cactiiSearch Engine Marketing / Pay Per Click, is the hottest thing around. Everyone is doing it and if you are not doing it you dare not admit it for the fear of looking crazy. There are more agencies and consultants out there than you could care to count and all of us are trying to work with all of them trying to do our best.

My hypothesis is that while a few companies are laughing all the way to the bank as a result of their SEM/PPC campaigns the rest are probably not maximizing return on investment.

We in the Web Insights world can play a killer role in helping our companies truly measure effectiveness of our SEM/PPC campaigns. We are unique because we can cut through the crap because of our awesome analysis powers, our access to all the data and our ability to think beyond base metrics like CPC or CPM. Yes people are doing CPA now and we are even measuring Conversion Rate by Key Phrase. But there is more.

Here are my suggestions to us Web Insights Analysts for providing deep insights to our decision makers, and potentially a competitive advantage to your company:

# 5: Measure your Bounce Rate (aggregate and by top key phrases)

My definition of Bounce Rate is someone who stays on your website for less than five seconds. Some folks define this as visitors who stay on the site for one page or less, this is fine as well.

The conversion rate for most sites, per’s most recent study, is around 2.2%. When we do PPC/SEM campaigns we are thrilled to get 3% conversion rate and we ask for more money to spend. But since we are paying for this traffic we should expect much more than a bit better than normal conversion rate.

Measuring the Bounce Rate for SEM/SEM traffic in aggregate is an eye opener. It usually turns out that the Bounce Rate is really high (60%+, often even higher). Decision Makers are shocked that 60% or 80% of the traffic stays for such a small amount of time because we are paying for each click at the search engine.

It gets even more interesting if you measure Bounce Rate by Key Phrase. This will highlight stinkers very quickly, phrases that drive traffic that stays for five seconds or less (or only one page).

The point of the recommendation is to really dig into your traffic. It is possible that the key phrase is the right one but people are landing on the wrong page. It is possible that the phrase is ok but you are not repeating the value proposition on the landing page, or the offer is missing etc. Once you know you can fix, and oh do set the bar higher for PPC/SEM campaign conversion rates.

# 4: Audit you Vendors/Agencies

The de-facto standard is agencies are running campaigns using some very sophisticated analysis (bidding) and measure “success” using third party javascript tags on your website. This is good progress. But there is more.

There are often problems with third party cookies. Each agency seems to be using a different kind of data capture and data processing system. They also define the same metrics differently (even metrics say like repeat visitors or visits to purchase) and they don’t do any analysis on site effectiveness because they are, rightly, optimizing your bids.

My recommendation is to request (or force as the case may be) your agency to add an extra url parameter at the end of the URL string that goes to the search engine. This should be a parameter that your analytics tool will recognize (usually something simple like will do). Now power up the segmentation in your tool and slice off the SEM/PPC traffic and match up key metrics like count of visitor, time on site, bounce rate, conversion rates using your own analytics tool.

The numbers will not tie, but if they fall within 10% you are fine. What you will usually find is they will be off by 20 or 30%, that would be a great time to compare notes with your agency because if they are measuring success 30% higher than you then it is likely your campaigns are not performing as well as you think.

Another benefit is that you can now truly, with inherent knowledge of your business that your agency does not have, analyze what this traffic is doing and understand their behavior and work on site optimization.

I have to stress that the Agencies are doing the best they can, they are not trying to mess with you. It is simply that there are limits to what they can do and you need to step up and take your responsibility.

# 3: Measure Cannibalization Rate (vs. Organic)

Another false measure of success, and very prevalent, is that we start buying our “branded key phrases”, traffic shows up, we pay google and overture, there are sales and success is declared. But if you have done decent SEO (search engine optimization) it is possible that you might still have gotten traffic from search engine (especially your well recognized branded key terms) from Organic results. Do you know how much you are cannibalizing your Organic (free) traffic by doing PPC (paying per click)?

