2 Key Questions That Determine Whether You’re Making the Most of Your PPC Ads

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Author: Raymond Coppinger

This year, pay-per-click (PPC) advertising platform Google Adwords celebrated its 15th birthday. While PPC ads can sometimes feel like the elder statesman of digital advertising, it’s still in its prime and its birthday serves as a good reminder of how much potential there is for all the digital channels that marketers want to master.

Since the arrival of Google Adwords, the digital advertising landscape has evolved in almost every way: more channels, more technologies, and more data. The PPC corner of that landscape has changed with it and marketers today have a much greater set of capabilities when running PPC compared to the early 2000s. Yet through all this change, the keyword auction remains at the heart of PPC, billions of which take place every month.

Like email marketing, search marketing remains a critical channel for many marketers and, if Google’s advertising revenue growth is anything indicator, it will remain so for quite a while. As a B2B marketer who wears the web/digital/online hat, PPC is a channel that I have been heavily involved in throughout my career. Across all my experiences with PPC activity, I’ve found that answering these two key questions has served as a foundation for delivering real growth and return:

Do you have an easy-to-measure indicator of the health of your PPC investment?

Like most digital advertising channels, PPC is metric-rich. There are so many ways to assess performance, from conversions to click-through-rate to quality score. In the B2B world where PPC is more often than not a lead generation channel, bridging the gap between PPC specific metrics (such as conversions or quality score) and the revenue performance of your PPC activity is critical. It is very possible to have a situation where you are seeing significant improvements in your PPC metrics, but the revenue performance remains flat. This makes it even more important to have a way to measure the revenue impact.

One possible metric is a simple yet powerful equation we use here at Marketo. We look at the ratio between the opportunity pipeline created by the PPC channel (first-touch or multi-touch) and the investment in PPC; we call this ratio ‘pipeline to spend’. There are a number of factors that determine what a healthy ratio is depending on your business. For example, based on your opportunity close rate, you may aim for a pipeline to spend ratio of 13:1, which means that for every $ 1 you invest in PPC, you aim to generate $ 13 in pipeline.

pipeline to spend

Pipeline to spend can be used to track the revenue impact of any marketing program and is a fantastic way of determining marketing efficiency. By focusing on pipeline as opposed to closed revenue, you can understand how well marketing is serving your sales organization with the right marketing qualified leads. If you were to look at closed revenue instead, then it would factor in the efficiency of your sales organization at closing opportunities.

Are you allocating your PPC spend based on the right data?

The pipeline to spend ratio is a great measurement of your overall PPC investment, but getting more granular and understanding what campaigns or ad groups are driving the pipeline enables more effective budget allocation. Take the following example, in which Ad Group 1 has a higher cost per conversion but generates 3x the amount of pipeline as Ad Group 2. In this scenario, the marketer might look to increase investment in Ad Group 1, if there is volume available.

ad groups

By tracking revenue performance down to the ad group and even keyword, you can prioritize where budget should flow. Below is an example of how you could categorize and then prioritize your ad groups in terms of budget. This simple categorization is a very easy way to ensure that budget gets to the most revenue-impactful areas first.

  • Priority 1: Ad groups that have historically generated significant pipeline.
  • Priority 2: Ad groups that have not necessarily generated significant pipeline, but are important from a brand, product, or industry perspective.
  • Priority 3: Ad groups that have not generated significant pipeline and are not critical from a brand, product, or industry perspective.

PPC is a channel that has plenty of measurement options and requires continuous optimization and analysis. Put another way, PPC requires a lot of hard work on an ongoing basis; it is a journey that never ends. By knowing that the return on your PPC investment is healthy and having a mechanism for allocating budget to the right places; you can empower yourself with the knowledge you need to drive on with optimization and find ways to improve your return.

Do you agree that these questions are important? Are there other key questions you ask yourself about your own PPC? I would love to hear them –please feel free to comment below!

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2 Key Questions That Determine Whether You’re Making the Most of Your PPC Ads was posted at Marketo Marketing Blog – Best Practices and Thought Leadership. | http://blog.marketo.com

The post 2 Key Questions That Determine Whether You’re Making the Most of Your PPC Ads appeared first on Marketo Marketing Blog – Best Practices and Thought Leadership.


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What is the Best Way to Determine a Page’s ROI?

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Everyone wants to determine the ROI on their page likes and be able to directly attribute a page like’s value relative to a conversion. But there’s been confusion conveying this value in a way that’s measurable back to that bottom dollar.

So what’s the best way to track this or paint a better picture on the value of a like?

At the end of the day, if they attribute conversion value back to these likes, then they are interested in pushing the throttle a bit heavier.

To answer this age-old question on the value of a fan (just Google “value of a fan Dennis Yu“) we need to make sure we’ve got the “plumbing” in place to enable this measurement. Two foundational articles:

You have to connect the top and bottom of the funnel to tie fan (or top funnel) activity to hard dollar ROI.

Recommended for YouWebcast: Successful Customer Experiences Are Identity-Centric

Perhaps the easiest way is to look at pairings of direct and two step sequences, where one ad is sending non-fans (of whatever targeting type) to a conversion page and the other ad is sending that same target filtered to also be fans.

You’d expect that fans convert better.

And the difference is a rough form of lift testing.

Here’s a page from our weekly reporting template to see how to set up such a pairing.

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But why assess just the incremental funnel impact of someone becoming a fan?

Why not look at the contribution from them joining the email list (which is like becoming a fan), visiting the site, searching on our brand terms, etc?

The heart of marketing automation is deconstructing complex interaction sequences into simple pairs.

And each pair is measuring the difference in conversion value between directly going from X to Y versus going to X to an intermediate step and then to Y.

There is a bit of chicken and egg here, since someone may already be a fan in real life,  just not on Facebook.

It’s not possible to fully eliminate the correlation and causation issue here.

But if you really want to get that extra level of precision, then you’d set up factorial tests with these pairings by geo.

Some randomized DMAs (designated market area) would get the fan acquisition campaigns, while others don’t.

Beyond the directly trackable effects of fan growth, which is tied in closely with generating reach, we have the softer benefits of brand growth.

Measure this via aided and unaided recognition in brand perception surveys, increase in conversion or brand search volume, or general increases in engagement.  There are mountains written about how to assess the value of a brand, independent of channel.

But for the immediate, direct hard dollar ROI of fan acquisition via Facebook, we’d set up these pairings as described above.

This lets us measure the incremental impact of fan acquisition campaigns, so long we take care to give these fans enough time to move down the funnel.

Marketing, not just social marketing, is about establishing these journeys and measuring the value of these nurtured touchpoints.

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