The 7 Habits of Highly Effective SEM

Whether or not you've run SEM campaigns for years, you can always optimize. Our 7 Habits of Highly Effective SEM, covering everything from keyword research to targeting to bidding and more, will help fine-tune even the most established campaigns.

Want a copy for on-the-go reading? Fill out the simple form on the right, and we’ll instantly email you a PDF copy of this whitepaper, including best practices on bidding, targeting, match types, and much more. If you have any questions, on this or any other digital marketing topics, you can always reach us at info@3QDigital.com or by filling out our handy Contact Us form. Otherwise, enjoy the whitepaper in full below:

Search engine marketing (SEM) is not magic. In fact, the tenets of SEM aren’t hard to pick up; the knowledge and tools needed to run a successful SEM campaign are available to anyone who knows how to poke around on Google. Good SEM, however, is a huge undertaking. Success is the result of hard work, a comprehensive scope, and diligent adherence to best practices.

Many SEM consultants and agencies like to cast themselves as wizards of a dark art; acceptance of this myth allows them to charge wildly for their services and dismiss complaints about poor performance by claiming clients simply don’t know what they are talking about.

This guide is designed to provide the knowledge to intelligently assess any SEM efforts. If you follow our best practices, the performance of virtually any SEM campaign can be improved.

Habit #1: Choosing the Right Search Engines

There’s no question Google currently dominates the search engine marketing space, with Yahoo and MSN (which combine under MSN AdCenter for SEM management) making up the rest of the big three. However, the right search engine for an SEM campaign is not always Google, Yahoo, or MSN. Before choosing the right search engine(s) for any marketing efforts, you must take into account five factors: quantity, quality, return on investment (ROI), audience, and product.

Quantity: For most search engine marketers, there is no such thing as “too much traffic.” SEM is an ROI-driven field; once a marketer discovers the keywords that work, he/she wants to grab as many clicks from those keywords as possible while identifying the search engines that drive the most quantity for those keywords. The biggest quantity opportunity is on Google, distantly followed by Yahoo Search Marketing (which includes Bing), then MSN, and, finally, Ask.

But indiscriminate quantity can be a burden. As the number of search engines in play increases, the complexity of an SEM campaign also increases, adding to the time required to manage it. Accounts eventually reach a point of diminishing returns as search engines with lower traffic volume are added.

Search engines actually offer two distinct advertising opportunities: “search” and “contextual” advertising. Contextual SEM advertising involves buying SEM ads alongside articles and content across millions of third-party Web sites that have opted into an engine’s content network (Google calls it the “Display” network). In some cases, contextual advertising drives more clicks than the ads on the search engines themselves do. And the range of ad media is much broader; you can place text, video, or image ads on content networks, where search is largely restricted to text.

One final important note about traffic quantity: social media sites like

Facebook and LinkedIn now offer pay-per-click (PPC) advertising opportunities. While Facebook still commands a very small percentage of most SEM budgets, there’s little doubt that it is a major opportunity that will likely grow substantially in the coming months. This will be discussed further in the “Product” section below.

Quality: Quantity only counts for so much. It is equally – if not more – important for clicks to convert into customers or dollars, depending on your specific business metrics. As with quantity, when it comes to quality, all search engines are not created equal. Two factors drive click quality: the search engine’s traffic source, and the tools the search engine provides to help search engine marketers filter the traffic received.

A search engine like Google or Yahoo gets the great majority of its traffic from loyal users. These searchers are the highest-quality users around; they have not been incentivized to visit the search engine, nor have they been tricked into thinking a paid link is an organic link.

It is critical to be able to stem the tide of bad traffic from a search engine. Google has led the way in giving search engine marketers tools to eliminate unproductive traffic, including the following features: negative keywords, match types, geo-targeting, day-parting, IP exclusion, site exclusion, demographic targeting, and category exclusion. Fluency with these features can help you quickly eliminate any click that doesn’t meet conversion metrics.

Beware of unfamiliar search engines, especially those claiming billions of clicks a month from ‘distribution relationships,’ ‘people downloading our toolbar,’ etc. The search engine is probably doing something strange to get clicks, and the odds are that this traffic is of a very low quality.

ROI: Quality and quantity matter little if your campaign isn’t making money. While 3Q Digital always recommends starting with Google and doing everything possible to make it profitable, sometimes this isn’t realistic.

