Search marketing is often about . It’s a waste of money if the conversion is not happening directly (or with ).
This can be framed in another way: the compromises between efficiency and quantity. Convert the terms that you bid on (unless they are completely unrelated). The question here is: Was that money efficient?
This article will provide insights on how to strike the perfect balance between volume and efficiency, and what a healthy and productive debate search marketers can have when working with companies.
1. Find out how your business operates
It is important to start with the overall operation of your business. Every business has its own important metrics which drive their decision-making.
- Are you able to make the business profitable?
- How many people are available to support the product or team?
- Is there any seasonality or market force that could affect the company’s normal status (supply chain and holidays)?
If the product is profitable, and the company has the capacity to handle additional sales, then you might be more willing to pay for traffic.
It is the opposite. It is possible to reduce traffic or find only profitable sales if profitability is low or the capacity is restricted.
You might need to work when the sun shines if you’re in a seasonal-driven business. These are only a few of the factors that can impact efficiency and volume.
2. Forecasting at different levels
Google Ads is a great place to begin. It can be found in the top menu bar under tools > Settings. You can use this tool to get an idea of potential opportunities for existing campaigns.
Select which Performance Max or search campaigns would you like to forecast this opportunity. Select some options and input some information to generate results.
Google will create an output similar to the one shown below. This curve provides conversions that are expected for various spend inputs.
This can be used for any number of campaigns. The output data and input curves can be adjusted. The more detailed you are, the more varied and specific the curves.
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3. Analyse the conversion cost incremental
Once you’ve created this curve, it is time to calculate the incremental conversion cost at different levels.
It can be tempting to only focus on the CPA in search as a search marketer. There are many other options that businesses could consider investing in.
We recommend that you review both the impacts of different spend levels as well as the implications of the next investment level on the metrics. This can be done with a table such as the one shown below.
Take the projected spend at different levels, subtract the previous level to get the incremental cost of acquisition.
Many brands only look at total CPA and neglect incremental costs per acquisition. It will be easier to see the incremental cost per acquisition and compare it to other potential opportunities.
In the above table, you can see that going from $351 total CPA to $405 represents a 15% increase in CPA. The incremental CPA, however, is $891 which equals 120% more than the CPA total of $405.
The question should be: What else could I do to get a lower CPA (less than $891)? It could include product enhancements and advertising spending outside of search (display-social, programmatic).
It is better to invest in something that can beat the $891 increment CPA. There are many other factors to be considered, such as level of effort or resourcing.
4. Choose your bid models
Take a look at before you make your decision. It is possible to set a target CPA or ROAS or increase impression share, as well as maximize the event outcome (conversions and clicks),
They also help with incremental cost decisions.
- If you choose to the optimization will prioritise hitting this CPA goal.
- If you consider then the CPA target won’t be under control. Instead, volume will become the primary metric.
Each model serves a specific purpose, depending on the goals of your business and priorities at the time. Brands can switch between the two models based on specific business goals.
Deciding between efficiency vs. volume in PPC
This matter is not a “right” choice and is certainly not a fixed one.
It is important to discuss and test the choice between volume and efficiency. This is where search excels. It is possible to adjust your aggression levels in near-real time.
Once, I managed four simultaneous paid search campaigns to find mortgages. Each bank had very different CPA goals based on their specific business objectives and business goals.
Take a look around at your business and consider how savings or incremental spending would affect it.
- Is there an incremental opportunity for growth?
- What other ways can you get incremental results?
- Spend in other areas to increase the flow of conversions and save money.
You will soon be able to balance efficiency and volume once you begin using data. (Until it is necessary to discuss again. Trust me.
These opinions are not necessarily those of Search Engine Land, but they do reflect the views of the guest author. Here are the names of staff authors.
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