4 Cornerstones of Paid Search (Adam Audette)

1) Separate competitive search from brand search. 2) Don’t budget search unless branding or lead gen. 3) Bid to traffic value not to position. 4) Build and manage longtail.

Brand search: Your name / trademark / domain. Driven by offline marketing, word-of-mouth, customer loyalty, not brand search. Sales cannibalized from other channels. There is no leverage to get more.

Competitive Search: Driven by interest in your category. Absent the ad, traffic goes to competitors. Sales are largely incremental. Hugely complex game to maximize sales within some marketing efficiency metric. Variable Volume: Law of Diminishing Returns.

Blended view makes paid search appear larger and more efficient than it is. Those with an interest in having you spend more will go to great lengths to hide this distinction.

PPC Data: 50% of orders involve only paid search ad touch. 35% involve two or more touches on the same ad. 10% involve 2 different non-brand ads. 5% involve a non-brad ad and a brand ad. Generally, switching from last touch credit to first touch credit doesn’t change the numbers materially.

Evaluate Paid Search on Competitive Search Only.

Competitive search hitting efficiency targets? Growth in competitive sales volume? Growth in competitive search as a percentage of site sales? Growth in new customer acquisition through search?

Budgeting: Fixed Budgets are often irrational.

Budgets make sense when: Advertising is primarily brand-building, not ROI. The R come long after the I in ROI. The ROI target is in the red for long term growth.

Budgets make no sense when ROI targets are break even or better. The RO becomes before the I. The R is easily quantifiable.

Argument Against Budgets:

Diminishing Marginal Returns: Trade off between Top Line and Bottom Line. Always a point at which spending the next dollar is past ROI objectives. Budgets force you to keep spending when the ROI turns south.

We can’t control or predict the volume of search.

The value of traffic on a given term is measurable and predictable. The CPC landscape isn’t know and is not predictable.

Bidding on low volume keywords requires sophisticated stats: Enter portfolio optimizations. You can’t easily measure all the value (Frauds / Cancels , spillover to phone / offline, lifetime value, cookie breakage, credit allocation & misapplication).

Traffic value varies by keyword, by engine, by match type, by syndication network, by time of day, by day of week, by season, by geography.

How important is the tail? Tremendous variance. Median: 31% of sales from the tail but varies from 8% to 83%. What are the determinants? Number of products / services. Commodities vs. unique products. How people search in the category.

Does broad match cover the tail? Some will argue: Broad Match can catch everything. Paring down everything with negatives knocks out the bad stuff. There’s much less complexity to manage. Therefore: Broad Match + Negatives = Long Tail.

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