Google is the most ‘efficient market’ out there when it comes to search marketing simply because everyone, including the competition, advertises there. A company’s best efforts won’t overcome a revenue per click (RPC) of $2 when 10 other competitors have RPCs between $3 and $25; it just won’t to be able to match its bids to profitably show up on the first page of the Google results.

Extra work may therefore be required to discover profitable opportunities on other search engines. There can be value in mining second-tier search engines for nuggets of gold that, when combined, can drive profit without heavy traffic from Google.

If, on the other hand, a company is already successful on Google, it must consider whether its overall ROI would increase more from further Google optimization or from trying out other search engines. At 3Q Digital, we believe that Google must be exhaustively optimized before you spend a lot of time on alternative engines.

Audience: Different search engines have different audiences, and while there isn’t often a noticeable difference in user behavior amongst the big boys of search, there are vertical search engines that cater to different audiences. IndustryBrains.com, Business.com, FindLaw, and WebMD are a few that 3Q Digital has used successfully. Many B2B buyers are available on vertical search engines, and in some cases, the conversion rates are significantly higher than those on Google or Yahoo.

Product: The product category being sold can have a huge influence on the choice of search engines.

Consider the following scenario: You are the marketing manager for TiVo in 2000, right around the time the product launches. Your boss tells you to advertise on search engines to get people to switch from VCRs to TiVo. Question: What keywords should you buy? If you buy the word “VCR,” people doing searches on that keyword are specifically searching for a VCR, and it might be hard to convince them in just a few words to consider a new-fangled technology. If you buy the phrase “alternative to VCR,” you would probably get no more than a handful of searches a month. What do you do?

In this specific case, the product is perfect for Google’s content network (known as “Google Display Network”), which you could use to place ads on Web sites visited by lots of “tech nerds,” or perhaps on an article in the New York Times about how VCR technology is out-dated. In other words, when you are marketing a new mousetrap, demand creation, not demand fulfillment, is what matters. Advertising next to search results is a case of demand fulfillment, whereas contextual advertising is more of a demand creation medium.

At 3Q Digital, we have a method of determining whether a product should be marketed through a search engine, in contextual advertising, or on a social media site like Facebook or LinkedIn. We call it the “the three in’s”: intent, information, and interaction.

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• Intent: Marketing a product that customers already need is called demand fulfillment and warrants ads on Google, the Google Display Network, or even Facebook (if B2B) or LinkedIn (If B2C).

• Information: When marketing a new mousetrap, demand creation is critical, which means you’ll be using sites like the Google Display Network or social media. A Google AdWords search effort may be futile.

• Interaction: Facebook, LinkedIn, and other social networks typically work when there is an offer that promotes “interaction” (survey or quiz) or facilitates the ability to share information with friends. Direct-response campaigns (“Buy this shoe now!”) rarely work on social networks.

Habit #2: Choosing the Right Keywords

Too many people waste too much time trying to come up with that killer ”long-tail” keyword instead of spending their time on more important aspects of SEM. Keywords are important – but not as important as they once were. The following are the best practices for keywords:

CREATE BASIC KEYWORDS

Before investing in expensive keyword research tools, create a basic set of keywords. Every campaign should have the following five keyword types:

• Root terms. The most basic keywords that relate to a campaign. For example, keywords for a mortgage lead campaign would include words like “mortgage,” “mortgage rates,” and “mortgage quotes.”

• Synonyms. Alternative words that mean essentially the same thing as the root terms. In the aforementioned mortgage campaign, this might include “home loans,” “refinancing,” and “home equity.”

• Action Prefixes and Suffixes. Words that can be added to the front or back of a root term or suffix that a user might type in to further qualify a query. There are two types of prefixes/suffixes: general and category-specific. A general prefix would be something like “buy,” “find,” or “best.” A category-specific prefix might include a geographic region, a qualifying state ment such as “bad credit,” or a commercial name like “Wells Fargo.” Note that the most generic prefixes and suffixes (like “the”) have now been almost entirely broad-matched out of existence, so if a prefix or suffix is getting no traffic, this may be the reason (and the keyword should be deleted in order to clean up the account).

• Run-ons and Misspellings. Like generic prefixes and suffixes, the utility of run-ons and misspellings is not what it once was. Still, you can sometimes get a few cheap clicks by creating words such as “mortgagerates” and “refiancing.” You should put these in separate ad groups, especially if you are using dynamic keyword insertion (DKI) in your ad text. It is highly recommended not to get too carried away with run-ons and misspellings – this practice should be limited to an account’s highest-volume keywords.

