The Most Important KPI For A Performance Marketer

Many performance marketers continue to consider click-through rate (CTR) as a key performance indicator of their search campaigns’ effectiveness and evolve their PPC optimization strategy around that.
At the end of the day, what matters most is achieving the best ROI given your business objectives and budget, and you might optimize directly to CTR or ROI or a combination of success metrics to achieve that.
In order to have the best optimization strategy for your SEM campaigns, it is important to understand and quantify the influencers of ROI.

The Two Extreme Optimization Strategies

There are two types of strategies performance marketers consistently use as their campaign optimization strategy:
1)    Optimizing To A CTR Goal
One of the main factors influencing Quality Score (QS) is CTR, which affects your cost-per-click (CPC) and in turn affects your ROI. An increase in QS due to a boost in CTR would lower CPC and improve ROI.

2)  Optimizing To An ROI Goal (Revenue-Per-Click & Cost-Per-Click)
Direct optimization to revenue or a conversion metric is a common strategy amongst performance marketers. Making sure an intelligent bid management is in use will be crucial to your campaign’s success.

While perhaps no marketer purely optimizes to CTR or ROI, they tend to skew towards one of these camps. Each method has its pros and cons. A CTR strategy will get you more clicks but does not guarantee the highest ROI. A purely ROI approach will get you the highest ROI but you potentially lose out on customers early in the sales funnel who might eventually convert.

ROI Breakdown

ROI equals Revenue-Per-Click (RPC) over Cost-Per-Click (CPC). Data analyzed from over two dozen advertisers using econometric methods (a simplified version of the equation is shown below) shows that 34% of ROI is influenced by RPC and 66% by CPC.
Bid management is by far the most important influencer of ROI. Forty-nine percent (49%) of ROI is influenced by bid management, 13% by other factors (i.e., marketplace, seasonality, etc.), and 4% by CTR. The data show the importance of having an intelligent bid management strategy in place for your SEM campaigns. But, does this mean a CTR maximizing strategy is a wasted effort?

A Deeper Dive Into The Relationship Between ROI & CTR

Previous studies have looked at the relationship between CTR & ROI by purely relying on correlations. A correlation analysis alone cannot determine the effects of CTR on ROI, and a more robust statistical technique is required to answer that question. These techniques enable us to control for all the factors that can potentially influence ROI.
From the chart below, we do see a relationship between the CTR & ROI — but not a very strong one.


Applying statistical modeling techniques will allow us to quantify any statistically significant relationship between the two if it exists.
In this model, I control for position, CPC, industry, and bid management differences across the different advertisers in the data in addition to CTR.
The results show that there is a statistically significant relationship between CTR and ROI; but in terms of impact, it’s quite small. For a 10% increase in CTR, expect to see a 1.2% increase in ROI. This means that if you increase your CTR from 10% to 11% for a campaign with an average ROI of $5, the ROI will increase to $5.06 due to the improvements made in CTR.

Key Takeaways For Performance Marketers

• Campaign managers should utilize both strategies above in optimizing their campaigns; main focus should be on ROI but do not completely ignore CTR
• 49% of ROI is influenced by bid management; intelligent bidding is integral to a campaign’s success
• CTR does have a small but statistically significant impact on ROI; a 10% change in CTR affects ROI by 1.2%

In Summary

Focus on optimizing your SEM campaigns for ROI but keep an eye on CTR. There is no need to purely optimize to CTR as it influences only 4% of ROI; but, it is important to account for it in your longer term strategy and make sure healthy CTR rates are met and maintained.
Intelligent bid management heavily influences ROI and is absolutely necessary to ensure your ROI goals are met.

Are Google’s Results Getting Too Ad-Heavy & Self-Promotional?

Are Google’s search results getting too ad-heavy and leading back to Google’s own content too much? A new blog post suggesting that Google’s non-paid listings make up only a tiny fraction of the entire search results page has sparked some discussion, though the exact percentage actually varies on how you count what’s on the page and from query-to-query.
According to the blog post by Aaron Harris, co-founder and CEO of Tutorspree, organic search results — listings that are not paid ads but ranked highly because Google thinks they are the best answer to a query — made up from 0-to-13% of a Google search results page.
However, if you measure the page not by pixel count but by actual listings, the situation is brighter than some of the “death of organic listings” proponents might think. Also, some things considered to be “Google” listings might not make sense to count that way.
Here’s what Harris found, along with some further analysis.

