads to sales. It simply takes a bit of reverse engineering to the sales cycle and determining values.

 However, with appropriate analytics, you know the demo to lead ratio, the lead to sale ratio, and average sale amount; therefore using your average sale amount multiplied by your lead to sale ratio, gives you your value per lead, then simply multiply that once again by your demo to lead ratio and you’ve calculated your value per demo. The same can be applied for filling out a contact us form, engaging in an online chat with a sales person, adding to cart, product customization, etc. Micro Conversions can assist in determining the value of a paid visitor by the actions taken leading up to the offline sales process where tracking can be more difficult, impossible even.