• Plurals. There can be significantly different user behavior on singular versus plural keywords (see further discussion below). As such, make sure that all top keywords include both iterations. NOTE: This is not necessary for Yahoo, as Yahoo does not differentiate between singular and plural.

Don’t Overdo It. While it may be true that the keyword “Pacifica California Subprime Refinancing Interest Rates Mortgage Companies” will not likely be purchased by many competitors, it is no longer true that you alone will show up on this keyword if you are the only one to buy it. Search engine “broad-matching” algorithms have gotten increasingly better at aggregating tail keywords into the same auctions with head terms.

Another hidden danger of millions of obscure keywords is the risk of either “slow bleeds” or sudden keyword “explosions.” A slow bleed occurs when a campaign contains 50 or 100 keywords that each cost $2 or $3 a month and attract no conversions. These keywords fly below the radar but, over time, can cost thousands of dollars a year. A sudden explosion occurs when a random long-tail keyword is suddenly matched on a major search, causing that keyword to get a spike in traffic. For example, 3Q Digital once bought the word “Pope mortgage,” using the name of the city, Pope, with the word “ mortgage” appended to the end. When Pope John Paul II died, this keyword received a huge rush of unprofitable clicks in a short time.

Keep Them Targeted. Although Google allows 2,000 keywords in an ad group, this does not mean that packing as many keywords into as few ad groups as possible is a good idea. In most instances, the fewer the keywords in an ad grouping the better, for two important reasons: click-through rate (CTR) and Quality Score. CTR will increase if keywords are closely related to the ad text. Segmenting similar keywords into well-defined ad groups enables the creation of very relevant ad text. It also improves Quality Score. Google rewards advertisers who send a targeted keyword to a targeted ad text to a targeted landing page. When a better Quality Score and higher CTR are combined, two of the three factors that impact an ad’s position on Google (the other being max cost per click, or CPC) are maximized. This can enable you to pay a lot less than the competition for the same keywords.

Track at the Keyword Level. Keywords are the DNA of an SEM campaign. As such, performance needs to be measured on a keyword-by-keyword basis. Luckily, through a combination of conversion tracking pixels and advances in Google’s dynamic URL parameters, keyword-level URLs are no longer needed for this kind of detail in analytics. An ad-level URL is more than capable of providing detailed performance data on a keyword level or even query level. This is critical, as individual keywords will vary tremendously in terms of performance. Continuing with the mortgage category example demonstrates this phenomenon. A search for “mortgage rate” is most likely looking for today’s current mortgage rate; a search for “mortgage rates” is probably looking for multiple mortgage quotes. Depending on the business, the conversion rate between these two keywords can vary dramatically.

Test Match Types. Google offers four match types – broad, broad modified, phrase, and exact – and keywords should be tested on all of them. In most cases, the exact match keyword will have the highest conversion rate, but it will also cost the most and have the least amount of traffic. The complete opposite is true for broad match. However, every account is different, and performance should be tested for each specific campaign. Note: At 3Q Digital, we don’t count match types as part of the total number of keywords in a campaign. In other words, if there are 5,000 keywords each matched three times, an account would have a total of 15,000 keywords – an acceptable-without-overdoing-it number.

Be Negative. At 3Q Digital, we consider the creation of negative keywords to be just as important as the creation of actual keywords. In fact, we believe the number-one mistake made by novice search engine marketers is not paying enough attention to negative keywords. As the search engines continue to push the limits of broad matching, the best defense against getting unproductive clicks is excluding massive amounts of negative keywords. There are two ways to create negative keywords. The first is to create a generic list of negatives that will apply to almost any keyword. This could include words such as “lawsuit, complaint, refund, scam, do it yourself, free, sex, UK, etc.” – but this list will vary depending on your business.

The second way to create negative keywords is to use the Google keyword tool to find words that might be semantically related to a product but in actuality are not at all related. Here’s an example we often use at 3Q Digital: it is probably important in an advertisement for “night stands” to exclude the word “one.”

Habit #3: Creating the Right Ad Text

At 3Q Digital, we look for prospective employees who excelled in three specific college courses: statistics, psychology, and creative writing. Creating good ad text is probably the one SEM skill that combines all three. To that end, here are our tips for creating and optimizing effective ad text.

