The path to proper PPC benchmarking
During a recent roundtable discussion of paid search for B2B at Focus.com (roundtable MP3 here!), one of the participants asked about benchmark conversion rates from click to form fill. As much as I hated to do it, I had to answer, “It depends.” There really isn’t a fixed standard. A number of factors influence CVR – number of fields, content you are offering, and, most importantly, the audience you’re going after. In the end, I find this type of benchmarking to be a futile exercise.
I think it’s in a marketer’s DNA to want to compare/evaluate himself against his competition – and this goes double for SEMs. Auctions are competitive in nature; we’re always running head to head with our closest competitors. The only problem is that search is an auction with incomplete information – specifically, you don’t know about every outcome. Naturally, people want to get at this information, but the reality is that you don’t need it to be successful. If anything, constantly trying to compare your performance to your competitors can be a distraction. There are some things that you can and should compare your program against – most notably, your own performance.
Even with all of the competitive performance data in the world, your goals shouldn’t vary from this: run a profitable, growing PPC program within the economic framework of YOUR business. PPC shouldn’t dictate the economics of your business; it works the other way around. Clients often ask us what their targets should be, and my answer is always the same: choose your targets based on your financials, and we can give you an honest assessment of how it translates in terms of volume and expectations for the program. PPC isn’t about vanity; it’s about results. Perpetually comparing yourself to what your competitors are doing (outside of messaging, which is an area where you need to pay very close attention to competitors) will lead you nowhere and, most likely, distract you from your primary objective.
The only benchmark you should compare yourself against is your most recent performance. Making sure to look at a large enough window of time (the more volume you generate, the shorter the window), you should always be looking to see if you are growing. You need to be reasonable – don’t expect every major category to grow every month. However, you should always be tuning something and, on a month-to-month basis, should see improvements in any number of categories: clicks, impressions, CTR, CPCs, CVR, impression share, etc. If you fall behind in any of these categories, all the competitive data in the world won’t make a difference.
In your self-comparison, though, be wary of false positives. Seasonal trends should be evaluated before you assess how well (or poorly) you did in a given month. (For instance, I wouldn’t put much stock in increased conversions activity for air conditioning units in July.) These are cases where year-over-year trends are more important. Seasonality aside, improved conversion rates (on the lead gen side) could create leakage in other areas. Sometimes opening up the top of the funnel can have adverse effects later on – clogged lead qual resources, poor sales etc. In short, you need proper context to measure your monthly, quarterly, and yearly gains.
In the end, even benchmarking against your own data can be misleading. It takes a discerning eye (and knowledge of how the data was generated) to make this useful benchmarking. That said, I wouldn’t waste too much time digging for dirt on the competition. Shoot for 5-20% improvements from month to month, and once you hit on some nice optimizations, ask yourself this: how can I do it again?
– Sean Marshall, Director of Search Engine Marketing