Auto Mechanic: Only 13% Unpaid?

When performing a Google search for “auto mechanic” using his Macbook Air with a 13-inch screen, Harris discovered that AdWords paid listings took up 29% of the page (12% at the top and another 17% to the side). The Google navigation bar took up 14% of the page. Unpaid “organic” listings got 13%, with the Google map plotted with local results having 7%, as illustrated below:

Vignesh Ramachandran at Mashable experienced similar results when he performed his own test on Google. Using the same search term as Harris — “auto mechanic” — Ramachandran found that organic search results only accounted for an estimated 13.5 percent of screen real estate on his 15-inch MacBook Pro in a Firefox browser:

Caveats & Counting Issues

Two sources coming away with a 13% figure for unpaid listings can sound pretty low. But that’s not the same as being able to declare that all searches are this way. Each search may have a different mixture of paid and unpaid results, based on the ads competing to appear, the location of the searcher and whether Google itself determines if a particular query deserves to be ad-heavy or not.

Beyond the variation from search-to-search, how you measure the percentage of a page that’s deemed “unpaid” isn’t as clear cut as it may seem.

One immediate caveat is the assumption that the map is somehow not worth counting in as “organic” listings. Clicking on the map leads to a page that will have both organic listings and paid listings plotted on a map. There’s a usefulness for search engines to show local information on a map. Arguably, some of the map “percentage” should count into the organic listings.

Another issue is the idea that the search box and navigation links should be somehow counted against Google as some type of new attempt to drive more traffic to Google products. Google’s long had navigation links. In fact, at some points, the navigation and search box unit might have been larger than it is now.

Beyond that is the idea that measuring in pixels is somehow the correct way to go. It assumes that the entire page is seen and interacted with in the same way. It also, oddly, counts the ads on the side as having nearly twice as much space as they actually take-up, because the box around them includes a bunch of white space.

Traditionally, what has concerned search marketers worried about Google (or any) search engine encroaching on the organic space has been to count the actual number of listings, especially those in the middle of the page, where people typically focus their attention and clicks.

By those measures, the example above works out to have 10 listings that are fully visible, with percentages like this:

• Total paid versus unpaid: 70% to 30%
• Paid versus unpaid, middle column: 50% to 50%

Those percentages are much better than the “13%” you might come away with from the original blog post. But then again, they still feel pretty low.

Meanwhile, Over At Bing…

For comparison sake, I ran the same search on my own MacBook Air with a 13-inch screen at Bing:

I didn’t try to measure the pixel count, because as explained, I’m not sure that’s the right approach for various reasons. But at-a-glance, it’s pretty clear that an ad-heavy page isn’t just a Google problem. In this example, Bing manages to push all but a single organic listing to the bottom of the page — and only the title of that one shows.
Like Google, the map leads you to a mixture of paid and unpaid listings. Unlike Google, selecting the local listings that appear next to the map sends you back into Bing Maps rather than to the actual business. Google used to do the same but changed this practice about a year or two ago, after criticisms.

Italian Restaurant: Only 7% Unpaid?

For another search, organic listings won even less screen real estate. When Harris looked for “italian restaurant,” the newly introduced Google Local Carousel located at the top of the page garnered a full 30% of the screen real estate.
With the navigation bar still taking 14%, AdWords at 9%, the Google map with 15%, a Google-owned Zagat listings (outside of the carousel) at 4%, organic search results for Harris’s search made up for only 7% of the page:

Again, that’s a shockingly low number at first glance. But, it gets better when you understand more about how the search page actually works.
The carousel links aren’t paid listings. Clicking on them leads to a fresh search results pages for the particular restaurants that are listed. The downside is that, as with Bing, this drives people back into Google rather than over to the restaurants themselves.
That’s disappointing. Google’s goal here is that the carousel is part of its Knowledge Graph, where it’s trying to share answers and information about things, including restaurants. But if someone clicks on the name of the restaurant, there’s a good assumption they just want to go to that restaurant’s page, not get stuck in an endless loop of Google search results.
As said, Google changed how its map results did this in the past; hopefully it will reconsider how the carousel works.
Another issue is counting the Zagat listing separately from the overall “organic” figure just because it’s a Google-owned property. Google asserts those properties are competing with all other pages and only appear if its algorithm believes they are relevant. There’s no programmatic command to always show a Zagat page at the top. Some won’t believe this, of course. But still, that’s far different than the assumption that a Zagat page might always show.
Indeed, here’s what I see in my location for the same search:

In this case, I don’t get any ads at all. I also don’t get any Zagat listings. Instead, I get the Olive Garden, an LA Times article and two listings from Google-competitor Yelp.

