A search marketer always has one thing on his or her mind (no, not that): how to efficiently drive more conversions for their business. But simply dumping money into your search campaigns is not enough to reach more customers and maintain profitability. Similar to an assembly line, your paid search advertising effort has many potential points at which efficiency is lost or the ability to drive conversions is limited.
Each of these weak points in your strategy and execution is a potential bottleneck that will limit your capacity to reach more customers at an efficient level of investment. By identifying and eliminating these possible bottlenecks, you can effectively grow your spend and conversions until you reach the hypothetical efficiency frontier.
Does Your Bottleneck Come Down to Supply or Demand?
The first step to streamlining and growing your search marketing process is to identify any and all constraints on your volume. Take a step back and ask yourself, is your campaign limited by supply or demand? If you aren’t hitting your budgets and your ads are consistently showing in high positions, you are likely limited by demand. This means that you are reaching all the users you possibly could with your current account setup. To grow conversion volume, you can add new keywords, expand your language and geo-targeting, or expand into display or other marketing channels.
If your campaigns are consistently hitting their budgets, your ads are not reaching every person they could be. In this case, you are limited by supply. Now, supply works well as an operations and economics term, but using it for search marketing is a bit of a stretch. In this case, supply refers to how much you are willing to spend. If you are supply-limited, expanding your account won’t drive more conversions. Pushing spend with capped budgets will actually decrease the amount of conversions you are getting as you drive up CPCs and destroy your overall efficiency.
In order to drive more conversions with a limited supply (budget), you need to focus on increasing your overall process capacity. In operations, capacity is defined as the output of an entire process, which is based off of the output of any bottleneck. In order to increase process capacity, you must increase the capacity of the bottleneck, which is the weakest point in the process. In PPC terms, this means that in order to get the most possible conversions possible within your budget, you need to identify where you are losing efficiency and volume.
3 Potential Bottlenecks
Let’s look at 3 potential PPC bottlenecks and how to alleviate them:
1) Campaign Budgets
If your campaigns are consistently hitting their daily budget limits, that is a bottleneck. When the budget is used up before the end of the day, it means that your keyword bids are not optimized effectively. You are losing impressions and possible conversions on keywords that perform better than others. Pull back on bids to bring spend under control so you can serve your best-performing keywords/ads as often as possible. The goal here is to eliminate muda, a Japanese production term for waste.
Once you are controlling your spend with bids instead of budget caps, you can look to increase spend by pushing your ads into higher positions to drive more clicks and conversions. Be careful, though; you will reach a point of diminishing returns where pushing into a higher ad position can start to hurt overall cost-per-action as the clicks become too expensive.
2) Conversion Rate
It doesn’t matter where your ad is on the SERP if you can’t drive click-through conversions. A well-designed landing page and purchase path are essential to avoid a conversion rate bottleneck. Even a well-designed page can always be improved further to drive more conversions for the same or less cost. The best way to improve your page is to constantly test and implement changes.
3) Quality Score & Ad Relevancy
As with any industrial process, quality control is of the utmost importance. For paid search, this requires tight control over your account structure. Keep similar keywords in close-knit ad groups, break out broad and exact terms, and always write compelling and highly relevant ad copy. As always, test, test, test. Providing potential customers with targeted, precise ads mapped closely to their queries will improve your click-through-rate and your quality score and decrease your cost-per-conversion.
Eliminate these (and other) bottlenecks, and your campaigns will be much better positioned to capitalize on the holiday surge. Good luck!