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6 Ways to Survive a PPC Budget Sequestration

  |  March 15, 2013   |  Comments

Cut back on keywords, cut smartphone spend, and make sure you have your engine mix right if you want to please the bean counters and avoid a slice in your PPC budget.

Just like U.S. government agencies, you may find yourself with a sudden unexpected budget cut; a "sequestration," if you want to use a topical reference.

However, before I get into the strategic and tactical response to an arbitrary PPC budget cut, I think it's important to say that as digital marketers we must understand the increasing role that the U.S. Federal Trade Commission (FTC) will be playing in regulating the digital marketing ecosystem. I'm referring not only to "online" as we define it now, but also to apps, mobile, interactive TV, digital radio, online video, and social media. Just this past week, the FTC voiced its concern that marketing messages on social media and mobile devices are not properly disclosed to consumers. Retrofitting social media platforms to conform to the FTC's recommendations may be quite challenging and it will be interesting to see how the industry handles placement of "disclosure on all devices that consumers may use to view the ad." It's likely that search will be revisited at some point in the future as well.

Now back to PPC budget cuts. Sometimes the boss wants to cut your PPC budget even though you feel like your budget should actually be going up. As search marketers it's not unusual for us to have data that proves that we are buying revenues and profit at a positive cash flow (after some lifetime value calculation or even immediately). That data should be a shield against budget cuts because you are essentially buying revenue and customers for the company profitably. However, despite the data, the "bean counters" may not agree with you about increased budgets and instead reduce your PPC search budget.

Below are six ways that you can survive a PPC budget sequestration.

  1. Dayparting/DOW scheduling. How much less are clicks worth to you during different times of the day? How about days of the week? You have two options. If the click value is considerably lower due to conversation rate, changes in shopping cart size, value of leads generated, or even better predicted lifetime customer value, then you can either lower bids proportionately to the change in value or you can pause the campaigns completely. I recommend changing bid multipliers because it's often the case that certain keywords and ad groups will still have a positive value, even during the "worst" times of day and/or days of the week.
  2. Marginal keywords. Each keyword has a marginal profitability value. The first keywords to cut back on (either through reduced bids or by pausing) are the ones that are the marginal performers. However, keep in mind that some of these keywords are often attracting searchers who later direct navigate or come in on brand search terms. So, while you are continuing to harvest existing demand, you won't be using search to create additional demand or change preferences in the later stages of a consumer's decision-making process.
  3. Negative geographies. Did you know that you can set negative geographies? You can essentially opt out of certain geographies, even in the pre-enhanced Google AdWords platform. But with bid modifiers (or bid vectors), you'll have an opportunity to depress bids in geographies that do poorly. Of course, when your budget returns you should be using the same process to raise bids on important keywords in the geographies that do best.
  4. Cut smartphone spend if you're a pure-play online company. Recent data indicates that a high percentage of mobile searchers actually take a positive behavior as a result of their mobile search session. But if your success metrics are purely online conversion, then you may want to cut your smartphone mobile spend.
  5. Make sure you have your engine mix right. It's amazing how many search marketers I talk to are not advertising in Bing adCenter. For this reason, there are often opportunities for good ROI in that engine. You need to be in Bing in the U.S. and you can take your lower ROI keywords in Google and lower bids, investing the savings in your best keywords in Bing.
  6. Hope that your investments start yielding fruit. SEO and social media investments take time to yield fruit. I include this to make the point that a well-rounded search engine marketing strategy includes SEO, and an SEO strategy includes social media that can deliver links. If you haven't been investing in SEO, then when your budget returns take a fresh look at your SEO and social media strategy.

The above tactics and strategies work just as well in reverse and apply quite well when you get additional budget instead of a budget cut, allowing you to properly evaluate new opportunities. Let's hope the economic recovery stays strong, decreasing the likelihood that you'll have to weather a PPC budget sequestration.

Budget Cuts image on home page via Shutterstock.

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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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