Meanwhile, Over At Bing…

On the one hand, I’m much happier with what I get from Bing:

There are ads, but they are over in the middle column, under the map. Clicking on the main listings takes you to the restaurants, unlike how Google’s carousel works. Organic search is far from “dead” here.

Then again, Google’s giving me a more colorful display that actually lists more restaurants than Bing does. If the carousel took me directly to those restaurants, rather than back into the search results (where you can then get to them), I think it would be a much better winner.

A final caveat in all this. Looking at a page doesn’t help you understand some of the interactivity that goes on. With Bing, selecting the “Reviews” link changes the middle column into showing more information from Bing’s own sources. How that gets measured is another complication, if we’re counting pixel space versus listings.

0% On Mobile?

Organic search results fared even worse in mobile searches, claiming 0% of the initial screens. When Harris searched “Italian Restaurants” from his iPhone, he had to scroll through four full screens before seeing any organic listings, which appeared after ad units, Google-owned Zagat listings, and a Google map followed by Google local listings:

Again, it sounds terrible until you get into the caveats. First, there’s the counting of Zagat in the first example as not being an organic search results, when it is. That really makes the results on that page 50/50 paid versus organic, unless you assume based on one search that Zagat will always occupy the top spot and that there will always be an ad. That’s not the case for me, in my location. In my area, Yelp has the entire page first screen.
After that, I get the same type of Google local listings as shown as “2″ in Harris’s example. I suppose that’s bad news for the Yelps of the world who want even more of that page, and it really does illustrate what Harris said, something the Yelps and others have already themselves said many times before:

“If you compete with Google in any way, you’re in its crosshairs. Your chances of ranking high enough to garner traffic are virtually nil and getting smaller.”

Life Harder For Competing Search Engines; Not Necessarily For Web Sites

Indeed. While the future may not be as bad as Harris paints it for other local search providers, in getting traffic from Google, the trend is pretty clear. Where Google can provide answers, it’s going to do that more and more directly, rather than feeding out to competing search engines.
That, however, isn’t necessarily bad for the user. If I’m on my phone, and I want to learn about a restaurant, the Google local results in the second screenshot are extremely useful, offering to let me call the restaurant or get directions to it. If I drill in, I’d even get an Urbanspoon menu. I’d also likely get Yelp reviews along with Zagat reviews, if that’s what Yelp wanted. But that’s not what Yelp wants, because Yelp blocks those reviews from appearing in Google.

But Google Owning Content Is Troubling

For me, the concern isn’t that Google doesn’t show enough listings of other search engines, any more than I’m not concerned that the New York Times doesn’t run enough Wall Street Journal articles.

To me, the real concern has been the transformation of Google from being a search engine that pointed out to destination sites (like those restaurants) to wanting to be a destination of its own.

SEO and organic search is far from dead, and anyone who runs a site can look at their traffic logs to know how much traffic Google sends them every day, for free. But selling movies, offering restaurant reviews, hosting video, hosting book content and more does further pollute the clarity we used to have about what Google’s role was as a search engine, and whether it pushes its own content above others.

Before You Quit Pay-Per-Click, Follow These PPC Tips

The thought of advertising your small business is both exciting and unnerving.  Many business owners are proactive when it comes to marketing their own business, using pay-per-click (PPC) advertising for instant results. When business owners try to handle their own PPC ,  they can spend  hundreds or even thousands of dollars on pay-per-click advertising  only to see little return on their investment.
Before you give up on PPC, consider the common mistakes that business owners make when managing their own advertising campaigns:

1. Having Unrealistic Expectations
2. Not Checking the Terms They are Actually Paying For
3. Not Adding Negative Keywords
4. Creating Ads Without Keyword Relevant Landing Pages

Having Unrealistic Expectations

Small business owners need to be broken out of the traditional advertising mindset.  For years, small business owners advertised on printed media, radio, and television. They are used to seeing and hearing their own ad constantly.  With  PPC advertising,  your ad will not be up 24 hours a day, 7 days a week. Often, business owners will set up a PPC campaign, search their keyword, and not find their ad. When this happens, their first thought is, “Where is my ad? This is not working!” PPC is a lot different than traditional advertising.  You pay for performance.  
There are a few reasons why you might not be seeing your ad:

1. Your ad  might have already been clicked on a few times today. Once you reach your daily budget, your ads will stop running for the rest of that day.
2. You may be targeting too many keywords or not the right keywords.  In general, the more specific the keyword, the better the results. See my post on longtail keywords.
3. Your daily budget may be too small. If your spending less than $10 a day, your budget might not be enough to provide meaningful results.

