Profit optimization
Profit optimization mainly occurs through bidding and refining the granularity and accuracy of those bids. Bidding looks at two major variables -- the keywords themselves and the conversion data attributed to them. Because of broad match and lack of conversion visibility, bid value predictions are often inaccurate and do not maximize profit.
To help combat broad match diluting bid values, you must get as granular in your keyword list as there is data to support. This means analyzing query data to find search queries representing keywords not currently in your account but with enough data to justify your decision. Keywords with positive conversion history should be added and bid separately. Keywords that cannot be profitable should be added as negatives.
Another way to bid more pricelessly on keywords with sufficient volume is to bid each match type separately. By cloning your campaigns and bidding each to a separate match type, you can take advantage of optimizing to the different conversion rates that result from each. In general, exact match terms produce the highest conversion rates and thus can be bid higher. Phrase match follows after that, and broad match is usually the lowest, as it is the least targeted.
The same process goes for geo-targeting. Analyze your conversion data by state to determine if any conversion rate differences exist. If so, break them out as geo-targeted campaigns with a national campaign overlaid to prevent losing users due to IP issues. Bid the keywords to their separate values.
Often, advertisers will lack the conversion data needed to make accurate decisions, and the above actions become difficult. In this case, it is best to try and find other informative data points or goals that exist within the funnel to use -- for example, a lead rather than a sale, time spent on site, pages visited. Many different metrics found by using analytics, placing pixels, or having actions users can trigger can serve as proxies for an end value conversion.
Ultimately, good bidders should understand their willingness to pay at each point in the conversion process. It is often advisable to use multiple variables to determine bid values, weighting the variable that correlates most with the probability of an end conversion the highest. As data become more plentiful, optimization can get closer to the final conversion point without sacrificing lack of data and transparency for value along the way.
Data can drive your bottom line
In summary, make your data work for you. Knowledge is power -- don't throw it away. The more data you have, the smarter and more effective you can be. A keyword or phrase specific to your industry or business category isn't always the optimal fit for your PPC campaign. Opinions don't matter. The numbers don't lie. It's the math that counts most. Invest in a database and spend some time understanding the numbers. It'll be well worth your time and make you a more efficient marketer.
Brian Eberman is CEO of Avenue100 Media Solutions.
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