SEM Budget Multipliers, Part 2

Let’s continue the discussion of media budget multipliers. A media budget multiplier is any strategy, tactic, or technology that results in an efficiency gain somewhere between the impression and the success metric (registration, order, sale, call, or page visit).

To illustrate the multiplicative power of budget multipliers, we’ll use the net contribution margin, which is the revenue minus the cost for each item or order.

Current monthly campaign status:

  • Pay per click (PPC) spending: $200,000

  • Total net contribution margin: $400,000
  • Conversion rate: 3.5 percent (average)
  • Keywords: 2,900
  • Engines: top five PPC engines

We’ve covered tactics you can use to increase a campaign’s profitability by boosting effectiveness, such as keyword expansion. Efficiency doesn’t stop there. These additional search engine marketing (SEM) budget multiplier tactics keep adding power to a campaign:

  • Engine expansion. I’m always amazed to find some marketers run campaigns on only one PPC search engine. Sometimes it’s Google, sometimes Overture. If some keywords deliver high volumes of profitable orders from one search engine, it’s likely they’ll work in others. Consider paid placement in the second-tier PPC engines, such as FindWhat.com, Kanoodle, and Enhance, and, if appropriate, shopping engines, such as Shopping.com, BizRate, PriceGrabber.com, and mySimon. Vertical portals, such as Business.com, can be combined with the Internet Yellow Pages.

    Engine expansion allows the least efficient part of your budget to be spread over the most efficient areas in the new engines. By taking budget away from “expensive” listings (the ones with lower than average return on investment, or ROI), you make your budget go further, multiplying its effectiveness. Engine expansion can add 5 percent or more efficiency to a campaign. In our example, that equates to $20,000 in profit.

  • AdGroup recategorization (Google only). So much of Google AdWords campaign efficiency centers around keyword creative and relevancy matching. The way AdGroups are categorized and how keywords are placed in those groups are often-overlooked factors. Categorize your AdGroups so the creative is more on target. It will increase the conversion from impression to click. That means clicks come in cheaper.

    If you’re also running AdSense (Google’s contextual product), it can target your ads better if the AdGroups have fewer keywords and if those keywords are similar to one another. It’s a win-win situation, due to better targeting and cheaper clicks. Recategorization can add an extra 5 percent to a campaign’s efficiency. There’s another $20,000 profit.

  • Automated campaign bid management. Every moment of every day, as each of your listings is searched, there are three possible outcomes: Your bid is too high and you exceed your ROI target; the bid is too low and you miss a great ROI opportunity; or your bid is just right, in the sweet spot where volume and ROI are balanced. Bid management systems that are based on position will check bids to keep them at the position and price you set. More advanced campaign management systems recalculate the “just right” position, based on one or more formulas.

    By keeping bids optimized, your budget goes further, particularly when overbidding situations are addressed and that budget is reallocated. Depending on where you start, automated campaign management can add 15 to 30 percent efficiency, sometimes more. In our example campaign, that’s a $60,000 to $120,000 profit.

  • Dayparting and day-of-week timing. Not all listings benefit from dayparting or day-of-week-based predictive models. Often, high-volume, very competitive keyword listings are likely candidates for some kind of analysis and modeling. Many marketers don’t need dayparting at all, while others can save budget from poor-conversion periods to spend during high-conversion periods. Savings from dayparting are often higher than the boost, but efficiency gains start at 5 percent.
  • Landing-page testing: navigation, layout, and images. The better the user experience, the higher the conversion rate. That’s why landing-page testing is critical. Changes to navigation, layout, images, color, and copy all influence conversion. Darwinian or multivariate testing can tease out the highest gains over time. Efficiency lift can be huge: 15 to over 50 percent. In our example, that could be as much as $200,000 in added profit.
  • Landing-page testing: offer and price testing. What sells more books, free shipping or 10 percent off? What induces more visitors to provide their email addresses, a free white paper or a free keyword research tool? Can you sell the same number of dating site subscriptions at $12.95 as you do at $9.95? Different offers work with different keywords. The price or offer is part of your landing page. Test them. The result might be a 5 percent or higher lift in efficiency.

Best of all, many of these tactics are compounding multipliers. Like compound interest in a bank account, the efficiencies you gain from each are reflected in the other baseline calculations. You could double efficiency by implementing the right tactics. Some marketers may see total increases over 2.5 times the original results. That’s a great way to multiply your budget.

Of course, many of the above tactics and strategies do have associated costs. These may be labor, time, or actual dollar costs to external vendors or solutions. The larger the budget, the more likely those costs will be more than covered by the increase in efficiency.

If budget multiplier strategies have a positive ROI effect, you’d be crazy not to use them.

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

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