Measure ROI In Segments From PPC

When it comes to PPC campaigns, you have two choices. Look at it as a collective effort of keywords and campaigns that either yield an ROI or do not, OR you can take a more granular approach and examine ROI by "segments". Not to say looking at the "overall picture" is a bad idea, as it most certainly is not, but it is these segments which can often make or break your campaign ROI so looking into them makes sense.

Now a good PPC manager will be proactively doing this for you already, but you may want to remind them every now and then or if you are managing things internally you may not think of some of this analysis immediately. If you are just looking at impressions and clicks, you have to go back and get your conversion analytics in place before you go any further.

So back to matters at hand - This is where analysis of geographic origins of traffic and subsequent %'s, ROI by keyword, by product/service, and other "segments" comes into play.

So for example, you can ask your PPC manager for a report on the % of your traffic from various states, cross reference this with your revenue metrics internally, to find out what the winners/losers are. THEN, you can develop micro strategy for those weaker areas to boost them, or of course you can simply exclude those areas. For example, you find that key states like California convert at a lower rate than states like Florida or Arizona, so, you might develop targeted landing pages around those weaker states. Then, on your stronger areas, you know these can be pulled out and emphasized in individual campaigns if needed with stronger bidding, and a larger budget on those "winning areas" to make sense the best regions are maxed out.

Even moreso this comes into play with products/service segments. So in other words, let's say your company offers 5 distinct services, and you spend 100K in a month on PPC. Well, if you determine you are at a 6X ROI from your PPC, but with some more granular analysis you see that 3 out of your 5 services represent 90% of revenue, and you only spend 50% of your PPC budget on those segments, you may simply want to adjust the top level budget strategy with your PPC manager, to vastly improve your ROI. Simply by "pulling the plug" on a couple of losing areas, you can accelerate ROI and make sure your budgets are not suffocated with the wrong traffic.

Suffocate?

Yes. When it comes to PPC, if you are like any other company, you have ROI goals. and a budget. So if you simply say one day "We want our ads to come up everywhere for every possible search!", what will happen is, you will start to substantially hurt your ROI. There is a psychology behind the way people search, and even seemingly related keywords can have a fraction of the ROI of others. (this all relates to key linguistics and how people search based on where they are in the sales funnel - but this is for another article) So this is why these micro adjustments on your campaigns over time is needed.

So if your budget is say $1000/day in PPC, and $500 of that traffic generates conversions at a CPA of $3, and then the second $500 generates at $5, then your overall CPA is $4 of course. But if you say, 'let's be more aggressive and do what our competitor is doing, or add in keywords that are NOT based on keyword linguistics and web psychology and are just arbitrary "guesses", you will end up killing your CPA. So, if your budget can barely handle 5,000 keywords which ARE converting well, and then you add in 1000 more which do not convert well, what do you think happens?

1. You get fewer leads
2. Your ROI drops substantially
3. You get FEWER clicks on the RIGHT keywords - why? Well, you just used up your budget on losing keywords!

Confused Dude - "But I thought if we did what the Google alerts told us, we'd have better ROI?"

Me - Careful. Google will only tell you as much as they think they need to so that you will keep advertising and where possible spend as much money as possible. This is why they are progressively preventing advertisers from seeing certain data and becoming less and less transparent about AdWords traffic, IMHO. IE Who loves "Other Search Terms" as a line item in your "Search Query / Search Terms" reports? HINT - It didn't used to be 90% of the traffic!

It's similar to pruning a garden. You don't let the weeds grow for too long, do you? No! Of course not. They are removed, you water and fertilize the soil, etc. So with PPC, you are pruning your keyword list (the weeds) so that your plants (profitable keywords) can "bloom", and by adding fresh water (good ad copy) and fertilizer if your feeling ambitious (landing pages and AB testing - ha!), so now your PPC campaigns will yield a substantial crop. :)

How's that for analogies?