Test, Test, Test . . . Wisely. As with any aspect of SEM, testing is fundamental to ad text success. The key to ad text optimization is to test efficiently because it is difficult, if not impossible, to successfully test ads across hundreds or thousands of ad groups.

At 3Q Digital, we recommend a two-pronged approach. First, find a “global” winner – i.e., ad text that can work well across multiple ad groups. The text should feature a slightly more generic message than one created for a targeted ad group. Create two or three of these global ads and test them in multiple and diverse ad groups over a period of two to three weeks. Once there’s an obvious winner, delete the losers and add some new challengers (a virtual “ad text war”). Repeat until the increase in performance becomes minimal or the ad text winner holds the top position through several ad text wars.

Next, perform the same ad text war for the top five to 10 ad groups. This time, the text should be targeted to each specific ad group. Continue to test until a winner emerges. In many cases, there may be a few winners – two or three ad texts that all perform at high levels. Some 3Q Digital clients keep multiple ad texts in each ad group as rotation of the ads helps them appear fresh to repeat visitors.

CTR is Just Part of the Equation. Absent in the discussion of ad-text testing is a definition for what qualifies as a “high-performing ad text.” Many people have been duped into thinking that the sole determinant of ad text success is click-through rate (CTR). If the business goal is optimizing for Google’s stock price, then this theory is correct; if not, a campaign should be optimized for a combination of CTR and conversion rate. While it is true that a higher CTR will reduce CPC on the search engines, sending thousands of unqualified visitors to a site will quickly deplete budgets and destroy ROI.

3Q Digital recommends a simple two-factor equation to determine effective ad text: CTR multiplied by conversion rate. For example, say that Ad Text A has a 10% CTR and a 5% conversion rate, and Ad Text B has a 5% CTR and 20% conversion rate. Ad Text A gets a score of .005 (.1 X .05) and Ad Text B gets a score of .01 (.5 X .2); thus Ad Text B wins over Ad Text A, even though Ad Text A has a higher CTR.

Research Competitive Ads: Copy . . . But Not Exactly. When first developing ad text copy, look at what competitors are doing. More specifically, look at what the advertisers in the top positions are using for their ad text. Most likely, these folks have refined their ad text over time and found a winning combination.

This does not, mean, however, that it is wise to copy these ads and run them, for two very good reasons. First, separate companies’ value propositions are probably different. For example, if a budget hotel chain is buying the keyword “hotel” and the Ritz Carlton is in top position, the Ritz ad copy that says “Luxury Hotels Redefined” is probably inappropriate for the budget chain. Second, it is critical to create ad text that stands out from the crowd. If the top advertisers are all saying virtually the same thing, a unique and proprietary message is one way to make an ad stand out.

Always Use a Call to Action – Start Now! Humans are herd animals–we like to be told what to do. This rule definitely applies to search engine advertising. End an ad with a call to action like “Learn more now!” or “Download your free white paper today!” Otherwise, many users will not click on the ad, simply because they weren’t instructed to do so. A “call to action” does not have to be too overt or “market-y,” but it is essential. “Schedule a free consultation” or “Research available options” are examples of calls to action that invite rather than command.

Use DKI in Moderation. Novice search engine marketers always get particularly excited about Dynamic Keyword Insertion (DKI) – the ability to automatically add the user’s query into the ad text. It is a cool feature we occasionally use at 3Q Digital, but it can sometimes backfire.

It is often the case that everyone is using DKI. As a result, there may be 10 ads that all have the user query as the headline. This “tragedy of the commons” scenario means that advertisers nullify each other’s ads, and no one gets a particularly good CTR. At 3Q Digital, we recommend that if you want to test DKI, you should create ad text variations with and without DKI. Sometimes the non-DKI ad text wins.

Get Bonus Bolding or Text. There are several ways to get extra bolding, extra lines of text, and extra relevancy in your ad text. Adding Google Checkout, for example, begets a big Google Checkout logo under an ad, and geo-targeting results in an extra line with the name of the targeted geographic region. The more real estate an ad occupies, and the more bolding it receives, the more likely it is that users will click through.

Use the Four Human Emotions. Internet marketing is new, but direct marketing is not – we’re all accustomed to getting letters from credit card companies and circulars in our newspapers. All of those direct marketing messages rely on four basic human emotions: fear, greed, exclusivity, and vanity. While the medium has changed, humans haven’t – use these emotions in ad text to drive CTR through the roof.

