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6 often-abused paid search metrics

6 often-abused paid search metrics JJ Bannasch

Over the years, I have come across several inefficient styles of paid search reporting that do not address client expectations, trending, or campaign goals. Most clients are looking for their agencies to provide high-level analysis and strategic recommendations that improve campaign performance. However, some reports are massive spreadsheets that jam too much information into one report; they do not put data into context, lack actionable insights, or fail to summarize trends, which can lead to clients' searching out insights and recommendations on their own. Others provide no data to support analysis and leave clients in the dark.

If someone is not intimately familiar with the ins and outs of paid search management, it is easy to misinterpret data when agencies report unnecessary information without much context. It makes it difficult to understand cause-and-effect optimizations and the true value of hiring an agency or expert.

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To minimize confusion, it is essential for paid search professionals to sort through the performance data and provide a framework to summarize reports. This way, clients are not blindly reporting a sheet of numbers/metrics back to their organizations. They should have the data they need to address C-level executives and present a clear understanding of how their campaigns are performing. While clients do range in paid search knowledge, an agency should never assume that everyone can fill in the context around a paid search campaign and the implications of performance fluctuation.

On the flip side, providing an incomplete picture with too little data can raise a number of questions about the value of paid search and can create a scenario in which clients do not believe their agencies are providing proactive, strategic counsel. Common questions that surface are: What is happening to my campaign? What is my agency/paid search manager doing? Can we scale up efforts? What is being done to improve/optimize performance?

Without an actionable report and data analysis, clients can quickly make assumptions on campaign health and make recommendations based on partial information or incorrect analysis of too much data. In extreme cases, these assumptions lead to unimpressive results, missed optimization opportunities, or a misunderstanding of campaign performance.

The remainder of this article outlines a few reoccurring assumptions with paid search interpretations and how a lack of context or explanation can be detrimental to campaign success. Here are some examples of reoccurring misconceptions looking at both pre- and post-click metrics.

It is commonly assumed that the more impressions (i.e., the more ads are being seen), the better. While it is true that getting your ads in front of a large audience is important, paid search should utilize impressions as a means to generate clicks and conversions; however, these key performance indicators (KPIs) are not directly proportional to ad impressions.

Striving to increase impressions will not guarantee better campaign output and, over time, could lower campaign quality and traction -- and potentially increase costs due to lower keyword and account quality scores. The ratio of impressions to clicks (i.e., the click-through rate) is a primary determinant of calculating quality score. Search engines could take a low ratio as a signal that ads are not relevant to searchers' queries. If quality scores take a hit, it will cost marketers more money to get the same traffic -- even for the keywords that are converting and relevant.

Like impressions, it is often perceived that paid search campaigns need to generate a large volume of clicks to be successful. Clicks are the first step in driving traffic to a website, but it should not be considered a primary success metric. If users click on an ad just to bounce off a landing page, the extra traffic is not beneficial. This incoherent user path could even frustrate potential customers who clicked a paid search ad only to find irrelevant content or different content than the ad copy promised.

A few questions need to be asked to determine if paid search traffic is contributing to the success of an organization. What is this traffic doing after it lands on a website? How engaged is this traffic? Are visitors interacting with the site and converting, or is the wrong traffic being generated? If too much value is placed on just click volume, marketers could be ignoring revenue-driving keywords by placing a non-aggressive bidding model on well-performing terms. These keywords and phrases might not drive as much traffic volume, but the clicks are more qualified and will help increase the performance of the campaign.

Number of keywords
The debate of quality versus quantity applies to the number of keywords in a campaign. Not all keywords are created equal. They are dependent on the overall goals of a campaign, available landing pages, budget levels, and implementation of segmentation strategies.

