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Monday, May 21, 2007

How to Maximize PPC Given the Budget Constraint!

Monday, May 21, 2007
As a student of Economics, many of you must have read how to maximize the Marginal Utility given the budget constraint. More or less, the same logic applies to PPC while running a successful campaign on Google.

Below is my analysis which I have elucidated with screenshots. It will help you run PPC more efficiently.

Localized Your Target for Glocalized Audiences
There exists trade-off between CTR, and impression. Any campaign you run on Google must not target the whole country. Country targeting increases the no of impressions and decreases the potential clicks. Targeting smaller regions can result in more relevant ads with higher clickthrough rates. As the impression decreases, potential click increases, and vice versa. Please, see below the screenshots that show the trade-off between CTR and impression.
Never Use Generic Keywords
Always check the performance of paid keywords you select. Make sure the campaign you run should not have very generic keywords. Generic keywords increase impression and decreases potential clicks because the avg. Ad position decreases. Choosing specific keywords will result in more targeted ads with higher clickthrough rates. Please, see below the screenshot.

As said above, there is tradeoff between impression and CTR. Zeroing in on the localized keywords for glocalized audiences may help us improve the performance of our PPC campaign.

We need to strike a balance between the two. We need to analyze the ‘keyword strategies’ with a near balance between the two –Impression (Imp) and Click Through Rate (CTR).

Keyword analysis after a very careful research may help us achieve the ideal situation (Equation 3), and thereby driving down the cost month after month.

Please, make sure that we can never set a higher bid for keyword which is of less significant and driving no or less results. In fact, we need to continually monitor the performance of our targeted keywords with emphasis be given on the ‘Quality Score’. Although many factors are taken into consideration while calculating ‘Quality Score’ but the major one is the overall performance of the targeted keywords. Given this situation, we need to really work hard to spreadsheet a list of targeted keywords with an eye on their performance. For this, measurement of KEI (Keyword Effectiveness Index) becomes necessity while performing keyword research.

In gist, we can drive down the cost by judiciously setting a bid for the targeted keywords.

Some Other factors affecting PPC performance:

  • Focus on ad quality. Attract more clicks by refining ads, and eliminate extra impressions by choosing highly targeted keywords and sites and using negative keywords.
  • Focus on ads and keywords and sites to attract the right audience. Focus on the website. Be sure the landing page and site are set up to let users find what your ad offers.
  • Create separate campaigns for each of product lines, resources, or brands. This helps to monitor advertising more easily and make the necessary adjustments to improve the campaign performance.
  • As with campaigns, each ad group should center on a single product or service to ensure ads reach the most qualified users. Build a list of keywords or sites, then separate them into related ad groups. Create ads that pertain directly to that list. For example, if you sell mp3 players, and you've organized your campaigns by brand, create multiple ad groups based on the models of each brand.
  • Google shows only one ad per advertiser on a particular keyword, so there's no need to include duplicate keywords in different ad groups or campaigns. Identical keywords compete against each other, and the better-performing keyword triggers the ad.
  • With some keywords, we get more ad impressions; with others, we get fewer impressions but potentially more clicks. By strategically using keyword matching options, we can reach the most appropriate prospects, potentially reduce our actual CPC or CPM, and increase our ROI. For example, use negative keywords to reduce irrelevant ad impressions and increase your Quality Score.
  • We can use Site-targeted campaigns.
  • Evaluation of website design. Website's overall layout and functionality. Websites that are attractive, easy to navigate, and informative tend to be more profitable.


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