Not Checking the Keyword Details (Query String Report)

When I have talked to small business owners that manage their own PPC, I was surprised to learn how few people actually use this. The keyword details are the actual search terms that you paid for. You can also think of this as keywords driving traffic.  Lots of valuable information can be found in this report. You can quickly see if you are wasting money or may see opportunities for new keywords. Hands down, this is my #1 PPC tip.
Here is how you can see the query string report:

Click on the keywords tab.

Select all keywords to see every search term that you paid for.

Click on view keyword details.

See which search terms are actually driving traffic. Notice that this list doesn’t exactly match your keyword list. Look for keywords that will never result in new business and add them as a negative keyword.

When you look through this report, you should ask yourself one question- could this search term result in business?
For example,  I was recently looking at a PPC campaign for a maid service company. One of their targeted keywords was “housekeeping.” I looked at the query string report and I saw that she had a lot of traffic coming from people searching for “housekeeping jobs.” The business owner was paying for this traffic and didn’t even know it. I also found something rather amusing.  One of the search terms was “arnold schwarzenegger housekeeper”. I am not sure why a person searching for this ended up clicking on an add for maid service; perhaps it was an accident. Anyways, after I checked the query string report, I added 71 negative keywords to this campaign. One was “jobs” and the other was “arnold schwarzenegger”. with the addition of negative keywords, the business owner does not have to worry about paying for these terms that will won’t result in a sale.

Not Adding Negative Keywords Every Month

This is somewhat repetitive to the step above, but it is so important I wanted to break it out into its own section.  Negative keywords are terms that you don’t want to advertise for.  This is almost as important as choosing the words you do want to advertise for.
Let me illustrate with an example. If you own a carpet cleaning service, you might have “carpet cleaning” and “cleaning service” as keywords. Without negative keywords, someone searching for “window cleaning service” might see your ad and call you to find out that you don’t offer window cleaning.  Not only is this annoying for both the customer and the business owner, it also eats up your PPC budget.
Many small business owners running their own PPC campaigns don’t create a negative keyword list.  PPC platforms like Adwords and adCenter are designed for anyone looking to get started ASAP. There are few requirements in the actual interface. You need a budget, some keywords, and an ad with a landing page.  Because negative keywords are not required, most small business owners don’t set them up. Adding negative keywords will make your campaign much more effective by spending your budget only on keywords that will drive  new business.

Creating Ads Without Keyword Relevant Landing Pages

One of the biggest mistakes is not having the actual keyword you are targeting on your landing page. For example, say you are an HVAC company. You have a home page that talks about your company with some marketing language about “why choose us.”  You want to advertise your business when people search for “Water Heater Repair In Houston,” but no where on your home page do you have those keywords in that order. This is like shooting yourself in the foot. If you want to get results for this keyword, this is how you should up your campaign:

1. Sign into Adwords and create a campaign. Set your daily budget and target your ads to be shown in Houston.
2. Create an ad group called water heater repair.
3. Add keywords specifically about water heater repair (water heater service, water heater not working, broken water heater, etc.)
4. Add negative keywords related to this service (jobs, etc)
5. Create ads specifically about water heater repair.
6. Create a landing page specifically about water heater repair using the keywords from step 3.

Follow the above tips to get the most out of  your PPC, increase conversions, and drive potential customers to your website. You’ll enjoy the boost to your bottom line that a properly executed PPC campaign can create!

New Upgrade Center For Enhanced Campaigns Lets Advertisers Do Bulk Upgrades & More

Google AdWords is rolling-out a new upgrade center today for advertisers using Enhanced Campaigns. Accessible from the left-hand nav bar on the Campaigns tab, the upgrade center lets advertisers managing several campaigns perform bulk upgrades to multiple campaigns simultaneously and merge selected campaigns in a few simple steps.

The bulk upgrade feature allows advertisers to select multiple campaigns, choose a mobile bid adjustment, view traffic estimates and upgrade their Enhanced Campaigns with fewer clicks, making it easy to upgrade individual campaigns all at once.
The upgrade center also identifies search-only or search+display campaigns that have similar keywords and location targets, and offers a preview of possible campaigns that could be merged. Advertisers can then adjust the proposed settings, ad groups and extensions for merged campaigns.

