7 Essential PPC Strategies, Part 2: “Begin With the End in Mind”
Published: September 9, 2013
Author: David Rothwell
What does the perfect AdWords Campaign look like?
What does it achieve?
What budget should it spend?
And what should it earn in return?
The answers depend on the goal of the website landing page you’re buying those AdWords clicks for.
There are two basic types of AdWords campaigns:
1. e-Commerce, where money is paid in exchange for physical goods, often on the same visit
2. Lead generation, where services are offered in exchange for user information from a form completion before the sale progresses.
e-Commerce breaks down into two areas:
1. A single purchase with no or hardly any repeat buying – this means the campaign has to consistently and predictably be a profit center, and seasonality can be important
2. If consumables are involved (say foodstuffs or office supplies) then repeat purchases and many-per-click conversions are possible, meaning the campaigns can be run for lower profit, break-even, or even at a loss as long as the back-end is fully accountable for profit over the lifetime visitor value
Lead Generation also breaks down into two areas:
1. Lead brokerage, where the lead is sold to the actual service provider from where it is captured
2. Self-fulfilment, where the organisation capturing the lead will follow it through to the final sale; this usually means back-end systems for Customer Relationship Management (CRM), automated email follow up, and others
Since self-fulfilling lead generation can take long periods of time (sale cycles can be months or even years) and requires ruthless tracking and follow up, this kind of campaign is challenging to track and assign value to, even though the final payoff could be very significant.
Furthermore the sales value can be all over the map, all the way up to include consulting, auditing, implementation, support, licensing per seat, and so on at the Enterprise level.
Most businesses have their front-end marketing and lead generation completely disconnected from the back end fulfilment, and consequently have no idea about their average sale value and the cost and profitability of the lead that produced it.
This can make managing lead generation to a defined Cost per Acquisition (CPA) arbitrary or impossible, meaning the AdWords Manager’s job is more about Impressions, Clickthrough Rates (CTR) and Cost per Click (CPC) than actual value or Return on Investment (ROI).
For Lead Brokerage, since the value of the lead is defined by what it’s sold for, management to CPA is more straightforward. Here the issue is more about ongoing Quality Control of the leads and ensuring they meet the needs of the lead buyers, and ultimately convert into profit for them – or else they’ll stop buying them.
E-Commerce campaigns are more straightforward to manage as a Profit Center, since we can track the value of actual sales completed. As long as our average order value exceeds our average CPA, taking into account margins and appropriate fixed costs, then we simply want to buy as many of these sales conversions as possible.
Merchants also have other data sources to consider like cart abandons, page interactions like Live Chat or similar, Site Searches, and phone call enquiries.
All are excellent sources to compile a Knowledge Base of Visitor interests to improve the website with – although (again) most companies don’t do this.
So, let’s take an e-Commerce Merchant as an example.
Whenever I do an Account Audit, what I’m looking for are constraints and opportunities, and to assess where in its Lifecycle of Discover /Optimize /Expand (to be covered in future articles) the Campaign is.
What does an AdWords Profit Center System look like?
My end goals are:
-A defined and profitable Cost per Acquisition
-Unlimited daily budgets
-Accelerated Ad Delivery
-100% Impression Share
-Ad positions 1-2
-Maximum appropriate coverage of Locations
-All appropriate Languages
-All appropriate Networks
-All appropriate Devices
-Elimination of all possible inappropriate click sources
This configuration is not achievable instantly – it takes time and ongoing adjustments. But the faster the traffic, the more quickly you can reach it, as long as you have a reasonable daily budget to get sufficient account performance data to benchmark your conversion rates and costs.
I expect such a “calibration period” to typically take 60-90 days, unless traffic volumes and conversion rates are unusually high. My expected target conversion rates are:
-Lead Generation: 10-40%
Is your AdWords account being managed as a Profit Center?
Be sure to read Part 1: “Ad Creation” and stay tuned for Part 3: “Traffic, Conversion, and Economics.”