Keywords that do not align with a paid search strategy can dilute overall performance on lower-budget campaigns. It spreads budget across too many keywords and does not maximize traction on well-performing keywords. Although increasing the number of keywords within a campaign will help increase scalability and volume, it must be done strategically with consideration to post-click optimization tactics, audience and keyword segmentation, and scalability projections. Long-tail keywords are an example of how marketers can build campaign scalability and one instance in which it makes sense to build campaigns around an extensive list of keywords.

Costs and aggressive ranking
It makes sense that marketers strive to minimize advertising costs -- in this case, costs per click (CPC). The trick to a successful paid search campaign is generating the right traffic. Not just any traffic drives conversions. At first glance, paying more per click seems like a counterintuitive way to drive ROI, but in practice, paying for premium clicks will drive revenue. The key is to bid on converting keywords. It does not make sense from an ROI standpoint to pay premium prices for top-funnel keywords that do not convert. It is easy to see high cost-per-click rates and assume the campaign is inefficient, but the cost per action (CPA) is a better metric to gauge success.

The right traffic that converts at a higher rate is much more valuable than unqualified traffic. It is preferable to pay more for a single converting keyword that generates more qualified traffic than to allocate the same budget to more keywords that might have lower conversion rates.  Do not let CPC stats scare you away from bidding aggressively on converting keywords. The one minor exception to this strategy is a more advanced keyword portfolio management, based on algorithm tools, that looks at a full keyword portfolio to find the ideal mix of bidding models to maximize volume while maintaining spending.

Striking the right balance between keywords that appeal to users at various points in a purchase funnel is critical to paid search. Marketers need to pull in new customers from the top of the funnel and capture those poised to convert. The combination of the two will keep a constant flow of traffic and conversion rates high.

Ranking for No. 1
Everyone wants to be No. 1, but this is generally not the smartest paid search strategy even on branding campaigns. It also underutilizes other available paid search metrics used to gauge a successful campaign.

It makes sense that if a marketer attains this position in paid search rankings that it will attract more impressions and clicks. By extension, it's assumed that high return rates will follow. However, this is not always the case. More eyeballs do not necessarily equate to more conversions or awareness -- especially when dealing with top-funnel keywords. If ad copy is strategic and relevant, the No. 1 and No. 3 position could have similar impressions, clicks, and CTRs. If marketers aim for the top position, they could be paying a premium for the same amount of traction. Try testing different rank positions to determine if there is a difference between ranking positions and traffic.

Click-through rate (CTR) is an important metric for determining the quality score of a keyword and a good sign that your ad copy is sparking the interest of targeted users. Search engines and marketers weigh this metric strongly. However, there are a few other metrics that should take precedent. Direct-response campaigns are obviously concerned with conversion rates, return on ad spends, and CPAs, but even with awareness and branding campaigns, there are other KPIs that must be considered. A branding campaign should be tracking how ad impressions turn into other traffic drivers, lower-funnel keywords, and branded queries. A high bounce rate does not bode well for brand building, and click-to-visit ratios also need to be measured. With too much emphasis on CTR, there is a high risk of ignoring crucial metrics for both direct response and branding campaigns.

It is up to paid search managers and agencies to be accountable to their clients and organizations. They need to lead their campaigns with transparent reporting and documents that combine meaningful insights on campaign history and future optimizations. Failure to provide a clear story and a lack of a defined strategy will lead to a client's desire for deeper understanding, and over time they might want to control their own paid search account.

JJ Bannasch is a media planner with Geary Interactive.

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With more than a decade of agency experience, JJ Bannasch specializes in media and the convergence of technology, best-in-class digital marketing, and campaign architecture in a world of data driven marketing. His approach, theories and strategies...

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to leave comments.

Commenter: Martina Steen

2010, November 11

What would you say is an acceptable bounce rate from a Google PPC campaign?

Commenter: Shei Wah Tan

2010, October 21

i think those often abused metrics are useful in the context of branding campaign within the display network as supposed to direct marketing efforts where metrics like cost per conversion & avg optimal posn for conversion (not 1st most of the time) are key.