How to Increase ROAS by Analysing Path to Conversion Data

  |  September 27, 2010   |  Comments   |  

Search advertising accounts for 61 percent of all online marketing investment in the U.S., according to a Forrester Research report. And it's becoming a trend in Asia Pacific as well.

You might have heard that the return on advertising spend (ROAS) from search advertising is typically the highest in all marketing channels. Search advertising accounts for 61 percent of all online marketing investment in the U.S., according to a Forrester Research report.This is becoming a trend in Asia Pacific as well, where marketers are investing more money on search advertising.

For the marketers who I work with, while some campaign objectives are still driving awareness or traffic to clients' websites, we can see more advertisers now utilise paid search to drive online sales, especially in travel, banking/finance, and education industries.

As an agency, our goal is to help our clients maximise their ROAS. What are some of the effective ways to achieve the highest return on investment? Our experience tells us that one thing that works well is to analyse the "path to conversion data".

Before introducing the "path to conversion" notion to my clients, many are still applying "the last click attribution model" to their paid search campaigns. They might be using a bid management tool, but the tool only takes into account the "last click" that contributes to the final sale.

As today's campaigns grow larger and more complex, skewed data can have severe repercussions when it comes to making strategic decisions. Coremetrics research has found that customers interact with online brands 5.5 times before a conversion takes place. By relying solely on the "last-click attribution model", marketers' performance data quickly becomes skewed towards the keywords that are at the end of the conversion funnel. This is one reason why some marketers might find an expensive keyword drives traffic to their websites but does not result in an acceptable number of high-margin conversions.

I work with clients in the travel industry. The obvious search marketing goal is to acquire online bookings. For a hotel client that we work with, we discovered that a typical conversion takes three days to complete, and users search at least three keywords before a conversion takes place.

Let me give you an example. A user might be planning a trip to Melbourne for vacation. He goes to Google, searches for the keyword phrase "Melbourne city hotel deals", and clicks on my client's ad, but he doesn't book any rooms. The next day, the same user searches again. This time he types "places to stay in Melbourne city". Once again he clicks the ad but doesn't convert. On day three, he goes to Google again and types "Melbourne hotel deals" and from our path to conversion data, he made a transaction by booking a hotel room for five nights.

Looking at the above example, if we solely rely on the last-click attribution model, we would have given full credit for the sale to the last keyword "Melbourne hotel deals", even though it should share credit with the keywords "Melbourne city hotel deals" and "places to stay in Melbourne city".

It is therefore important to leverage tools that monitor the entire path from the first click to the conversion. Some bid management tools have the ability to do that and they provide you with detailed reporting on the search terms that participated in the path. They can also automatically distribute conversion credit weights for all clicks leading to conversions based on your marketing goals.

This attribution modeling opens up the benefit of being able to view all your customers' interactions and to attribute proper ROI to each stage in the funnel. This will ultimately increase the overall ROAS from search advertising.

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Anna Chan

Anna Chan is the managing director of Reprise Media Asia. Based in Hong Kong, she oversees the development and effectiveness of search within Mediabrands' agencies Initiative and UM in Hong Kong, Indonesia, Malaysia, the Philippines, Singapore, Taiwan, and Thailand. Anna began her career as an advertising account executive in San Francisco. Anna has over 11 years of experience in Asia. Prior to this role, she was the head of search for UM in Asia Pacific and before that, sales manager at Yahoo. Here she managed the direct sales team and developed pioneering search strategies for major corporate brands. Anna is a regular speaker at search marketing conferences, including Ad:Tech, ADMA, British Chamber of Commerce, Pacific Conferences, and others.

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