To Be Market-y . . . or Not To Be. Never assume you “know” what your users want to see in ad text. As part of testing, always try out different tones – some very direct-response and aggressive, others soft and unobtrusive.

Habit#4: Setting the Right Bids

Bid management is probably the most difficult and least understood aspect of search engine marketing. Indeed, it is so complex that we will only touch on the basics in this section.

It All Begins with Tracking. Whether you are Walmart.com or an individual selling out of a garage, bid management is only as good as the tracking behind it. There is simply no excuse not to have keyword-level tracking for all paid search campaigns.

The simplest way to quickly get keyword-level tracking is to install the search engines’ conversion pixels. These are small bits of code that have little to no impact on a site’s load time and can be implemented by anyone with a basic knowledge of HTML. With these tracking pixels installed, advertisers can see which keyword and often which ad text, search query, and referring site drove conversions and can then immediately start reducing or pausing keywords/ad text/referrers that aren’t bringing in the appropriate return.

Rules-Based Bidding: The Industry Standard. The easiest and most popular mode of bidding is “rules-based bidding.” Rules-based bidding means establishing the value of a click to a business, then bidding a portion of that value based on a business objective. There are three parts to rules-based bidding:

• Determine your business objective;

• Set minimum data thresholds;

• Calculate the appropriate bids.

AT 3Q DIGITAL, OUR SEM CAMPAIGNS FEATURE THREE COMMON BUSINESS OBJECTIVES:

1. Maximize revenue within a given budget. For a start-up trying to gain market share, SEM is a means to grab as many customers as quickly as possible, without regard to profit dollars. In such a case, the objective is to drive maximum conversions (revenue/leads/sign-ups/etc.) within the con straints of a specific marketing budget.

2. Maximize profit. Most lead-generation companies and many mature businesses are concerned with profit and profit alone. In this case, a business would rather drive $5 of revenue with profit of $4 than drive $1,000,000 of revenue with profit of $1. While this is an extreme example, it makes the point that a profit-maximization strategy does not look at revenue or margin as a goal but rather as a means to maximize profit.

3. Maximize revenue with a margin constraint. This is
probably the most popular business objective, with a goal of acquiring as much revenue as possible without going below the company’s margin objective. This enables a business to grow revenue/customers/market share at a rate that will not bankrupt the company. It is a hybrid of the aggressive growth approach of revenue maximization and the aggressive profit approach of profit maximization.

The next step in rules-based bidding is to determine minimum data thresholds. It is both impractical and potentially inefficient to bid-adjust every keyword every day, because most keywords don’t generate enough statistical data to help drive an informed bid.

3Q Digital recommends a two-part approach to establishing minimum data thresholds – one based on time and the other based on historical keyword performance. The time-based threshold suggests running data over multiple time periods — for example, a seven-day report, a 14-day report, and a 28-day report. What might be insignificant over

a seven-day period could suddenly be very significant over a 28-day period, or vice versa. In both cases, a sudden change in clicks over a short time period suggests that something may have changed in the bid landscape that requires attention.

In order to define a historical keyword threshold, 3Q Digital recommends looking at three factors: clicks, cost, and conversions. Determine a historical conversion rate and revenue per conversion for keywords, and then use these as benchmarks to determine when it is time to make a bid adjustment. To account for opportunity keywords, identify keywords that may not have reached the minimum click or cost threshold but have already generated a certain number of conversions.

Once business objectives and data thresholds are established, it’s finally time to begin bidding. A rules-based approach is defined by the following formula: Bid = RPC(1-MG) where RPC means “revenue per click” and MG means “margin goal.”

Let’s put this into action. Say that you have a keyword that has re- ceived 100 clicks and $25 of revenue. Your goal is to achieve a 20% margin. First, calculate your revenue per click. In this case, $25/100 = $.25 RPC. Our margin goal is 20%, which we express in the calculation as .2. Thus, Bid = $.25(1-.2) or $0.20. Note that RPC can be substituted with “cost per conversion,” “cost per lead,” or whatever your business metric is.

Cluster. If you’ve built out a list of thousands of keywords, odds are there are many keywords in the mix that get a few clicks here and there but never get enough clicks to make it on to the seven-day, 14-day, or 28-day reports. This can often be a real problem, since these little keywords can collectively cost a lot of money and margin. Consider, for example, if there were 1,000 keywords that each cost $5 a month and never converted; on an annual basis, you would spend $60,000 without a return.

