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Building and Managing an SEM Campaign, Portfolio Style

  |  April 22, 2005   |  Comments

How to run a portfolio-style campaign and meet objectives -- without damaging your business.

I’ve been asked a lot recently about portfolio-style campaign management. I covered the basic concepts in an earlier column. Today, I’ll provide a tactical foundation, and explain how to run a portfolio-style campaign, and meet your objectives, without damaging your business.

Portfolio-based campaign strategies are of particular interest to agencies that manage media beyond search engine marketing (SEM). They look at media plans from an overview perspective, often because they can’t accurately gauge the effectiveness of specific media buy elements. Portfolio-approach skeptics may point out a portfolio-based media campaign results in higher media spending than a campaign based on strict direct marketing maximum-allowable methods. After all, agency commissions are generally based on a percentage of spending.

Skeptics may also say search engines love when marketers manage their campaigns based on a mix of listings judged together, rather than on individual listing results, which contribute to the bottom line at a given metric. Several marketers and agencies have told me reps even use the portfolio-return concept to justify turning on contextual advertising or escalating bids on generic keywords.

I prefer a data-driven foundation when deciding whether to turn on contextual inventory or escalate bids. One example of this would early buy-cycle behavior highly correlating with both. A strategic decision can be made based on empirical data about a searcher’s buying cycle and the time between search and purchase. Data may also be available to support a conclusion that future purchase behavior and brand lift can be delivered through contextual or bid-escalation tactics.

A well-executed portfolio campaign can positively influence your business’s overall profitability. Yet not all portfolio strategies are the same. Portfolio-style campaign management isn’t for every marketer or even for every campaign within an overall strategy.

Before engaging in a portfolio-style pay-per-click (PPC) campaign, ask the following questions:

  • Are you judged purely on your media spend’s average results, or does management want to know every dollar is delivering a specific return on investment (ROI)?

  • Does your company strive to hit volume goals or growth objectives, and is it willing to trade efficiency in some campaign segments to get a larger scale campaign, so long as overall results are balanced by sufficiently high ROI campaign segments?

  • Do you run other media that perform significantly worse than your PPC SEM campaign? If so, SEM may actually already be subsidizing other media and could use an increased media allocation.

  • Is your average ROI objective positive enough so that if some campaign segments perform at a 30 percent variance from the object you’re still near breakeven?

  • Can you take into account media touch points that aren’t the last ones before purchase/registration, but may contribute to the desired behavior?

  • Can you effectively measure power keywords’ price/volume elasticity? Elasticity measurement and prediction are critical to managing a portfolio. If you assume you can get more volume from a campaign by bidding more on power keywords (those with high-volume potential) and your competition wasn’t telegraphing its true reserve price in the auction, you can get into a bidding war that results in a low marginal volume increase accompanied by a significant cost spike. This is not a good outcome, and it’s very difficult to predict in advance.

  • Are your competitors one or more of the following:

    • Rational, thoughtful bidders

    • Rational bidders using sophisticated campaign management systems or API (define)-linked campaign software

    • Brilliant marketers who know how to squeeze conversion out of even the most challenging keyword clickstreams and can therefore be very aggressive

    • Marketers who manage different keywords or engines using the same or different strategies, some elastic, some not

    • Marketers with a strong brand that may translate into a significant AdRank advantage in Google (difficult to dislodge and an inelastic landscape)

    • Irrational bidders with deep pockets

    • Irrational bidders with venture capital money -- who hate your guts

    • Marketers who report to a CEO who checks Google and Yahoo daily and yells if the brand isn’t in the (insert favorite position here)

There are no easy answers to when and how much you should use a portfolio approach in managing a keyword campaign. By asking the above questions, you approach the campaign with eyes open. In a portfolio campaign some segments vary dramatically from the average return. You may have data supporting a portfolio approach based on measurable conversions because lots of conversions were less measurable but tied to the campaign.

Discuss this internally and with your agency or search provider, and make sure your campaign is managed the way you want it to be at both the micro and macro levels. Running a customized, profit-maximizing portfolio is far superior to running a boilerplate portfolio, just like investing in the stock market. Have your team do the customized math regularly and tune your keyword portfolio for maximum profit.

Meet Kevin at Search Engine Strategies in Toronto, Canada, May 4-5, 2005.

Want more search information? ClickZ SEM Archives contain all our search columns, organized by topic.

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ABOUT THE AUTHOR

Kevin Lee

Kevin Lee, Didit cofounder and executive chairman, has been an acknowledged search engine marketing expert since 1995. His years of SEM expertise provide the foundation for Didit's proprietary Maestro search campaign technology. The company's unparalleled results, custom strategies, and client growth have earned it recognition not only among marketers but also as part of the 2007 Inc 500 (No. 137) as well as three-time Deloitte's Fast 500 placement. Kevin's latest book, "Search Engine Advertising" has been widely praised.

Industry leadership includes being a founding board member of SEMPO and its first elected chairman. "The Wall St. Journal," "BusinessWeek," "The New York Times," Bloomberg, CNET, "USA Today," "San Jose Mercury News," and other press quote Kevin regularly. Kevin lectures at leading industry conferences, plus New York, Columbia, Fordham, and Pace universities. Kevin earned his MBA from the Yale School of Management in 1992 and lives in Manhattan with his wife, a New York psychologist and children.

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