16 Oct Risks and returns: Building a search engine marketing portfolio
Investing marketing dollars wisely into search engine campaigns on Google, Yahoo, and MSN can reap dividends. Doing so wildly leads to ruin.
Managing a search engine marketing campaign effectively is a lot like managing any investment portfolio: you want to save as much money as possible while simultaneously investing as much money as possible in areas that are likely to achieve results.
Having a good baseline for your search engine marketing campaign is the best way to save money and, as a result, optimize the results of your day-to-day paid campaigns on Google, Yahoo, and MSN.
This is achieved by managing your campaign diligently over time using four strategies: keyword expansion, keyword removal, match-type optimization, and position placement.
Keyword expansion plays a very significant role in developing the right SEM strategy. A new pay-per-click (PPC) campaign is typically based on a handful of broad terms that relate to a business. Campaigns typically begin with the most popular and competitive terms, which also are the most expensive. Adding less expensive terms and variations is one of the best ways to expand the effectiveness of a PPC campaign.
For example, a PPC campaign based on the keyword “shoes” (at $1 per click) may expand into “running shoes” (at $.75 per click) and eventually into “street running shoes” and specific brands (at $.25 per click) carried by the store running the campaign. Since fewer shoe stores bid on these terms, they cost less. You get more clicks for the same budget.
As your portfolio expands with new terms, you have an opportunity to remove high-volume terms without having a negative effect on sales. In fact, as savings are redirected to less expensive terms, you should see higher sales at the same cost – or, ideally, at a lower cost.
PPC terms that are broad-match result are displayed more often. For example, running the term “shoes” on broad match results in displaying an ad when any search engine query includes the term “shoes.” The ad appears for queries on “running shoes,” “pink shoes,” or even “horse shoes.” Running the same term on exact match only displays the ad for a query of “shoes.” Exact matches are less expensive than broad matches and typically achieve better results.
With new PPC campaign, it’s common to seek the top-most position in search results. However, the top position isn’t always the best performing spot. For example, if the top position for “cell phone charger” costs $1.50, but the fifth position costs $.20, you’ll need to sell a lot fewer chargers to recover your expenses.
The best means of measuring the effectiveness of your PPC campaign is to look at return on investment (ROI) and cost per acquisition (CPA). ROI generally compares the overall amount spent on PPC against raw sales. CPA compares the amount spent on PPC against the profit margin of each item.
The sign of a good baseline PPC campaign is when the ROI and CPA numbers show consistent, sustainable profitability.
Risking and reaping
Changes made to a search engine marketing campaign are immediate. This makes it possible to take occasional risks to reap larger rewards.
For example, PPC can be used to help reverse negative conditions. A vacation resort can examine its projected occupancy rate during the week. And, if numbers for the upcoming weekend are lower than expected, it might attempt to boost sales for the forthcoming weekend by running ads on broader terms and with broader matches. However, doing so reduces the effectiveness of its baseline campaign.
A better, more strategic approach is to create a new campaign that can be turned on or off at will to address concerns of low occupancy. For example, the resort can run PPC ads that include a temporary discount or limited time offer that encourages Internet users to plan a weekend getaway. They can use the keyword phrase “weekend getaway” to ensure they’re getting the best sales leads possible.
During weeks when the occupancy level for the resort isn’t a concern, the promotional ads are disabled until the next time they are needed to boost sales.
Like a good investment portfolio, an effective PPC search engine marketing campaign uses a balanced approach. It’s important to manage the long-term effectiveness of an overall campaign while seeking and creating opportunities for short term gain.
Recent articles by Troy Janisch
• Troy Janisch: Search engine optimization: What’s the word?
• Troy Janisch: Big opportunities with small businesses
• Troy Janisch: Express pay may be the way
• Troy Janisch: Location, location, location: Spots to consider for online ads
• Troy Janisch: Link Popularity: The Internet’s ‘In’ Crowd
The opinions expressed herein or statements made in the above column are solely those of the author, and do not necessarily reflect the views of Wisconsin Technology Network, LLC. (WTN). WTN, LLC accepts no legal liability or responsibility for any claims made or opinions expressed herein.