Google notes that ad groups and budgets will be combined by default, and any campaign level settings and extensions in the Primary campaign will override Secondary campaign settings and extensions.
According the Inside Adwords blog, the upgrade center will roll-out to advertisers over the next few weeks.

“Facebook Home” Keeps Google, Search Is Harder To Reach

Pick your survey, and one of the top activities on a smartphone is to use Facebook. That’s what the new Facebook Home is all about, making it easier for Facebook users to get Facebook. But it also makes another top activity — search — harder to do.
On Android devices, search is almost always just one touch away. Most current devices have a Google Search bar at the top, while older devices have the old-style search button at the bottom.
Facebook Home turns search into at least a two-touch, or two-step, process. It doesn’t appear to be a purposeful move to somehow oust Google. In fact, Facebook CEO Mark Zuckerberg seemed full of praise for Google and wanting not to impact what people’s search experiences are. Rather, it almost feels like an oversight.
Consider the two screenshots below:

On the left is my Galaxy Nexus. You can see the Google search bar at the top. If you want to search, you just tap on that box — one step (if the phone is locked, then it’s two steps).
On the right is a phone with Facebook Home. There’s no search bar. If you want to search, and this is a Facebook Home Partner device (like the forthcoming HTC First) you have to tap your picture at the bottom (step 1), then drag up to open your app drawer (step 2) then tap on the search box that appears at the top of that (step 3).
Here’s another side-by-side, this time with the HTC First (on the left) next to my Galaxy Nexus, showing how you can eventually get to the search bar:

If you’re on a non-Facebook Home Partner device, one that has the latest version of Android and is deemed Home capable, the bar goes away entirely.
For example, here’s how things look on the Galaxy S3, after you’ve opened the app drawer:

That’s the full screen. The search bar is nowhere to be seen, no matter which app pane you switch to, either. I’ve had two people from Facebook confirm that if you add Facebook Home to a device not part of the partner program, the search bar goes away.
So how are these Facebook folks who’ve been using the Facebook Home already conduct searches? They open up Chrome, then search from within there.
That works, of course. Plenty of people search in a similar way on iOS devices, by going through Safari or an alternative browser like Chrome. But for those used to one-touch “app-less” search, Facebook Home makes that harder.
Is this on purpose? Like I said, I doubt it. It’s certainly not the impression I got when talking briefly to Zuckerberg about it. He made it pretty clear there was no intention of trying to change search around for people.
“We don’t want people to have to choose do I want to be in this Facebook mode or a different mode. We want it to be additive,” he said. “The swapping out of Google’s functionality isn’t really something we want to do here.”
What about the idea that people may want to do local searches, and while Facebook effectively has a local search engine, Facebook Home doesn’t seem to help with that? Zuckerberg simply said Facebook had “a lot of opportunity” to show such content in the new Cover Feed or within the Facebook app itself.
But on the web, Facebook Graph Search is in part designed to better provide access to local information. Will Facebook Graph Search come to the app?
“When that’s available, hopefully we’ll be able to make that available here [in Home]. But even Graph Search, Graph Search is not web search. People still need Google or Bing of whatever they use for web search.”
Is Zuckerberg perhaps being cagey, holding back on a secret-uber plan to eventually have Graph Search take over on these devices. Perhaps. And I do think Graph Search is going to come. But really, the impression I got was that search has largely been overlooked with the launch of Home.
Consider that Facebook repeatedly talks about how it’s now a mobile-first company, and how more people are using it through mobile devices. Graph Search — and its partnership with Bing — are key features of the desktop experience. Neither of those are ready to follow Home over?
Down the line, of course, Facebook could potentially prompt people to change search providers — it could offer to be a search provider itself. But would that mean Bing would become part of that partnership on mobile, as it is on desktop? Or might Facebook worry that perhaps some might react badly to the idea of not having Google as their search engine?
We’ll see. But for now, it’s pretty clear that if you depend on some direct access to Google search, you’re going to do some additional steps in the future, if you go to Facebook Home.
As for Google Now, that seems to remain unchanged. A single hold on the main menu button with the HTC First will bring that up. The Vine video below shows this, after I first show the steps you go through to do a search:
On a non-partner device like the S3, a hold on the main menu button brings up access to Google Now via the G icon, at the bottom of the screen: