PPC Optimization: Conversion is Only Half the Battle

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Posted: January 31, 2012 | B2B Marketing

I’m pleased to welcome Mike Nierengarten, Founder of Obility Consulting, an internet marketing company as a guest blogger. Mike has spent the last 7 years driving increases in revenue & lowering customer acquisition costs for his clients by optimizing their online marketing tactics.

The value of a lead is relative. Most marketing departments would be more comfortable handing off a lead from sballmer@microsoft.com than one from anonymous@gmail.com. Yet, from an online marketing perspective, these leads often look the same.

Ad networks like Google AdWords offer robust reporting, but they are fairly limited in evaluating the quality of a lead. For most ad networks, a conversion is typically triggered when a visitor completes a lead capture form and lands on a thank you page. Unfortunately, leads are fairly useless without an eventual sale. Marketers need to understand the effectiveness of their online campaigns because managing a campaign based solely on leads can lead to destruction.

An example:

Marketo’s lead management campaigns are not too different from its clients. Marketo’s campaign goals are to identify prospects that are likely to turn into customers. In one campaign, we targeted Google’s Search and Display networks over the course of a month. Based on Google’s conversion reports, the Display Network seemed a pretty attractive option (all numbers are for example purposes only):

Network Spend Individual Conversions Cost Per Conversion
Search $100,000 1000 $100
Display $50,000 2000 $25

If I was to manage from AdWords alone, piping more money into the Display Network is a no-brainer. Dirt cheap conversions and high volume, what more could Marketo ask for? And, not surprisingly, Google’s reps had the exact same thought. “Build out dozens more Display campaigns” seemed to be Google’s marching orders, repeated in lockstep over weekly chats.

Now, this campaign wasn’t my first lead management rodeo, and so I wanted to look at lead scoring data before recommending a further course of action. How qualified were these conversions from Search & Display (again, all numbers fictional)?

Network Spend Prospects Cost Per Prospect
Search $100,000 250 $400
Display $50,000 200 $250

Well, now I was a convert. Sure the Display Network drove a high volume of undesirables, but who can argue with cheaper prospects? Doubling down on Display made sense. It’s tough to argue with the numbers.

And, that is exactly what we did. For the next 3 months, we gorged on Display leads, doubling our monthly spend. From a prospect (qualified lead) standpoint, we crushed it: each subsequent month, better than the last. The future was bright, but was this new deluge of prospects actually translating to sales and boosting the bottom line? Inquisitive minds (and folks who pay my fees) wanted to know.

Utilizing Marketo’s Revenue Cycle Explorer, we were able to view performance over the course of the months following the 3-month campaign. The results (again, fictionalized):

Network Spend Customers Cost Per Customer
Search $300,000 100 $3,000
Display $250,000 5 $50,000

Needless to say (but, I’ll still say it), our strategy diverged significantly, our Google reps’ calls were left unanswered, and the record-setting prospect counts were never spoken of again.

As a paid search manager, it is incredibly valuable to know the worth of a keyword. That value directly translates into a bid. In knowing that bid, I can predict monthly clicks, which gives me lead volume, and ultimately, monthly ROI of a given keyword. With that knowledge, I can get the most of each keyword and devote budget where it will be most effective. All of a sudden my job goes from maximizing form submissions to maximizing return on investment.

As an employee or consultant, knowing the ROI you are contributing to the company (and having the tools to significantly increase ROI from your marketing channel) is extraordinarily useful come review time. You must calculate ROI across all marketing channels. Whether you are managing webinars, email campaigns, or paid search, measurement using revenue performance management tools is the key to translating marketing efforts to sales.

Related Resources

  • Pingback: Best of B2B Marketing Zone for January 31, 2012 « Sales and Marketing Jobs

  • http://www.carvermediagroup.com/services/digital-marketing/pay-per-click-ppc.html Pay Per Click Marketing

    Those with existing PPC campaigns can extract the information and
    translate it into SEO opportunities, while those without PPC data can
    set up test beds for keywords that have the best chance of converting.
    It is often recommended that ads run for at least four weeks before
    continuing with the next step.

Maria specializes in Inbound Marketing for Marketo, leading efforts in adoption of social media channels for brand awareness and demand generation. She has worked in marketing for over ten years, and specifically in online marketing including social media, search marketing, and lead generation and nurturing for the past six.

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PPC Optimization: Conversion is Only Half the Battle

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