Unleashing the power of Paid Search

Udayan Bose

BANGALORE: In today’s world, the internet is the second most commonly used medium after television. The rapid spread of fast broadband net connections has led consumers to spend more time online than to on newspapers and magazines.

According to recently available data, there has been a 200.9 per cent increase in internet usage between 2000 and 2006. In India alone, there were 37 million internet users in September 2006, with online transactional applications (e-commerce) steadily gathering steam, a recent report from IAMAI-IMRB survey revealed.

Given this scenario, search engines have become a way of life. Nearly 38 million people utilize search engines every day and 54% of adults use search engines to find a website to purchase products. Paid search (PPC) advertising revenue is expected to touch $33 billion by 2010 at a growth rate of 37% CAGR over next five years (Source: Piper Jaffrey, January 3, 2006).

Nearly 34% of total advertising spend in 2004 was online and is expected to outpace display advertising by 2010 (Jupiter Research Report, 09/2005). Over 350,000 advertisers advertise in US on Google and MSN and ASK.com have plans to introduce standalone paid search engines in 2006.

Moreover, this form of advertising represents the lowest cost per customer acquisition at $8.50, compared to Yellow Pages ($20) and e-mails ($60). (Source IAB, 9/2005). However, with increasing competition and entry of bigger players in the space, the costs are increasing quite dramatically every month. Hence the need to pay adequate attention to the economics of PPC advertising campaigns.

The explosive growth of paid search (PPC) advertising has attracted advertisers in masses Marketers across industries are rushing in to capitalize on this “new-found panacea to their advertising woes” – an option that is measurable and direct and has the benefits of reaching out to many potential customer segments that would otherwise have seemed impossible to reach.

But the road to success through PPC Advertising is difficult. In fact, several of them are “spending more on PPC advertising than their returns from it” - than those who are able to consistently get a positive return on their investment.

However, by dividing the entire PPC campaign process into the following five broad stages, it is possible for an advertiser to derive maximum ROI from his campaign.

i) Strategy Formulation and Setting up of an Execution Plan

ii) Keyword Research, Development and Selection

iii) Creative Development and Landing Page Testing

iv) Keyword Bid Management

v) Performance Measurement, Analysis and Optimization

i) Strategy Formulation and Setting up of an Execution Plan

 The advertiser needs to write down his overall goal for the marketing plan, how and why PPC advertising fits into it and objectives to be achieved by the campaign. The objectives need to be translated into measurable numbers.

The execution process focuses on the optimal way to achieve the objectives and includes basic issues like which search engines to advertise on, assessment of capabilities and available resources (people, infrastructure, technology, in-house expertise, budget, time), aligning the IT, Sales and Marketing, Customer Services departments to the objectives, drafting a checklist of activities and stage specific sub-objectives along with review checkpoints (quality, execution time, etc.), setting up of SOP (Standard Operating Procedures) for each campaign stage.

ii) Keyword generation

 -- At the end of this stage, the advertiser should be able to come up with the first set of potentially optimal keywords where he would want his ad to be listed. The keywords should be able to help him achieve his pre-defined campaign objectives.

To help build SOP’s for this stage he would need to do an industry research on competition websites (to check out their PPC price-performance benchmarks, estimated spends, ads and offers), industry trends (seasonality, buyer types, buying cycle, etc), analyze his own website to chart out which sections of his site(s) address the needs of the visitor who comes in from PPC ads.

The next step is to research and generate a comprehensive list of keywords using various available tools and then select the most optimal set that suits his business needs. This can be tricky and ideally needs a lot of data testing.

Each keyword needs to be treated as a potential revenue generator that can help achieve set objectives but has a risk or a certain cost attached with it. Therefore, the budget and campaign objectives need to be divided on a per keyword basis – each keyword has a target.

If stage one and two are done properly – with sufficient focus – 50% of the PPC Campaign Performance worries get taken care of!

iii) Creative Development

-- Writing the ad copy is a time consuming job and requires expertise and creativity. Even the best set of keywords won’t generate the desired ROI if the copy is not effective. No one would click his ad...and a strict Search Engine like Google would give him a poor score on relevancy (read CTR) and push his site down in the listing.

While writing the copy, he needs to focus on customization, regularly check competitor ads and put in place an “ad-copy performance tracker” that constantly evaluates how effective each individual ad copy is. The next step is to specify the "optimal destination/landing page URL's. It’s of no use leading a visitor to a page that does not contain the information he/ she wants. It is often useful to design a customized landing page for a campaign. An optimal landing page can have substantial impact on conversions (and therefore ROI).

At the end of this stage, the listings are ready for search engine submission and live action!

iv) Keyword Bid Management

-- For bid management to generate optimal result, the keyword bids are to be changed keeping in mind the performance objectives (targets and budget per keyword). This can only be done by monitoring and changing bids for each keyword so that the specified objectives are attained.

In a competitive category like travel the bids can change for the top keywords even 300 times in a day! This can therefore affect the site's listing position and performance. Keeping a round-the-clock vigil is especially important for competitive sectors. Bid management can be done manually if the number of keywords in management is less than 100 and if bid managers can work 24/7. Else, bid management tools are advised.

One also needs to keep a watch on click frauds –approximately 12-15% of the budget is wasted because of fraudulent clicks. The advertiser must have sufficient capability to capture instances of fraud and bring them to Search engine's notice. He also needs to keep a very close watch over the visitor logs.

iv) Performance Analysis and Optimization

– At this stage, the advertiser needs to choose a suitable tool to analyse the effectiveness of his campaign, eg the number of additional conversions received after increasing his PPC ad budget, number of visitors coming in from PPC search engines, time spent by each on a page, links being clicked upon, the conversion ratio (click to leads to sales), cost per lead and cost per acquisition. In short, he needs to figure out if his PPC ad campaign is yielding desired results.

A sophisticated marketer with the ability to measure, analyze and optimize performance on a real time basis has an edge over others. However, even a daily performance measurement and optimization system is adequate for a basic PPC Campaign. The most important aspect here is the regularity with which the above operation is conducted.

PPC search advertising is arguably the most powerful advertising choice available to a marketer today. But with increasing competition in the segment, it is extremely important to pay adequate attention to the economics of PPC advertising campaigns. Because, not doing so might quite radically affect marketing budget and performance.

The writer is President and CEO of NetElixir, a paid search advertsing company