In order to stop these losses, cluster groups of similar keywords together and bid en masse. If the ad groups are organized into tightly knit groups of related keywords, the easiest way to do this is to create an ad-group-level default bid. For example, if there are five keywords in the ad group that meet the minimum data thresholds but 200 that do not, bid individually for the five keywords, but then aggregate click, cost, and revenue data for the remaining 200 and bid on those together.

It’s possible to get even more sophisticated by trying to cluster key- words based on semantic similarity (words that are like each other) or behavioral similarity (users interact with the keywords in a similar manner), but at 3Q Digital, we believe creating a very basic clustering rule is the best strategy to save your sanity.

Habit #5: Creating the Right Landing Pages

Having a bad landing page will destroy even the best search engine marketing campaign. Time spent crafting the most amazing
keywords and compelling ad text will be for naught if you take users to an amateur-looking Web page. At 3Q Digital, we think landing

pages are so important that we actually build pages for our clients for free. The best landing page practices are divided into two areas: the “universal truths” and “best practices” that apply to almost every SEM campaign.

The Universal Truths are:

Test, test, test. Never conclude that a specific landing page will work for your business, and never assume the needs or desires of your audience. Don’t assume because competitors are doing something that it must be right. The beauty of SEM is there is a lot of data readily available for analysis. Use this data to make statistically relevant conclusions.

Copy, copy, copy. 3Q Digital never recommends blindly following whatever the competition is doing. An efficient best practice is to enter a few valuable keywords in Google and review the commonalities amongst the top advertisers on that keyword. There’s a good chance that if multiple competitors have an American flag on their landing page, it probably increases conversions. Always test to be sure, but this is an easy shortcut to achieving great results.

Track, track, track. It is impossible to improve landing pages without the ability to get detailed data about the performance of different tests. For this reason, conversion tracking must be in place before testing begins.

The Best Practices Are:

Important data needs to be above the fold. “Above the fold” is a generations-old newspaper term that refers to the content that is viewable without opening up the front page of the paper; in SEM terms, it means the content that is viewable without scrolling. People hate scrolling and in many cases will leave a landing page in just a few seconds if something doesn’t immediately grab their attention. If it’s important to your audience, put it above the fold.

Have a clear call to action. A call to action is a prompt that tells a visitor what to do. Most people want to be told how to interact with a page, so being very direct fulfills that need. Some examples of common calls to action on SEM landing pages are:

• Sign Up Now!
• Order Today!
• Try it Free!
• Get Started!

Less is more. Too much text on a landing page causes distraction and anxiety and deters people from converting. Try to cut anything but trademark phrases or messaging in half.

Emphasize benefits, not features. A feature is something a product does; a benefit is something a product does to improve the life of the user. People respond to benefits, not features. Consider these examples:

• Feature: Only six inches tall
• Benefit: Small enough to fit easily into your carry-on!
• Feature: Has a 26-gallon gas tank
• Benefit: Drive to LA and back without having to stop and fill the tank!
• Feature: We have 50 full-time call-center operators
• Benefit: Call us 24/7 and get a quote in less than five minutes!

Credibility and social proof. People are generally distrustful of the Internet. Anything that can be done to alleviate this fear will improve conversion rates. Two ways to do this are through credibility and social proof. Credibility includes reviews from major media publications or positive ratings from the Better Business Bureau, an online service like TrustE or VeriSign, etc. Social proof comes from recommendations and testimonials from users.

Multiple means of communication. Some people like to submit forms online. Others will only work with companies that offer a toll-free number. If the business has the ability to interact with customers in different ways, consider emphasizing this on the landing page. Common methods on SEM landing pages include “contact us” forms, telephone numbers, live chat, and email.

Habit #6: Setting Up the Right Reporting and Tracking

All of the above techniques are completely useless without great tracking. Fortunately, tracking cost, clicks, and profit at a basic level is fairly easy today – just follow these simple steps:

Use search engine conversion tracking. Every search engine now offers free conversion tracking for their customers. This tracking is a very small piece of java script code that can be copied from the search engine interface and pasted into the conversion pages of the site (this is usually the “thank you” page).

This tool gives you access to data that reveals which keywords are making money and which ones are unprofitable.

Track at the keyword level. Conversion tracking code from the search engines will automatically provide keyword-level reporting, which is vital to success. It is critical to be able to see the performance difference between keywords – even a singular keyword like “mortgage rate” and the plural “mortgage rates” can have fundamentally different profitability.