This is a very powerful metric and something you should be watching all the time and based on the results of that analysis optimizing your SEM/PPC spend. Many good Agencies are doing this, demand it from yours.

I will share a very simple way of measuring cannibalization. Take some of your most popular branded key phrases, assuming you don’t have heavy weekly seasonality factors, and turn off your campaigns for those key phrases for a week. Measure number of visitors, bounce rates, engagement with site (if you have that metric)  and conversion rates. Turn on the campaigns next week and measure the same metrics again, for the PPC/SEM slice. Compare the two sets of numbers and you have a nice idea of how much you are cannibalizing your Organic (free) traffic when you spend on PPC.

My recommendation above is not the most awesome, but it is a really simple way to measure cannibalization. I am sure you can think of ten better ways, what is important is that you measure cannibalization and then make informed choices. Why pay for traffic that you could get for free?

# 2: Aggressively push for Testing & Experimentation

Testing and experimentation is not normally considered the scope of web analytics, but it should be. One of the beautiful things about key phrases is that we can infer intent from them. It is likely that 60% of your site traffic is No Referrer and you don’t know squat about them and you can’t give them relevant content, but with your search traffic you know something of value.

Partner with key marketers in your company and implement a testing strategy (multi variate, AB, DQB, RRR does not matter) that will allow your to try different content, pages, structures, layout, navigation based on what you understand about the intent of those key phrases. The result will be optimal customer experiences for your PPC/SEM traffic and a huge spike in conversion rate, whatever you are selling.

(And if you set persistent first party cookies you can “remember” the SEM/PPC driven traffic and the next time they come you know who they are, which test experience worked for them, or did not, and now your site can start to have much richer interactions with them.)

# 1: Strive for “Multi Goal” Understanding of Visitors

No website exists for just one purpose, not even the simplest one. Yet almost all SEM/PPC campaigns are measured by one outcome goal (usually a conversion rate of some kind, purchase or a lead submission or visiting a page listing your core content). If the traffic comes for a few different purposes why measure them all by one goal? (To beat a dead horse, this is another reason to do testing.)

For your SEM/PPC traffic set multiple relevant goals. For example along with Conversion Rate you can also measure Customer Satisfaction and Task Completion Rates by surveying that traffic (if your web platform allows that). This will tell you oh 10% are converting but the others were looking to print pages or your tech support number or came to read reviews. You can then take relevant action to optimize your campaigns.

Or you have a frequent turnover site, set goals for Multiple Purchases in each Month, great complement to just conversion to first purchase. Or here is a nice one, if you follow the advice in #4 above, amass data for x period of time then compute “Live Time Value” for SEM/PPC campaigns and use that to optimizing your bidding as well as set a new bar for success. Bottom-line, if you are measuring “single goal” success for your campaigns, there is opportunity to get more sophisticated.

As usual ; ) I have one bonus recommendation for you…….

# 0: Help Measure the Value of the “Long Tail”

The concept of the long tail, as applied to Search Marketing, states that there are hundreds of key phrases that individually drive small amounts of traffic to your website, but if added together they can be a huge amount of, potentially profitable, traffic.

Thanks to our current analytics packages we are all used to only looking at Top 50 key phrases from each search engine. Maybe you look at the Top 150 because after that you have the “onesies” and “twosies” and we don’t care. But the delightful thing is that these key phrases are not a part of cut-throat bidding process in ad-words or overture or ad-center.

The implication is that if you can identify your “long tail” and make that a part of your SEM/PPC campaigns (assuming you are using some automated bidding system), you can capture a large share of this traffic and do so at very effective costs and turn great profits for your company. 

There are limitations to identifying the long tail just using your clickstream package so use other tools that are on the web and/or ask your Agency. I also recommend HitWise as a great source. But help your company look beyond the obvious / “top” key phrases and go after the long tail and help them measure the value of the long tail.

What do you think? Do you agree with these recommendations? Most of you are much much better at PPC/SEM than I am, do you have suggestions to add? Please share your feedback / critique via comments.

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