Make sure to consider latency. “Latency” describes a conversion that happens after the calendar date during which a click occurred. For example, if a click occurs on Monday, but the purchase decision isn’t made until Thursday, conversion data would not be accurate on Tuesday. Depending on the business, upwards of 60-70% of conversions can occur after the day of the click – make sure to understand this before making bid adjustments.

Track offline conversions if relevant. A B2B company that closes most of its business via telephone or an inside sales force should try to connect its search engine conversion tracking to offline conversions. For example, SalesForce.com is integrated with Google AdWords, making it possible to track from click to inside sales revenue seamlessly. There are also companies that can create unique phone numbers for every keyword bought so that if someone calls, it is known which keyword drove what leads.

Use Google Analytics. Google Analytics is a free Web analytics program. It’s easy to install (the same process as installing search engine conversion tracking) and will provide a lot of data about how visitors from SEM campaigns interact with a site.

Habit#7: Creating the Right Targeting

Once conversion tracking is installed, there is a rich database of information about people who have clicked on your SEM ads, including everything from keywords clicked, time of day they were clicked, geography, and even an IP address. All of this information is extremely valuable and can often be the difference between a suc- cessful and a failed SEM campaign.

Negative keywords and sites. Give Google the opportunity, and they’ll match a company or product on a lot of strange keywords – most of which will perform badly. Negative keywords allow for identification and exclusion of search queries that don’t convert. Similarly, “site exclusion” allows for the same thing on Google’s Display Network, excluding bad URLs that are just costing money.

Targeted ad text and landing pages. Keyword-level conversion tracking enables a user to see which keywords are driving the bulk of the revenue in a campaign. Once identified, these keywords should be moved into their own ad groups with very targeted ad text; they might also have specific landing pages built out for them.

Geography. Depending on the business, geography can be a huge factor in a campaign’s success. If, for example, the business sells fireplaces, it will succeed more in Alaska than in Hawaii. In many cases, people in different parts of the country or the world just behave differently. Analysis and segmentation of geographies can take advantage of these differences.

Day-parting. Some products sell better in the middle of the workday, while others only really perform on the weekends. Google permits automatic adjustment of bids six times a day, seven days a week – a total of 42 day-parting adjustments per week. The Google Analytics day-parting feature for AdWords can be used to figure out when to bid high and even when to pause a campaign.

Putting It All Together

No white paper by itself can guarantee you success in SEM. The techniques described in this guide, however, will lead down the path to success.

SO, TO RECAP:

1. Choose the right Search Engine. Although enough minnows can occasionally add up, save your bait for the big fish – Google.

2. Choose the right Keywords. Create a basic set of compact phrases. Keep ad groups small and targeted. Test match types. Add negatives. Track, track, track.

3. Create the right Ad Text. Test continually. Try to find global winners to apply across groups. Optimize for both conversion and CTR. Use a call to action, apply critical copycat skills, play to the four human emotions, and use the tricks of the trade to help your ads stand out.

4. Set the right Bids. Set up keyword-level tracking. Use rules-based bidding with your objectives, your minimum data thresholds, and your margin objectives and historical revenue per click.

5. Create the right Landing Pages. Set up testing to track how changes work. Track conversions. Look for commonalities in top advertisers’ sites. Use a call to action; work above the fold; highlight benefits instead of features; add credibility; offer multiple ways to communicate.

6. Set up Reporting and Tracking. Track conversions on the keyword level. Incorporate latency and offline conversions for the most accurate data. Set up Google Analytics to measure users’ behavior on your site.

7. Create the right Targeting. Reporting and tracking will give you visibility into optimal keywords, times of day, geography, and more. Target the winners!

About the Author

David Rodnitzky is founder and CEO of 3Q Digital, a position he has held since the Company’s inception in 2008. Prior to 3Q Digital, he held senior marketing roles at several Internet companies, including Rentals.com (2000-2001), FindLaw (2001-2004), Adteractive (2004-2006), and Mercantila (2007-2008). David currently serves on advisory boards for several companies, including Marin Software, MediaBoost, Mediacause, and a stealth travel start-up.

David has a B.A. with honors from the University of Chicago and a J.D. with honors from the University of Iowa. In his spare time, David enjoys salmon fishing, hiking, spending time with his family, and watching the Iowa Hawkeyes, not necessarily in that order.


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